Unfortunately, income reported in Box 3 is not Royalty Income. Mineral bonuses are one-time income. For this reason, you would enter this Form 1099-MISC under:
- Federal Taxes
- Wages & Income
- 1099-MISC and Other Common Income
- Income from Form 1099-MISC
When asked, check that this income was NOT related to a main job. Likewise, check that you received it only this year. Check that it didn't involve an intent to earn money.
This entry will result in your description and the amount in Box 3 appearing on Form 1040 Line 21 "Other Income." No Schedule E will be created.
Your legal expenses, since they relate to recovering taxable income, may be reported as Itemized Deductions on Schedule A.
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