Income from rental real estate schedule E says I need a separate property

Forum|Forum|11 months ago
April 8, 2025
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TT keeps saying Line 3 - 1099 misc - Income from rental real estate and income from royalties must be reported as separate properties on Schedule E. I only have the rental amount, there is no royalty so I have no idea what it is talking about.

PatriciaV

Have you reviewed your entries for Form 1099-MISC to confirm that you entered an amount only for Box 1 Rents? Be sure there isn't a zero entered in Box 3 by mistake.

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lordartAuthor

Yes, I made sure that nothing else has an entry (ie. blank, not 0).

I had to recreate it as a rental property (which it isn't, since I don't own the land, just the mineral rights), so I could enter the rental amount (which was the lease cost. I haven't received any royalties yet).

I did create the royalty version with nothing in it (because I have no royalties).

PatriciaV

Since this was a lease bonus, which is typically one-time income, you can enter Form 1099-MISC as follows:

Go to:

Federal Taxes
Wages & Income
I'll choose what I work on
Other Common Income
Income from Form 1099-MISC

Be sure you answer the questions this way:

When asked, check that this income was NOT related to a main job.
Likewise, check that you received it only this year (do not check "intend to get it in 20XX", ie: next year).
Check that it did not involve an intent to earn money.

These entries will result in your description and the amount in Box 3 appearing on Form 1040 Line 8 "Other Income."

No Schedule E is needed if you enter the income this way. But you may need to return to the Rental Properties section and delete the property that was previously created.

When you begin receiving royalty payments, you will set up a Royalty Property to report the income and any related expenses. You don't need to own the land where the minerals are extracted.

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