Schedule C or E

[Gabriel11]

I have multiple 1099-Misc I receive from the oil/gas operators from a result of this work. I was not sure if I should put all these 1099-Misc on a Schedule E and add a QBI, or if I should do this on a Schedule C. I am also having a hard time understanding if I would qualify for a QBI (my income levels allow this, but it’s more of the work I do, that I want to be sure I am allowed to claim this). 

[ColeenD3 · Accepted solution]

You should enter your income on Schedule C. You are in the business of finding heirs. Yes, you should qualify for QBI, on the face of things.

The fact that your payment is in the form of certain rights is irrelevant.  Per Pub 525, you can receive income in the form of money, property, or services. In most cases, if you receive property for your services, you must include its FMV in your income in the year you receive the property. 

Transferable property.

Property is transferable if you can sell, assign, or pledge your interest in the property to any person.

The working interest would be reported on a Schedule C for the gross receipts, expenses and depletion. The taxpayer will receive the gross receipts (including lease and bonus payments) on Form 1099-MISC, Box 7, Nonemployee Compensation. This will be reported on Schedule C, along with the expenses directly related and indirectly related. These include overhead, dry hole, legal and administrative, taxes, and other operating expenses.

While working interest would not be subject to the Net Investment Income surtax, it would be subject to the self-employment tax (Social Security and Medicare) reported on Schedule SE.

Schedule C 

[Edited 3/20/2021|10:46 AM EST]