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Petitioners' reply to respondent's motion finds it "rather
absurd" that respondent has sought information from petitioners
regarding the contents of the deficiency notice. Petitioners'
reply, however, does not deny that during the April 30 conference
call, petitioners' counsel did, in fact, state that the $2.8
million addressed in petitioner's allocution was not included in
the $5 million determined deficiency. Accordingly, petitioners'
reply does not contravene, and may in fact support, respondent's
assertion that petitioners may be liable for taxes on an
additional $2.8 million in unreported income.
The matter should be sorted out, and, because it may involve
an increase to the determined deficiency, the proper way to
address it is through an amendment to the pleadings, under Rule
41. We are mindful of petitioners' general complaints of
prejudice should we grant respondent's motion, and we are aware
that respondent did not file the proposed amendment until 9
months after the telephone conference call with the Court.
Although unexplained, the delay does not appear particularly
harmful when compared to the time this case has already consumed,
and although petitioners complain that allowing the proposed
amendment may require further efforts on their part, we do not
think that possibility would be unduly prejudicial to them. The
instant case has not been tried, nor is there a date set for a
trial. Moreover, Rule 142 places upon respondent the burden of
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