Hello and thank you for using Just Answer,You would record the amount of each payment that is not principle. Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Even if little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest.
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You said part of each payment 'may' be treated as interest. Is this an option or a requirement? Assuming of course that there is interest on the loan.
It is a requirement when I said "may" I was speaking about "imputed interest" where the IRS applies interest when not enough or any is being claimed.
okay, sounds good. thanks for clarifying!