Joseph Baldwin Campbell - Page 10

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            allottee is determined to be competent to manage his or her own                              
            affairs, a fee patent can be issued to the allottee with respect                             
            to the allotted land.  The Indian General Allotment Act serves to                            
            preserve the value of the land in trust until such time as the                               
            Secretary of the Interior determines that the allottee is                                    
            competent to hold title to the land in fee simple.  County of                                
            Yakima v. Confederated Tribes & Bands of the Yakima Indian                                   
            Nation, 502 U.S. 251 (1992).                                                                 
                  In Squire v. Capoeman, supra, the Supreme Court concluded                              
            that a Federal income tax exemption was created by the Indian                                
            General Allotment Act for income that an allottee derives                                    
            directly from the land held in trust for him.  In that case, the                             
            Supreme Court reasoned that there existed a congressional intent                             
            to exempt allotted lands from all charges and encumbrances until                             
            after the fee interest was conveyed to the allottee.  It held                                
            that income received by an incompetent Indian from the sale of                               
            standing timber logged off his own allotment was exempt from                                 
            Federal income tax, but "reinvestment income" was not.  Id. at 9.                            
            The Court stated:  "It is clear that the exemption accorded                                  
            tribal and restricted Indian lands extends to the income derived                             
            directly therefrom."  Id. (quoting Cohen, Handbook of Federal                                
            Indian Law, 265, (1941); emphasis  added).  The stated rationale                             
            for the "derived directly" standard was that the logging of the                              

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