U.S. Internal Revenue Code Essay

U.S. Internal Revenue Code (61)     The types of income used to determine taxes paid in some countries is a limited list.  In the United States the types of income that can be taxed is defined by U.S. Internal Revenue Code (61).

  This approach is a major advantage in the United States.     The types of income that are defined as gross income in the United States is “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust.”  (Cornell).

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     The advantage to Code 61 is in the definition of income.  This broad definition provides a larger tax base for the United States to tax.  The definition of what is income is the foundation of the United States tax law.

  The code should not be looked at as  a “fix- all” to any tax code.  This code only enables the United States to begin to collect taxes on the defined sources of income.    In many foreign countries pay is the only source of income that is taxable.  Many other sources of income are not included in gross income – therefore they are not taxable.  The tax base in limited by the definition of income types that are included in gross income.BibliographyCornell.  (2009).  Cornell University Law School.

  U.S. Code Collection.  Retrieved on March 21, 2009.  From.  http://www.law.cornell.edu/uscode/26/61.html 

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