- 11 -
Commissioner, 91 T.C. 344, 351 (1988). Such awareness is
evidenced by petitioners' concerted effort to preempt
respondent's ability to raise the section 469 issue generally and
to refute its status as an affected item as a matter of law in
their motion for summary judgment filed before respondent moved
to amend the answer.
Nor have petitioners convinced us that the delay was due to
a failure on the part of respondent to exercise reasonable
diligence. Prior to moving for leave to file an amendment to
answer, respondent attempted to rescind the March 14, 1997,
notices in order to issue corrected notices after discussions
with petitioners' counsel. Respondent was prevented from issuing
valid notices when petitioners revoked their consent to withdraw
the March 14, 1997, notices. Furthermore, the motion for leave
to file amendment was filed 2 and one-half months from the filing
of the original answer, which does not strike the Court as
dilatory under the circumstances. See Waterman v. Commissioner,
supra; Wendorff v. Commissioner, T.C. Memo. 1995-258.
Based on the above discussion, we shall grant respondent's
motion for leave to file the foregoing amendments to the answer.
See, e.g., Waterman v. Commissioner, supra at 351; Spain v.
Commissioner, supra.
Respondent further seeks leave to amend the answer to assert
increased deficiencies in the amounts of $97,033 and $114,768,
and increased penalties pursuant to section 6662(a) in the
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