Solved

Royalty Income from land owned by Trust

Forum|Forum|3 years ago
February 27, 2023
1 reply
0 views

How do I report income from 1099-MISC for royalty income (all of $20) from land owned by a Trust?

We own a share in the Trust and it's not a business we own.

Trying to enter 1099-MISC but don't know how to answer Turbo Tax question about property I own or business I own. Neither of which seems to apply here and there is no other option to choose.

Not sure how / where to report this income.

Any guidance or help would be appreciated.

Thanks!

TurboTax Home & Biz Windows

Best answer by PattiF

First, you must enter your 1099-MISC in Box 2 (assuming that is the box in which you are showing your royalty income). On the next screen, choose Investment income from property you own as the source of your 1099-MISC. Although you do not own the property, you have mineral rights and receive royalty income from the property rights you have inherited.

Investment Income includes amounts received from oil, gas or mineral properties when natural resources are extracted from your property. These royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you.

TurboTax will then create a Schedule E on your tax return. Schedule E is the Rental and Royalties section of your return that was referred to previously. Once you enter the address of the property in which you own mineral rights, you will select Oil and Gas Income and be able to enter any expenses relevant to this income.

@bunny0209

SantinoD

With your return open, search for 1099-MISC and select the Jump to link in the search results.

When you enter your 1099-MISC, enter the income in Box 2 - Royalties. On the following screen, choose the source of your royalty income:

Investment income from property you own – This includes natural resources extracted from your property by a third party who leases your property, as well as royalties from intellectual property that you didn't create yourself. This gets reported on Schedule E
Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C) – This includes income from natural resources that you extract from your property as well as royalty payments from the intellectual property you created as an inventor, writer, artist, and so forth. This gets reported on Schedule C

Once you've selected the proper classification, follow the onscreen instructions.

When you get to this section, make sure this box is selected and on the next screen enter your percentage of ownership:

As you go through the questions, it will ask about expenses related to your income. If there were no expenses, you don't have to select anything there.

For the question "Is this Qualified Business Income" you can select "no".

B

bunny0209Author

Thank you for your response! The question is which one to I select below as I don't directly own the property and I don't own the business. The Trust owns the property of which I own a small share (kind of like owning a stock in a company). So am not sure which classification below is correct to select as there is no other options to get past the below question. Thank you again for your assistance with this!

When you enter your 1099-MISC, enter the income in Box 2 - Royalties. On the following screen, choose the source of your royalty income:

Investment income from property you own – This includes natural resources extracted from your property by a third party who leases your property, as well as royalties from intellectual property that you didn't create yourself. This gets reported on Schedule E
Royalty income from your business, including artist royalties or operating a natural resources business (Schedule C) – This includes income from natural resources that you extract from your property as well as royalty payments from the intellectual property you created as an inventor, writer, artist, and so forth.

P

PattiFAnswer

First, you must enter your 1099-MISC in Box 2 (assuming that is the box in which you are showing your royalty income). On the next screen, choose Investment income from property you own as the source of your 1099-MISC. Although you do not own the property, you have mineral rights and receive royalty income from the property rights you have inherited.

Investment Income includes amounts received from oil, gas or mineral properties when natural resources are extracted from your property. These royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you.

TurboTax will then create a Schedule E on your tax return. Schedule E is the Rental and Royalties section of your return that was referred to previously. Once you enter the address of the property in which you own mineral rights, you will select Oil and Gas Income and be able to enter any expenses relevant to this income.

@bunny0209

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"