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If the estate receives royalities - that is a taxable income - theer are two options - either that income is taxable to the estate or is passed to beneficiaries.
Sush income is reported on the line 5 form 1041 - http://www.irs.gov/pub/irs-pdf/f1041.pdf and schedule E should be attached - http://www.irs.gov/pub/irs-pdf/f1040se.pdf where the royalty income would be reported on the line 5 Other portfolio and nonbusiness
If that income is passed to beneficiaries - schedule K-1 should be issued - http://www.irs.gov/pub/irs-pdf/f1041sk1.pdf
Beneficiaries will report such income on individual tax returns - schedule E (see above) line 33, column (f)