- 13 -
prevailing hourly rates in the relevant area are not a special
factor. Pierce v. Underwood, supra at 571-572; Powers v.
Commissioner, 100 T.C. at 489. Therefore, we conclude that
petitioner is not entitled to fees in excess of the statutory
rate (i.e., as adjusted by increases in the cost of living) and
award petitioner attorney's fees at an hourly rate of $104.29 for
1995, $107.37 for 1996, and $109.83 for 1997. See Huffman v.
Commissioner, supra at 1151 (stating that 1986 is the appropriate
base year for calculating cost of living increases); Galedrige
Constr., Inc. v. Commissioner, T.C. Memo. 1997-485 (providing the
rates for 1995, 1996, and 1997).
b. Apportioning and Awarding the Fees and Costs
Petitioner requests an award for 848.5 hours in fees and
$4,844.65 in costs. Because petitioner failed to challenge
respondent's position relating to the tax matters partner or the
period of assessment, petitioner may not receive an award for the
231.2 hours that are attributable to those issues. Therefore,
petitioner is eligible to receive an award of fees based on 617.3
hours (i.e., 95.6 hours in 1995, 225.2 hours in 1996, and 296.5
hours in 1997) and $4,844.65 (paid in 1997) in costs.
Accordingly, petitioner is entitled to an award of $7,674;
Hon Family Ventures, Ltd., is entitled to an award of $9,555; and
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