The Honorable D. Irvin Couvillion presiding. 1 

## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 98-1648

___________ Joseph Baldwin Campbell, * Appellant, *

v. * Commissioner of Internal Revenue, * States Tax Court. Appellee. * *

*

* Appeal from the United

*

* *

___________ Submitted: December 16, 1998 Filed: January 8, 1999

___________ Before MURPHY, JOHN R. GIBSON, and MAGILL, Circuit Judges.

___________ MURPHY, Circuit Judge. Joseph Baldwin Campbell appeals from a decision of the United States Ta x Court fin ding a deficiency of $8,512 on his 1992 federal income tax obligations, a s

1 well as additions due under 26 U.S.C. §§ 6651(a)(1), 6651(a)(2), and 6654. Campbell, an enrolled member of the Prairie Island Indian Community, contends that the court erred in concluding that the per capita distribution of tribal casino proceeds he received-2-

in 1992 was taxable as ordinary income and that certain unreimbursed travel expenses were not adequately substantiated. The Commissioner of Internal Revenue supports the court’s rulings on thes e issues but points out that no additional tax is due under 26 U.S.C. § 6 651(a)(2) because that section does not apply. We affirm the judgmen t except fo r the $681 penalty imposed under § 6651(a)(2) and remand for deduction of that amount from the total due.
I. Campb ell received an assignment from the Prairie Island Indian Community in 1982 which granted him the right to occupy and use a 270 acre pl ot of reservation land. He lived o n the land, grew various agricultural crops, and installed some irrigatio n eq uipment. Campbell agreed to relinquish 10 acres in 1983 so the Community could build a bingo hall and casino, and the parties entered into a second agreement in 1987. The Community agreed to lease to Campbell through December 31, 1996 the same 270 acres, minus some 10 acres “presen tly occupied by a bingo hall and parking lot.” The lease limited the parties’ rights to sublease, assig n, or amend the lease; it also provided that it would be binding only after approval by the Secretary of the Interior. The lease was to terminate on all or part of the land, and Campbell would be entitled to n o compensatio n, if the Community were to notify him before January 1 of any year that itwo uld need the land for economic development the following summer. This leas e was approved by the Minneapolis Area Director of the Bureau of Indian Affairs. On December 30, 1991, the tribal council informed Campbell that the entire 270 acre tract would be required for community economic development and advised hi m to cease a ll farming operations. Campbell questioned the validity of the council’ s action and protested its decision to bulldoze his two trailer homes, but he did not act to remove all of his belongings. Some of his possessions were lost when the trailers were removed, including records of his travel expenses.-3-

Ca mpbell’s claims against the tribe eventually went to arbitration. Campbel l sought a new land assignment and compensation for the de struction of his property and lost farming income. He has at this point received some compensation from the tribe, but the matters have apparently not yet been finally resolved. Campbell’s ta

x status was also affected. From 1982 through 1991, the income he received f

rom farming was not taxable by the federal government. See Squire v

. Capoeman , 351 U.S. 1 (1956 ) (recognizing tax exemption for income derived directly fr om land held in trust for an Indian allottee). Campbell ceased earning income from farming when the Community converted the land use to economic development, bu t he and other tribal members received a distribution from casino earnings. In 1992, the ind ividual distribution amounted to $43,380 for each tribal member living on th e re servation. The tribe reports such per capita distributions to the Internal Revenu e Service (IRS) on Forms 1099-DIV, and they are normally taxable under 25 U.S.C. § 2710(b)(3)(D). Campbell did not report his portion as income, however. Campbe lldid not file a tax return for 1992, and he received a notice o f deficien cy from the Commissioner for that year. The IRS indicated that he owe d $8,512 in federal income tax based on his receipt of the $43,380 dividend, $1,951 in non-empl oyee compensation from the tribal council, and $98 in interest income. The IRS acknowledged that he was entitled to a self-employment tax deduction of $138 , a standard deduction of $3600, and a $2300 deduction for one exemption, but it also notifie d him that he owed additions to his tax. These additions were based on failure to file a timely return ($1,915 due und er § 6651(a)(1)), failure timely to pay tax shown as due ($681 due under § 6651(a)(2)), and failure to pay esti mated tax ($374 due under § 6 654(a)). Campbell ultimately filed a tax return for 1992 showing the income an d deductions figured by the IRS and an additional $1756 deduction for a business los s arising from unreimbursed travel expenses. Although he listed the tribal dividend on the return, Campbell continued to maintain that it was not taxable.-4-

Cam pbell filed a case in the United States Tax Court to challenge th e Commissioner’s determinations. He claimed that the dividend was exempt fro m federal taxation because

it was derived from Indian land to which he had a valid lease and because it was a substitute for farmi ng income from that land. The parties entered into a stipulation which resolved many of the issues, but two remained for trial. The rem aining issues were whether the $43,380 dividend was taxable and whethe r Campb ell could deduct as a business loss $1756 in unreimbursed travel expense s rela ted to his activities as a member of the tribe’s environmental protection council

. The tax court ruled for the Commissioner on both issues.
II. Campbell argues t

hat the tax court erred both in deciding that the dividend was regular taxable income and in determining that he was not entitled to deduct his travel expenses. Decisions of the United States Tax Cour t are reviewed on the same basis as decisi ons from a civil trial before a federal district court. Black Hills Corp. v

. Commissi oner , 73 F.3d 799 (8th Cir. 1996). The tax court’s findings of fact ar e reviewedfor clear error and its legal conclusions are reviewed de novo. Broadaway v. Commissioner , 111 F.3d 593, 595 ( 8th Cir. 1997); Jacobson v. Commissioner , 963 F.2d 218, 2 19 (8th Cir. 1992). A taxpayer bears the burden of proving that a determinat ionmade by the Commissioner was erroneous. Welch v. Helvering , 29 0 U.S. 111 (1933). Campbell asserts that the $43,380 dividend is not taxable because it wa s re ceivedin lieu of non-taxable income from farming tribal land. He argues that h e sh ould be able to offset his lost farming income from the per capita payments. H e contends that because he had a lease giving him the right to farm the land on which the casino stands and because he was prevented from exercising this right, his per capita share of casino profits represents income received in lieu of farming. Th e Commissioner responds that the income was not in fact received in lieu of farming , that-5-

even income received in lieu of farming is not tax exempt, and that Campbell did not have a valid lease to the land in 1992.
Tribal membe

rs are required to pay federal taxes absent an express exemption, Squire v. Capoeman , and the Indian Gaming Regulatory Act explicitly provides tha t per capita distributions of income from tribal casinos are subject to federal taxation

. 25 U.S.C. § 2710 (b)(3)(D). Campbell has not presented any evidence of a specia l agreement designat

ing the $43,380 he received in 1992 as anything other than the per cap ita distribution of casino proceeds made to all tribal members living on th e reservation. He has not shown that the dividend was received in lieu of farmin g income , and Campbell’s prior farming activities do not change the character of thi s distributi on. The tax court correctly determined that the dividend was taxable a s ordinary income. Campbell also challenges the determination that he had not provided adequate documentation to deduct certain unreimbursed travel expenses. He argues that h e sh ould not be required to meet the strict documentation standards of 26 U.S.C. § 27 4(d) because his records were lost when his house was bulldozed. Th e Commission er

responds that § 274(d) applies, and that Campbell neither provided a reasonable reconstruction of his expenses nor established that the expenses were not reimbursable.
Unreimbursed expenses incurred by an employee may be deductible under § 162(a), Primuth v. Commissioner , 54 T.C. 374, 377 (1 970), but travel expenses cannot be deducted unless the substantiation requirements of 26 U.S.C. § 274(d) are met

. Langer v. Comm

issioner , 980 F.2d 1198 (8th Cir. 1992). Section 274(d) requires the taxpayer to substantiate the amount, time, place, and business purpose of each travel expense , “by adequate records or by sufficient evidence corroborating the taxpayer’s own statement.” 26 U.S.C. § 274(d). When a taxpayer has lost records for reason s bey ondhis control “such as destruction by fire, flood, earthquake, or other casualty , the taxpayer shall have a right to substantiate a deduction by a reasonabl e reconstruction-6-

of his expenditures.” Treas. Reg. § 1.274-5(c)(5). In order to take advantage of thi s exception, a taxpayer must prove that he had records which would have adequatel y substantiated his or her expenses and that those records were destroyed or lost in a casualty “beyond the taxpayer’s control.” Treas. Reg. § 1.274-5(c)(5).
The loss of records in connection with a move is not a casualty beyond th e taxpay er’s control unless there are extenuating circumstances. See, e.g. , Gizzi v

. Commi ssioner , 65 T.C. 342 (1975); see also Olivares v. Commissioner , 47 T.C.M
. (CCH) 165 (1983) (exemption does not apply when taxpayer had si gnificant notice that po ssessions would be removed). Some lower courts have held that in extrem e circumstances the loss of records caused by an abrupt eviction is sufficient to invoke this e xception. See Murray v. Commissioner , 41 T.C.M. (CCH) 337 (1980)
. Campbell’s s ituation was not so extreme, however. He had received notice of th e counc il plans to destroy his trailers and had an opportunity to remove his belongings. The fact that he may not have believed the council would act as it did is not sufficient to make his eviction a casualty beyond his control. The court did not err in it s applicatio n

of the § 274(d) requirements and in determining that the summary o f expenses Campbell submitted did not satisfy those requirements.
III. For the reasons already discussed, the judgmen t of the tax court is affirmed with the exception of the inclusion of a penalty under § 6651(a)(2). Although the court’ s memorandum o pinion noted that § 6651(a)(2) did not apply to Campbell and that i t was “mistakenly included in the notice of deficiency,” its final decision apparentl y overlooked t

he need to deduct the $681 originally sought by the Commissioner under this section. The case is therefore remanded to the tax court for modification of th e judgment to correct this oversight.-7-

A true copy.
ATTEST: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.