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How do I report income from Form 1099-MISC, box 2?

Box 2 of Form 1099-MISC shows income from royalties. You’re paid royalties for:

  • The right to use your work over a specified period of time
  • Extracting natural resources from your property

Some royalties are taxed as ordinary property, including royalties from:

  • Copyrights
  • Patents
  • Oil, gas, and mineral properties

Report most royalties on Schedule E, Part I. However, report income, royalties, and expenses on Schedule C or Schedule C-EZ if you either:

  • Hold an operating oil, gas, or mineral interest (working interest)
  • Are business as a self-employed writer, inventor, artist, or other creative professional

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