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1. Royalties are earned income when they are:

a) Received as part of a trade or business; or

b) Received by a person in connection with any publication of his work such as publication of a manuscript, magazine article or artwork.

2. While royalties may involve natural resources, an outright sale of natural resources by the owner of the land or by the owner of rights to use the land constitutes conversion of a resource. Proceeds from the conversion of a resource are not income.

3. Absent evidence to the contrary, assume the amount of any honorarium received is in consideration of the actual services provided by the individual and treat as earned income. Any other payment received in cash or in-kind connected with service is unearned income to the extent it exceeds the individual’s expenses.

a) If the income from royalties/honoraria that are earned income are not allowed. However, such expenses are deductible from royalties/honoraria that are unearned income.

Source: Social Security Act §1902 (r)(2); 42 CFR § 435.601(b) (Rev 1994).

Rule 9.8: Uniformed Services Pay and Allowances.

A. These types of income are broadly defined as follows:

1. Compensation to members of the Uniformed Services takes several forms, chiefly:

a) Basic or Base Pay;

b) Special and Incentive Pay; and

c) Cash Allowances.

B. These types of income are treated as follows:

1. Cash payments for pay and allowances which are paid for service as a member of the uniformed service are treated as earned income, with the exception of the following:

a) Service members and their families living in on-base housing or privatized military housing may receive a BAH payment or the military may direct a BAH to a housing contractor by way of payroll deduction or allotment. In each case, the BAH is not cash income. However, if service members and their families who live in private housing receive a BAH payment, it is earned income.

b) Hostile fire pay and imminent danger pay (sometimes referred to as “combat pay”) are