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Tax Shelters to Steer Clear of

To avoid trouble, stay away from these tax shelters.

By Michael Rozbruch

Opinions expressed by Entrepreneur contributors are their own.

Many entrepreneurs may not be getting sound tax advice from their financial advisors. Beware of these abusive tax shelters--no matter how a financial advisor may spin them, they're still illegal.

1. Setting up a new entity and transferring assets into it to avoiding paying income taxes: This is tax evasion. Surprisingly, business owners still buy into this advice from shady financial advisors. The most recent scheme the IRS successfully prosecuted netted almost $4 billion in settlements and involved about 750 corporate executives. The scam was sold mostly to corporate executives, who transferred their stock options to a family-controlled partnership, thereby avoiding income tax liability.

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