An Agency receives royalties on behalf of artists it represents. Should the 1099's to the artists list the full royalty received or the royalty minus commissions?

Forum|Forum|1 year ago
February 25, 2025
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"Agency A receives $1000 royalty for work by represented Artist B. It takes a $400 commission, and pays Artist B $600. Agency A reports the royalties on Form 1099-Misc and sends it to Artist B. Should the royalties reported by $1000 or $600?"

PatriciaV

Employee

Report gross royalties.

Per the IRS Instructions for Form 1099-MISC:

"The literary agent (whether or not a corporation) that receives the royalty payment on behalf of the author must report the gross amount of royalty payments to the author on Form 1099-MISC."

The agent should include supplemental information to report the commissions withheld from the actual payments to the artist.

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LLarsen1Author

Thank you. One follow-up question:

"Agency A made payments of $600 to Artist B for $1000 Royalties Received minus $400 commission.

Agency A is a C-Corp filing as an S-Corp, using Form 1120-S.

1. What income category is the $1000 royalties received by the agency reported under? These were sent to the Corporation but they are on behalf of the artist and reported under the Artists' 1099-Misc.

2. What expense category is the $600 paid to the artists reported under?"

Thanks,

Lisa