It depends whether it is a working interest or royalties when determining the correct way to report the income.
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 is listed in Box 1, Form 1099-NEC.
Expenses are allowed on either form (Schedule C or Schedule E).
If you believe it is royalty Income instead of a working interest then you can use Form 1099-MISC to enter in Box 2, Royalties, with the amount reported on the 1099-NEC as if it was reported on Form 1099-MISC. TurboTax takes specific form information to the tax return (Schedule E) but the only way to get the royalty income on Schedule E is to enter the amount as if it were reported on a 1099-MISC.
Entering the income reported on a 1099-MISC instead if a 1099-NEC could end up generating a letter from the IRS because the income wasn't reported on Schedule C.
You can be prepared for this easy explanation that the royalty income reported on Schedule E was incorrectly reported on Form 1099-NEC. Because it was royalties and not a working interest, it was reported correctly.
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