Pub. 2 2020 Issue 1

J A N U A R Y / F E B R U A R Y 2 0 2 0 10 nebraska cpas C O U N S E L O R ’ S C O R N E R GRAEGIN LOANS: A TOOL FOR DEFERRING AND REDUCING ESTATE TAX As tax season gets underway, we are reminded of how important it is for tax-return preparers to consider strategies to cope with their clients’ tax burdens. For estate tax-return preparers, one potential strategy is the use of a Graegin loan. A Graegin loan is a mechanism to finance payment of estate tax and administration expenses. Under the right circumstances, it can provide low liquidity estates with the ability to both defer and reduce estate tax liability. When Graegin loans are used, it is in estates that contain illiquid assets of significant value, such as a significant holding in a closely held business. For these estates, low liquidity canmake paying the estate tax difficult if the sale of the illiquid asset is not advisable (e.g., poor market timing or, in the case of a significant holding in a closely held business, BY JAMES A. TEWS & NATHAN G. PATTERSON, KOLEY JESSEN