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I put them on Schedule C.
IF there's a F 1099 showing them as *royalties* , I also run them in/out so the IRS can do their matchy matchy thing.
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Sounds like they and the royalties might belong on schedule C.
Slava Ukraini!
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You will need to set up a Schedule C for the author to record any expenses. You will then link the 1099-MISC royalties to the Schedule C by clicking in the Schedule C box on the 1099-MISC worksheet.
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I think a phantom Schedule E like that will increase the chances of an audit:
1) Higher positive income before deductions.
2) Schedule E expenses extraordinarily high compared to revenue.
Hundreds of publishers issue thousands of 1099s to authors or their agents, showing royalty income in Box 2. Has anyone ever seen a CP-2000 asking for a Schedule E, when it's reported on Schedule C? What writers do, is write. I think if it happened, someone would have written about it.
I would think twice about preparing an extra form (do you charge for it?) without advising the client that it might inspire more questions from IRS, than it prevents.
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"What writers do, is write."
But first, they travel the world, taking all the cost as expense, without any income, while it takes them 3-10 years to get that book to the publisher.
This question is a bit vague. It could be work in progress, not Expense. The timing matters.
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