If I cant convert the basis and am going to have to pay tax then I want to sell within 3 years to claim the 2/5 rule.

I suggest before anyone make a claim that has the potential to keep someone from getting started that you know of which you speak and probably have some experience. 

After completing a worksheet at one of the big tax sites, it was suggested I claim 10. 

They'll claim you  should have known it couldn't be cleaned, or that the cleaning was sufficient enough because it was done by a pro and therefore the carpet didn't need replaced.I'd rather charge for the replacement and have them say it could have been just cleaned.

My dad makes about 45k he claims for his work.His current interest rate is 5.5 percent.

How much did they claim you originally owe and how much did they settle for?

I have talked many potential buyers out of buying here just because they were not ready or had unrealistic expectations.  

My problem is I did not claim enough money (I'm a server) last year.

The ideal scenario based on your situation is to secure it with financing in your name and then do a quit claim deed into the llc.

By far the best advice here would be to seek legal counsel for inheritance claims in California.