Caspian Consulting Group, Inc. - Page 5

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          proceedings.  Given the facts of this case, we find petitioner              
          did not unreasonably protract these proceedings within the                  
          meaning of section 7430(b)(3).                                              
          II.  Reasonableness of Litigation Costs                                     
               Section 7430 limits the prevailing party to an award of                
          reasonable litigation costs.3  Section 7430(c)(1)(B)(iii)                   
          generally limits the hourly rate for attorney’s fees.4  A                   
          taxpayer may recover attorney’s fees above the statutory limit if           
          the court determines the existence of a special factor such as:             
          (1) Limited availability of qualified attorneys for the                     
          proceeding; (2) the difficulty of the issues presented in the               
          case; or (3) the local availability of tax expertise.  Sec.                 
               Petitioner seeks to recover attorney’s fees in excess of the           
          statutory limit based on two reasons.  First, petitioner argues             
          that its counsel’s “knowledge of substantive and procedural                 
          federal income tax law, and his experience in litigation of tax             
          controversies, is far more extensive than the knowledge and                 
          experience of a tax attorney who is merely well-qualified to                

               3  Reasonable litigation costs include, inter alia,                    
          reasonable court costs and fees paid or incurred for the services           
          of attorneys in connection with a court proceeding (attorney’s              
          fees).  Sec. 7430(c)(1).                                                    
               4  Rev. Proc. 2002-70, sec. 3.32, 2002-2 C.B. 845, 850; Rev.           
          Proc. 2003-85, sec. 3.33, 2003-2 C.B. 1184, 1190; and Rev. Proc.            
          2004-71, sec. 3.35, 2004-2 C.B. 970, 976, state that the hourly             
          rate for attorney’s fees during 2003-2005 is $150.                          

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