For years, high-rolling investors risked big bucks and took even bigger tax write-offs in complex and sometimes shaky movie-financing arrangements. The Internal Revenue Service kept challenging the deductions and finally succeeded in tightening up the loopholes through which most of the money was flowing. In response, movie financial moguls toned down their tax breaks and tuned up their acts, creating a new series of hot-selling investment packages. But although the new deals promise glamour, tax advantage, and the chance of big payoffs -- all within the bounds set by the IRS -- they can't escape the intrinsic uncertainty of the movie business itself.

Today's deals are usually structured as partnerships. Investors buy in as limited partners, often for as little as $5,000 each, and the general partner then negotiates an arrangement with a major studio or a group of independent producers to help finance several films. SLM Entertainment Ltd. raised $40 million for MGM/UA Entertainment Co. in this way. Delphi Film Associates and Coca-Cola Co.'s Columbia Pictures Industries Inc. subsidiary put together two funds totaling $110 million, and Delphi is now in the process of marketing a third in conjunction with Columbia and Tri-Star Pictures.

The tax advantages of movie investing come from two sources. One is an investment tax credit amounting to 6.67% of an investor's share of a movie's production costs, the other is a deduction for the film's depreciation, sometimes coupled with deductions for advertising expenses. Since the old loopholes were closed, though, these tax benefits alone can't justify the investment. At most, the system generates a one-to-one write-off over a period of several years.

What investors hope is that the deal will finance a blockbuster and thus generate cash returns as well. Those who bought into Delphi's first offering found themselves part owners of Tootsie; investors in Cinema Group Partners, a limited partnership in Los Angeles, wound up with a stake in Flashdance. Even a successful deal, however, can be slow to return money unless the fine print works to the investor's advantage. Thus Delphi's first venture paid out only 6% of investors' money in its first 15 months of operation (although it did provide a 70% tax deduction in its first year). The Flashdance partnership performed better, partly because it collected a percentage of its films' gross proceeds rather than net proceeds. Delphi's new offering gives investors a specified percentage of gross or net, whichever is more.

Still, as the newsletter Tax Shelter Insider explains it, as a rule, a movie needs a "distributor's gross" of three times its production costs before it breaks even, which can translate to a $100-million box-office total. Not many movies do that well, Insider says, and winnings from a blockbuster have to be balanced against the red ink produced by losers. Because of such uncertainties, more than a few experts are skeptical of the deals. "I'm not excited about movie investments," says Beverly Tanner, author of the book Shelter What You Make -- Minimize the Take. "I think they're high speculation." Adds Donald Jay Korn, Insider's editor, "Basically they're all a crapshoot. Movie investments are for investors with solid overall portfolios that won't be obliterated by a series of box-office bombs."

To protect yourself, urges Robert Scharlach head of Arthur Andersen & Co.'s firmwide entertainment-industry tax team, get expert advice. "There are a lot of people who want to do it mainly for the thrills and glamour involved," he says. "They should put the economics of the deal first, and they should find a tax attorney or a tax accountant who is knowledgeable about the field to review the transaction. There are more pictures that don't make money than do."