Internal Revenue Code (IRC): Definition, What It Covers, History

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Definition of 'Internal Revenue Code (IRC): Definition, What It Covers, History'

The Internal Revenue Code (IRC) is the main body of federal tax law in the United States. It is a complex and ever-changing document that governs how individuals and businesses are taxed. The IRC is divided into 26 sections, each of which deals with a specific topic. Some of the most important sections include:

* Section 1: Definitions
* Section 2: Gross Income
* Section 3: Taxable Income
* Section 4: Tax Rates
* Section 162: Business Expenses
* Section 179: Depreciation
* Section 212: Investment Expenses
* Section 263: Capital Expenditures

The IRC is also supplemented by a number of regulations, which provide additional guidance on how the law is to be interpreted and applied. These regulations are issued by the Internal Revenue Service (IRS), which is the federal agency responsible for administering the tax laws.

The IRC has a long and complex history. It was first enacted in 1913, and has been amended numerous times since then. The most recent major overhaul of the IRC was in 1986.

The IRC is a critical part of the American tax system. It determines how much tax individuals and businesses owe, and how those taxes are collected. The IRC is also a source of revenue for the federal government. In 2020, the federal government collected over $3.4 trillion in taxes. Of that total, over $2.4 trillion was collected under the IRC.

The IRC is a complex and ever-changing document. It is important for taxpayers to understand the basics of the IRC, as well as how it applies to their specific situation. By understanding the IRC, taxpayers can minimize their tax liability and ensure that they are compliant with the law.

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