Crown Loan


DEFINITION of 'Crown Loan'

A loan with no set maturity date, These loans are typically made by a wealthy parent or grandparent to a lower income child or grandchild. They are named after Harry Crown, a Chicago industrialist, who first used this type of loan so the borrower could invest the loaned funds and pay less taxes on the income because they were in a lower tax bracket.


For many years, high-income individuals were able to make loans to lower-income individuals at zero-interest rates or significantly lower rates than those available elsewhere. The borrower could then invest the funds and pay little to no taxes on the earnings from the investment. In 1984, the U.S. Supreme Court finally caught on and ruled that these loans would be subject to gift taxes unless they were made at similar interest rates to the prevailing market rates.

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  1. Can personal loans be included in bankruptcy?

    Personal loans from friends, family and employers fall under common categories of debt that can be discharged in the case ... Read Full Answer >>
  2. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  3. Are personal loans bad for your credit score?

    Taking out a personal loan is not bad for your credit score in and of itself. However, there are several factors that come ... Read Full Answer >>
  4. Can Sallie Mae loans be forgiven?

    Sallie Mae loans, similar to other private loans, cannot be forgiven. As of 2015, there is no option for private student ... Read Full Answer >>
  5. Can Sallie Mae loans be consolidated?

    Sallie Mae loans can be consolidated with other federal loans, but not with private loans. For federal loan consolidation, ... Read Full Answer >>
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