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constitute an abuse of discretion if the taxpayer was not
currently in compliance with Federal tax laws. E.g., Rodriguez
v. Commissioner, T.C. Memo. 2003-153; Moorhous v. Commissioner,
T.C. Memo. 2003-183; Londono v. Commissioner, T.C. Memo. 2003-99.
B. Petitioner’s Motion For Leave To File Second Amended Petition
We shall begin with petitioner’s motion for leave to file
second amended petition.
Rule 41(a) provides that leave to amend “shall be given
freely when justice so requires.” In Foman v. Davis, 371 U.S.
178, 182 (1962), the Supreme Court stated that leave to amend may
be inappropriate where there is:
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. * * *
With respect to a motion to amend, a significant inquiry is
whether or not the moving party would prevail on the merits.
Russo v. Commissioner, 98 T.C. 28, 31 (1992). In exercising its
discretion, the Court may deny petitioner’s motion for leave to
amend if permitting an amended petition would be futile.
Klamath-Lake Pharm. Association v. Klamath Med. Serv. Bureau, 701
F.2d 1276, 1293 (9th Cir. 1983).
On October 7, 2005, petitioner filed a motion for leave to
file second amended petition. Respondent objects to the granting
of this motion, and, we therefore must use our discretion in
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