Thank you for this thread. I'm trying to follow the suggestions but my situation is a little more complicated... the university who gave me the royalty money for patent income put it in box 3 instead of box 2 (as with other users on this thread) AND bundled the money with an honorarium that i received from them in the same tax year for a separate activity. Hence Box 3 includes both honorarium and patent royalties (which can be treated as capital gains). My understanding is that the honorarium should be treated as self-employment income (? - please correct if wrong); therefore, after entering my 1099, i'm not sure if I should STILL say "NO" to the three questions about "do one of these uncommon situations apply" to force it to treat the whole sum as ordinary income. How can I apply the strategy to use a negative entry to reconcile the income as sec 1235 income, while still keeping the honorarium as proper SE income?
