If you already paid the capital gain on the entire sale in year 1, you should not be reporting it as an installment sale.
Just report the interest you are receiving as interest received.
The tax has already been paid on the principal.
An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs.
You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale.
You may elect out by reporting all the gain as income in the year of the sale.
Topic No. 705 Installment Sales
@JCL22
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