1099-NEC for mineral lease bonus payment

[JS2982]

I have received a 1099-NEC for a oil and gas mineral lease bonus payment. In the past they were always reported on a 1099-MISC and claimed as rents on a Shcedule E. How do I claim the 1099-NEC? Am I stuck having to claim it as just other income and not being able to deduct my legal fees and other deductions?

Thanks

[DaveF1006]

 To clarify, are you a working interest owner or a royalty owner? Tax treatments are different.

@JS2982 

[JS2982]

I am a royalty interest owner. I am not involved in production in any way. 

[JS2982]

PattiF - Just to clarify, the amount reported on the 1099-NEC was for a bonus payment for executing the lease. There is currently no active production or royalties being paid. Is your advice still correct for that situation?

[DaveF1006]

This would actually be reported as self-employed income because it was a payment for performing a service in executing a lease. In this respect, you are a lease contractor but you probably haven't thought of yourself as one. This would not be considered royalty income because the money wasn't earned from oil or mineral production but from a service you performed.

To report, go to:

1. Go to federal>income and expenses>
2. Self-Employment>Self-employment income and expenses
3. Complete the profile that asks about your business. Here you don't need to be too detailed.
4. Then there will be a screen where you will enter your self-employment income.

@JS2982