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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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