LLC change in owners

LLC was owned 50% each by two taxpayers. At the beginning of 2019 (January 18 2019), Partner A withdrew from the LLC. As a result, he was an owner for only 18 days in 2019.

As for the withdrawn partner's 2019 Form K-1s , can it be done with proration by allocating 18/365 of the 2019 LLC income and expenses to his K-1?

Sure, if you want to screw one of them. Someone gets screwed when you allocate instead of close the books.

Don't you have an actual termination of the partnership on 1/18/19?

Don't you have an actual termination of the partnership on 1/18/19?

He gifted his shares to his sibling. So the LLC continued to exist.

Sure, if you want to screw one of them. Someone gets screwed when you allocate instead of close the books.

All the partners are siblings. And since the period was only 18 days, I suppose proration should be very close as the business activity of the LLC stays quite constant for the whole year.

So the question is: Is preparing the K-1s by proration allowed in this situation?

You can allocate any way they agree to.....

Don't you have an actual termination of the partnership on 1/18/19?

He gifted his shares to his sibling. So the LLC continued to exist.

The LLC continued to exist only as a Disregarded Entity on Jan 19, 2019 and forward. As pointed out, the last day of the partnership was January 18, 2019.

Your tax return was due April 15th, 2019 and is now late.

You probably qualify for late penalty relief under RP 84-35. If it were me, I would file the proper 1065 as late and advise my client to forward the Late Filing Penalty notice my way to respond to and remove the penalties.
As JR notes, this is the equitable way to properly report income.

If there were 2 partners, A and B, and on 1/18/19 B gave his shares to C, I don't see a termination. I think OP confused the facts by using the word "withdrew" without explaining the gift.

If there were 2 partners, A and B, and on 1/18/19 B gave his shares to C, I don't see a termination. I think OP confused the facts by using the word "withdrew" without explaining the gift.

It was my bad as ‘withdrew’ was probably a poor choice of word. Should have made it clear from the beginning that it was a gift. The LLC still remained with 2 partners after the change though. And there was no ‘technical termination’ after 2017. So I think the LLC continued to exist.

So I think the LLC continued to exist.

Unless the LLC was dissolved with the applicable Secretary of State, of course it continued to exist regardless of what happens for federal income tax purposes.

And IRS frowns on such 'gifts'....is a 709 necessary? Or something else?

If there were 2 partners, A and B, and on 1/18/19 B gave his shares to C, I don't see a termination. I think OP confused the facts by using the word "withdrew" without explaining the gift.

It was my bad as ‘withdrew’ was probably a poor choice of word. Should have made it clear from the beginning that it was a gift. The LLC still remained with 2 partners after the change though. And there was no ‘technical termination’ after 2017. So I think the LLC continued to exist.

My interpretation was clearly incorrect.

The partnership year for the exiting partner closed when he left the partnership. Unless income is VERY consistent throughout the year, you would usually allocate the exiting partner income for only that period for which he was a partner.
However, as JR points out, they are free to allocate income during the year in almost any way to which they agree.