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of pleadings.” 60 T.C. 1089 (explanatory note accompanying
promulgation of Rule 41). The U.S. Supreme Court has interpreted
the “freely given” language of the civil rule as follows:
If the underlying facts or circumstances relied upon by
a plaintiff may be a proper subject of relief, he ought
to be afforded an opportunity to test his claim on the
merits. In the absence of any apparent or declared
reason--such as undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment,
etc.--the leave sought should, as the rules require, be
“freely given.” * * * [Foman v. Davis, 371 U.S. 178,
182 (1962).]
We conclude that the foregoing standard renders leave to
amend appropriate in the circumstances of the instant case.
Although the summary fashion in which the deduction issue was
initially presented by petitioners gave us insufficient
information to decide that the prejudice to respondent would not
outweigh that to petitioners, the parties through their various
motions, responses, and memoranda of law have now had the
opportunity to fully explain their positions. While we continue
to look with disfavor upon petitioners’ initial failure to
appropriately plead the deduction issue, we are at this point
satisfied that the potentially prejudicial factual and procedural
concerns cited in our original opinion do not justify barring
petitioners from properly raising this issue through amendment.
When performed in light of the postopinion submissions, a
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