“Royalties are payment for use of copyrights or for the use and exhaustion of mineral properties. Royalties are taxable as ordinary income and are reported in Schedule E (Form 1040).

But if you are a self-employed author, artist, or inventor, you report royalty income and expenses on Schedule C.

Royalty income includes:

License fees received for use, manufacture, or sale of a patented article
Renting fees received from patents, copyrights, and depletable assets (such as oil wells)
Author’s royalties including advance royalties if not a loan
Royalties for musical compositions, works of art, etc. ”

No wonder I don’t do taxes anymore.

OK, fair enough. Let’s just compromise and say its for oil, gas and the possibility of one-hit wonder revenue.

Indeed a good point on the records and taking all deductions to which you’re entitled. On this front, my point on the “other expenses” is categorize all expenses where reasonably appropriate in the schedule E line items without going through the itemization necessary by throwing expenses into the “other” category.

Thanks for the good comments.

If you keep good records, don’t be afraid of ‘other’ expenses; like Mr.Crabs says: “that’s costin’ me money!!” If you don’t include these, it’s deductions you’re missing out on:

Mileage driving to and from properties (that’s BIG).
Advertising costs
Postage & office supplies
Home office expenses

Just remember to keep good records!