Question

How do I report royalties reported on a 1099-MISC tax form as capital gains? I know this is an unusual situation.

Forum|Forum|3 years ago
April 12, 2022
1 reply
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How should I report sale of a patent that is not controlled by myself but I did get royalties reported in 1099-MISC?

TurboTax Premier Online

In Wages and Income, scroll down to Rental and Royalty. Enter your 1099-MISC as a royalty.

A royalty property is a right to income from natural resources like oil, gas, or mineral properties.

This might also include royalty payments you'd get from copyrights and patents, but only if you are not in the business of creating such works. An example of this might be a patent you purchased in order to collect fees by licensing the patent.

If you regularly create intellectual property such as a copyright or patent (for example, you're a professional author), you should report income from this self-created property as Business Income, not as investment royalties.

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PFOSBRE

My client develops patents in the normal course of business and spends a significant amount of money on research and development and patent applications. The useful life of a patent is 20 years. How do I determine if the client is entitled to any patent income. They license the technology that is developed from the patents and the company holds and maintains the patents and can sue if there is any patent infringement. The only source of income that I see is from the license of the technology. If an exclusive license is granted what does this mean in terms of future license sales from a federal and state income tax perspective. My client has not received a 1099S for the receipt of $19,000 in license income.