Music royalties can offer investors a stable yield, but tax planning is critical to retaining much of that income. Every individual’s situation is unique, but royalties are typically reported as self-employment income on Schedule C of IRS form 1040. While music royalties are often taxed at a higher rate, they also have unique tax benefits. Since music royalty income declines over time, it is considered a depreciating asset. As such, music royalties can be amortized, meaning that investors can write off the cost of this asset over a number of years. By offsetting the income produced, investors in turn also reduce their tax liability. For more specifics surrounding amortization, please refer to section 167 of the Internal Revenue Code.