Opinion
286-21
12-20-2023
CURTIS K. KADAU & LORI A. KADAU, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Christian N. Weiler Judge
This case is calendared for trial at a two-week special trial session of the Court in Tampa, Florida, commencing on February 20, 2024. On November 9, 2023, respondent filed a Motion for Leave to File First Amendment to Answer. On November 10, 2023, petitioners filed a Motion for Leave to File Objection to Motion for Leave to File First Amendment to Answer. We granted petitioners' Motion and their Objection to Motion for Leave to File First Amendment to Answer was filed on November 22, 2023.
A party may amend a pleading once as a matter of course at any time before a responsive pleading is served. Rule 41(a). After pleadings are closed, a party may amend a pleading "only by leave of Court or by written consent of the adverse party, and leave shall be given freely when justice so requires." Id.; Foman v. Davis, 371 U.S. 178, 182 (1962). Whether to permit such an amendment is a matter within the sound discretion of the Court. Estate of Quick v. Commissioner, 110 T.C. 172, 178 (1998); Law v. Commissioner, 84 T.C. 985, 990 (1985). The touchstone in evaluating whether to allow an amendment is the existence of unfair surprise or prejudice to the nonmoving party. Estate of Quick v. Commissioner, 110 T.C. at 178-80; Law v. Commissioner, 84 T.C. at 990.
Rule references are to the Tax Court Rules of Practice and Procedure.
The question of prejudice under Rule 41(a) is not simply whether an amended pleading that includes the proposed new issues would make the case harder or more expensive for the other party, since this is likely to occur in any amendment to the pleadings. Ax v. Commissioner, 146 T.C. 153, 168-69 (2016). Rather, the question of prejudice is whether the addition of those new issues by a later amendment, rather than by inclusion in the initial pleading, creates an unfair disadvantage to the other party. Id.
Respondent moved to amend his answer, some three months in advance of trial. While not ideal timing, we cannot say that the First Amendment to Answer will create unfair surprise or prejudice to petitioners, should the Court grant respondent's Motion for Leave.
After due consideration and for the efficient disposition of this case, it is
ORDERED that respondent's Motion for Leave to File First Amendment to Answer, filed November 9, 2023, is granted.