Rarely are tax issues easily answered, let alone answered correctly. As a general matter, Deferred Sales Trusts act as deferral vehicles, meaning that any tax is recognized at the moment of sale, yet paid at a later point when the funds are distributed.
Only a tax attorney can explain the intricacies of how business assets are taxed. Remember that businesses are comprised of assets, so selling a business may be more accurately referred to as selling the assets of that business. Those assets (and their respective bases upon contribution to the company) are what determines the final tax treatment upon selling the business, whether gains - ordinary or capital - or losses. Even then, there may be another nuanced section of the tax code that will impact the sale of a business (such as depreciation recapture). Accurate record-keeping, from start to finish, is critical.
Bear in mind that both a qualified and licensed tax attorney and CPA are necessary to correctly manage any intricate tax situation, such as the sale of a business. There are no easy answers.
** This statement contains general legal information only, and none of the information in this statement should be deemed legal advice or should be acted upon without prior consultation with appropriate professional advisors.