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the $43,380 per capita distribution he received was in lieu of
the farming income he relinquished in order to allow the building
and operation of the casino. Therefore, petitioner contends, the
$43,380 paid to him should be exempt from Federal income tax as
"substitute farming income".
The Court does not disagree that, if petitioner had
continued to farm the leased land, the income derived from his
farming operations would have been "derived directly" from the
land and, thus, would have been exempt from Federal income taxes.
See Stevens v. Commissioner, supra. However, this Court is
unwilling to extend such an exemption to encompass a type of
income that clearly falls outside the bounds of the "derived
directly" standard, and that was clearly intended to be subjected
to Federal income tax under the Indian Gaming Regulatory Act.
The $43,380 per capita distribution to petitioner in 1992 was not
paid in lieu of his potential farming income for that year but,
rather, was paid to petitioner as a result of his status as an
enrolled member of Prairie Island Indian Community and a resident
on the tribal reservation. That petitioner may have held a lease
to farm the 270 acres in 1992 had no bearing on whether or not he
received the per capita distribution in that year, and did not
operate to change the character of the per capita distribution he
received. Each and every enrolled member of Prairie Island
Indian Community who lived on the reservation received an equal
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