It's taxed in both. While the royalties are not "California-sourced" income as such, California is allowed to tax all of your income because it is your resident state. You won't be able to remove the income from the California return. However, to limit the effect of double-taxation, you will receive a credit on your California return for the taxes you pay to Oklahoma on this same income. But the royalties will be included in California taxable income, because you live there.
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