And that position is WRONG.
One more time: US residents do not use Section 861 or Subchapter N for determining their tax liability.
We use Subchapter B.
Posting this code paragraph is a tautology. Of course anyone whose income is subject to tax imposed by the code is liable to pay that tax.
And Subchapter B lays out what is and isn't taxable if you are a US resident.
We use Subchapter B.
Then why are there so many references, in the index, the statutes, and the regulations, pointing one to Subchapter N to "determine the sources of income for the purposes of the income tax?" Note that it doesn't say "for the purposes of the income tax if you are a nonresident alien," but for the purposes of THE income tax, the whole thing. Income tax
Sources of income
Determination, 26 § 861 et seq...
Within the U.S., 26 § 861
No mention there of "ignore this if you are a US citizen."
Why does Section 61 of the code have this cross reference? Income from sources -
Within the United States, see section 861 of this title
Without the United States, see section 862 of this title
Again, no mention of "ignore this if you are a US citizen working in the US."
You're proceeding from a foregone conclusion here - "all income of US citizens MUST be taxable," your foregone conclusion, "and since Section 861 doesn't show the income of most US citizens to be taxable, Section 861 must not apply to most US citizens."
You're drawing a conclusion about the application of Section 861 based on your foregone conclusion that all income of US citizens is taxable income, instead of based on the law and regulations.