When a joke can't be funny?

So i was round at a persons house the other day and they were going to tell a joke, but before they said 'its a racist joke by the way' or something, as if it was ok after they acknowledged it as wrong.

It got me thinking how far can jokes go, should they have any boundaries? It seems ok to make jokes about any subject matter (like sept. 11th, sexist jokes, about paedophilia) but is it wrong and spreading insensitivity prejudices and stereotypes etc? i don't think we'd say the joke if who was the butt of it were there, is that an acnowldgement that it is wrong?? Or are we just being too PC?

I'm kinda stoned so i hope this question makes sense, sorry about all the questions..