Deceased Royalties

[Gregory Chilcote]

I'm working with a client whose spouse passed
away 2 years ago. Deceased spouse received
royalties for copyrighted material. When spouse
was alive we reported the royalties on Sch C and
paid self-employment taxes. Now I'm not sure of
where to report the royalties from deceased
spouse and whether they are still subject to SE
tax.

After spouse's death my client formed a living
trust in deceased spouse's name and has been
depositing royalties into the trust's bank
account.

My research points to reporting on Spouse's
1040 Sch C and pay SE taxes. But I've found
some contradicting material as well.

Where do I report these royalties? I appreciate
any help or directions on how to treat this
income.

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[Arthur Rubin]

Looks to me as if it schedule E (Royalties), rather than schedule C.

>From the instructions for 1040 Schedule E, line 4:

>Report on line 4 royalties from oil, gas,
>or mineral properties (not including op-
>erating interests); copyrights; and pat-
>ents.

...

>If you are in business as a self-em-
>ployed writer, inventor, artist, etc., re-
>port your royalty income and expenses
>on Schedule C or C-EZ.

Your client is not a "self-employed writer"; the deceased spouse
probably was.

--
Arthur Rubin
CRTP, AFSP in Brea, CA