Where do I deduct royalty expenses on my 1120-S corp tax return?

[jahekele]

My business received a Form 1099-MISC for royalty income.  The form also shows deductions for taxes and Other to get to the net amount received.  The Royalty Income section of Turbo Tax for Business only allows for entering the gross amount of royalty but not expenses.  Where do I deduct royalty expenses on the 1120-S corp tax return?

[RichardK · Accepted solution]

Royalty expenses go on Form 1120S, Schedule K, line 12d other deductions (coded as royalty expense) and are allocated to the shareholders K-1, line 12d.

To enter in Turbotax:

·        Open TurboTax Business, and go to the S corporation return.

·        On the top right click on Forms

·        On the top left click on Open Form

·        In the search field type Form 1120S p3-5, then click on Form 110S p3-5: Income Tax Return for an S corporation

·        Scroll down to Schedule K, line 12d, in the drop box under line F, in column Type:  select I - Deduction -royalty income

[JoJo4]

Where to enter the expense paid on Roaylties to Broker....not the income of royalty on S Corp.

[JamesG1]

To enter expenses related to royalty income (not S Corp income and expense).  Follow these directions.

• Down the left side, click Federal.
• Click on Income & Expenses.
• Under Your income and expenses, scroll down to
• Rental properties and royalties, click Edit/Add.
• Do you want to review your rental?, click Yes.
• Under Rent and Royalty Summary, click Edit.
• Click Update to the right of Expenses.
• And continue to answer the questions.

See IRS publication 525, page 17.