I have a situation where a new partnership was formed in 2020. Two partners in the partnership contributed each 2% in cash, but received an additional 2% share each at formation for "services rendered" (total share of 4% + 4% = 8%) . This diluted the other 3 partners who contributed only cash at formation. The other 3 partners who only contributed cash contributed 96% of the cash, but only received a 92% share of the partnership interests.
QUESTION: Is the above scenario one that capital account revaluations? Would it require reporting of Partner’s Share of Net Unrecognized Section 704(c) Gain or (Loss) on the 2020 1065 K-1?