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the restrictions on Ms. Quinn’s trading activities were expressly
articulated in both the petition and their pretrial memorandum
(and in a letter, a copy of which they attached to their reply
brief, sent to the IRS during the examination process). Nothing
in respondent’s submissions can reasonably be interpreted to
propound otherwise. Most importantly, petitioners continue to
make only generalized references to surprise and disadvantage,
without providing any specifics as to how they might be
prejudiced in presenting relevant evidence.
Hence, the Court is faced with a situation where the
evidence on which respondent’s amendment is based was introduced
at trial without objection from petitioners and where petitioners
have not offered any particularized explanation of how their
opportunity to present their case will be prejudiced by
permitting the amendment.4 Accordingly, the Court concludes that
the issue of the duty of consistency was tried by implied consent
and that the answer may properly be amended under Rule 41(b)(1)
to conform to the evidence introduced at trial. Respondent’s
motion shall be granted.
4 Interestingly, much of the balance of petitioners’ reply
brief is devoted to an argument that petitioners’ uncontroverted
testimony must be given substantial weight. That, i.e.,
crediting Ms. Quinn’s testimony with respect to her 1999
reporting, is essentially what the Court will do to the extent
that respondent’s position as to the duty of consistency is
sustained.
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Last modified: November 10, 2007