In general, if you receive payments from the buyer over time, you report the gain on the payments in the year you receive them, rather than reporting the entire gain in the year of the sale. Thus, each time you receive a principal payment on the debt, a pro rata portion of the gain will be subject to tax. You must use the installment method unless you elect out of it. However, be aware that:

The recently enacted “American Recovery and Reinvestment Act of 2009” contains a wide-ranging tax package that includes tax relief for low and moderate-income wage earners, individuals and families with college expenses, and home and car purchasers.

While the new law tax changes in the American Recovery and Reinvestment Act of 2009 were the most significant developments in the first quarter of 2009, many other tax developments may affect you, your family, and your livelihood. These other key developments in the first quarter of 2009 are summarized below.

The American Recovery and Reinvestment Act of 2009 (commonly referred to as the Recovery Act), which was signed into law on Feb. 17, 2009, makes a number of beneficial changes for businesses. A key provision in the new law which is designed to help struggling eligible small businesses cope with the economic downturn is a temporary elective extension of the carryback period for certain net operating losses (NOLs) from 2 years to up to 5 years. The longer NOL carryback period gives small businesses that experienced losses the ability to get immediate refunds of income taxes paid in earlier years. The refunds can be used to fund capital investment or other expenses.