I'm sorry, as I just re-read your post and missed the rental income explanation.
You'll treat box 3 "as if" it was entered in box 2.
Note that with the TTX program, you must treat this "as if" you received two physically separate 1099-MISCS. One has the rental income reported in box 1, and the other 1099-MISC has the royalty income reported in box 2. This is the only way the program can handle it correctly so that the rental income shows up in column A of the SCH E, and the royalty income shows up in column B of the SCH E.
So you will enter the 1099-MISC twice. Once, using on the amount in box 1. Then again using only the amount in box 3, but enter that amount in box 2 in the program.
