Craig F. and Lynn M. Rehberg - Page 9

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                    (C) a failure to make such purchase within such                   
               period; and                                                            
                    (2) such deficiency may be assessed before the                    
               expiration of such 3-year period notwithstanding the                   
               provisions of any other law or rule of law which would                 
               otherwise prevent such assessment. [Emphasis added.]                   
               Petitioners do not dispute that their tax liability was what           
          they themselves reported on their amended return.  Petitioners              
          first contend, however, that respondent assessed them for their             
          unpaid liability beyond the 3-year period of limitations for                
          assessment.  See sec. 6501(a).  In support of this contention,              
          petitioners contend that the 3-year period of limitations began             
          on or about April 14, 1995, when petitioners filed their 1994 tax           
          return, and expired on or about April 14, 1998.  Respondent,                
          however, argues that the assessment of petitioners’ unpaid                  
          liability was timely under section 1034(j).  We agree with                  
               On or about April 14, 1995, petitioners timely filed their             
          1994 tax return notifying respondent of their intention to roll             
          over the gain from the sale of their home into a new residence.             
          See sec. 1034(a).  Petitioners, however, did not at any time roll           
          over their gain into the purchase of a new home.  On March 22,              
          2001, petitioners filed an amended return notifying respondent              
          that they failed to purchase a replacement home within the                  
          specified time period under section 1034(a), and petitioners                
          reported the gain realized from the sale of their home in 1994.             

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