If I close a brokerage account and invest the amount in a certificate of deposit (CD), am I required to report the proceeds as income when I file my taxes?

If I close a brokerage account and invest the amount in a certificate of deposit (CD), am I required to report the proceeds as income when I file my taxes?

Banking, Personal Finance, Investing, Taxes
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No, unless your "brokerage account" was titled as an IRA.  You only owe tax on the gains.  Whatever the difference was between your cost basis and the amount received upon liquidation is taxable income.  Some of it may be long term (held over a year and taxes at lower rates) or short term (taxed as ordinary income).  If you had a loss you can deduct the first $3,000 from your ordinary income and carry the rest forward to offset gains in future years.

If you liquidated an IRA and took the proceeds as a distribution, you will not only be taxed at your marginal bracket but if you are under 59-1/2 years old you must also pay a 10% penalty.  (If you did this less than 60 days ago you can still undo it.  Hurry.)

By the way, after taxes and inflation your return on a CD will be negative.  Liquidating your equities and other dividend/interest-paying assets (unless you need this money in the next 12 months) was a dumb thing to do.  

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