If a taxpayer has a single member LLC which owns a rental property as its only asset, and has been reporting income and expenses on Schedule E (ie, for tax purposes, disregarding the LLC), what is tax consequence, if any, of terminating the LLC and distributing the rental property to the LLC owner?
None. A single-owner LLC is a disregarded entity.
(A multi-owner LLC is a partnership, unless the sole owners are husband and wife in a community-property state.)
You still have to file form 4797 for the disposition of assets. You may owe tax due to depreciation recapture. I think you have to buy the assets from yourself at FMV.
Not so. Transactions between a disregarded entity and its owner have no tax impact.
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