Preheat the oven to 350 degrees F (175 degrees C). Grease and flour two 9 inch round cake pans. Sift together the flour, baking powder, baking soda and cocoa, set aside.
In a medium bowl, beat the sugar and egg until light, add the 1/2 cup butter, beat until smooth. Stir in the sour cream, water, and vanilla.
Add dry ingredients, mix slowly until flour mixture is absorbed. Fold in the 2 cups chocolate chips. Divide the mixture evenly between the two prepared pans.
Bake for 35 to 40 minutes until cake tests done with a toothpick.
Place pans of cake on wire racks to cool for 10 minutes before removing from pans to cool completely. When cool frost with the following frosting recipe.
To make the frosting, melt the remaining 1 cup chocolate chips with the coffee in a small saucepan over low heat.
Remove pan from heat, and beat in the 3/4 cup of butter, 1 tablespoon at a time, until smooth. Set pan in a bowl of ice and beat until icing is spreadable and holds it's shape. Cool completely before frosting cake.
