License fees received for use, manufacture, or sale of a patented article.

Renting fees received from patents, copyrights, and depletable assets (such as oil wells).

Authors’ royalties including advance royalties if not a loan.

Royalties for musical compositions, works of art, etc.

Proceeds of sale of part of your rights in an artistic composition or book, for example, sale of motion picture or television rights.

Royalties from oil, gas, or other similar interests (9.16). To have a royalty, you must retain an economic interest in the minerals deposited in the land you have leased to the producer. You usually have a royalty when payments are based on the amount of minerals produced. However, if you are paid regardless of the minerals produced, you have a sale that is taxed as capital gain if the proceeds exceed the basis of the transferred property interest. Bonuses and advance royalties that are paid to you before the production of minerals are taxable as royalty income and are entitled to an allowance for depletion. However, bonuses and advance royalties for gas and oil wells and geothermal deposits are not treated as gross income for purposes of calculating percentage depletion. If the lease is terminated without production and you received a bonus or advance royalty, you report as income previously claimed depletion deductions. You increase the basis of your property by the restored depletion deductions.