Reclaimed income from oil royalties from decedent

[Greenspey]

We finalized a claim with the State of Oklahoma for unclaimed property held by them since 2017.  The claim consisted of income from oil royalties.  The 1099-MISC that we received from them placed the income in Box 3, as "other income."  Is it possible to claim this as oil royalty income so that depletion and taxes can be deducted?  

[PatriciaV · Accepted solution]

Yes. The IRS defines Box 3 Other Income on Form 1099-MISC Box 3 as income that is not reportable in one of the other boxes on the form. Technically, Royalties should be reported in Box 2. The State of Oklahoma didn't produce the royalty income for you, which could explain why they used Box 3 and let you decide how to report it.

As long as you report this income somewhere on your tax return and have records to explain why you reported it as you did, the IRS is satisfied.

[Greenspey]

Thank you so much!