The stepped up basis is the amount all seven of you get to claim as basis coming out of the estate. This is before you put the property into your LLC, or rather, at the time you receive the property.
If all seven of you then received an equal interest, I would say you are running into gift tax issues by giving that amount to one sibling and dividing the remainder amongst the six. Contact your local professional and run this information by him/her. Please, trust me on this.
The 1099-S reports gross proceeds for the sale of real estate, yes. The problem is that this is not a sale, at least not with respect to putting the property into an LLC. On Schedule D, if you did get a 1099-S under these circumstances, your basis would equal your proceeds as I explained above, your gain would be $0, and there would be nothing to tax.
This is a transfer between the one and six siblings. I believe the six siblings are paying the one sibling the money, plus letting the one get away with additional acres, correct? That's why I'm saying it's a gift...
If I'm mistaken about the wording, and the one sibling is paying the six siblings for additional acres, then each of the six will get a 1099-S for the acres purchased by the one. This is actually a sale then, yes, and is taxable.