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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: 12/13/2013

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.  Interest on an installment sale can be reported on Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF):
For additional information on interest income, refer to:
For additional information on installment sales, refer to: