NSBN LLP Announces Year-End Tax Law Update

FOR IMMEDIATE RELEASE
Contact: Tammy Mescobi
Director of Media & Public Relations
(310) 288-4283
tam@nsbn.com

NSBN LLP Announces Year-End Tax Law Update

Several changes have been made to the tax law that impact 2006 tax year returns. Among those most notable for impacting the largest groups of taxpayers are:

• Extended "kiddie tax" from under age 14 to under age 18
• Hybrid vehicle credit available to purchasers
• Residential energy credits
• Strict limitations on the quality of clothing and household items that are entitled to a charitable deduction, beginning August 17, 2006
• Allowing direct, tax-free charitable contributions from IRAs
  Starting in 2007, cash donations must be backed up by paperwork that includes either a cancelled check or a written note from the charity indicating amount, date and the name of the charity

Alternative Minimum Tax (AMT)

The AMT was designed to ensure that wealthy taxpayers were not able to escape taxation by exploiting deductions. However, the AMT has not been appropriately indexed for inflation, which means that it affects a growing number of taxpayers every year. 2006 and 2007 will prove to be "record years" for the IRS's collection of AMT.

California Tax Law Changes

During 2006, California has enacted new laws that are noteworthy:

• New Dissolution Procedures for Corporations, LLCs, LPs, and LLPs---For taxable years beginning on or after January 1, 2006, corporations, LLCs, LPs and LLPs no longer must obtain a Tax Clearance Certificate from the Franchise Tax Board (FTB) upon termination. As of September 29, 2006, if certain requirements are met, the FTB will no longer assess the franchise tax or the annual tax after the business closes its doors.
• Real Estate Withholding---For sales and dispositions of California real estate occurring on or after January 1, 2007, a seller may elect to compute the required withholding tax based upon the reportable gain. In addition, the seller must certify the alternative withholding amount to the buyer or the escrow agent under penalty of perjury.
• Registered Domestic Partners Must File as "Married" Beginning in 2007---For taxable years beginning on or after January 1, 2007, Registered Domestic Partners (RDPs) in California will be required to file as "Married" for California income tax purposes only. Federal law does not recognize this status and therefore, prohibits RDPs from filing as "Married". Consequently, each partner will have to file as Single or Head of Household for Federal income tax purposes. This will definitely create a lot of confusion for those impacted by this law.

For more information on year-end tax planning or how various tax law changes affect you and/or your business, you may contact Barbara Kogen, CPA, Partner at bck@nsbn.com or (310) 288-4282.

Any tax information or written tax advice contained herein (including any attachments) is not intended to be and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)

About NSBN LLP

NSBN LLP (formerly Nanas, Stern, Biers, Neinstein and Co. LLP) is a full service CPA and business consulting firm that has been in practice in Beverly Hills, California, for over 50 years. The firm currently ranks among the top 25 CPA firms in Los Angeles County and among the top 20 Best Places to Work in Los Angeles.

NSBN has 18 partners and a staff of approximately 80. NSBN has particular expertise in various industries, including real estate, escrow, nonprofit organizations, entrepreneurial businesses, entertainment, employee benefit plans, and high net worth individuals.

For more information, please visit www.nsbn.com.

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