There are not sufficient facts to address this question:
- You can't "sell" a rental and have a Section 1031 in the same transaction.
- Was the Section 1031 handled with an intermediary?
- Hopefully the answer is "yes", as if not, you have a problem
- Is the one LLC member still a member of the LLC?
- Based on the limited facts, assuming a valid Section 1031, this is only a partial exchange since the FMV of the replacement property is less than the exchanged property.
- You need to have an in-person visit with a tax professional to help you through this issue. A forum such as this is not good for these types of questions; too many facts and questions going back and forth.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
