Royalties and QBI

[kathyc2]

Client inherited mineral rights in WY. 2018 royalties were 50K. He doesn't do anything with it other than collect checks. I say no QBI, but wanted to check if I was missing something.

[Lion]

Royalties, K-1, Sch E, no. Working G&O on a 1099-MISC, maybe yes.

[Maribeth]

1099-Misc, Box 2, Royalties - No. 1099-Misc, Box 7, Nonemployee compensation - Yes ???????

[Kram BergGold]

I have seen multiple articles saying royalties from oil and gas are not eligible for QBI.

[Lion]

Royalties - No. Working interest on Sch C - Yes/Maybe.

[ATSMAN]

Most of the K-1s that have QBI eligible income will supply a worksheet showing the sources of income and the shareholder's interest ratio and the shareholder's amounts. I just did 2 K-1s this year and both had that nice worksheet.

[kathyc2]

Royalties are on 1099-misc forms. I've pretty much decided to not claim it this year, and if different guidance comes out I'll amend next year.

[Burke]

Royalties are on 1099-misc forms. I've pretty much decided to not claim it this year, and if different guidance comes out I'll amend next year.

I think it all boils down to whether the royalties are generated by the TP's business activities or not. If they are directly related to the TP's trade or business, they go on the business return(s). If the royalties are generated by other activities such as investments, and other pursuits which do not relate to TP's business activities, such as the publication of a book for someone who is a one-time author of fiction, for instance, they go to Sche E.