gain is reported pro-rata in each year you receive principal payments. if no interest is specified on the payments you may be subject to the imputed interest rules under IRC 483 or 1274. if so, then under the law part of those payments will be treated as interest. you'll need to read IRS PUB 537 - start at page 10
https://www.irs.gov/pub/irs-pdf/p537.pdf
