Question

Reporting income from the sale of intellectual property

Forum|Forum|3 years ago
February 27, 2023
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As a research and development employee of a major university I was granted the right to participate in the distribution of profits from the commercialization sale of intellectual property for which I was designated a "creator." One such property was sold in 2014 and in 2022 I received a distribution of the proceeds of the sale. The amount of the distribution was reported to me as "Royalties" on a 1099-MISC form for 2022. The income reporting categories provided by TurboTax seem to be limited to requiring the completion of Schedule C or E, neither of which seems to be suitable. I'm looking for additional advice about this.

J

JulieS

Yes, Schedule E is where you report your royalty income and any expenses you have that are associated with it.

This is where to start:

Select Federal from the left side menu.
Select Wages & Income.
Scroll down and look for Other Common Income, expand the section.
Click Start or Revisit to the right of Form 1099 Miscellaneous.
Answer the first question Yes.
Enter the information from your 1099-MISC.
On the screen Source of 1099-MISC Income, select the first option, Investment income from property you own.
Continue, then enter a description and location. Your description can be "Intellectual property" and the location would be your employer's location.

If you have associated expenses, you can add them in the Rentals and Royalties section.

Select Federal from the left side menu.
Select Wages & Income.
Scroll down and look for Rental Properties and Royalties (Sch E)
Click Review on the right.
Click Edit to the right of your 1099-MISC entry.
Choose none of these apply and click Continue.
Royalty should already be selected, click Continue.
Fill in any missing information.
On the screen, What type of royalty income is Intellectual property? choose Other intangible.
Answer the remaining questions in the section.