Where and how do i enter gains and losses on CD's? The cost basis is ~$500 over the proceeds on maturity.

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. 

 

Please update here if you need further assistance.

Thanks!  I bought this CD in the market and paid a premium for it.  How do I reflect that?

Based on your comments you do have a sale of investment property.  If it was held for more than one year (one year plus one day) then you will be considered long term, if held for a shorter period it would be considered short term. The maximum investment loss allowed in one tax year is $3,000 with a carry forward of the remainder of the loss.  Before this occurs, any gains will be offset by the loss and only the excess will reduce your income up to the maximum allowed in one calendar year.

• What is a capital loss?

You should select 'Other' as the type of investment, then you should select that your purchased it. If you had any sales expense this would be added to your cost basis.  Use the steps in the link to enter your sale and see the image provided for assistance.

• Where do I enter an investment sale?

Alternately, if you pay a premium to buy a bond, the premium is part of your basis in the bond. If the bond yields taxable interest, you can choose to amortize the premium. This generally means that each year, over the life of the bond, you use a part of the premium to reduce the amount of interest includible in your income. If you make this choice, you must reduce your basis in the bond by the amortization for the year. As indicated by our awesome Tax Champ 

@SteamTrain.

@mcmahtj2 

[Edited: 02/18/2022 | 5:19a PST]

@DianeW777 

 

I was wondering if the premium paid should have been amortized over the life of the CD..

 

I'm hardly one to know for CDs purchased in the market...but this post suggests a YES...maybe should have been amortized and with updated basis, there is zero gain/loss at maturity?

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TMF: Re: secondary CDs / Tax Strategies (fool.com)