If a U.S. citizen writes a computer program and sells it to a friend, are they required to report the income on their taxes? Does the answer change if it's something else? Like a sculpture, a book, a song, a work of art or a craft product like a bead necklace?
Yes, you need to report this. It will be treated as self-employment income and goes on Schedule C of your personal Form 1040. The product doesn't matter - software, sculpture, book are all the same.