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smRev. Rul. 62-83
1962-1 C.B. 175
IRS Headnote
The value of all real estate owned by an Osage Indian at the date of his death is includible in his gross estate for Federal estate tax purposes with the exception of one exemption for a homestead allotment not in excess of 160 acres, pursuant to the Act of June 28, 1906, 34 Stat. 539, and, in addition, another exemption for either agricultural lands not in excess of 160 acres or city property not exceeding $5,000 in cost, pursuant to the Act of June 20, 1936, 49 Stat. 1542, as amended by the Act of May 19, 1937, 50 Stat. 188.
Revenue Ruling 55-418, C.B. 1955-1, 445, rovoked; Revenue Ruling 54-168, C.B. 1954-1, 182, distinguished.
Full Text
Rev. Rul. 62-83
In view of the decision of the United States District Court for the Northern District of Oklahoma, in the case of Hazel Fair Daniels, et al. v. United States , 6 American Federal Tax Reports (2d) 6139, 60-2 U.S. Tax Cases 11,966, reconsideration has been given to Revenue Ruling 55-418, C.B. 1955-1, 445.
That ruling holds that the estate of a deceased Osage Indian is entitled to exclude the value of only one homestead allotment of either agricultural land of not more than 160 acres or village, town, or city property not exceeding in cost $5,000 in determining the value of the decedent's gross estate for Federal estate tax purposes.
The conclusion reached in Revenue Ruling 55-418 is based on certain United States statutes which provide for the exemption from Federal taxation for homestead allotments of Osage Indians. These statutes read as follows:
Act of June 28, 1906, 34 Stat. 539, at 541.
* * * Each member of said tribe shall be permitted to designate which of his three selections shall be a homestead, and his certificate of allotment and deed shall designate the same as a homestead, and the same shall be inalienable and nontaxable until otherwise provided by Act of Congress. * * *
Act of March 2, 1929, 45 Stat. 1478-1479.
* * * Homestead allotments of Osage Indians not having a certificate of competency shall remain exempt from taxation while the title remains in the original allottee of one-half or more of Osage Indian blood and in his unallotted heirs or devisees of one-half or more of Osage Indian blood and in his unallotted heirs or devisees of one-half or more of Osage Indian blood until January 1, 1959; Provided , that the tax-exempt land of any such Indian allottee, heir, or devisee shall not at any time exced one hundred and sixty acres. * * *
Act of June 24, 1938, 52 Stat. 1034-1036.
* * * Homestead allotments of Osage Indians not having a certificate of competency shall remain exempt from taxation while the title remains in the original allottee of one-half or more of Osage Indian blood and in his unallotted heirs or devisees of one-half or more of Osage Indian blood until January 1, 1984: Provided , That the tax-exempt land of any such Indian allottee, heir, or devisee shall not at any time exceed one hundred and sixty acres. * * *
The Act of June 20, 1936, 49 Stat. 1542, which applied to Indians generally, including Osage Indians, provided, in part, as follows:
Sec. 2. All lands the title to which is now held by an Indian subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of said Indian, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress.
Section 2 of the Act of June 20, 1936, was amended by the Act of May 19, 1937, 50 Stat. 188, to read as follows:
All homesteads, heretofore purchased out of the trust or restricted funds of individual Indians, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress: Provided , that the title to such homesteads shall be held subject to restrictions against alienation or encumbrance except with the approval of the Secretary of the Interior: And provided further , That the Indian owner or owners shall select, with the approval of the Secretary of the Interior, Either the agricultural and grazing lands, not exceeding a total of one hundred and sixty acres, or the villege, town, or city property, not exceeding in cost $5,000, to be designated as a homestead. Emphasis added.
In the Daniels case, the United States District Court for the Northern District of Oklahoma decided that there is one exemption from the Federal estate tax for a homestead of up to 160 acres allotted under the Act of June 28, 1906 and, in addition, another exemption under the Act of June 20, 1936, as amended by the Act of May 19, 1937, for either agricultural lands not in excess of 160 acres or city property not exceeding $5,000 in cost. The court based its conclusion upon the interpretation that the latter acts are cumulative upon the former act and that, therefore, such members of the Osage Tribe, as may have received tax-exempt homesteads under prior land allotment acts, become entitled to another tax-exempt homestead of either agricultural lands not in excess of 160 acres or city lands costing $5,000, such lands to have been purchased with restricted trust funds. See also like decisions handed down by the same court in similar cases of Russel Wagoshe, et al , v. U.S. , 7 American Federal Tax Reports (2d) 1767, 61-1 U.S. Tax cases 12,001, and El Reno West, et al. v. U.S. , 7 American Federal Tax Reports (2d) 1770, 61-1 U.S. Tax cases 12,000.
The Act of June 28, 1906, allotted to enrolled members of the Osage Tribe certain parcels of land. Of the lands so allotted, each Indian was entitled to designate one selection, not to exceed 160 acres, as a tax-exempt homestead. By virtue of the Act of March 2, 1929, the tax exemption was to extend to January 1, 1959. The Act of June 24, 1938, extended the period until January 1, 1984.
The Act of June 20, 1936, as amended by the Act of May 19, 1937, differed from the Osage Allotment Act of 1906 in two important respects. First, this Act applied to all Indians. There is no language to indicate that those Indians previously provided for under the various tribal allotment acts are not covered by the 1936 and 1937 legislation. Second, the lands therein referred to are lands which were purchased by the Bureau of Indian Affairs, Department of the Interior, with restricted funds held in trust for the Indians.
Accordingly, it is held that the estate of a deceased Osage Indian not having a certificate of competency is entitled to one exemption for a homestead of up to 160 acres set aside and designated under the Act of June 28, 1906, and, in addition, another exemption for either agricultural lands not in excess of 160 acres or city property not exceeding in cost $5,000, under the Act of June 20, 1936, as amended by the Act of May 19, 1937.
Accordingly, Revenue Ruling 55-418, C.B. 1955-1, 445, is hereby revoked.
Revenue Ruling 54-168, C.B. 1954-1, 182, states that the value of restricted allotted lands of an Indian of the Quapaw Tribe is includible in the deceased Indian's gross estate for Federal estate tax purposes. The validity of Revenue 54-168 is not affected by the revocation of Revenue Ruling 55-418 for the reason that the treaty with the Quapaw Tribe contained no tax-exemption provision such as was included in the treaty between the United States and the Osage Tribe. Moreover, since the Act of June 20, 1936, as amended by the Act of May 19, 1937, applies only to lands purchased out of restricted trust funds, it would not create a tax-exempt status with respect to lands allotted to members of the Quapaw Tribe pursuant to treaty.
Accordingly, Revenue Ruling 54-168, C.B. 1954-1, 182, is distinguished.