It doesn't. The installment method is only available when there is taxable gain.
An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. If you realize a gain on an installment sale, you may be able to report part of your gain when you receive each payment. This method of reporting gain is called the installment method.
If you receive interest each year you will report it each year as it is received.
@saraajane
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