How do you treat the expenses of writing a book. Do we put it on schedule E where we put the royalties? I have never dealt with this before.

[abctax55]

I put them on Schedule C.

IF there's a F 1099 showing them as *royalties* , I also run them in/out so the IRS can do their matchy matchy thing.

[IRonMaN]

Sounds like they and the royalties might belong on schedule C.

[Randy Haynes · Accepted solution]

You will need to set up a Schedule C for the author to record any expenses. You will then link the 1099-MISC royalties to the Schedule C by clicking in the Schedule C box on the 1099-MISC worksheet.

[BobKamman]

I think a phantom Schedule E like that will increase the chances of an audit:

1)  Higher positive income before deductions.

2)  Schedule E expenses extraordinarily high compared to revenue.

Hundreds of publishers issue thousands of 1099s to authors or their agents, showing royalty income in Box 2.  Has anyone ever seen a CP-2000 asking for a Schedule E, when it's reported on Schedule C?  What writers do, is write.  I think if it happened, someone would have written about it.  

I would think twice about preparing an extra form (do you charge for it?) without advising the client that it might inspire more questions from IRS, than it prevents.  

[qbteachmt]

"What writers do, is write."

But first, they travel the world, taking all the cost as expense, without any income, while it takes them 3-10 years to get that book to the publisher.

This question is a bit vague. It could be work in progress, not Expense. The timing matters.