Question on Step up basis for property owned by Father Son in LLC upon Death

[Justin Summers]

My father and I bought a Vacation home in Florida 7 years ago for $500k and purchased it in an LLC .. The only purpose and use for this LLC was to purchase the property.. No other business or properties owned by the LLC. We have mostly used this as a vacation home but I have been living in the house full time for the last 2 years. My father passed away last year and I would like to move into the property and have it as my homestead. To have it as a homestead it can not be in an LLC. So, I was going to transfer it to a living trust with myself as the beneficiary and trustee. House is now worth about $1,500,000.

These are my questions. 

1. I'm assuming since both my father and I owned the house there would be a stepped up basis to 1/2 of the value of the house upon his death or roughly $750k..  Correct? 

2. To qualify for a homestead exemption on the house I would have to transfer it from the LLC to my trust.. Would IRS then consider this a "sale" and I would have to pay capital gains on it?

3. I can't really afford to pay capital gains on 1/2 the value when I'm not really selling the property and getting any funds.. If I just keep the property in the LLC since the other member is dead does the LLC now become a single member LLC?

Or could I just transfer the property from the LLC to my trust for 1/2 the value ($750k) and owe no capital gains?