Thanks to the economic challenges catalyzed by the pandemic, a new hybrid opportunity zone investment model has emerged. The new structure combines opportunity zone investment with the exclusion from capital gains for the sale of qualified small business stock after reaching a five-year hold, according to Phil Jelsma, a partner at Crosbie Gliner Schiffman Southard & Swanson.

"This new form of investing is related to the fact that tax planners are beginning to link two disparate sections or areas of the law together and realizing that they can work in conjunction with each other to achieve a different or more favorable result," Jelsma tells GlobeSt.com.

This new model is a new perspective on the structure of the opportunity zone fund as well as the hold period. "Typically, most opportunity zone investments are structured as LLCs or partnerships so the tax attributes of income or loss are passed through to the investors," says Jelsma. "Further, most opportunity zone investments have a 10‑year investment horizon, which is often too long for venture capitalists. This new structure goes another direction by having a qualified opportunity zone fund invest in C corporations. These are taxable corporations who pay their own liability and don't pass tax attributes out to the investors."