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Frequently Asked Tax Questions

Interest, Dividends, Other Types of Income - 1099-INT Interest Income

  1. How do I report interest income on an installment sale?

Rev. date: 12/18/2014

How do I report interest income on an installment sale?

If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for adequate stated interest payable with the deferred payments. That interest is taxable as ordinary income in the same manner as any other interest income. 
If an installment contract does not provide for adequate stated interest, the amount of interest to be reported for a taxable year will be determined under the provisions of the Code dealing with imputed interest or original issue discount. You can report interest income from an installment sale payment on Form 1040 (.pdf), U.S. Individual Income Tax Return. If there was no gain on the sale, you can also use Form 1040A (.pdf), U.S. Individual Income Tax Return, or Form 1040EZ (.pdf), Income Tax Return for Single and Joint Filers With No Dependents:
For additional information on interest income, refer to:
For additional information on installment sales, refer to: