I entered 100k as 1099-MISC box 3. That created a Sch E so that's all correct and up and up.
However, royalties from long term IP (university owns old IP and started give some quarterly royalties as those have started to be generated from some licensing) have been (successfully) argued that they can be entered as capital gains, e.g. https://www.colorado.edu/venturepartners/sites/default/files/attached-files/2003pwcupdate.pdf
Also, INITUIT TurboTax has a thread on how to handle this:
https://ttlc.intuit.com/community/taxes/discussion/how-do-i-report-patent-income-as-a-capital-gain-w...
I followed that of course. The point is it didn't work. I noted the baseline of my taxes before entering any of the royalties on the 1099-MISC. Call that baseline taxes. Then, as I entered $100k as 1099-MISC box 3, I watched how much the taxes go up (by about ~$40.5k) and noted that (it also properly created Sch E). Then I entered as "Other income" the same amount but as a negative number i.e. -100k), but the taxes did NOT fully return back to baseline (about $4k of the $40.5k rise remained outstanding). In order to get them to return fully back to baseline, I would need to enter -$101,808 to offset the $100,000 in as 1099-MISC in box 3. If, alternatively, I redo the whole thing pretending it was a 1099-DIV and enter $100k there and -$100k as "Other income", it works and they cancel perfectly. Not sure why 1099-MISC box 3 is taxed differently.
(To complete the picture for you when I do the above, I get in Sch 1 a $100k on line 5, -$100k on lines 8z and 9, and $0 on line 10, and I get in Sch E a $100k on lines 4, 21, 23b, 24, and 26)
So, the gist is I need to enter 1099-MISC because it was issued so I need it entered in and have a Sch E generated. Then I need to cancel it out by an equal but negative amount under other income and explain that royalties are to be entered as capital gains in accordance with precedent and as per to Sec 1235. By the way, when entered as capital gains, the 100k only generate a tax rise of ~$21.5k. That's MUCH better than the ~$41k tax rise from entering as 1099-MISC box 3.
