Report the income as 0?  You may also have to make an adjustment to Sch D and 4797

Just like any installment sale--calculate the adjusted total gain --Year 1 + Year 2 + Zero Year 3= total gain. Then subtract the reported gain from prior years. You will probably have a capital loss for Year 3.

If you sold it for $150, and received two payments of $50 each in Year 1 and Year 2, and all was taxable  $50 in each year, then you have no loss. You sold it for $100 and received $100.

FYI, I previously purchased 3 customer lists and by the 3rd one I realized I should have reduced the payments when clients left before the final year.

When I sold MY list we calculated it on actual revenues received over 4 years, so new clients good, former clients got no more money for them.