See https://www.irs.gov/publications/p537#en_US_2022_publink1000221693
Inventory.
The sale of inventories of personal property can’t be reported on the installment method. All gain or loss on their sale must be reported in the year of sale, even if you receive payment in later years.
If inventory items are included in an installment sale, you may have an agreement stating which payments are for inventory and which are for the other assets being sold. If you don’t, each payment must be allocated between the inventory and the other assets sold.
Report the amount you receive (or will receive) on the sale of inventory items as ordinary business income. Use your basis in the inventory to figure the cost of goods sold. Deduct the part of the selling expenses allocated to inventory as an ordinary business expense.
