Hello:
The LLC Agreement governs how this transaction might affect income/loss allocations. In general, no change would be made prior to the change in ownership.
The transfer of interest from one individual member to his own entity (basically from him to his company), and that transfer was done in the last week of December. The LLC has small expenses to be passed through - as you mentioned - you will need a "final" K-1 for the individual and a new K-1 in that individuals company ID number and company name.
In TurboTax, report the change of ownership under Business Info >> About Your Business >> Has an Ownership Change = Yes.
Under Partner/Member Information, you will need to check the box for "This member left the company this year" for the partner who was replaced.
TurboTax will prompt you for the date of the ownership change and the profit/loss percentages after the change. Be sure the new percentages total to 100%.
TurboTax uses a weighted average based on days of ownership to allocate profit/loss to the members. Be sure you review the final allocations that are summarized on the Schedule K Reconciliation worksheet. Because the change in ownership occurred late in the year, the difference in income allocations may be less than you expected.
In summary, the purchase price is not reported on the partnership return. All partners will receive an income allocation for the year based on the days of ownership. TurboTax will report this change in ownership as required by the IRS.
Happy Wednesday.
Have an amazing day. Evelyn M (CPA 20+ years)
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