IDGT taxation attributes all trust income, deductions, and credits to the grantor, who pays the tax personally while the trust compounds tax-free. Transactions between the grantor and the trust (sales, loans, swaps) are disregarded for income tax, enabling basis management and efficient funding. For transfer tax, completed-gift IDGTs remove future appreciation from the estate; careful drafting avoids retained-interest inclusion under 2036/2038. Clear accounting and annual statements keep CPAs, trustees, and families aligned.

CPAs report trust income on the grantor's return and ignore sales between the grantor and trust. Advisors consider toggling powers if tax burden becomes excessive or circumstances change.