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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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my husband was a osage indian and received a full headright

Customer Question

my husband was a osage indian and received a full headright --he had a revokable trust that he left the check to me and on my death to the kids--he was a resticted indian so ther was no taxes payed--I am not so do I have to pay taxes?????
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!

The federal laws allow Osage Indians to place their headright interest, restricted land and some other assets into a revokable trust with the Secretary of the Interior. The trust permits to pass these Osage Indian assets to other persons without going through legal probate.

After your husband died – the trust became irrevocable and while income will be distributed to you as a beneficiary of the trust – the trustee will issue the form K-1 which reports amounts and types of taxable income. Below are some common types of distributions and there treatments fro tax purposes depending if the individual has a certificate of competence or is a non competent.

<table border="0" cellspacing="0" cellpadding="0">

Type of Distribution

Taxability if individual has certificate of competence, subject to SE tax, and how reported

Taxability if individual is non-competent, subject to SE tax, and how reported if taxable

Authority

Income held in trust for the non-competent Indian patent holder which is derived directly from allotted and restricted Indian lands while such lands are held by the US as trustee N/A

Not includible for federal tax.

Not subject to
SE tax.

Squire V. Capoeman, 351 U.S. 1 (1956)
Osage headright income from tribal mineral interests received by a competent Osage

Includible for federal tax, but not subject to SE if it is a royalty interest (Sch E).

Net income from a working interest (Sch C) is subject to SE

N/A

Rev. Ruling
70-116

Rev. Ruling
77-78
Osage mineral interest held in trust by the US for non-competent Osage Indian N/A

Not includible for federal tax.

Not subject to
SE tax.

Rev. Ruling
70-116
Income derived directly from unallotted tribal lands with no treaty or statute to exempt from federal tax

Includible for federal tax.

The question of SE tax is determined by the characterization of the income, as well as where to report.

Includible for federal tax.

The question of SE tax is determined by the characterization of the income, as well as where to report.

Rev. Ruling
67-284
Income from a possessory holding on tribal lands N/A Not includible for federal tax.

Not subject to
SE tax.
Amy T. Critzer V. the US
Sale of land, the proceeds of which were placed in trust with the US Government

Not includible for federal tax.

Not subject to
SE tax.

Not includible for federal tax.

Not subject to
SE tax.

Public Law 251
Payments made under legislatively provided social benefit programs for promotion of the general welfare

Not includible for federal tax.

Not subject to
SE tax.

Not includible for federal tax.

Not subject to
SE tax.

Rev. Ruling
77-77
Payments made to a trust on behalf of minor or incompetent members of an Indian tribe when trust is revocable N/A Not taxable because it is a revocable trust.
Certain taxable payments of Indian casino profits

Includible for federal tax.

Not subject to
SE tax.

Includible for federal tax.

Not subject to
SE tax.

IRC section 3402(r)
Economic development grants from revenues from Class III gaming

Not includible for federal tax.

Not subject to
SE tax.

Not includible for federal tax.

Not subject to
SE tax.

Non-reimbursable grants for stimulating and increasing Indian entrepreneurship and employment

Not includible for federal tax.

Not subject to
SE tax.

Not includible for federal tax.

Not subject to
SE tax.

Indian Financing
Act of 1974 –
Indian Business Grants –
Title IV

Let me know if you need any help.

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