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Inspiration in Every Turn

To every partner and investor who has worked with us: Thank You. - See this introduction of IRC §643(b) - trust framework. We’ve watched physicians, engineers, passive landlords, etc. legally eliminate capital gains, rental, dividend, and interest taxes—often saving six figures on a single exit. Your confidence in our properties, acquisition strategy, and SDIRA-integrated syndications has not only helped scale portfolios under management, but has proven that tax-efficient, tangible-asset investing is the future of wealth preservation.

We are deeply grateful for your partnership and excited

to deliver even stronger, tax-advantaged returns in 2026.

**Always verify with your CPA***.

How Investors Legally Stop Paying Taxes on

Profits Using IRC §643(b)

Especially for Accredited Investors, Real Estate Syndicators & SDIRA Holders | November 10, 2025

The Legal Mechanism: IRC §643(b) + Complex Trust Structure

Under Internal Revenue Code §643(b), a complex trust (not a simple or grantor trust) can classify income differently than a typical investor. The IRS allows the trust’s governing document (and local law) to define what is "income" (taxable to beneficiaries) vs. "principal/corpus" (taxable only to the trust, if at all). This creates a legal tax deferral or elimination pathway when structured correctly.

Key IRS Rule: “Income… means the amount of income of the estate or trust… determined under the terms of the governing instrument and applicable local law.” — §643(b)

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How It Works: 5 Income Types → Tax-Free or Deferred

Income Type | Traditional Investor | §643(b) Complex Trust Strategy

Capital Gains (sell property/stock) | You pay 15–20% + 3.8% NIIT | Gains allocated to principal → trust pays 0% if distributed as corpus (or compressed rate if retained)

Interest Income (notes, bonds) | You pay ordinary income tax | Classified as FAI → passed to beneficiary tax-free if DNI rules followed

Dividend Income (stocks) | 15–20% qualified dividend tax | Same as interest — DNI pass-through = tax-free to beneficiary

Rental Income (RE investor) | Ordinary income + depreciation recapture | FAI → distributed tax-free; depreciation stays in trust

Royalty Income (IP, talent) | Ordinary income | FAI → tax-free distribution

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Step-by-Step Legal Flow (Compliant Structure)

Form a Complex Trust
- Non-grantor, discretionary distribution trust (e.g., Delaware or Nevada situs).
- You (or your SDIRA) are beneficiary; independent trustee manages.
Fund the Trust
- Contribute cash, RE, or securities via SDIRA or personal funds.
Generate Income
- Trust owns the asset (e.g., rental property, stock portfolio, or syndication LP interest).
Classify Under §643(b)
- Trust document says: "All capital gains are principal. Only ordinary income (rent, interest, dividends) is income."
- Result: Gains stay in corpus; rents/dividends are FAI.
Distribute Strategically
- FAI → Distributed to you → Tax-free (counts as DNI, not taxable).
- Principal (gains) → Retained or distributed later → taxed only if/when trust realizes and retains.
Exit & Reset
- Sell asset inside trust → gain stays in principal.
- Distribute principal later (or to heirs) → step-up in basis at death = 0% tax.

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Why It’s 100% Legal (IRS-Approved)

IRS Code | What It Allows

§643(b) | Trust defines income vs. principal

§661 / §662 | Beneficiary gets deduction for DNI received → $0 tax

§641–§692 | Trust pays tax only on undistributed income

§1014 | Step-up in basis at death → permanent elimination

No "Abusive Trust" Red Flags: As long as the trust has economic substance, independent trustee, and no self-dealing (Prohibited Transactions under §4975), it’s fully compliant.

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Real-World Example: $1M Real Estate Flip

Step | Traditional Investor | §643(b) Trust Investor

Buy Property | $1M (personal/SDIRA) | $1M into trust

Sell After 3 Years | $1.5M → $500K gain | $1.5M → $500K principal

Tax Due | ~$100K (20%) | $0 (distributed as corpus)

Cash in Pocket | $1.4M | $1.5M

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Who This Works For

Accredited Investors using SDIRAs
RE Syndicators pooling LP capital
Passive Investors in notes, stocks, royalties
High Earners in 37%+ tax brackets

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Next Step

Book a 15-Min Tax Strategy Call with Sally Gimon → [Your Calendly Link] We’ll review your portfolio and draft a custom §643(b) trust to legally eliminate taxes on your next exit.

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Not tax advice. Consult your CPA/attorney. Structure must comply with IRC §671–§679.

⚠️ IRON-CLAD DISCLAIMER – MUST READ BEFORE ACTING

This is NOT tax, legal, or investment advice. The strategies discussed (including IRC §643(b), complex trusts, SDIRAs, or any tax-deferral/elimination structure) are general educational examples only and do not apply to every situation.

YOU MUST CONSULT YOUR OWN QUALIFIED TAX ATTORNEY, CPA, OR ENROLLED AGENT before implementing any strategy.

IRS rules are complex and fact-specific.
Improper use of trusts can trigger audit, penalties, or criminal liability under IRC §7201–§7206.
No guarantee of tax savings — outcomes depend on your income, state laws, trust situs, and IRS scrutiny.
GGI Inc. and @Garofalo are not fiduciaries and assume zero liability for your decisions.

Your accountant is the final authority. Do not rely on social media, webinars, or templates without written confirmation from your licensed professional.

By continuing, you acknowledge you will verify everything with your CPA/attorney. Failure to do so may result in 100% of tax liability + penalties.