Royalties

[Gretel]

Looked at IRS publicatons and 1099-Misc. instructions and concluded that royalty payments are taxable when payment is made not when amount is accrued.

I have a situation where payor send bulk of payments and 1099-Misc. 2nd week in 2007. Tax return was filed with info we had until then. Am I right that 1099 should have included payments only, which were actually made in 2006?

[Snaggletooth]

I think so

Gabriele, consider the requirements on the issuer of the 1099. They are specifically to report payments during the calendar year.

I believe a taxpayer in business may opt to accrue revenue and expenses, but if he is only an investor, I think he is only entitled to the cash basis. In the example you gave, if he reports the income in 2006, the IRS matching program will expect him to report this same revenue in 2007.

All of this can, of course, be explained, but who wants to put up with having to write or call the IRS and get enough attention to get the problem corrected??