Trusts, Income and Capital Tax Loophole under 26 USC sec. 643
Trusts that are qualified under 26 USC sec. 643 are simple irrevocable trusts, where you as the Settlor have control over the assets through veto powers over the trustee's decisions. 26 USC sec. 643 allows for the deduction of the sale of capital assets against income and capital gains taxes, but not against income taxes due on the normal course of business activity.
An example of a capital asset is the Trust purchases a house and holds it for a while and then sales it, but if you buy homes and fix them up to flip is considered normal course of business. Another example is the trust purchases Dinar hold it in the trust and then realize a gain is exempt from income taxes and capital gains under sec. 643, but if the trust is involved in forex trading or the buy and sale of Dinar that would be the normal course of business wherein the taxes would be due.
The only down fall of the sec. 643 exception is you cannot make beneficiary distributions or the gain cannot be required to distributed to beneficiaries in the same taxable year, but the trust can do all the investing and re-investing and pay all trust expenses it want during the same taxable year.
26 USC sec. 643:
(a) Distributable net income
For purposes of this part, the term “distributable net income” means, with respect to any taxable year, the taxable income of the estate or trust computed with the following modifications—
(3) Capital gains and losses
Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not
(A) paid, credited, or required to be distributed to any beneficiary during the taxable year, or
(B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Losses from the sale or exchange of capital assets shall be excluded, except to the extent such losses are taken into account in determining the amount of gains from the sale or exchange of capital assets which are paid, credited, or required to be distributed to any beneficiary during the taxable year. The exclusion under section 1202 shall not be taken into account.
The exclusion under 26 USC sec. 1202 pertains to small business stock.