Define royalty income.What criteria determine which form is used and where the royalties are reported?

Royalty is a payment for the right to use intangible property such as income received from books,stories,plays,copyrights,trademarks,formulas,patents,and from the exploitation of natural resources such as coal,gas,or timber.If the royalty is a result of a trade or business,the taxpayer should report the royalty income on Schedule C.However,if the royalty income is produced by a non-trade or non-business activity (such as an investment or a "side-project"),then the royalty should be reported on Schedule E.