How to avoid buying an abusive tax shelter
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You also need to look at the flip side, he says: Will you lose money? Are you creating some kind of loss?

Then consider your answers to these two questions together.

"Basically, you want to determine whether the benefit is disproportional to the dollars you're placing in the shelter," says Provine. "Or do the tax benefits multiply beyond the dollars that you're putting into the shelter. Are you getting a lot of tax benefits for nothing?"

If the answer to that last question is yes, you could have a problem.

Get it in writing
Scharin says it's a good idea to get written information on any tax shelter proposal.

Reputable firms obtain opinion letters, documents written by a CPA or tax attorney, that discuss what the tax considerations and issues of the plan are or should be. "With the latest IRS scrutiny," says Scharin, "practitioners should be more concerned about what they're putting in these letters."

Some KPMG offices apparently provided letters that overstated the shelters' benefits, says Scharin. That's why you also want to try to determine what kind of affiliation the opinion's author has with the company offering the investment.

"The person writing the letter will get a fee for research and writing the letter, but you would not want someone who also is selling the product and getting a commission," says Scharin. And since the IRS is cracking down on the quality of written advice, he says you also want to make sure that the opinion writer considered and researched the shelter's relevant issues.

Luscombe says questionable support of shelters was more of a problem in the late 1990s, the tax shelter's heyday. "It wasn't just the marketers behind these things," he says. "Corporations were attracted to these things, too, and a lot of pressure was applied to those who were asked to evaluate and verify their credibility.

"People would go to a third party and say 'KPMG has this deal. What do you think?' If you told them it was a little questionable and you wouldn't do it, you were likely to be ignored if the person or company really wanted to go ahead. There were lots of lawyers willing to issue a favorable opinion. There was pressure on third parties to go along to avoid losing clients and favor.

"That's changed 180 degrees now. You can pretty much rely on an independent third party to give you an honest and unbiased evaluation."

Get your own evaluation
The key here, everyone agrees, is that the evaluation be objective. To guarantee that, take the proposed shelter information to your own tax adviser.

"If the [shelter promoter] will not let you take anything off premises, that a signal," says Scharin.

Some shelter sellers ask that you sign a confidentiality agreement or promise you won't tell anyone about this tax-saving deal. Their argument: The shelter is such a great arrangement, they don't want someone else to steal the idea. Don't buy that pitch or the shelter.