Income derived by an Indian from allotted and restricted land which is exempt from income tax by reason of a Federal statute or treaty is not NESE.

A farmer may exclude from the income he reports part or all of the payments he receives under certain Federal or State cost-sharing conservation, restoration and reclamation programs.

Develop status of income from Indian land only when the FO has reason to believe income may be excluded. Ask the tribal office or the local office of the Bureau of Indian Affairs how the land is held.

Do not develop to determine whether income was excluded. If a farmer asks for information, refer him to the Farmer's Tax Guide, IRS Publication 225.