Discussion:1065 Music Royalties Question

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Discussion Forum Index --> Basic Tax Questions --> 1065 Music Royalties Question
Discussion Forum Index --> Tax Questions --> 1065 Music Royalties Question

Z32 Twin Turbo (talk|edits) said:

11 March 2008

I'll try and make this short and sweet. Have a music band that formed a partnership (5 members all equal). They received 100k in music royalties (publishing rights), Now one member writes most of the stuff so he got 40k and the rest got 15k a piece for thier part in writing songs. All the other income from shows and merchandise is split 20% each member. My question is since the Publishing rights are not split equally then I should issue a 1099misc for royalties to each member for their amount. The 1099 will be from the partnership to each member. Then report that 1099 on their individual return as other income or schedule e page 2 income. And from what I read, these royalties are not subject to SE tax, correct? And is that the correct way to report income that doesnt get split as per the 1065 members share percentage? Thanks

Death&Taxes (talk\|edits) said:	11 March 2008
Maybe treat it as a guaranteed payment, which can be split any way you want. Royalties from self-created works are taxable to SE Tax.

Z32 Twin Turbo (talk\|edits) said:	11 March 2008
Gotcha. 1065's are a new monster to me. With so many people going to LLC's I figured its time to dive in. Now if one of the members has more expenses, how would that be deducted or is it split equally no matter what. Sorry for the stupid questions. As I said new territory for me.

Death&Taxes (talk\|edits) said:	11 March 2008
The expenses paid from the partnership bank account are split in relation to the profit/loss percentage; however, if the partnership does not reimburse a partner for money spent on its behalf, and puts this in writing, the partner deducts it on his/her return as a Unreimbursed Partnership Expense.

Z32 Twin Turbo (talk\|edits) said:	11 March 2008
Thanks so much. Makes perfect sense. Dont know what I'd do without Death & Taxes :) Oh yea. I about had a heart attack. Went to get gas and its 3.48 a gallon in Ohio. Cost $71.00 to fill up my truck (and it gets 10 miles to the gallon). How is it in your area ?