I agree that the expected input produces this unexpected result.
The royalty isn't showing up on the EIC worksheet, because the literal wording of the worksheet doesn't provide for it to show up there. (Pension and IRA distributions are another one where running it through a trust or estate gives you a different result than if you held it directly. Sometimes it's a worse answer, sometimes not.)
If you really dislike this answer:
1 To Print No on Form 1040, 2 to Suppress [O]
Earned Income
Credit
Screen 38; Code
58
The program prints "No" on the earned income credit line of
Form 1040 according to the IRS instructions. Enter 1 to force "No" to print
regardless of the instructions, or enter 2 to suppress "No" from printing.
