                        T.C. Memo. 2004-278



                      UNITED STATES TAX COURT



               FREDRIC ARLAN DUBRAY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7547-02.             Filed December 13, 2004.


     Fredric Arlan DuBray, pro se.

     Shelley T. Van Doran, for respondent.



                        MEMORANDUM OPINION


     GOEKE, Judge:   Respondent determined deficiencies in

petitioner’s income taxes of $5,050, $6,250, and $5,959 for the

taxable years 1997, 1998, and 1999, respectively.   After

concessions, the remaining issue for decision is whether

petitioner’s wage income from Pte Hca Ka, Inc. (the corporation),

is exempt from taxation pursuant to the Treaty With the Sioux,
                                - 2 -

which is sometimes called the Fort Laramie Treaty of 1868 (the

treaty).1    We hold this wage income is not tax exempt.

     All Rule references are to the Tax Court Rules of Practice

and Procedure.

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.

Background

     When the petition was filed, petitioner resided in Mobridge,

South Dakota.    Petitioner did not file Federal income tax returns

for the years in issue.

     Petitioner is an enrolled2 member of the Cheyenne River

Tribe of Sioux Indians (the Cheyenne River Sioux).    The Cheyenne

River Sioux have a designated reservation which is part of the

treaty land.3




     1
      The treaty is known as the Treaty With the Sioux-–Brule,
Oglala, Miniconjou, Yanktonai, Hunkpapa, Blackfeet, Cuthead, Two
Kettle, Sans Arcs, and Santee–-and Arapaho, Apr. 29, 1868, 15
Stat. 635. Among the many signatories of this historic treaty
were Gen. William T. Sherman and the great chiefs Sitting Bull
and Red Cloud.
     2
      The term “enrolled” means that petitioner is listed on the
tribal roll as a member of the Cheyenne River Tribe of Sioux
Indians.
     3
      By Act of Mar. 2, 1889, ch. 405, 25 Stat. 888, Congress
created the Cheyenne River Reservation on part of the Great Sioux
Reservation land.
                                - 3 -

     During the years at issue, petitioner was employed by the

corporation.    The corporation was owned and operated by the

Cheyenne River Sioux for purposes of restoring buffalo to tribal

lands.   The corporation raised buffalo on tribal land, and the

buffalo were used for various purposes, including slaughter for

tribal and public consumption and sale, and for use in tribal

ceremonial events.    Petitioner’s position with the corporation

was director of the buffalo restoration project.

     During the years at issue, the corporation paid petitioner

wages for his services as director and reported those wages to

respondent and petitioner via Forms W-2, Wage and Tax Statement.

The corporation deducted withholding tax, FICA tax, and medicare

from petitioner’s wages, and those deductions were also reported

on the Forms W-2.    The wages paid by the corporation were

$33,860, $37,105, and $37,600 for 1997, 1998, and 1999,

respectively.

     The source of the wages paid petitioner by the corporation

is not clearly described in the record, but the wages are not

exclusively from revenue related to the buffalo restoration

project.

     Petitioner also received various other items of income he

concedes are taxable to him during the years at issue and are no

longer in dispute.
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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


     4
      Petitioner 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.
                               - 5 -

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.
                               - 6 -

     We have reviewed petitioner’s other arguments and find them

without merit.   In light of the above and the other concessions

made by petitioner,


                                            Decision will be entered

                                       under Rule 155.
