Last year, I was served a subpoena for any documents I might have pertaining to a patent infringement suit. I had worked for a company that no longer exist but whose assets were bought by a major pharmaceutical company. This company paid me a fee ($4800) for the time I spent finding these documents. They sent me a 1099 misc with the money reported in box 7. Do I report this as business income (Sch C) or as other income?
i would report this on a Schedule C since it was a fee for a service you performed for the pharmaceutical company. The good thing about this is you can write any expenses incurred while researching these assets.
Thanks for the answer but this is what confuses me. To be a qualified business, the activity must be a "trade or business with the intent of making a profit as well as with regularity and continuity".
I am not engaged in a business with regularity and continuity. This was a one off instance.
If it is reported as BOX 7 NONEMPLOYEE COMPENSATION, this usually means the IRS is expecting Self-Employment Tax. If you include it as Other Income, you will not be able to exclude any expenses.