Foothill Ranch Company Partnership, Buck Equities, Ltd., Tax Matters Partner - Page 10

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          Income Trust and, as a result, they have not met the net worth              
          requirements.  We note that the presence of ineligible partners             
          does not preclude the eligible partners, petitioner, Hon Family             
          Ventures, Ltd., and Hon Property Investments Inc., from receiving           
          an award.  See, e.g., Sierra Club v. United States Army Corps. of           
          Engrs., 776 F.2d 383, 393-394 (2d Cir. 1985) (concluding that the           
          presence of 1 ineligible party did not prevent 11 eligible                  
          parties from receiving an award).                                           
          II.  Unreasonable Protraction of Proceeding                                 
               Costs may not be awarded for any portion of the proceeding             
          which the prevailing party "unreasonably protracted".  Sec.                 
          7430(b)(4).  Respondent contends that petitioner unreasonably               
          protracted this proceeding by failing to select properly a tax              
          matters partner and, therefore, the costs relating to the                   
          preparation of petitioner's objection to respondent's motion to             
          dismiss should be denied.  Respondent's contention is moot                  
          because we have already concluded that petitioner may not recover           
          costs relating to the tax matters partner issue.                            
          III.  Determination of Reasonable Costs                                     
               Petitioner claims litigation costs totaling $224,816.                  
          Petitioner is only entitled to these costs, however, if such                
          costs were both incurred and reasonable.  Sec. 7430(a)(2).                  
               A.  Costs Incurred                                                     
               A party's award for litigation costs is limited to the costs           
          that the party actually paid or incurred.  Frisch v.                        

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