Confusing Scenario (Business vs Passive Income)

Forum|Forum|2 years ago
February 18, 2024
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I have a bit of a complicated business and I'm trying to figure out the correct way to file. I work with a small group of individuals, and we do research on missing royalty and gas owners. We sometimes partner with them to fix their title issues, and sometimes we purchase this interest. The initial part of this is an investment and takes capital to complete. Once this is done, we normally receive a check for money that has been sitting getting collected, and then moving forward a royalty month by month (depending on production of minerals).

I receive a lot of 1099-MISC from the producers of the minerals. Some of these are deals we have done years back, and are completely passive income. Others are ones we completed last year, that has business expenses. Those business expenses, I want to be sure I am deducting for correctly.

Is it appropriate to add the 1099-MISC that were business deals done for 2023 to my Self-employment income, and then the 1099-MISC that happened in the previous years to passive income section where most 1099-MISC go?

TurboTax Self Employed Online

PatriciaV

Employee

Yes, you may report income from Forms 1099-MISC under whatever topic is appropriate. We recommend skipping the 1099-MISC topic entirely in situations like yours. Go directly to the business (Sch C) or royalty property (Sch E) and enter the income there.

As long as you report at least as much income as was reported to you on Form 1099-MISC, you have satisfied the IRS reporting requirements. Be sure to keep your calculations for the income you report in case there are questions in the future.

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