Do I need to report local business taxes that were charged late?

I live in Los Angeles. After filing my taxes for 2005 (I was self employed that year), I was sent a notice to pay income tax to the city because I was considered a business. I paid this bill in 2006 and closed the business account. Do I need to report this income tax I paid to LA in my 2006 federal and/or state taxes? And, if so where do I list it in the forms?

Since you paid the bill in 2006, you claim the deduction in 2006, not 2005.
Why? Because the majority of taxpayers are on the "cash basis". Income is
reported in the year, when received, and deductions are reported in the year, when paid.

Where to put it? Interesting question. You closed your business account in 2005, which I am assuming was a Schedule C. You have an option. You can
report it as a Schedule C expense in 2006, call it "Licenses and Taxes", show of course zero as income and claim it as a Schedule C net loss.

Or, you can report it on Line 21 "Other Income". Show "Statement Attached"
on LIne 21 and in the amount column show the amount in brackets ( ).
Attach a statement in the back of the return that you filed as a Schedule C
last year and since then you closed the bank account, and then you had to pay an additional bill.

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