Certificates of Deposit (CDs) report interest each year as it accrues by sending you a Form 1099-INT. They don't change their initial value or purchase price. If you cashed out the CD before it matured, then you would have a early withdrawal penalty.
When you enter the interest income from the CD, check the box beside "My form has info in other boxes (this is uncommon)." This will open a drop down with additional boxes. Enter the early withdrawal penalty in box 2.
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