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Rule 41 addresses amended and supplemental pleadings.1
Under the circumstances here existing, Rule 41(a) provides that a
party can amend his pleading only by (1) written consent of the
adverse party or (2) leave of Court, and such leave shall be
given freely when justice so requires. Respondent has not
consented to the amendment and objects to the motion. Respondent
objects to the motion on the grounds that (1) the Court generally
lacks jurisdiction to consider the defense of equitable
recoupment, (2) this is a partnership proceeding and, since
equitable recoupment is not a partnership item, it is not an
appropriate item for the Court to consider, and (3) granting the
motion will cause a substantial disadvantage to respondent.
We assume, arguendo, that respondent's first objection lacks
merit. See Estate of Branson v. Commissioner, 113 T.C. ___
(1999); Estate of Mueller v. Commissioner, 101 T.C. 551 (1993),
affd. on other grounds 153 F.3d 302 (6th Cir. 1998). We agree,
however, with his last two objections. Our reasons for agreeing
with his last two objections are as follows.
II. Equitable Recoupment
To "recoup" is to get back the equivalent of something lost.
The American Heritage Dictionary 1511 (3d ed. 1992). The
1 Hereafter, unless otherwise indicated, all section
references are to the Internal Revenue Code in effect for the
year in issue, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
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