Robert J. and Anne L. Wilson - Page 10

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          report any interest income received from the State.  However,               
          petitioners now concede that, for taxable year 1989, they had               
          unreported postjudgment interest income from the State in the               
          amount of $1,333.35.5                                                       
               Petitioners never asked the Internal Revenue Service (IRS)             
          for an extension of time in which to buy replacement property               
          pursuant to section 1033.  Furthermore, petitioners did not,                
          prior to October 1991, notify the IRS that they had bought                  
          replacement property with the condemnation proceeds.                        
               In 1989, petitioners purchased property in Bath County,                
          Virginia (Bath Co. property), paying $125,000 for such property.            
          In 1993, petitioners rented out the Bath County property with the           
          agreement that the property would remain on the market and, if              
          sold, the rental agreement would terminate.  Petitioner called              
          the IRS in the Spring of 1989, and he was referred to section               
          1033; after reviewing the code section, he concluded that he had            
          acquired replacement property that complied with section 1033.              
               In 1987, petitioners bought 691.043 shares of International            
          Stock Fund from T. Rowe Price (stock fund) for the total amount             
          of $19,750.  In 1987, petitioners received distributions from the           
          stock fund in the amount of $7,006.92.  Petitioners reinvested              
          this amount into the stock fund.  In 1988, petitioners received             

          5    Although the parties stipulated that the postjudgment                  
          interest was $1,335.35, this appears to be a typographical error,           
          as the schedule accompanying the State's deposit listed the                 
          postjudgment interest as $1,333.35.  Accordingly, we find that              
          the stipulated postjudgment interest income is $1,333.35.                   

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