Anthony and Gloria Donnora - Page 10

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          matter of right but is within the discretion of the Court.                  
          Zenith Radio Corp. v. Hazeltine Research, 401 U.S. 321, 330-333             
          (1971); Foman v. Davis, 371 U.S. 178, 182 (1962); Kramer v.                 
          Commissioner, 89 T.C. at 1085; Law v. Commissioner, 84 T.C. 985,            
          990 (1985).  The trial court’s ruling on this matter will not be            
          reversed unless the trial court abuses its discretion.  Wood v.             
          Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1520 (9th           
          Cir. 1983); Law v. Commissioner, 84 T.C. at 990.                            
               Denials of motions for leave to amend are generally based on           
          undue delay, and the possibility of bad faith.  Wood v. Santa               
          Barbara Chamber of Commerce, Inc., 705 F.2d at 1520; Kramer v.              
          Commissioner, 89 T.C. at 1085; see Charpentier v. Godsil, 937               
          F.2d 859, 863-864 (3d Cir. 1991).  In determining the justice of            
          a proposed amendment, we must examine the particular                        
          circumstances in the case before us, for the exercise of                    
          discretion “`may never be arbitrary and must be controlled by               
          sound reason and fairness.’”  Law v. Commissioner, 84 T.C. at 990           
          quoting California Brewing Association v. Commissioner, 43 B.T.A.           
          721, 725 (1941).                                                            
               Petitioners’ counsel should have seen paragraph 7 in the               
          answer.  Although paragraph 8 is twice as long as paragraph 7,              
          paragraph 7 covers all the income adjustments and applies to both           
          petitioners, while paragraph 8 covers collateral estoppel as to             
          only Anthony and only as to one issue.  If paragraph 7 is                   





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