How can he charge tenants as "Merchant" but not have a sales tax license? 

Can he legally do this by buying a duplex as an investment property and also using it as his primary residence?

How can he be stopped as I said we dont have money to go to court or anything we are on a very fixed income here can you please advise in any way??

If he serves, and he can, he doesn't care, but it may not hold up in court.

Considering his new income level, can he still afford to rent the place?

How can he refinance into a traditional 30 year mortgage? 

But can he still get his grubby paws on the LLC?

Or can he not evict them as part of the trust and is looking to work around his limits to get them out?

If @Eric Fiedler  buys 7/8 of the interest in the property can he then bid on the property at auction with 7/8 of the proceeds going back to him and 1/8 to the PITA?

It is likely advisable to have a written agreement that addresses all sorts of possible issues that could arise in this situation including with regard to the loan and any mortgage interest deductions, splitting of expenses, splitting of profits, tax reporting, what is to happen in the event of disagreement, any rules about rehabbing such as particular types of materials to be used or types of projects (can he choose the cheapest and ugliest materials, consider that has having rehabbed it, and then takes a split of the profits still at 50%?)