At the Chandler mansion, Babe is delighted when JR admits that he's falling in love with her. Julia tells an irked Tad that Di left town for the holidays. Meanwhile, Di encourages Dixie to come back to Pine Valley and reunite with her son and grandson. Erin is distressed to learn that her brother was interrogated all night long without even the benefit of an attorney's presence. Jamie presses Ryan to reveal if Jonathan was responsible for little A's abduction. Amanda angrily demands that JR and Babe apologize for ambushing her in front of her boss and falsely accusing her of stealing their son. Kendall joins Erica and Jackson as they enjoy exchanging gifts with Lily, Reggie, Bianca and Miranda. Jamie comes to Amanda's rescue after Babe and her ex-husband team up to rag on the girl once again. Dismayed to hear about her new friend's arrest, Lily insists that Jonathan could not have kidnapped the Chandler baby. Erica reminds her daughters how blessed she feels to have both of them home for Christmas. Later, Kendall announces that she's decided to carry her baby to term but cautions her excited mother that she still isn't sure if she'll raise the child or give him up for adoption. Jamie privately explains to his brother how he's looking to catch Amanda in the act if she is indeed guilty of all the transgressions in which she's been implicated. After bringing Jonathan back to the Pine Cone, Erin and Ryan discuss the worrisome possibility that their sibling might have taken little Adam from his parents after all. Di reminds Dixie how much she hates keeping such a huge secret from the rest of the family. JR and Babe agree to spend New Year's Eve together, unaware that "Janet from another planet" has already made plans of her own.
Babe went to see Jamie and Amanda opened the door in her nightie. When Babe asked why she was there, Amanda informed her that she lived there. Again accusing Amanda of stealing her baby, Jamie asked Babe if she had any proof. Babe said she didn't but asked Jamie how he could be with someone who stole the baby, pushed her down the stairs and who knows what else. Just then, Janet came in and said to Babe that it sounded like someone got coal in their stocking. Janet said that she understood because jealousy could do terrible things to a person. Jamie took Babe out and told Amanda that she wouldn't be bothering her again. Amanda told Janet that everyone thinks Babe is so good, but she was still just a screwed up freak. Amanda said that the whole Babe thing helped she and Jamie and that he was now completely devoted to her. Outside, Jamie told Babe that Amanda went over the edge when he broke up with her and it was his responsibility to stop her. He told Babe that she has no say in his life anymore and not to come around he or Amanda again. Amanda told Janet that she was in love with Jamie and Janet told her that she would get what she wanted and nobody would get in the way. Janet said they were a team, but Amanda said that she needed space and Janet should home to Trevor. Amanda asked where Trevor was because she called him but he never returned the call. Janet said that Trevor was "in the field" on a top secret mission. Janet thanked Jamie for taking care of Amanda. After Janet left, Amanda told Jamie that if he wanted her to leave she would understand. Jamie assured her that they would figure out what was causing the blackouts. Amanda told him that she just wanted to make him happy.
David paid Jonathan a visit and offered him a smoothie, but before Jonathan took a sip, Ryan warned him not to drink it. Ryan threatened David saying that if anything happened to Jonathan he would aim at him. David told Ryan that if he didn't get Jonathan out of town, he would do it himself. Jack appeared and said that he would help David. Erin tried to explain to Jonathan that David was there because he blamed him for the kidnapping of Little Adam. Jack said that everyone knew that Jonathan stole the baby, so he needed to take his family and get out of town. Ryan said that until Kendall had the baby, he would not leave town. Jack then ranted about how he treated Greenlee and again told Ryan to get out of town. Ryan told Jonathan that they had to prove he had nothing to do with the kidnapping. Erin said they could prove it because Jonathan had an alibi. He had spent hours talking with a lady named Victoria. Aidan came to the door and Ryan said that they didn't need his help, but Erin said that they did need his help. David proposed to Jack that they both poison Jonathan then neither would be completely guilty. Jack told him no chance would he go in with him. David told Jack he hoped he choked on his virtue.
Bianca and Myrtle met at Erica and Jack's new home. Myrtle told Bianca that Zach was a difficult man, but when Kendall and Zach were in the same room and their eyes met chemistry took over. Bianca told Myrtle that she had spent hours with both Zach and Kendall telling them to trust each other. Erica came in and said she Zach and Kendall will never be together. Bianca tried to explain to Erica that Kendall and Ryan could never be. Erica told her to take off the rose colored glasses because Kendall and Zach together are radioactive. Bianca tried to explain that Kendall loved Zach but Erica said that Kendall could find real love with the baby and Ryan.
Zach came to see Kendall at Fusion and said he was there to fulfill his final duty as her husband. Kendall told him that as of now all deals are null and void. Zach told her that he would buy out Babe's share of Fusion and give them to her, but she told him that she could handle her own problems. Kendall told Zach that she had decided to carry the baby and that Ryan wanted to be involved perhaps even be in the delivery room. Zach said that if she was happy, he was happy. She told him he wasn't even remotely happy, but he said he was working on it. Because Zach and Kendall never get to spend more than three moments alone, Simone and Danielle came in and immediately Kendall attacked them wanting to know who came up with the bubble headed idea of changing the name of one of the eye shadows. Simone told Kendall that Babe backed her up and Kendall of course was not impressed. Simone said that it was not a bubble headed idea and what Kendall thought doesn't matter. Babe came in and Zach immediately took her by the arm and escorted her out of Fusion. Simone dropped the bombshell telling Kendall that Ethan gave her the same amount of shares as she and Babe. Simone told Kendall that she was there to stay. Outside, Zach offered Babe a lot of money to sell her shares to him. Zach told Babe that Kendall didn't need the stress right now but Babe said she wouldn't sell. Babe said that Fusion was more than just money, it was a career and that she did have something to offer. She told him that she could handle Kendall even though she hated her guts. Zach went back to Kendall and reported that he made the offer to Babe, but didn't know if they had a deal. She said that she had lost everything that mattered in her life, why did she have to lose him too. As Babe sat on the Fusion rooftop contemplating life, Janet came through the door.
As Kendall tried to cover for asking Zach, "Why did I have to lose you?" he appeared to grope her breast, but he was actually...er, fingering her dragonfly broach. Ryan spoiled the moment by walking in, so Zach left. Ryan offered his help with the pregnancy. They agreed that Greenlee was better at helping, but she's gone, and they're both suffering. Kendall allowed him to escort her to a sonogram appointment.
At the New Beginnings studio, Amanda scoffed at JR's bid to buy her off, so he whipped out a crowbar and slammed it on the desk. JR taunted her about growing up with violence, and how Janet killed his Uncle Will with a crowbar. He suspected she may have taken Little Adam, and warned her to take the cash and leave town. Josh eavesdropped and learned Amanda thinks Babe is playing JR. Then Josh threw out JR. Later, Josh made sure Amanda overheard him tell a reporter Erica hasn't fallen off the wagon. Then he accused Amanda of erasing a DVD during a blackout.
On the Fusion roof, Janet startled Babe. Janet vowed to do her best to make sure there's no more trouble between Babe and Amanda. JR appeared (what's he doing on the roof?) and blew up at Janet over Amanda's conniving. "Your mother would be ashamed of you!" Janet wailed and stormed off. When Babe thought Janet was "kinda nice," JR called Babe "too nice." Babe revealed that Zach tried to buy her out, and JR offered to help her fight. He asked her to start celebrating New Year's early and they smooched.
Despite knowing Greg loves her, Erica asked Greg to talk to Jack about Kendall's "situation." Greg was skeptical Jack would listen, but agreed to try to convince him he and Kendall only wish to honor Greenlee. Then Erica recounted "the strangest dream" — one that featured Greg: "You were my doctor!" Erica said he was a psychiatrist who asked her questions about her past. Jack appeared, and Erica covered by saying she wanted to make sure Dr. Madden gives Kendall top care; Jack said he came for the same reason. In the park, Jack demanded to know Erica's real reason for visiting Dr. Madden. (Jack confessed he wanted to rip Greg from stem to stern.) Erica balked because she didn't want Jack to "lay down the law," which she would ignore anyway. Finally, she admitted "It's all about me." (Surprise! AMC fans know everything is always about Erica.) She is convinced she has "crossed paths" with Greg before. Then she revealed Dr. Madden confessed his love to her — but she thinks he's hiding a bigger secret. Jack warned her to stay away from Greg.
Bianca ran into Zach and apologized for pushing him and Kendall together, because Binks feared she's making things worse. Zach seated her at a table with an impressive centerpiece (apparently to avoid being distracted by her impressive cleavage) and said he confronted Kendall, but she didn't admit loving him. He thinks she's scared to have faith, but obsessed with love and loyalty. He vowed to find a way to help her salvage her pride and still keep him. "It's never too late to tell someone you love them," he said, and revealed he has an idea to give her an evening she'll never forget (but in a good way — not like the murder game). If Kendall doesn't want him, he promised to let her go. They sipped champagne.
Later, Greg showed Kendall and Ryan the sonogram of their son, and they clasped hands. Meanwhile, Erica said she was convinced Greg's secret was locked inside her. At the studio, Josh promised to cover for Amanda, but added, "Erica will never know what hit her." Janet looked in mirror to see her old, dorky self staring back, taunting her. "I have a plan," Janet smiled. "And it's a very good plan."
"Mirror Janet" taunted Janet as she slowly donned a disguise: a man with a mustache and glasses.
Simone insisted she could order Kendall around, then begged her to go to the New Year's Eve party at the Valley Inn. Ethan said there would be "hot English boys" there, but Kendall resisted and was left alone. Until Zach appeared and said, "I need you." He invited her to the casino, implying a business interest. She arrived there in a sexy little sequined number. When Zach revealed it was a set-up to be alone she stormed out in anger — or at least tried to. He locked her in and poured "sparkling fruit juice." He wanted another shot at their divorce party, so she dared him to "make this the best divorce celebration ever."
Jonathan wished Lily a Happy New Year and gave her Erin's skates so she could learn. Meanwhile, Ryan, Erin and Aidan questioned park-goers about "Victoria" without luck. Just as they were about to call it a night, Aidan spotted a woman taking a slug from a flask and called "Victoria!" prompting her to flee. The gang caught up to her and quizzed her about Jonathan but she denied knowing him. Then she recalled she had spent the whole night with "Santa Jonathan," and she's willing to give a deposition. Relieved, Erin and Ryan argued over who was the worse sibling for doubting Jonathan before Ryan headed off to tell him the good news. Left behind, Erin started crying, and Aidan comforted her before confessing that he wanted to clear Jonathan so that Aidan could ask her out for New Year's Eve, stunning her. Eventually, she accepted.
Adam and Krystal bickered over business (and grammar!) when Babe arrived as the guest of a tuxedo-clad JR — as his date! Adam joked that somebody should "get a gun and shoot me," JR and Babe rounded hunting rifles and Krystal found a bow and arrow. Adam took JR aside and scolded him for not supporting him at a board meeting to buy a company, but JR brushed him off. Adam accused JR of falling for "that girl." Then Babe appeared, clad in a glamorous green dress. Adam huffed, "I wouldn't be caught dead pretending to be optimistic about 2006," and settled in with his newspaper. Then Krystal appeared, clad in a glamorous black dress. Adam tried to ignore her entreaties to join her at the Valley Inn, but he resisted. She flopped down, sighed loudly, batted her eyelashes and wiggled her shoulders, yet still he resisted. But he couldn't resist staring at her cleavage. She told "Frosty" that Palmer had invited her to dinner and they would talk business. Apparently that floated Adam's boat, and the pair embraced passionately. Suddenly he broke the kiss and shouted "Sucker!" and fled the scene. Outside the room, he questioned his own sanity and resolved to take an immediate cold shower.
At the Valley Inn, all eyes were on JR and Babe, who were followed by Jamie and his "trashy piece of arm candy," Amanda. The girls sniped at each other while JR covertly quizzed Jamie about the progress of their plot. Meanwhile, Ethan quizzed Simone about why she looked miserable. She confessed it was because she "knew" he was going to dump her, just like all the other men in her life. Why was he acting "so awesome"? Ethan asked if she wanted him to hit on a "busty brunette." Nevertheless, he vowed to keep "adoring the heck out of her." Elsewhere, Palmer danced and flirted with Krystal until Adam cut in and warned her, "Welcome to 2006!"
After Ryan told Jonathan he had an alibi, Ryan joined his brother and Lily skating. Lily suggested making resolutions: She resolved not to get mad at Reggie for eating cereal; Jonathan resolved to take Lily skating every week; and Ryan resolved to "stand by Kendall however I can." At the party, JR asked a waiter for drink. The "waiter" was actually Janet in her disguise!
Josh finds Babe at the party. He tells Babe that she is making a huge mistake with JR and that he is very much interested in her.
Jamie continues to work on Amanda. When Brooke arrives with a handsome date, she is none too pleased to see her son being cozy with Amanda. When she finds a moment to have a private word with him, Brooke tells Jamie that she knows all about his plan to romance Amanda in the hopes of discovering the truth about the things he suspects her of. Brooke warns Jamie that if what he thinks is true, then Amanda is a dangerous person and he needs to stay away from her. Jamie assures her that he has everything well under control and knows what he's doing.
Adam tries to use Brooke to make Krystal jealous but Brooke isn't interested in his games. She walks away from Adam, eager to join her date.
JR admits to Babe that despite his strong feelings for her, he still doesn't trust her.
Palmer is shocked to discover that Opal's date is Dale.
Ethan and Simone enjoy their evening together at the party now that they've reached a deeper understanding about where they stand with each other.
Janet is disguised as a waiter while she mingles among the guests at the Valley Inn as they celebrate New Years Eve. After Krystal ends up drinking a drugged glass of champagne, she slips away from the party and ends up outside where she is overcome and falls to the ground unconscious. Janet quickly goes to work, moving Krystal's body as she grumbles about what a nuisance the Carey women tend to be. Once Janet returns to the party, she drops Krystal's purse into a nearby garbage bin and then makes sure that Babe receives the next spiked drink. Parched, Babe gratefully accepts the champagne and gulps it down. After a while, Janet sends a waiter over to Babe with a message from Krystal asking Babe to meet her outside. Babe succumbs to the drug that Janet slipped into the champagne once she is alone outside. Pleased with her success, Janet manages to sneak Babe through the party by hiding her beneath a large cart draped with a tablecloth. For a moment, Babe's hand slips out from beneath the tablecloth, but Janet is able to tuck it back into hiding without anyone noticing.
JR and Jamie become quite concerned after they realize that Babe and Amanda are missing from the party. Jamie finds Amanda quickly. She tells him that he has nothing to worry about, promising him that she was not off poisoning drinks or pushing Babe down any stairs. Jamie lies, assuring her that his only concern was for her safety after he realized that Babe was missing and he feared she's gone to confront Amanda.
JR comes in possession of a keycard, one he mistakenly believes Babe intended for him. He happily goes to the room number on the card.
Erin and Aidan decide to celebrate the New Year by ice fishing. Unfortunately neither is successful in catching anything. Aidan comes close at one point but he ends up wet for his efforts and the fish gets away. Initially Erin is frustrated with how their evening didn't live up to her expectations but Aidan has her smiling before long.
Julia is freaked out about her upcoming exams to have her nurse's license reinstated. Ryan offers to help her study, much to her relief. After several hours of successful studying, Ryan and Julia decide to crack open a bottle of champagne. When Ryan gives Julia the news that Kendall has decided to have their baby, Julia is very supportive. She encourages him to be there for Kendall during the pregnancy.
Kendall and Zach spend New Years Eve together at the casino, alone. Zach pulls out all of the stops to make it a romantic evening for Kendall. He gives her sparkling cider, plays sentimental music and offers her a romantic candlelight dinner. After dinner they dance slowly to the music until Zach pulls slightly away from Kendall and declares his love. His heartfelt admission that he's loved her since telling her so in the apartment, on the island and will always love her brings tears to Kendall's eyes. Zach completely opens his heart to her but in the end, Kendall's reluctance to believe him has her spurning him when she tells him that she simply can't deal with his feelings.
As the countdown begins, Ryan and Julia toast to friendship and share a chaste kiss. JR opens the hotel room and finds Josh leaning over Babe who is in bed but coming slowly regaining consciousness. She is apparently nude beneath the covers. Downstairs, Krystal groggily pops out of a cake wearing only a sash. Not realizing that she's nude, she seems confused why everyone, including Adam, is staring at her in shock. Aidan and Erin share a tender kiss outside of the cabin. At the casino, Kendall stops Zach as he begins to walk away from her. Tearfully, she tells him that she is deeply in love with him. Zach immediately pulls her into his arms and kisses her passionately.