Quote from buzzy2:
It sounds like an Offshore Asset Protection Trust. Under US Tax Code, they have no effect on taxes so you'd still have to pay. Reporting requirements are a huge pain though.
The only real solution to pay zero tax to the IRS is renouncing citizenship and moving out of the U.S.
If you still want to live in the US and keep your citizenship, you could also give all your assets away (in a tax efficient manner) to a non-OECD citizen living in a tax haven with zero foreign source income taxes zero capital gains and zero wealth tax. You must renounce to all control and beneficial ownership, present and future. Could be a wife, or in-law or distant cousin. You should not be legally entitled anymore to the money, so it all comes down to trust and the verbal agreement you have with this person, who must be also willing to declare in court that no such agreement exist.
This still works, but who knows, judges might rule tomorrow that no sane person would engage in such transactions unless it's to pay less tax, so they are null and void and you still have to pay tax.
Meanwhile you could defer, or take advantage of deductions, otherwise there is no way of using loopholes. Even if you find one, they close it retroactively later.
Another option is trying to hide the money from the IRS but you know how risky it is these days.
