Joe T. Kieffer and Linda R. Kieffer - Page 8

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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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