A combination of both situations will apply in the creation of the "tax reporting documents" for the multi- and single-member LLC's members for their individual income tax return(s). The LLC could have two partial tax years if it is operated part of the tax year as a multi-member LLC and part of the tax year as a single member LLC.
Schedule K1s will need to be issued to both multi-member LLC members by the LLC to report the income and expenses for the multi-member LLC's tax year before its termination (as long as it did not previously make the election to be taxed as a corporation). A multi-member LLC, in this case is taxed "as a partnership" on Form 1065 generating k-1s for each member. The Schedule K-1s should be included on their individual income tax returns on page 2 of Schedule E.
How to handle multi-member LLC termination to a single member LLC entity.
As long as the single-member LLC owner has not made the election with IRS to be taxed as a corporation, then Schedule C of the individual income tax return of the single member LLC owner will be used to report the income and expenses for the portion of the tax year after its creation. Form 1099-NEC is not required to be used in this situation because as a single owner of the newly created LLC, the owner is considered a sole-proprietor for income tax reporting purposes.
