To enter Royalty income that is not your business:
1. With your return open in TurboTax, type royalty income in the search bar and click search.
2. Click on Jump to royalty income.
3. On the Income from Rentals or Royalty Property You Own, answer Yes
4. On the next screen, check None of the above.
5. On the Is This a Rental Property or Royalty? screen, check Royalty property or payment. Enter the information.
6. On the next screen, answer Yes.
7. On the What Type of Royalty Income? screen, click on an appropriate category.
8. Continue answering the onscreen interview until complete.
The above instructions are spot on correct. You do "in fact" own interest in the royalty. Otherwise, you won't be paid for it.
The other way to get to it, is to select the Personal Income tab followed by "I'll choose what to work on".
Then scroll down to the Business Items section and elect to start/update Rental & Royalty Income (SCH E) and go from there. make sure you select the option to identify it as a royalty payment and not rental income (if the income is reported in box 2). Otherwise, your taxes will not be correct and you'll be asked questions that assume you have ownership of physical real estate, when you don't.