I say "I'll try, but let me tell you some of the risks..." Once or twice I've said it's impossible, and it's my duty to tell you that. You don't have to be nice, just not abrasive. Inform them and let them see it your way (which you are convinced of the correctness of).
Art E. Berg, The Impossible Just Takes a Little Longer wrote:
“While the difficult takes time, the impossible just takes a little longer.”
I try to frame it in terms of time and money. "How soon do you need this? Well, we're going to need this and that and it takes this and that long to do this and that. Then we have to yada, yada, yada. All this is going to cost quite a bit more and I still can't promise that you'll get it in the time frame you want it. However, if we could do something similar, except you won't have ... (and so on) "
This usually gets them thinking about different compromises they can accept.
The best ideas are the crazy ones. If you have a crazy idea and it works, it's really valuable.—Kent Beck