Yes the client looked at it.  He's the one who questioned me.  And rightfully so.  If I contribute X a non-tax person thinks it should show X on the K-1.

K-1 capital accounts are not changed to FMV each year.  They are prepared based upon cost, unless there is a step up or step down in value with a 704/754 situation.  And yes, I understand inside and outside basis.

But I've never heard of "theoretical liquidating value" as being the basis.  Effective 2020, capital accounts on K-1 have to be presented using the tax basis. 

And yes, we did ask the partnership.  That's when we were told of this "theoretical liquidating value".

Thank you anyways.