So, you have a Trust which is a member of an LLC and holds interests in real property. Does a distribution of trust LLC interests terminate the LLC and trigger a deemed sale capital gain. If the Trust has a fractional share formula clauses (equal distributions), there is no capital gain on the distributions even if one person gets land and another gets the partnership interest. So, if you are a Trustee wrapping up a trust and run into this situation, you may be able to make people happy and not trigger bad tax results.