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 August 30, 2006 - 06:01 AM PST
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Berkshire Hathaway Subsidiary to Appear Before Kansas Supreme Court

Commission Express Suit Defends Rights of Independent Contractors/Sole Proprietors

OVERLAND PARK, Kan., Aug. 30 /PRNewswire/ -- Are Realtors independent contractors/sole proprietors (IC/SP) who have the right to sell a business asset, such as a commission (accounts receivable), as part of managing their own businesses? Or are they employees, whose firms must shoulder the benefits and tax consequences associated with that type of relationship?

That is the issue that will be heard before the Kansas Supreme Court in an appeal filed by Decision Point, Inc. d/b/a Commission Express of Kansas City (CEKC) against Reece & Nichols Realtors, Inc. (RAN), a subsidiary of Berkshire Hathaway, Inc. (NYSE: BRK.A and BRK.B). The hearing is scheduled to begin at 1:45 p.m. CDT, Thursday, September 7, and will be broadcast over the web at http://www.kscourts.org/supct/ .

'This case has far-reaching implications for all IC/SP,' says John Effrein, president of CEKC. 'The Kansas Supreme Court has the unique opportunity to establish a definitive precedent as to whether Realtors are truly IC/SP and, as such, have the right to sell a business asset to a third-party as provided under the uniform commercial code, or whether they are employees who are, therefore, precluded from doing so. We welcome the opportunity to defend their rights before the Court.'

Effrein says the U.S. tax code clearly supports his company's position. 'The economics of the real estate business model relies on Realtors being IC/SP, because of the significant tax advantages to the firms. As such, Realtors should have the same right to manage their business assets as they see fit. RAN and the Kansas Association of Realtors essentially contend that Realtors are some form of hybrid employee, even though these 'employees' enjoy none of the typical employee benefits such as a regular paycheck, health insurance, sick days, paid vacation, or tax withholding.'

A group of Realtors, as well as the International Factoring Association (IFA) have filed Amicus Curiae ('friend of the court') briefs in support of CEKC's position, emphasizing the significant nationwide implications for all IC/SP if the Kansas Supreme Court does not overturn the ruling of the District Court of Johnson County, Kansas. 'If not overturned,' says Bert Goldberg, executive director of the IFA, 'it would have devastating cash flow ramifications for business owners who sold an estimated $100 billion of accounts receivables to third-party financiers in 2005.'

CEKC is one of 71 Commission Express franchisees in 40 states that, collectively, have advanced more than $290 million in commissions to real estate agents seeking to better manage cash flow in their businesses.

SOURCE Commission Express of Kansas City