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income a noncompetent Indian derives from other Indians' or his
tribe's trust land. Accord Holt v. Commissioner, 44 T.C. 686
(1965), affd. 364 F.2d 38 (8th Cir. 1966).
Contrary to the argument petitioners urge us to adopt,
"Policy alone cannot support a federal tax exemption in the
absence of express exemptive language in a statute or treaty."
United States v. Anderson, supra at 917. Petitioners earned
income from logging pursuant to a tribal permit on trust land and
lumber sales to the tribe. Petitioners were not allottees and
did not derive income from sales of lumber produced from timber
on their own allotted lands. Petitioners' income from lumber
sales is not income derived from Indian fishing-rights-related
activity and is not income that is exempt under any treaty
provision. Petitioners' lumber sales income is not exempt from
Federal income tax.
Respondent determined that a section 6662 accuracy-related
penalty is due with respect to both of petitioners' tax returns
for 1993 and 1994. Section 6662 imposes a penalty equal to 20
percent of the portion of the underpayment attributable to
negligence or disregard of rules or regulations. Sec. 6662(a)
and (b)(1). Negligence is defined as any failure to make a
reasonable attempt to comply with the provisions of the Internal
Revenue Code, and the term "disregard" includes any careless,
reckless, or intentional disregard. Sec. 6662(c).
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