6. Income Taxes

Holding is a "grandfathered" publicly-traded partnership for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, Holding is subject to the 4.0% New York City unincorporated business tax ("UBT"), net of credits for UBT paid by AllianceBernstein, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. Holding's partnership gross income is derived from its interest in AllianceBernstein.

Holding's income tax is computed by multiplying certain AllianceBernstein qualifying revenues (primarily U.S. investment advisory fees and SCB commissions) by Holding's ownership interest in AllianceBernstein, multiplied by the 3.5% tax rate. Holding's effective tax rate increased during the three months and nine months ended September 30, 2012 compared to the corresponding periods in 2011 due to AllianceBernstein's net income decreasing at a greater rate than the decrease in its qualifying revenues, which resulted from AllianceBernstein's third quarter 2012 real estate charge.

	Three Months Ended September 30,									Nine Months Ended September 30,
	2012			2011			% Change			2012			2011			% Change
	(in thousands)

Net (loss) income attributable to AllianceBernstein Unitholders	$	(44,246	)	$	90,981			n/m		$	117,217		$	341,592			(65.7	)%
Multiplied by: weighted average equity ownership interest (see note)		37.5	%		37.5	%					37.5	%		37.4	%
Equity in net (loss) income attributable to AllianceBernstein Unitholders	$	(16,595	)	$	34,074			n/m		$	43,915		$	127,877			(65.7	)

AllianceBernstein qualifying revenues	$	492,996		$	533,542			(7.6	) %	$	1,428,600		$	1,633,584			(12.5	)
Multiplied by: weighted average equity ownership interest (see note)		37.5	%		37.5	%					37.5	%		37.4	%
Multiplied by: federal tax		3.5	%		3.5	%					3.5	%		3.5	%
Income taxes	$	6,547		$	7,071			(7.4	)	$	19,019		$	21,682			(12.3	)

Effective tax rate		39.5	%		20.8	%					43.3	%		17.0	%

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Note: Equity in net (loss) income attributable to AllianceBernstein Unitholders and income taxes are recorded monthly using equity ownership interest as of each month-end, whereas the weighted average ownership interest shown in the table represents our quarter-end ownership interest. Accordingly, the calculation above will not compute to actual amounts recorded.

In order to preserve Holding's status as a "grandfathered" publicly-traded partnership for federal income tax purposes, management ensures that Holding does not directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. If Holding were to lose its status as a "grandfathered" publicly-traded partnership, it would be subject to corporate income tax, which would reduce materially Holding's net income and its quarterly distributions to Holding unitholders.