Craig F. and Lynn M. Rehberg - Page 4

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          Form 1040, U.S. Individual Income Tax Return, for the taxable               
          year 1994 (1994 tax return).  On their 1994 tax return,                     
          petitioners excluded from gross income their $53,226 capital                
          gain.  By way of explanation, they attached Form 2119, Sale of              
          Your Home, to their 1994 tax return.  On Line 9 of Form 2119,               
          petitioners marked “Yes” to the question:  “If you haven’t                  
          replaced your home, do you plan to do so within the replacement             
               Petitioners, however, did not purchase a replacement home              
          within the replacement period.6  On March 22, 2001, petitioners             
          filed an amended return for the taxable year 1994.  On the                  
          amended return, petitioners reported the $53,226 capital gain               
          from the sale of their primary residence, and the tax due of                
          $14,360 on the additional income.  In Part II, Explanation of               
          Changes to Income, Deductions, and Credits, of the amended                  

               5  Instructions for Form 2119 set forth additional filing              
          requirements, which state, in pertinent part:                               
               You must file Form 1040X, Amended U.S. Individual                      
               Income Tax Return, for the year of sale with the second                
               Form 2119 attached if any of the following apply:                      
                              *   *   *   *   *   *   *                               
                    2.  You planned to replace your home when you                     
               filed your tax return but did not do so within the                     
               replacement period.                                                    
               6  For the year in issue, the replacement period begins 2              
          years before the date of the sale of a taxpayer’s principal                 
          residence and ends 2 years after such date.  Sec. 1034(a).                  

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