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to the allottee was from operations conducted on his own allotted
land." Fry v. United States, supra at 648. Another factor cited
by the court was the taxpayers' failure to show that their income
met the Squire test of being derived "directly" from the land as
opposed to being derived from a contract.
Petitioners argue that, but for the fact that the taxpayers
in Fry v. United States, supra, did not earn their income
directly from the land as required by Squire v. Capoeman, supra,
the taxpayers would have prevailed. Petitioners' argument was
addressed in United States v. Anderson, 625 F.2d 910 (9th Cir.
1980). The issue there was whether the income a noncompetent
Indian derived from cattle ranching under a tribal license on
land held in trust by the United States for other Indians and for
the tribe was subject to Federal income taxation. The court in
Anderson found that the rationale of the Squire v. Capoeman,
supra, case was:
if an Indian's allotted land (or the income directly
derived from it) was taxed, and the tax was not paid,
the resulting tax lien on the land would make it
impossible for him to receive the land free of
'incumbrance' at the end of the trust period. * * * By
contrast, 'taxation of the taxpayer's individual profit
derived from his lease of tribal [or other allottees'
trust] land cannot possibly represent a burden or
encumbrance upon the tribe's [or other allottees']
interest in such land.' Citing Holt v. Commissioner,
364 F.2d 38, 41 (8th Cir. 1966), affg. 44 T.C. 686
(1965). [United States v. Anderson, supra, at 914].
The Court of Appeals for the Ninth Circuit held in Anderson
that the General Allotment Act provides no tax exemption for the
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