Fredric Arlan Dubray - Page 5

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          this regard was well explained in Jourdain v. Commissioner, 71              
          T.C. 980, 989 (1979), affd. per curiam 617 F.2d 507 (8th Cir.               
          1980), which states:                                                        
               Petitioner’s salary did not represent his pro rata                     
               share of tribal income.  Rather, his wages were solely                 
               for his benefit, obtained through his labor, and we do                 
               not believe, therefore, that his wages were directly                   
               derived from the land.  Nonetheless, petitioner argues                 
               that his management of tribal land is a necessary part                 
               of deriving (tax exempt) income from the land, and that                
               to tax his income from management of the land is to                    
               thereby indirectly tax the land itself.  However, it                   
               does not follow that income received by an employee as                 
               compensation for services rendered the tribe is tax                    
               exempt because the income earned by the tribe through                  
               (in part) his services is tax exempt. * * *                            
          In Jourdain, as support for this position, we cited Fry v. United           
          States, 557 F.2d 646 (9th Cir. 1977), and Walker v. Commissioner,           
          326 F.2d 261 (9th Cir. 1964), revg. in pertinent part 37 T.C. 962           
          (1962).  In Walker, the Court of Appeals stated:                            
               Walker earned the income as an employee of the Gila                    
               River Pima-Maricopa Indian Community by performing the                 
               duties of elected Treasurer as prescribed by the                       
               Community charter and By-laws.  If, under the law, the                 
               income of an organization is exempt from taxation, it                  
               does not follow that the income received by an employee                
               as compensation for service rendered to such                           
               organization is also exempt from taxation. * * *  [Id.                 
               at 264.]                                                               
          Given this precedent, petitioner’s wage income is not tax exempt.           

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