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"And there's the unreported gifting! If Reid paid tax bills on property in which he had no legal interest, he was GIFTING the money to the true owner (the LLC?)! And he would have been required to file Federal Gift Tax Returns for each such gift. Which I presume he did not?"

You presume he didn't? Why? Everything points to this being a basic business deal and it states he's paid his taxes. Now you want to stretch it to maybe he didn't declare a gift? Since when do you gift to a corporation? You invest in corporations and you 'gift' to individuals, trusts, etc. There's a lot or room for me to be wrong here so please enlighten me if you think otherwise.

I "presumed" with a "?" . . .

But if Reid paid property taxes for an entity (donee) in which he had no legal interest and he didn't file Federal Gift Tax Returns documenting those payments, I think he's in trouble with the IRS...

He also has a gift tax problem if he sold the property to the LLC for less than fair market value and didn't file Federal Gift Tax Returns reflecting that gratuitous discount...

From the Instructions for IRS Form 709 (Gift Tax Return):

Generally, the federal gift tax applies to any transfer by gift of real or personal property, whether tangible or intangible, that you made directly or indirectly, in trust, or by any other means to a donee.

The gift tax applies not only to the gratuitous transfer of any kind of property, but also to sales or exchanges, not made in the ordinary course of business, where money or money's worth is exchanged but the value of the money (or property) or money's worth received is less than the value of what is sold or exchanged. The gift tax is in addition to any other tax, such as federal income tax, paid or due on the transfer...

The gift tax may also apply to the forgiveness of a debt, to interest-free or below market interest rate loans...