Berger v. Cas' Feed Store, Inc.

LARSON, Justice.

Cas’ Feed Store (Cas) in Traer, Iowa, had a long-standing arrangement with its customers by which the customers prepaid (usually at the end of the tax year) for future crop expenses such as chemicals, seed, and fertilizer. Several reasons were given for this arrangement, but the greatest impetus seems to be to offset income, for tax purposes, by making these payments in the current tax year.

Cas deposited some of these prepayments in the Farmers Savings Bank and Trust in Traer. Cas also borrowed money from the bank and, during the time in question, was heavily indebted to it.…