Opinion
5191-20
04-12-2022
CORY H. SMITH, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro, Judge.
This case is currently calendared for trial during the Court's May 24, 2022, Dallas, Texas, remote special trial session. On March 21, 2022, respondent filed a Motion for Leave to File Amended Answer (Doc. 33) and lodged the accompanying Amended Answer (Doc. 34). By Order served March 25, 2022, petitioner was directed to file a response to respondent's motion on or before April 7, 2022. On April 7, 2022, petitioner filed a Response to Respondent's Motion for Leave to File Amended Answer (Doc. 47).
In respondent's Motion for Leave to File Amended Answer, respondent states that "[w]hile this case was pending with respondent's counsel for trial preparation, respondent's counsel observed that for tax year 2018, petitioner incorrectly claimed a deduction for certain business expenses despite not belonging to a category of individuals entitled to this deduction."
In petitioner's response to respondent's motion, petitioner states that respondent waited over two months to file the motion after notifying counsel for petitioner and that the delay renders this motion untimely and places an undue burden on petitioner.
Rule 41 governs amended supplemental pleadings. Rule 41(a) covers amendments and provides in effect that after a responsive pleading is served or 30 days if no responsive pleading is permitted, "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." Whether to permit such an amendment is a matter within the sound discretion of the Court. See, e.g., Estate of Quick v. Commissioner, 110 T.C. 172, 178 (1998). In evaluating whether to allow an amendment, we consider, among other factors, whether the opposing party would suffer unfair surprise, disadvantage, or prejudice if the motion to amend were granted. Id.; Waterman v. Commissioner, 91 T.C. 344, 351 (1988); see also Foman v. Davis, 371 U.S. 178, 182 (1962). Such surprise or prejudice, in turn, rests largely on evidentiary and other considerations bearing on the nonmovant's opportunity to respond. For instance, this and other courts may take into account whether the nonmovant would be prevented from presenting evidence that might have been introduced if the matter had been raised earlier and whether the movant delayed unduly in raising the matter. Estate of Quick, 110 T.C. at 178-180; see also Foman, 371 U.S. at 182; Estate of Strangi v. Commissioner, 293 F.3d 279 (5th Cir. 2002), aff'g in part and rev'g in part 115 T.C. 478 (2000).
The circumstances of the instant proceeding fall short of establishing the requisite unfair surprise, disadvantage, or prejudice to justify denial of respondent's Motion for Leave to File Amended Answer. Given the nature of the amendment sought by respondent, the fact that petitioner has been aware of respondent's intent to amend for more than two months, and the fact that the case is calendared for trial at a session scheduled to commence May 24, 2022, we do not believe that the timing of respondent's motion for leave will prevent petitioner from being adequately prepared for trial or properly defending his position. To the extent there are disadvantages because of time or discovery, those disadvantages generally weigh more heavily on the party with the burden of proof, and because respondent seeks to advance new matter here, he bears the burden. See Rule 142(a)(1), Tax Court Rules of Practice and Procedure. Moreover, petitioner is also free to seek an extension of existing deadlines if doing so is necessary to address any unfair surprise, disadvantage, or prejudice arising from our decision to permit respondent to file an Amended Answer.
Upon due consideration, it is hereby
ORDERED that respondent's Motion for Leave to File Amended Answer is granted, and the Amended Answer lodged on March 21, 2022, is filed as of the date of this Order.