Hate to brake it to you but two things in life are an absolute certainty: 1) death at some point and 2) paying taxes.You can only defer the payment of taxes (assuming you have exhausted all means of reducing the taxable income/gain as much as legally possible).You say you "have been reading up" on this.

There is no question that this property will be passed on to my wife or her brother, but that might be another 15 or 20 years....and I'd imagine it would make more sense for my father in-law to sell his property to his heirs over time than let it go through his estate as a taxable item.

While I can't speak to FL taxes on real property transfers, I'm willing to guess that it's unlikely to create a taxable event at the state level.  

Also excluded from unrelated business taxable income are gains or losses from the sale, exchange, or other disposition of property other than: Stock in trade or other property of a kind that would properly be includable in inventory if on hand at the close of the tax year,Property held primarily for sale to customers in the ordinary course of a trade or business, The last part feels like interpretive case-by-case basis.

If you die ten years from now, the federal estate tax exemption will be whatever amount is in effect in the year of your death -- and may be higher or lower than $5.25 million.If the value of a gift to any individual exceeds $14000 (this year), the excess is taxable and reported to the IRS on the giver's personal tax return.

@Sarah Jones taxable income is the rent you collect less all your expenses.

The distributions are still considered taxable, but the 10% penalty for early distribution is waived.You can also take a distribution from an IRA for the purpose of purchasing a primary residence and have the 10% penalty waived.  

Your principal pay down is taxable profit (not a deduction).

...or is it charged to the CEO as a taxable event?

That depends on what your taxable income is for the year.