Cash In Lieu of Fractional Shares
Eric Polk asked,
Our investment club received a fraction share payment of cash when a stock splitted that we owned. I am confused about if that payment amount is recorded as a dividend payment or is it a net short term capital gain. If it is a net short term capital gain would I file that in form schedule 1065 schedule K on line 4e. 
Cash in lieu of fractional shares should be thought of as two transactions rolled into one.    It should be treated as though you actually received the fractional shares and then immediately sold them.   Therefore, any gain or loss related to the sale of these fractional shares should be reported as such on line 4(d) or line 4(e) of Form 1065 Schedule K, as appropriate for the holding period of the applicable fractional shares sold.
Jerry Dressel
St.Louis, Missouri