I'm going to give my iMac (21" - late 2007) to my brother. So, I did a back-up and now I want to format it and create his new profile. What to do and how? I have OS.x 10.7 (Lion)

I'm going to give my iMac (21" - late 2007) to my brother. So, I did a back-up on an external disk and now I want to format it and create his new profile. What to do and how? I have OS.x 10.7 (Lion). Thanks very much for your support and help.

Welcome to Apple Support Communities
There isn't a Late 2007 21-inch iMac. I think you are referring to a Mid 2007 20-inch iMac, right?
In that case, you can't give him your iMac with OS X Lion. OS X Lion is registered to your Apple ID, and he won't be able to reinstall Lion unless you give him your Apple ID.
The best you can do is to give him the Mac with Snow Leopard installed, if you have the DVD. Follow these steps:
1. Insert the DVD and hold the C key while your computer is starting.
2. Choose your language, and go to Utilities menu (on the menu bar) > Disk Utility.
3. Choose Macintosh HD in the sidebar, go to Erase tab and erase the disk.
4. Close Disk Utility and reinstall Mac OS X. When the installation finishes, hold the mouse or trackpad to eject the disc and turn off the computer.
This is the most recommended way to do it and avoid problems. Anyway, if you insist on giving him the iMac with Lion, you just have to start in OS X Recovery (holding Comman and R keys while your computer is starting), use Disk Utility to erase Macintosh HD as described above, and finally, reinstall Lion with your Apple ID

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