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Other Schedule E Income

Use Schedule E to also report certain other types of income or loss from royalties, partnerships, S corporations, estates and trusts. The total income or loss from these sources and from rental real estate is entered on line 17 of Form 1040.


What are Royalties? (definition of royalties)

Royalties are payments for the granting of a right to use certain property such as a patent or to extract natural resources such as oil, gas or minerals. If you received $10 or more in royalties in 2006, you should be sent a form 1099-MISC, Miscellaneous Income, showing the amount of royalties paid to you.

How to report royalties?

Report royalties in Part I of Schedule E. On line 4, report the royalties you received from oil, gas, or mineral properties, copyrights and patents. Enter your total royalties in the totals column. Any expenses related to royalties can be claimed on lines 5 through 21.

If you are in business as a self employed writer, inventor, artist, etc. report your royalty income and expenses on Schedule C.

Partnership and S Corporations

Estates and Trusts

The estate or trust reports its income, deductions, losses, etc. on Form 1041, US Income Tax Return for Estates and Trusts. If you are a beneficiary of the estate or trust, you distributive share of the income, deductions, credits, etc. is reported to you on Schedule K-1 (Form 1041) Beneficiary's Share of Income, Deductions, Credits, etc.

Do not confuse the income from an estate with property (including cash) that you receive as an inheritance. Inherited property is not taxable. The taxable inocme reported on Schedule K-1 is income generated by the principal of the estate before the principal is distributed to the beneficiaries.

Report your share of estate or trust income or loss in Part III of Schedule E and enter the total on line 17 of the Form 1040. Do not file Schedule K-1 with your tax return. Keep it with your tax records.



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