The Honorable D. Irvin Couvillion presiding. 1

 United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 98-1648

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Joseph Baldwin Campbell, *

 Appellant, *

 v. *

Commissioner of Internal Revenue, * States Tax Court.

 Appellee. * 

*

*

* Appeal from the United 

*

*

*

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Submitted: December 16, 1998

 Filed: January 8, 1999

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

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MURPHY, Circuit Judge.

Joseph Baldwin Campbell appeals from a decision of the United States Tax

Court finding a deficiency of $8,512 on his 1992 federal income tax obligations, as

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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
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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 these issues but points out that no additional tax is due under 26

U.S.C. § 6651(a)(2) because that section does not apply. We affirm the judgment

except for the $681 penalty imposed under § 6651(a)(2) and remand for deduction of

that amount from the total due.

I.

Campbell received an assignment from the Prairie Island Indian Community in

1982 which granted him the right to occupy and use a 270 acre plot of reservation land.

He lived on the land, grew various agricultural crops, and installed some irrigation

equipment. 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 “presently occupied by a bingo hall and parking lot.” The

lease limited the parties’ rights to sublease, assign, 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 no

compensation, if the Community were to notify him before January 1 of any year that

it would need the land for economic development the following summer. This lease

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 him

to cease all 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.
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Campbell’s claims against the tribe eventually went to arbitration. Campbell

sought a new land assignment and compensation for the destruction 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 tax status was also affected. From 1982 through 1991, the income

he received from farming was not taxable by the federal government. See Squire v.

Capoeman, 351 U.S. 1 (1956) (recognizing tax exemption for income derived directly

from land held in trust for an Indian allottee). Campbell ceased earning income from

farming when the Community converted the land use to economic development, but

he and other tribal members received a distribution from casino earnings. In 1992, the

individual distribution amounted to $43,380 for each tribal member living on the

reservation. The tribe reports such per capita distributions to the Internal Revenue

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.

Campbell did not file a tax return for 1992, and he received a notice of

deficiency from the Commissioner for that year. The IRS indicated that he owed

$8,512 in federal income tax based on his receipt of the $43,380 dividend, $1,951 in

non-employee 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

notified him that he owed additions to his tax. These additions were based on failure

to file a timely return ($1,915 due under § 6651(a)(1)), failure timely to pay tax shown

as due ($681 due under § 6651(a)(2)), and failure to pay estimated tax ($374 due under

§ 6654(a)). Campbell ultimately filed a tax return for 1992 showing the income and

deductions figured by the IRS and an additional $1756 deduction for a business loss

arising from unreimbursed travel expenses. Although he listed the tribal dividend on

the return, Campbell continued to maintain that it was not taxable.
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Campbell filed a case in the United States Tax Court to challenge the

Commissioner’s determinations. He claimed that the dividend was exempt from

federal taxation because it was derived from Indian land to which he had a valid lease

and because it was a substitute for farming income from that land. The parties entered

into a stipulation which resolved many of the issues, but two remained for trial. The

remaining issues were whether the $43,380 dividend was taxable and whether

Campbell could deduct as a business loss $1756 in unreimbursed travel expenses

related 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 that 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 Court are reviewed on the same basis as

decisions from a civil trial before a federal district court. Black Hills Corp. v.

Commissioner, 73 F.3d 799 (8th Cir. 1996). The tax court’s findings of fact are

reviewed for 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, 219 (8th Cir. 1992). A taxpayer bears the burden of proving that a

determination made by the Commissioner was erroneous. Welch v. Helvering, 290

U.S. 111 (1933).

Campbell asserts that the $43,380 dividend is not taxable because it was

received in lieu of non-taxable income from farming tribal land. He argues that he

should be able to offset his lost farming income from the per capita payments. He

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. The

Commissioner responds that the income was not in fact received in lieu of farming,

that
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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 members are required to pay federal taxes absent an express exemption,

Squire v. Capoeman, and the Indian Gaming Regulatory Act explicitly provides that

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 special

agreement designating the $43,380 he received in 1992 as anything other than the per

capita distribution of casino proceeds made to all tribal members living on the

reservation. He has not shown that the dividend was received in lieu of farming

income, and Campbell’s prior farming activities do not change the character of this

distribution. The tax court correctly determined that the dividend was taxable as

ordinary income.

Campbell also challenges the determination that he had not provided adequate

documentation to deduct certain unreimbursed travel expenses. He argues that he

should not be required to meet the strict documentation standards of 26 U.S.C. §

274(d) because his records were lost when his house was bulldozed. The

Commissioner 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 (1970), but travel expenses cannot

be deducted unless the substantiation requirements of 26 U.S.C. § 274(d) are met.

Langer v. Commissioner, 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 reasons

beyond his control “such as destruction by fire, flood, earthquake, or other casualty,

the taxpayer shall have a right to substantiate a deduction by a reasonable

reconstruction
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of his expenditures.” Treas. Reg. § 1.274-5(c)(5). In order to take advantage of this

exception, a taxpayer must prove that he had records which would have adequately

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 the

taxpayer’s control unless there are extenuating circumstances. See, e.g., Gizzi v.

Commissioner, 65 T.C. 342 (1975); see also Olivares v. Commissioner, 47 T.C.M.

(CCH) 165 (1983) (exemption does not apply when taxpayer had significant notice that

possessions would be removed). Some lower courts have held that in extreme

circumstances the loss of records caused by an abrupt eviction is sufficient to invoke

this exception. See Murray v. Commissioner, 41 T.C.M. (CCH) 337 (1980).

Campbell’s situation was not so extreme, however. He had received notice of the

council 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 its

application of the § 274(d) requirements and in determining that the summary of

expenses Campbell submitted did not satisfy those requirements. 

III.

For the reasons already discussed, the judgment of the tax court is affirmed with

the exception of the inclusion of a penalty under § 6651(a)(2). Although the court’s

memorandum opinion noted that § 6651(a)(2) did not apply to Campbell and that it

was “mistakenly included in the notice of deficiency,” its final decision apparently

overlooked the 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 the

judgment to correct this oversight.
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A true copy.

ATTEST:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.