Originally posted by @Steve Babiak:An entity can never take advantage of the IRS Section 121 exclusion on capital gains.  ...except for eligible single-owner, disregarded entities (like a single-member LLC).

If the LLC is a single member LLC, the IRS considers it a "disregarded entity" for tax purposes, and so it's return is just a part of the single member's personal return.

It sounds as though LLC 2 will be treated as a single member limited liability company that is 100% owned by LLC 1 and therefore a disregarded entity to income tax reporting purposes.

@Rayanna Scott,It is as easy as buying a ticket at the gate, disregarding where your ticket is and heading to the .390 bar on the 3rd base line in the outfield.

If by historic you mean "old" then you can disregard this.  

if you don't know what i mean, just disregard...

If you are going to be the only member of the LLC, then you will have a SMLLC (single member LLC) and it will be disregarded for federal tax purposes and that means that you will not file a 1065, but include it on your Sched C/E (just like if you owned it in your own name).

The LLC is disregarded as I am the only member when it comes to my taxes so my rental incomes/losses are just reported via Schedule E.I forget all of the reasons why but when I looked into this initially 3 years ago the best strategy was S-Corp for shortterm, LLC for holds.BMR

see post
http://forums.biggerpockets.com/viewtopic.php?p=40644&highlight=#40644
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My response: Yhey will be out on Wednesday, so please disregard the smell...Thanks for the input everyone!