MEMORANDUM OPINION
WILBUR, Judge: TheCommissioner determined the following deficiencies and additions to tax in the petitioners' Federal income taxes:
| | | Sec. 6651(a) 1 | Sec. 6653(a) |
| Petitioner | Year | Deficiency | Addition to Tax | Addition to Tax |
| Myrtle Landry | 1971 | $50,133 | $12,533 | $2,507 |
| 1972 | 190,438 | 47,609 | 9,522 |
| 1973 | 159,023 | 39,506 | 7,901 |
| 1974 | 118,418 | 29,604 | 5,921 |
| 1975 | 122,252 | 30,563 | 6,113 |
| 1976 | 115,310 | 28,827 | 5,766 |
|
| Alfred Landry 2 | 1971 | 19,579 | 4,895 | 979 |
| 1972 | 87,014 | 21,753 | 4,351 |
| 1973 | 70,712 | 17,678 | 3,536 |
| 1974 | 50,886 | 12,722 | 2,544 |
| 1975 | 52,622 | 13,156 | 2,631 |
| 1976 | 49,089 | 12,272 | 2,455 |
After concessions, the only issue remaining for decision is whether income earned from the retail sale of cigarettes and tobacco products (smokeshop income) by a member of the Shoalwater Bay Indian Tribe is subject to Federal income taxation.
This case was submitted under Rule 122, 3 all facts having been stipulated. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Petitioners Myrtle and Alfred Landry were husband and wife residing in Tokeland, Washington, for all periods relevant to this litigation. Petitioner Alfred Landry is a member of the Turtle Mountain Band of the Chippewa Indian Tribe. Petitioner Myrtle Landry (petitioner or Myrtle) was included in the 1940 census of the Quinaielt Indian Tribe and was the recipient of an allotment on the Quinaielt Indian Reservation. This allotment is still held in trust for her by the United States. On December 10, 1971 Myrtle became an enrolled member of the Shoalwater Bay Indian Tribe.
Petitioner operates the Smoke Signal Smokeshop (smokeshop) on land within the exterior boundry of the Shoalwater Bay Indian Reservation. This land is held in trust by the United States for the Shoalwater Bay Indian Tribe (the Tribe) subject to a possessory assignment in favor of Myrtle Landry. Petitioner is authorized and licensed to operate the smokeshop by the Shoalwater Bay Tribal Council and pays taxes and license fees to the Tribe pursuant to tribal ordinances.
During the years in issue, the fair rental value of the land upon which the smokeshop is situated was $5,000. This figure is based upon the value of the property for use in the operation of a smokeshop or other similar commercial enterprise, the highest and best use of this particular property.
The net profit from retail sales of the smokeshop for the years in question is the separate income of petitioner Myrtle Landry and is as follows: 4
| Year | Net Income |
| 1971 | $68,840 |
| 1972 | 231,509 |
| 1973 | 201,451 |
| 1974 | 155,881 |
| 1975 | 152,505 |
| 1976 | 142,680 |
For the years 1971, through and including 1976, petitioners did not file Federal income tax returns, either separately or jointly. In the notices of deficiency the Commissioner determined that net smokeshop profits are includable in gross income.
Section 61 provides that income "from whatever source derived," is subject to Federal income taxation. It is well established that the income of Indians is taxable under this section, "unless an exemption from taxation can be found in the language of a Treaty or Act of Congress." Commissioner v. Walker,326 F.2d 261, 263 (9th Cir. 1964); Jourdain v. Commissioner,71 T.C. 980 (1979), affd. 617 F.2d 507 (8th Cir. 1980); Hoptowit v. Commissioner,78 T.C. 137 (1982), affd. 709 F.2d 564 (9th Cir. 1983). The mere fact that petitioners are Indians will not preclude them from being liable for the payment of income tax. Choteau v. Burnet,283 U.S. 691 (1931); Superintendent v. Commissioner,295 U.S. 418 (1935). In order to prevail petitioners must point to "express exemptive language in some statute or treaty" showing that they need not include amounts in their gross income. United States v. Anderson,625 F.2d 910, 913 (9th Cir. 1980); Karmun v. Commissioner,82 T.C. 201, 204 (1984). 5 See Welch v. Helvering,290 U.S. 111 (1933).
Petitioners have failed to show an express exemption in any Treaty or Act of Congress. Thus, we must agree with respondent that income from the smokeshop constitutes taxable income under section 61.
This Court has previously decided the issue which is once again before us in this case. 6 Factually, the two cases do not differ. Petitioner is an enrolled member of the Shoalwater Bay Indian Tribe seeking a tax exemption for smokeshop income under the Treaty with the Quinaielt, 12 Stat. 971 and the General Allotment Act, 24 Stat. 388, 25 U.S.C. sec. 331 et seq. (1982). We have considered this treaty and others which contain identical language, 7 each time finding no express exemption from taxation. See United States v Anderson,supra;Karmun v. Commissioner,supra.
We adhere to the multitude of earlier decisions involving the western Washington treaties, and those decisions which have found smokeshop income taxable. Hoptowit v. Commissioner,supra;Cross v. Commissioner, 83 T.C. (Sept. 27, 1984); Hale v. United States,579 F. Supp. 646 (E.D. Wash. 1984). 8
Alternatively, petitioners ask us to exclude the rental value of the land from their smokeshop income under the theory that this is rental income "directly derived" from the land within the meaning of Squire v. Capoeman,351 U.S. 1 (1956). Normally we would not consider this issue because petitioners first raised it in their reply brief. However, the parties did stipulate to the fair rental value and the only purpose of this stipulation was to raise this specific issue. Additionally, respondent had a previous opportunity to fully brief this issue in Cross v. Commissioner, 83 T.C. (Sept. 27, 1984), a companion case presenting comparable facts. We have carefully considered this issue in Cross and reach the same result here on the basis of our opinion in that case.
Decision will be entered under Rule 155.