American Indian Law Meets the Internal Revenue Code: Warbus v. Commissioner
Tax Notes, Vol. 83, p. 105, 1999
11 Pages Posted: 28 Feb 2009
Date Written: February 27, 2009
This article examines a 1998 Tax Court decision, Warbus v. Commissioner, that has implications for both American Indian law and federal tax law. Section 7873 of the Internal Revenue Code exempts from taxation amounts derived by American Indian tribal members from fishing-rights related activit[ies] of their tribes. Taxpayer Warbus claimed that discharge of indebtedness income from the foreclosure of his fishing boat qualified for the exclusion; the Tax Court said no. The author argues that Warbus was wrongly decided for two reasons: the court failed to take account of basic principles of American Indian law, and the court misapplied the controlling statutory language in section 7873. Warbus is the first case to explicate that section, and it could have unfortunate consequences for American Indian tribes. The author explains why that should not happen.
Keywords: Warbus v. Commissioner, IRC 7873, Indian Tribes, Taxation, American Indian Law
JEL Classification: K34, K41
Suggested Citation: Suggested Citation