What you choose determines if it is part of your personal return (Sole Proprietorship) or if you need to file a separate return anything else.If you choose a sole proprietorship the LLC can be treated as a disregarded entity.

The process @Chris T. is referring to is creating a "disregarded entity" - an LLC that chooses to be taxed as a sole proprietor. 

Disregard.

@Timothy KeyIf it is a single member LLC, by default it is considered a disregarded entityIf is it a multi-member LLC, by default it is taxed as a partnership.Speak with your accountant to see if you want it taxed as a corporation.Again speak with your accountant to see if makes sense to make the election to be taxed as an C-corporation.

Sorry, and please disregard

If the property was used other than as a residence, aka a rental, you don't get the full exclusion and must prorate it.Finally, there is an exception: if you moved out and never moved back in, then Step 2 is disregarded.

Some people think that if they have a single member LLC that the LLC and themself are one and the same because the IRS says its a disregarded entity. 

There comes a time if you own many houses, that owning them through a LLC might help mitigate legal risk.LLC can either be disregarded for tax purpose, which means that in general you will elect to file for tax and get taxed on net income as US persons are (with minor differences on exemptions/deductions).

@Jeffrey McKee,Reading your post, reminds me of a tenant we just got rid of-- I call them "Laura Lawyers" because they think they are much smarter, and will read the fine print to their advantage and disregard all the good things you did-- ie: not charging to break a lease.         

Hi @Alex Castillo, This means that the LLC is not a single member LLC or disregarded entity for tax purposes.