Capital Gains on Land Contract Sale

[Doug F.]

How does capital gains tax work for a land contract sale?

If a property was purchased say at $50,000 and then sold via land contract at $ 90,000, assuming everything simple, and there is a capital gain of $40,000.

if the land contract is for a period of 10 yrs, and the seller is recieving yearly payments of principal and interes.

When does the $40,000 capital gain tax become due? is all $40,000 looked at when the property is sold, or is it spread out over 10 yrs as one recieves principal?.

I understand that one must also pay tax on the debt income recieved too.

thanks

Doug