Where do I report interest payments received from an installment sale that my mom was receiving but I now have inherited?

[User ID 912021]

My mother had sold a rental property several years ago on contract and was receiving payments. She recently passed away and I am now receiving the monthly payments. 

The instructions for Schedule B say to use schedule B if, “You received interest from a seller-financed mortgage and the buyer used the property as a personal residence.” 

This is a rental property and was not used as a personal residence. 

Where do I report the interest received?  

[Hal_Al · Accepted solution]

Enter the interest at the 1099-INT screen, even though you didn't actually get a form 1099-INT.
In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)
 - Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Interest & Dividends
  -Interest on a 1099-INT

You also need to report the principal payments as income. You have  inherited an installment sale, not a mortgage.  You need to review your mother's previous income tax returns to gather the information needed to continue reporting the installment sale "as if" she was still alive.  

From IRS Publiction 537: 

"Transfer due to death.   The transfer of an installment obligation (other than to a buyer) as a result of the death of the seller is not a disposition. Any unreported gain from the installment obligation is not treated as gross income to the decedent. No income is reported on the decedent's return due to the transfer. Whoever receives the installment obligation as a result of the seller's death is taxed on the installment payments the same as the seller would have been had the seller lived to receive the payments."

[Hal_Al]

Answer revised to address the principal payments

[MelissaVoicer]

This seems to answer my question as well, so thanks! But where do I enter the principal income? Also, I seem to have read something conflicting--or at least confusing to the layperson (me!) about dividing the principal in two portions on the return--one of which is tax-free? Perhaps this only the case if the contract is COMPLETED during the tax year in question? (mine will finish in 2020, so for 2019, I am JUST receiving monthly paments...) The following was taken (and likely misunderstood by me) from https://smallbusiness.chron.com/tax-filing-land-contract-irs-31798.html

Installment Sale

IRS Publication 537 defines an installment sale as the sale of property that results in at least one payment after the tax year in which the sale took place. If the seller treats the transactions of a land contract as an installment sale as defined by IRS Publication 537, the portion of the money received for the sale that is not interest may be divided into two sections. The first section is a tax-free return of the adjusted basis in the land subject to the land contract. Sellers can use the IRS form Adjusted Basis and Gross Profit Percentage Worksheet A of IRS Form 6252 to determine their adjusted cost basis and gross profit from the land contract. Sellers with installment sale income should complete and submit IRS Form 6252 when filing federal taxes for the year of sale and for two subsequent tax years.

[Hal_Al]

See if this helps

https://ttlc.intuit.com/community/taxes/discussion/prior-year-installment-sale/01/1287509#M465530