-7-
First, petitioner argues that his income is “exempt function
income” within the meaning of section 527(c)(3) and is therefore
not taxable to him. Section 527 taxes political organizations on
their political organization taxable income. Sec. 527(a) and
(b)(1). Political organization taxable income does not include
exempt function income. Sec. 527(c)(1)(A). Petitioner is not a
political organization. Accordingly, section 527(c)(3) does not
exempt his income from taxation.
Petitioner also argues that his income is derived from a
fishing-rights-related activity through a qualified Indian entity
and is therefore exempt. Sec. 7873. Section 7873 does provide a
tax exemption for income derived from a fishing-rights-related
activity by a member of an Indian tribe directly or through a
qualified Indian entity. Petitioner has not introduced any
evidence, however, to establish that the requirements of this
section were met during the years at issue. Specifically,
petitioner did not show that his income was attributable to any
fishing-rights-related activity nor received from an entity that
satisfied the ownership, gross receipts, and management tests to
meet the definition of a qualified Indian entity. See sec.
7873(b)(3). Accordingly, petitioner has not proven that this
section applies to his compensation, and he may not rely on it to
exclude any of his income from taxation.
Petitioner also argues that his income is not taxable under
Rev. Rul. 59-354, 1959-2 C.B. 24. Rev. Rul. 59-354, supra,
excludes compensation for the duties performed by elected tribal
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