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In the instant case, the continued use of the trust land for
casino operations does not decrease the economic value of the
land. In this regard, there is no exploitation of the land by
the Prairie Island Indian Community resulting in a diminution of
the land's value. Moreover, persons gambling and enjoying food
and drink in the casino are paying principally for the use of the
casino facilities. Thus, the per capita distributions petitioner
received were primarily derived from the utilization of a capital
improvement; i.e., the casino, and not from the land itself. See
Beck v. Commissioner, supra.
Petitioner agrees that, absent his possession of a lease to
farm the 270 acres, the $43,380 per capita distribution would be
subject to Federal income tax.8 However, petitioner argues that
the existence of his lease provides him with a special exemption
from the general taxability of the income derived from the casino
operations. Petitioner points out that, if he had farmed the 270
acres in 1992, all the income derived from such farming activity
would have been exempt from Federal income tax under the "derived
directly" standard. Petitioner argues that, because he held a
lease on the land upon which the casino was located and operated,
8
The courts have uniformly denied an exemption for an
Indian's distributive share of income derived from unallotted
tribal lands held in trust for the tribe as a whole. E.g.,
Anderson v. United States, 845 F.2d 206 (9th Cir. 1988); Holt v.
Commissioner, 364 F.2d 38 (8th Cir. 1966), affg. 44 T.C. 686
(1965).
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