Most middle-aged Atlanta Braves fans remember well the days when Ryan Klesko was using that Captain Caveman swing of his to hit bombs and Hall of Famer John Smoltz was blowing heaters past hitters. They were both integral parts of the Braves' previous dynasty and have fans eternal gratitude. However, both Braves legends find themselves in a bit of trouble with IRS and it looks like they are going to take a hit to their wallets.
Smoltz and Klesko purchased a large piece of property together in central Georgia under a company they founded together. Again, not an uncommon thing for anyone with money to do with friends they trust. However, apparently they are facing the ire of the IRS for how high a value they placed on the property when they claimed a charitable deduction on their taxes and were assessed a hefty penalty.
Klesko and Smoltz's company took the matter to court and unfortunately for them, a tax appeals court just ruled that the property value was exaggerated by...a lot and the penalty assessed was justified.
Company owned by John Smoltz and Ryan Klesko are fighting, and losing, a battle with IRS over wild property values
The property in question is roughly 1,561 acres just north of Macon that they gave the name Buckelew Farms. The company said that their over $50 million valuation of the property comes from the value of a future residential development plan that they were working on. The problem is that the company also filed paperwork which would have made the property only available for conservation, but that moved allowed the company to claim the charitable deduction. Basically, they wanted the best of all worlds and, in this case, that is not how taxes work.
The judge ruled that the actual value of the property was closer to $7.4 million which would entitle the former players to about one tenth of the deduction they claimed. The judge added that their valuation was "firmly planted somewhere in the realm of fantasy". The report also noted that Smoltz and Klesko tried to sell the property for $14 million a year ago and didn't find any takers even at that price.
Again, this isn't a situation where Smoltz or Klesko are going to get thrown in jail by the big bad Tax Man. These sorts of tax disputes aren't uncommon and they are probably just going to have to pay the previously assessed 40% penalty and that will be the end of it. Still, it is an odd story that two former Braves greats tried to exploit a tax loophole, go toe-to-toe with the government, and ultimately fell short.