are these from a royalty trust or thru a k-1. in such case the royalties are portfolio income not passive. portfolio is entered on schedule E page 1.
The IRS considers royalties from oil and gas leases to be ordinary income even if the taxpayer doesn't participate in the business (thus nonpassive). Owners should get a Form 1099-MISC early in the year that details total royalties earned the year before. Royalty recipients are also entitled to take a deduction for the oil depleted during the year. Owners with a working interest in extraction operations can also deduct related business expenses such as legal, administrative, transportation costs.
