First, you must enter your 1099-MISC in Box 2 (assuming that is the box in which you is showing your royalty income). On the next screen, choose Investment income from property you own as the source of your 1099-MISC. Although you do not own the property, you have mineral rights and receive royalty income from the property rights you have inherited.
Investment Income includes amounts received from oil, gas or mineral properties when natural resources are extracted from your property. These royalties are based on units, such as barrels, tons, etc., and are paid to you by a person or company that leases the property from you.
TurboTax will then create a Schedule E on your tax return. Schedule E is the Rental and Royalties section of your return that was referred to previously. Once you enter the address of the property in which you own mineral rights, you will select Oil and Gas Income and be able to enter any expenses relevant to this income.
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