"So, although general language was introduced into the statute of 1871, it is not to be read as reaching to matters in respect to which the legislature had no constitutional power, but only as to those matters within its control. And, if there were, as it seems there were, certain special taxes and dues, which, under the existing provisions of the state constitution, could not be affected by legislative action, the statute is to be read as though it in terms excluded them from its operation." McCullough v. Com. Of Virginia, 172 U.S. 102 (1898) The above cite of McCullough v. Com. Of Virginia tells us two things. 1.) Statutes can have broad and general language that makes the statute appear to reach where it Constitutionally can not. 2. Statutes are to be read as if they do not embrace that which they may appear to embrace, if what they appear to embrace is not allowed by the Constitution. 4.10.7.2.3.1 (05-14-1999) Income Tax Regulations 1. The Federal Income Tax Regulations (Regs.) are the official Treasury Department interpretation of the Internal Revenue Code and follow the numbering sequence of Internal Revenue Code sections.
http://www.irs.gov/irm/part4/ch10s11.html