skip navigation

Search Help
Navigation Help


Main Topics
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z #


FAQs
Forms
Publications
Tax Topics


Comments
About Tax Map

previous page Previous Page: Publication 17 - Your Federal Income Tax - Repayments
next page Next Page: Publication 17 - Your Federal Income Tax - Unemployment Benefits
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pub17/p17-071.htm#en_us_publink100033078

Royalties(p87)


rule
spacer

previous topic occurrence Royalties next topic occurrence

Royalties from copyrights, patents, and oil, gas, and mineral properties are taxable as ordinary income.
You generally report royalties in Part I of Schedule E (Form 1040). However, if you hold an operating oil, gas, or mineral interest or are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040).
taxmap/pub17/p17-071.htm#en_us_publink100033079

Copyrights and patents.(p87)


rule
spacer

Copyrights and patents.

Royalties from copyrights on literary, musical, or artistic works, and similar property, or from patents on inventions, are amounts paid to you for the right to use your work over a specified period of time. Royalties generally are based on the number of units sold, such as the number of books, tickets to a performance, or machines sold.
taxmap/pub17/p17-071.htm#en_us_publink100033080

Oil, gas, and minerals.(p88)


rule
spacer

Oil, gas, and minerals.

Royalty income from oil, gas, and mineral properties is the amount you receive when natural resources are extracted from your property. The royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company who leases the property from you.
taxmap/pub17/p17-071.htm#en_us_publink100033081

Depletion.(p88)
spacer

If you are the owner of an economic interest in mineral deposits or oil and gas wells, you can recover your investment through the depletion allowance. For information on this subject, see chapter 9 of Publication 535.
taxmap/pub17/p17-071.htm#en_us_publink100033082

Coal and iron ore.(p88)
spacer

Under certain circumstances, you can treat amounts you receive from the disposal of coal and iron ore as payments from the sale of a capital asset, rather than as royalty income. For information about gain or loss from the sale of coal and iron ore, see Publication 544.
taxmap/pub17/p17-071.htm#en_us_publink100033083

Sale of property interest.(p88)
spacer

If you sell your complete interest in oil, gas, or mineral rights, the amount you receive is considered payment for the sale of section 1231 property, not royalty income. Under certain circumstances, the sale is subject to capital gain or loss treatment on Schedule D (Form 1040). For more information on selling section 1231 property, see chapter 3 of Publication 544.
If you retain a royalty, an overriding royalty, or a net profit interest in a mineral property for the life of the property, you have made a lease or a sublease, and any cash you receive for the assignment of other interests in the property is ordinary income subject to a depletion allowance.
taxmap/pub17/p17-071.htm#en_us_publink100033084

Part of future production sold.(p88)
spacer

If you own mineral property but sell part of the future production, you generally treat the money you receive from the buyer at the time of the sale as a loan from the buyer. Do not include it in your income or take depletion based on it.
When production begins, you include all the proceeds in your income, deduct all the production expenses, and deduct depletion from that amount to arrive at your taxable income from the property.
previous pagePrevious Page: Publication 17 - Your Federal Income Tax - Repayments
next pageNext Page: Publication 17 - Your Federal Income Tax - Unemployment Benefits
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication