Lynn $(29)$ is a full$-$year resident of Nebraska and an enrolled member of the Sioux tribe. She has lived on the Omaha Indian Reservation since birth. Her income for the year includes $$37,339$ in wages, as a Sponsored Programs Director at the Little Priest Tribal College on the Winnebago Indian Reservation for the first part of the year. Both of these reservations are in Nebraska. For the remainder of the year, she worked at the University of Nebraska in Lincoln, Nebraska, where she earned $$47,793.$ The university is not within the boundaries of any Nebraska reservation. How is Lynn$\text{'}$s income from each of these jobs reported on her Nebraska return?

The total of her yearly wages is reported on her Nebraska income tax return and subject to Nebraska taxation. There is no adjustment available for either of these amounts on the Nebraska tax return.

The total of her yearly wages is reported on her Nebraska income tax return. Her wages earned at the Little Priest Tribal College are eligible for an adjustment that will decrease her federal income on her Nebraska return.

The total of her yearly wages requires no adjustment on her Nebraska tax return because they are exempt from state taxation under both federal and state law.

The difference between the wages earned outside the reservation is reduced by those earned within the boundaries of the reservation and the net result is an adjustment that decreases her federal adjusted gross income on her Nebraska return.