Do you pay taxes on the collection of a Bank CD? If I do, what form do I use?

Question

Purchased on Sept. 2004 for $10,000 and collected $11,000 on the date it matured Oct. 1 2006. What do I pay taxes on?

Answer 1

Income on a bank CD would normally be reported as interest, and usually you would get a 1099-INT each year for the interest accrued that year, whether you took it then or not.

Answer 2

you pay tax on the $1,000 of interest income. however, you would have already paid some tax on the interest earned in 2004 and 2005, so you'l only pay tax on the interest earned in 2006.

Answer 3

You would report it on a Schedule D. You would enter your purchase date, sale date, cost of 10,000 and sale of 11,000 and you will have a long term capital gain of 1,000, which you will pay low capital gains tax on.

Answer 4

the main day