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"fishing rights-related activity of such tribe" is not subject to
income tax. For purposes of section 7873, income derived from
"fishing rights-related activity" means income derived from
activity "directly related" to harvesting, processing,
transporting, or selling fish in the exercise of recognized
fishing rights of an Indian tribe. Sec. 7873(b). Petitioners'
income from lumber sales is not income derived from Indian
fishing-rights-related activity and is not exempt under the
statute. See Warbus v. Commissioner, 110 T.C. ___ (1998).
Petitioners' argument, however, is that the intent of
Congress, as expressed by the protection of Indian fishing-
rights-related activity under section 7873, "should also apply to
timber harvested and processed within the boundaries of the
Spokane Indian Reservation." A similar issue has been addressed
and resolved contrary to petitioners' position.
Petitioners' lumber sales income is, arguably, income
derived from Indian land, which under some circumstances is
exempt from income tax. In Squire v. Capoeman, supra, it was
held that income from allotted lands upon which a patent2 had not
been issued is not subject to income tax. The Court concluded
that a Federal income tax exemption was created by the Indian
General Allotment Act of 1887 (General Allotment Act), ch. 119,
2The term "patent" as used here refers to an allotment
certificate. See Monson v. Simonson, 231 U.S. 341, 345-346
(1913).
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