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$1,509, respectively and accuracy-related penalties in the
amounts of $375 and $302, respectively.
The issues for decision are whether petitioners' income from
the sale of lumber by petitioner Joe T. Kieffer (petitioner) is
exempt from income tax and whether petitioners are liable for the
accuracy-related penalty under section 6662. If we find that the
income from lumber sales is subject to income tax, the parties
agree that petitioners are entitled to trade and business expense
deductions in the amounts of $11,214 in 1993 and $6,954 in 1994,
and self-employment tax deductions in the amounts of $427 in 1993
and $265 in 1994.
All of the facts are stipulated and are so found. The
stipulation of facts and the attached exhibits are incorporated
herein by reference. Petitioners resided in Fruitland,
Washington, at the time their petition was filed.
Background
In 1993 and 1994 petitioners were and currently are enrolled
members of the Spokane Indian Tribe (tribe). Petitioner was
self-employed in 1993 and 1994. He harvested diseased timber on
the tribal reservation pursuant to a tribal permit allowing him
to conduct such activity. Reservation land was and continues to
be land not allotted to individual Indians.
Petitioner transported the timber he harvested on
reservation land to "his property" where it was cut into lumber.
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