royalties & self-employment tax - Posted by wysiwyg

Posted by Dave Murray, Ohio CPA on August 04, 2003 at 09:54:16:

I am not familiar with the exact situation you are questioning. I do work with authors and also those who have licensed others’ works but in all cases an outside publisher is printing and selling the inventory. Frankly I don’t know how you’d treat it if you are doing both. Sorry.

royalties & self-employment tax - Posted by wysiwyg

Posted by wysiwyg on July 29, 2003 at 03:54:33:

If you receive royalties for active creative work (wrote a book, took a photograph) those royalties are reported on Schedule C. If you license somebody else’s creative work, those royalties are reported on Schedule E. Is this correct?

If I license a work and resell it (as a book, CD, whatever) is all the net profit considered a royalty, or is the profit part royalty (Schedule E) and part sale of inventory (Schedule C)?

Re: royalties & self-employment tax - Posted by Dave Murray, Ohio CPA

Posted by Dave Murray, Ohio CPA on August 01, 2003 at 15:29:20:

I believe your first statement is incorrect. Only Royalties from owning but not operating oil & gas producing properties are what’s reported on Schedule E. Income from royalties from licensing someone else’s creative work is reported on Schedule C.

Re: royalties & self-employment tax - Posted by wysiwyg

Posted by wysiwyg on July 29, 2003 at 07:27:48:

I realized the last question is non-sensical, in that the profit wouldn’t be part X, part Y, but all X or all Y. In any case, it’s basically a question about how licensees are taxed if what they license is embedded in a good for sale.

Re: royalties & self-employment tax - Posted by wysiwyg

Posted by wysiwyg on August 01, 2003 at 16:58:41:

Doesn’t an active/passive distinction apply here? Owning an oil & gas property is passive, operating it is not. Licensing one’s own creative work is considered self-employment, licensing another’s creative work is not.