Hello tax102523,
To me this sounds like a mutual fund. But not quiet sure if that is what you are investing in so I will give you a couple of different answers for consideration.
First, if it is a mutual fund product, the general rules follow: The fund passes dividends, interest, and capital gains to you, the shareholder, either in a check or through reinvested distributions. You must pay taxes on dividends, interest, and capital gains that the fund company distributes to you, in addition to capital gains or losses on sale or exchange of shares in your account and reported to you annually for tax reporting (1099-B, 1099-DIV).
Next, if the Broker is merely offering banking services, such as a cash management account or checking account, you will report only the interest earned for the year (1099-B) just as you would do from you local hometown bank. If this is the case, you can also ask for the FDIC disclosure.
Great question, but feel free to respond with additional details if we can help!
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