What are the best strategies to get benefits from both programs?
It's possible but quite complicated and does not lend itself to ready explanation in one paragraph. The optimal way to do it would appear to be setting up a C corporation that is both QSB and QOF, especially prior to Dec. 31, 2021. But there are way more details and nuances to it than that.
There are a few alternatives for combining Qualified Small Business Stock with Opportunity Zones. An investor can invest directly into a C corporation that will be both a qualified small business and a qualified opportunity fund. Alternatively, the investor can invest into a partnership, which will be a qualified opportunity fund and hold an interest in a C corporation that will be the qualified small business and a qualified opportunity zone business. Either structure should give the investor the ability to defer/exclude invested gain under the opportunity zone rules and exclude future appreciation from a disposition of the qualified small business stock after five years, under Code Section 1202. The structures can also have a "belt and suspenders" benefit, in a case where the entities fall out of compliance with one regime but not the other.
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