Royalties - Sch E

[Hoosier]

Client received a 1099-MISC with $10k in box 2 for royalties. Client authored a technical manual. I would think that this is reported on Sch E. In some cases would royalties be reported on Sch C? Seems to me Sch E is appropriate plus it saves the self-employment taxes associated with Sch C. Any comments or thoughts?

[Donanita]

Sch E

Royality income is reported on Sch E and if income is from oil or gas production you can take a 15% depletion from the gross amt.

[thomtax]

if income is from oil or gas production you can take a 15% depletion from the gross amt.

Donanita,
Can you tell me where this info comes from so that I can study up on it a little more?

Thanks.
LT

[Joe Btfsplk]

Royalty income.

Donanita,
Can you tell me where this info comes from so that I can study up on it a little more?

Thanks.
LT

Just read the instructions for Schedule E. The only kind of oil and gas income you are likely to encounter is Working Interest Income (Schedule C) and Royalty Interest Income (Schedule E). There are other types of oil and gas income such as delay rentals, net profit interest payments, etc., but those kinds of tax returns would usually be handled by one of the big national firms.

[JON]

Michael Jackson

reports on Schedule E the royalties he receives from the Beatle songs he purchased, but royalties he is paid on his own creations are Schedule C. Both of the authors of Tax Book are performing artists, I think played with the Beatles. They will tell you.