Will 2 1099-misc from companies leasing mineral property and one reports income in box 1 rentals and the other reports income in box 7 non-employee compensation matter?

[PaulaM]

1099-MISC box 1 rents is reported on Schedule E under the Rental and Royalty section.  1099-MISC with box 7 non-employee compensation and is reported on Schedule C. TurboTax Deluxe can prepare a simple Schedule C and the income is subject to self-employment taxes. 1099-MISC box 7 is used if you have a working interest in the lease operations. If this is not your case, you may need to contact the issuer. <a rel="nofollow" target="_blank" href="https://www.irs.gov/newsroom/tips-on-reporting-natural-resource-income">https://www.irs.gov/newsroom...>

[DianeW · Accepted solution]

If you are not performing any services for the company who issued the Form 1099-MISC with income in box 7, then report it exactly like you do for the one with box 1, rental income.  This would be the correct way to report it, as rents.

Retain your leasing agreement as well as the the Forms 1099-MISC with your tax records should the IRS have a question down the road.  It's a good idea for you to alert the company of their error.

The only time a Form 1099-MISC is issued with an amount in box 7, for Nonemployee Compensation is when a service is being provided to the company.

Here is the definition of a working interest: A percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit.

[Edited: 02.20.2018 | 12:01 PM PDT]

[philiperickson30]

Thank you that cleared it up.

[DianeW]

@philiperickson30  You're welcome.