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On January 10, 2002, respondent mailed to petitioner a
notice of deficiency for the years at issue. Petitioner timely
filed a petition in this Court seeking a redetermination.
Discussion
Petitioner argues that his wage income earned as an employee
of the corporation is not subject to Federal income tax as a
result of certain provisions of the treaty. Specifically,
petitioner relies upon a phrase in article 2 of the treaty which
modifies the description of the treaty lands as “set apart for
the absolute and undisturbed use and occupation of the Indians
herein named”.4 It is uncertain whether this provision was
intended to exempt the Cheyenne River Sioux Tribe itself from
Federal taxation of its income related to the buffalo restoration
project, but petitioner’s position is weakened by a more basic
point. The caselaw has well established that income earned by an
individual member of a tribe from working for the tribe or for a
corporation on unallotted tribal land is not exempt even if the
income derived by the tribe from the land would be exempt in the
hands of the tribe itself. See, e.g., Holt v. Commissioner, 364
F.2d 38, 41 (8th Cir. 1966) (involving a lease of unallotted
land), affg. 44 T.C. 686 (1965). The position of this Court in
4Petitioner must show in this regard that the income in
question is specifically entitled to an exemption from taxation
by treaty or Act of Congress. Squire v. Capoeman, 351 U.S. 1, 6
(1956); LaFontaine v. Commissioner, 533 F.2d 382, 382 (8th Cir.
1976), affg. T.C. Memo. 1975-165.
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