A gain is recognized when property is reacquired.
The Seller, on a seller financed property, when reacquired now has all the payments previously made by the ex-buyer plus the property back. he government says that this is now all taxable gain. This is only limited to gain already realized.
The gain upon reacquisition is equal to the cash and fair market value of the property received by the seller prior to the acquisition, less gain previously reported.
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