How should royalties from a book that was not part of an individual's regular job be reported?

Royalties from a book that are not part of an individual's regular job should be reported on Schedule E. This is because Schedule E is specifically designed for reporting income from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residuals.

When an individual earns royalties from work that is more of a secondary venture—like writing a book rather than it being part of their main employment—this income is considered passive or portfolio income rather than self-employment income. Therefore, it's not appropriate for Schedule C, which is used for business income that arises from self-employment activities.

Moreover, royalties do not fit the nature of capital assets typically reported on Schedule D, which deals with capital gains and losses from the sale of assets. Lastly, royalties are generally considered taxable income, not nontaxable, so they cannot be classified as such. Consequently, reporting royalties on Schedule E aligns with IRS guidelines for this type of income.