Conveying townhome into a multi-member LLC

[Chris Loy]

My parents own a townhome as joint tenants. However, they want to transfer it to a separate entity (likely an LLC) for protection against liabilities and to start growing their portfolio.

I *believe* that the IRS doesn't treat a single member LLC different from an individual; however, will my parents have a taxable event if they remain members of the LLC (and while I am a managing member but did not previously own the property)?