1099-MISC for Royalties

[AB107]

I received a 1099-MISC from Fidelity Investments for Royalties I received (from Mesabi Trust). I tried entering this info under MISC-1099 section under Other Common Income. I then next selected “Investment income from property you own” but not sure if this was the correct selection? Then TurboTax said this would require a Schedule D because “I sold investments.” I personally did not sell any of my stocks so why is it saying this? Did I enter the info in wrong section or make wrong selection?

Thank you!

[AliciaP1]

Yes, you entered the 1099-MISC in the wrong section.  You will need to delete it and re-enter it in the Rentals, Royalties and Farm section.

To delete a specific form in TurboTax Online you can follow these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click on Delete a Form. 
4. Scroll down to your form and click Delete.
5. Under Federal in the black menu bar click Wages & Income to get back into your tax returns.

To enter your Royalties reported on 1099-MISC you can follow these steps:

1. Under Federal in the black menu bar click Wages & Income
2. Scroll down to Rentals, Royalties, and Farm and click the dropdown arrow
3. Click Start for Rental Properties and Royalties (Sch E)
4. Enter the information about your Royalties on the screens after the rental property questions

[AB107]

Ok, thank you. I was able to enter that in the correct section, including the info from the 1099-MISC.

From the information I was provided through Fidelity on Mesabi Trust, it looks like I may claim a deduction for depletion. On the first page of depletion section, it says “Enter your depletion information” and the blank box is designated as “Total amount.” Directions say to enter “total cost”. I am confused about what I am supposed to be entering here. Is it just asking for the amount I initially paid for these stocks or is it asking for me to enter the total cost depletion?

If it is asking for cost depletion how would calculate this? I do have the “cost depletion percentage” already available for Mesabi for 2022. I have never sold any of these stocks.

[JulieS]

Yes, it is asking for your total depletion for 2022. 

You start with your adjusted basis in your investment. That is the the purchase price plus the costs of purchase. If you have taken depletion in the past on this trust, you would reduce the amount by your prior depletion deductions. 

Multiply your adjusted basis by the percentage  provided by the trust and enter that amount in the "Total cost" field.