Internal Revenue Code: Wikis

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The Internal Revenue Code (or IRC; more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes and statutory excise taxes. The Internal Revenue Code is published as Title 26 of the United States Code (USC), and is also known as the internal revenue title. Its implementing agency is the Internal Revenue Service.

Contents

Genesis of tax codes in the United States

Prior to 1874, U.S. statutes (whether in tax law or other subjects) were not codified. That is, they were not set forth in one comprehensive subject matter title, but were instead contained in the various acts passed by Congress. Codifications of statutes, including tax statutes, undertaken in 1873 resulted in the Revised Statutes of the United States, approved June 22, 1874, effective for the laws in force as of December 1, 1873. Title 35 of the Revised Statutes was the internal revenue title. Another codification was undertaken in 1878.

In 1919, a committee of the U.S. House of Representatives began a project to recodify U.S. statutes which eventually resulted in a new United States Code in 1926 (including tax statutes).

Internal Revenue Code of 1939

The tax statutes were re-codified by an Act of Congress on February 10, 1939 as the "Internal Revenue Code" (later known as the "Internal Revenue Code of 1939"). The 1939 Code was published as volume 53, Part I, of the United States Statutes at Large and as title 26 of the United States Code. Subsequent permanent tax laws enacted by the United States Congress updated and amended the 1939 Code.

Internal Revenue Code of 1954/1986

On August 16, 1954, in connection with a general overhaul of the Internal Revenue Service, the IRC was greatly reorganized by Congress and expanded. Ward M. Hussey was the principal drafter of the Internal Revenue Code of 1954. The code was published in volume 68A of the United States Statutes at Large. To prevent confusion with the 1939 Code, the new version was thereafter referred to as the Internal Revenue Code of 1954 and the prior version as the Internal Revenue Code of 1939. The lettering and numbering of subtitles, sections, etc., was completely changed. For example, section 22 of the 1939 Code (defining gross income) was roughly analogous to section 61 of the 1954 Code. The 1954 Code replaced the 1939 Code as title 26 of the United States Code.

Section 2 of the Tax Reform Act of 1986 provides (in part):

(a) Redesignation of 1954 Code. - The Internal Revenue Title enacted August 16, 1954, as heretofore, hereby, or hereafter amended, may be cited as the "Internal Revenue Code of 1986".
(b) References in Laws, Etc. - Except when inappropriate, any reference in any law, Executive order, or other document -
(1) to the Internal Revenue Code of 1954 shall include a reference to the Internal Revenue Code of 1986, and
(2) to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954.

In effect, the 1954 Code was renamed the Internal Revenue Code of 1986 by section 2 of the Tax Reform Act of 1986. The 1986 Act contained substantial amendments, but no formal re-codification. That is, the 1986 Code retained most of the same lettering and numbering of subtitles, chapters, subchapters, parts, subparts, sections, etc. The 1986 Code, as amended from time to time (and still published as title 26 of the United States Code), retains the basic structure of the 1954 Code.

The Internal Revenue Code includes most but not all Federal tax statutes. Some tax statutes are found in other provisions of the United States Code including title 11 (related to bankruptcy) and title 28 (related to the judiciary). Further, some tax statutes are not codified at all (for example, the provisions of tax statutes that list the effective dates of Internal Revenue Code amendments).

Individual and corporate income tax

Section 1 of the Internal Revenue Code imposes the Federal income tax on the taxable income of U.S. citizens and residents, and of estates and trusts. The corporate income tax is imposed by Internal Revenue Code section 11.

Organization

Since the IRC is a part of the USC, the organization of the IRC is identical. See United States Code#Organization.

As an example, section 162(e)(2)(B)(ii) (26 U.S.C. § 162(e)(2)(B)(ii)) would be as follows:

Title 26: Internal Revenue Code

  • Subtitle A: Income Taxes
    • Chapter 1: Normal Taxes and Surtaxes
      • Subchapter B: Computation of Taxable Income
        • Part VI: Itemized Deductions for Individuals and Corporations
          • Section 162: Trade or business expenses
            • Subsection (e): Denial of deduction for certain lobbying and political expenditures
              • Paragraph (2) Exception for local legislation
                • Sub-paragraph (B)
                  • Clause (ii)

Key Parts of IRC The Internal Revenue Code is topically organized and generally referred to by section number (sections 1 through 9834). Some topics are short (e.g., tax rates) and some quite long (e.g., pension & benefit plans). The following describes the key topics, by section number:

IRC Topics By Section
Sections Function
1-15 Tax rates
21-54 Credits (refundable and nonrefundable)
55-59A Alternative Minimum Tax & environmental tax
61-90 Definition of gross income (before deductions), including items specifically taxable
101-140 Specific exclusions from gross income
141-149 Private activity bonds
151-153 Personal exemptions; dependent defined
161-199 Deductions, including interest, taxes, losses, and business related items
211-224 Itemized deductions for individuals
241-250 Deductions unique to corporations
261-291 Nondeductible items, including special rules limiting or deferring deductions
301-386 Corporate transactions, including formation, distributions, reorganizations, liquidations (Subchapter C)
401-436 Pension and benefit plans: treatment of plans, employers, & beneficiaries
441-483 Accounting methods & tax years
501-530 Exempt organizations (charitable and other)
531-565 Accumulated earnings tax and personal holding companies
581-597 Banks: special rules for certain items
611-638 Natural resources provisions: depletion, etc.
641-692 Trusts & estates: definitions, income tax on same & beneficiaries
701-777 Partnerships: definitions, treatment of entities and members, special rules (Subchapter K)
801-858 Insurance companies: special rules, definitions
851-860 Regulated investment companies (mutual funds)
861-865 Source of income (for international tax)
871-898 Tax on foreign persons/corporations; inbound international rules
901-908 Foreign tax credit
911-943 Exclusions of foreign income (mostly repealed)
951-965 Taxation of U.S. shareholders of controlled foreign corporations (Subpart F)
971-999 Other international tax provisions
1001-1092 Gains: definitions, characterization, and recognition; special rules
1201-1298 Capital gains: separate taxation and special rules
1301-1359 Interperiod adjustments; certain special rules
1361-1388 S Corporations and cooperative associations: flow-through rules
1391-1400T Empowerment, enterprise, and other special zones
1401-1403 Self employment tax (like social security, below)
1441-1465 Withholding of tax on nonresidents
1501-1564 Consolidated returns and affiliated groups (corporations)
2001-2210 Estate tax on transfers at death
2501-2704 Gift tax and tax on generation skipping transfers
3101-3241 Social security and railroad retirement taxes
3301-3322 Unemployment taxes
3401-3510 Income tax withholding; payment of employment taxes
4001-5000 Excise taxes on specific goods, transactions, and industries
5001-5891 Alcohol, tobacco and firearms taxes and special excise tax rules
6001-6167 Tax returns: requirements, procedural rules, payments, settlements, extensions
6201-6533 Assessment, collection, and abatement; limitations on collection & refund
6601-6751 Interest and non-criminal penalties on underpayments or failures
6801-7124 Other procedural rules
7201-7344 Crimes, other offences, forfeitures, tax evasion
7401-7493 Judicial proceedings
7501-8023 Miscellaneous rules
9001-9833 Special taxes & funds (presidential election, highway, black lung, etc.)

Subtitles

  • A. Income Taxes (sections 1 through 1563)
    As a further example, here are the chapters of this subtitle:
    • Chapter 1—NORMAL TAXES AND SURTAXES (sections 1 through 1400L)[1]
    • Chapter 2—TAX ON SELF-EMPLOYMENT INCOME (sections 1401 through 1403)[2]
    • Chapter 3—WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS (sections 1441 through 1464)[3]
    • Chapter 4—Repealed
    • Chapter 5—Repealed
    • Chapter 6—CONSOLIDATED RETURNS (sections 1501 through 1563)[4]
  • B. Estate and Gift Taxes (sections 2001 through 2704)
  • C. Employment Taxes (sections 3101 through 3510)
  • D. Miscellaneous Excise Taxes (sections 4001 through 5000)
  • E. Alcohol, Tobacco and Certain Other Excise Taxes (sections 5001 through 5891)
  • F. Procedure and Administration (sections 6001 through 7874)
  • G. The Joint Committee on Taxation (sections 8001 through 8023)
  • H. Financing of Presidential Campaigns (sections 9001 through 9042)
  • I. Trust Fund Code (sections 9500 through 9602)
  • J. Coal Industry Health Benefits (sections 9701 through 9722)
  • K. Group Health Plan Portability, Access, and Renewability Requirements (sections 9801 through 9833)

List of commonly-referenced sections

All of these examples are from Chapter 1 (Normal Taxes and Surtaxes) of Subtitle A (Income Taxes)

(key: §="section", §§="sections")

Title 26 - Internal Revenue Code

  • Subtitle A - Income Taxes (§§ 1-1563)
    • Chapter 1 - Normal Taxes and Surtaxes (§§ 1-1400L)
      • Subchapter A - Determination of Tax Liability (§§ 1-59)
        • Part I - Tax on Individuals (§§ 1-59)
      • Subchapter B - Computation of Taxable Income (§§ 61-291)
        • Part I—Definition of Gross Income, Adjusted Gross Income, Taxable Income, Etc.
        • Part III—Items Specifically Excluded from Gross Income
        • Part VI - Itemized Deductions for Individuals and Corporations (§§ 161-198)
      • Subchapter C - Corporate Distributions and Adjustments (§§ 301-385)
        • Part III - Corporate Organizations and Reorganizations (§§ 351-368)
          • Subpart A - Effects on Recipients (§ 351)
            • Section 351 - Transfer to Corporation controlled by transferor (26 U.S.C. § 351)
          • Subpart B - Effects on Shareholders and Security Holders (§§ 354-358)
          • Subpart D - Special Rule: Definitions (§§ 367-368)
            • Section 368 - Taxfree reorganizations (i.e. takeovers, mergers) (26 U.S.C. § 368)
      • Subchapter D - Deferred Compensation, Etc. (§§ 401-425)
      • Subchapter E - Accounting Periods and Methods of Accounting (§§ 441-483)
        • Part II - Methods of Accounting (§§ 446-475)
          • Subpart A - Methods of Accounting in General (§§ 446-448)
          • Subpart B - Taxable Year for Which Items of Gross Income Included (§§ 451-460)
          • Subpart D - Inventories
            • Section 475 - Mark to market accounting method for dealers in securities
      • Subchapter F - Exempt Organizations (§§ 501-530)
      • Subchapter O - Gain or Loss on Disposition of Property
        • Part III - Common Nontaxable Exchanges

External links

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Source material

Up to date as of January 22, 2010
(Redirected to United States Code/Title 26 article)

From Wikisource

United States Code
by the United States Government
Title 26. Internal Revenue Code
See U.S. House of Representatives, and Cornell Law School.
Title 26 − Internal Revenue Code

Notes

See Also
  • Internal Revenue Code of 1954

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