Can the difference between the royalties on 1099 misc and the net income received be listed as an expense on Schedule E?

Yes - the difference between the royalties on 1099-MISC and the net income received can be listed as an expense on Schedule E, as long as the expenses were connected with the royalty.

To enter the royalty and expenses, please follow these steps:

1. Click on Federal  > Wages & Income 
2. Scroll down to the Rentals, Royalties, and Farm section and click on the Start/Revisit box next to Rental Properties and Royalties (Sch E).  
3. On the Income from Rentals or Royalty Property You Own screen click Yes.
4. If you have already started adding information about your royalty, you will come to the Rental and Royalty Summary screen.  Click the Edit box next to the royalty.  Or you can click on the link Add Another Rental or Royalty.  
5. If you haven't entered any rental or royalty information you will see the screen, Is This a Rental Property or Royalty?  Be sure to mark the radio button next to Royalty property or payment.  Continue through the screens, entering the requested information, until you reach Review Your [XX] Royalty Summary. 
6. On the screen, Review Your [XX] Royalty Summary, click on the Start/Update box next to Expenses. 
7. You can enter the expenses on the next screen, Enter Common Expenses.