The taxpayers earned $80 million per year and purchased an estate for 48 million. the first appraiser's conservation easement had a fair market value of $49 million, and the second appraiser took the position that the conservation easement had a fair market value of $38 million. The taxpayers donated a perpetual for 49 million.

The IRS disallowed a charitable deduction for the gift of the conservation easement in its entirety. The IRS alleged civil fraud based on the appraisal.

What are the deduction issues and penalties issues?