IRS Publication 515 (2026): royalty categories and income codes, including know-how and software (IRS, Publication 515 (2026), Royalties (income codes 10, 11, 12))
The IRS reports know-how royalties under income code 10 and copyright or software royalties under income code 12. A data licence could fall in either, and treaty rates sometimes differ between them.
Dated 18 Oct 2026Source checked 18 Oct 2026Basis: primary text
In the source's own words
“Industrial royalties (income code 10). This category of income includes royalties for the use of, or the right to use, patents, trademarks, secret processes and formulas, goodwill, franchises, “know-how,” and similar rights. ... Other royalties (for example, copyright, software, broadcasting, endorsement payments) (income code 12). This category refers to the royalties paid for the use of copyrights on books, periodicals, articles, etc., except motion picture and television copyrights.”
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