Which of the following statements is true with regard to the reporting of royalty income?
A)It must be reported on Schedule C only
B)It must be reported on Schedule E only
C)It can be reported on Schedule C but generally on Schedule E
D)Royalty income reported on Schedule E is subject to self-employment tax

Question

Quizplus · Accepted Answer

Royalty income can be reported on Schedule C, but it should generally be reported on Schedule E. This is because royalty income is generally considered to be passive income and should be reported as such. Schedule E is specifically designed for reporting passive income such as rental income and royalties. Additionally, royalty income reported on Schedule E is not subject to self-employment tax like it would be if reported on Schedule C as business income.

Which of the Following Statements Is True with Regard to the Reporting