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The modern Internal Revenue Code categorizes taxpayers into two main groups: individuals (natural persons) and corporations. Individuals are subject to federal income tax under section 1, while corporations, artificial bodies created by state laws, are taxed under section 11. Other entities like partnerships, LLCs, S corporations, trusts, and estates are variations of these two basic taxpayer types. Corporations have complex and sometimes counterintuitive tax rules, but they can be formed tax-free by individuals.
