The best advice he can give clients, Delgass says, is to play the big tax reduction game as infrequently as possible.

"Avoid this aggressive approach whenever you can. And just use all the accepted resources to minimize the tax burden in the first place," concurs Louis Stanasolovich, a certified financial planner licensee with his own firm in Pittsburgh. Stanasolovich says that's because IRS officials, over the last year or so, have been publicly warning that some aggressive tax reduction strategies for the wealthy are becoming abusive.

Indeed, the tax authorities announced in a recent bulletin that "the Internal Revenue Service is aware that certain promoters are advising taxpayers to take highly questionable, and in most cases, meritless positions ..." The IRS cited amended returns that use "frivolous" tax reduction strategies. One red flag is a scheme to reduce the Alternative Minimum Tax through "the exercise of nonstatutory or statutory stock options."

Last year, the IRS warned that it was going to deal harshly with the Son of Boss, which is the trade name for a certain kind of basis-shifting strategy. Here's how this questionable tax reduction vehicle works, according to the authorities:

Options are put in a partnership. With the liquidation of the partnership, the taxpayer claims a fraudulent tax loss. For example, let's say that Taxpayer Jackson used the Son of Boss strategy. He purchases and issues stock in Corporation XYZ. Taxpayer Jackson pays $100 for the option to buy XYZ stock. Taxpayer Jackson then contributes to a partnership the $100 received on the sale of the option. The partnership assumes Taxpayer Jackson's obligation to satisfy the option that he has issued.

The value of Taxpayer Jackson's interest in the partnership is $0. However, some advisors and taxpayers argue that Taxpayer Jackson's basis in the partnership is actually $100 because his basis in the partnership interest is not reduced by the amount of the option obligation assumed by the partnership. Taxpayer Jackson then sells his partnership interest for $0 and claims a $100 loss.

The government will no longer allow this. When the new rules aimed at the Son of Boss transactions were issued, Assistant Treasury Secretary for Tax Policy Pam Olson said that "these regulations are part of our increased efforts to shut down abusive tax shelter transactions."

In targeting the Son of Boss transactions, the IRS also made a point of stating that some taxpayers using this vehicle would be assessed the full tax, interest and a penalty, although some provision would be allowed for transaction costs. In similar cases of questionable shelters, the IRS had generally imposed no penalties and had also allowed some part of the claimed deduction, notes Harvey Coustan, a retired CPA who worked for Ernst & Young in Chicago.

The Son of Boss crackdown, advisors say, is part of a larger trend of looking more carefully at various big tax-saving vehicles aimed at those with large incomes or an unexpected windfall.

"The IRS is questioning these things much more. They're actually looking more closely to make sure that these things are legitimate. We hear this a lot from the attorneys we deal with," says Stanasolovich. Family limited partnership deductions have been one of the tactics targeted by the authorities, he adds.

"The IRS is just waiting for people to cross the line. They're looking for people who want to take too big a discount for liquidity. Investment-only limited partnerships that only hold marketable securities, are also a potential problem," Stanasolovich says. He believes that family limited partnerships that own an operating business have a much better chance of steering clear of problems with the government. Liquid securities cannot generate as large a deduction for estate tax purposes as an operating business.