Joseph Baldwin Campbell - Page 13

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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,                            

                  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                                 

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