The steps you outlined are good. There is one thing that you could do differently in the reporting of the royalty income. Instead of entering the income as if it had been received on Form 1099-MISC, simply enter it as 'other income' not reported on Form 1099-MISC. This may prevent the letter from the IRS since the amount will match the Form 1099-NEC.
All of the other steps are on the right track.
@MrZeppo92
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