When to report your interest income depends on whether you use the cash method or an accrual method to report income.
Most individual taxpayers use the cash method.
If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. However, there are special rules for reporting the discount on certain debt instruments. See U.S. Savings Bonds and Discount on Debt Instruments, earlier. You are not in the business of lending money. The note stated that principal and interest would be due on August 31, 2000.