Not required to report, at least not as SCH E income. See topic 704 at https://www.irs.gov/taxtopics/tc704 for the depreciation aspects. All criteria are not met.
Does not meet item #2 which states "it must be used in a business or income producing activity". The buyer has no such business or activity. This rent back was a part of the sales contract/agreement. Not a contract separate from it.
Does not meet item #4 which states, "it must be expected to last more than a year". One issue here is that "it" is not clarified. Is "it" the business? (which the buyer does not have any such business) Or it "it" the asset? Either way, the asset is not required to be depreciated since the period of rent back started and ended in the same tax year with no intention of making a profit.
