Thanks for choosing JustAnswer.com! I will do my best to provide you with a clear and concise answer to your tax question based on the information that you have provided me.There is no problem with your parents gifting a portion of the rental property per year in order to avoid gift tax issues. Remember each one of your parents can give 14,000 dollars a year to each person. Therefore, they can give 56,000 dollars to each couple each year.You could do the LLC they way you mentioned, and the first year your parents would report their portion of the LLC on their form 1040 and the rest of the rental profits would be reported on the form 1065 for the LLC. Title should go to the gift recipients first, then the gift recipients would transfer title to the LLC.If I were planning the LLC situation out, I would probably have your parents title the property in the LLC before they start giving the rental property. Then they would simply give each of you membership shares of the rental property each year until the rental property LLC is fully distributed and then the rental property would be reported in full through the form 1065 for the LLC. However, either way would be fine.If there are additional questions, please reply to this answer so that I may assist you further. If this answers your question, please rate my performance between OK and Excellent so that I may assist you further. Thanks for your business.