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What is the proper way to record taxable interest income?

I have a payment series...
What is the proper way to record taxable interest income? I have a payment series coming in. Do I record interest with each payment or after I have collected my principle back?
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Answered in 5 minutes by:
4/1/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,866
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D :

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.

Robin D :

Your positive rating is always thanks enough.

If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.

Customer:

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.

Robin D :

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.

Customer:

okay, sounds good. thanks for clarifying!

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,866
Experience: 15years with H & R Block. Divisional leader, Instructor
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