If you are an independent contractor or self-employed in a business related to a working interest in the oil or gas, you must report the royalty income on Schedule C instead of Schedule E and generally will be subject to self-employment tax. If your royalty is a working interest, the income should be listed in Box 7 of the 1099-MISC form.
Unless you are the owner of a large oil and gas corporation, your oil and gas income is generally from a royalty, which is a percentage of the total income that you receive when resources are extracted from your property or from a mineral right in which you own an interest. - report on schedule E - not subject to self-employment taxes. you may or may not get a 1099. for example, you can buy an interest in a royalty trust that's traded on a stock exchange. they may not issue a 1099 bu instead a report enabling you to compute income expenses including depletion.
