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by alanpost 3600 days ago
One salient detail that's a bit difficult to pick out of the article: Hampton Creek gave cash to contractors with instructions to use that cash to purchase Just Mayo. However, they recorded (some of?) these cash payments as wages on those contractor's 1099s, meaning those contractors had to pay taxes on that "income" when in truth this was (at best) a business expense.
1 comments
paulcole 3600 days ago
What I don't get is why the contractors didn't just claim the expense on their taxes to striaghten it out?
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pcvarmint 3599 days ago
Because their expenses would have to total at least 2% of their AGI in order for them to deduct them.

This means someone making $50K would need to buy $1000 worth of Just Mayo or other qualifying unreimbursed expenses.

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alanpost 3599 days ago
My comment is based on the single report substantiating the larger story in the article. I think you ask a reasonable question. Maybe the particular contractor had an axe to grind. Maybe the bookkeeping was a mess but for reasons of incompetence rather than fraud.

I think the larger picture is troubling, but I can also see a scenario where each of the pieces that builds up to that case has a plausible and benign explanation. I don't think there are enough details in this article to conclude one way or the other.

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