Final answer:
Jack will be subject to income tax on the gain from the distribution of his company stock in the year of distribution, and the interest income from CDs will be taxable as it is received.
Step-by-step explanation:
If Jack elects to take the distribution of all his company stock, then decides to invest the proceeds into purchasing Certificates of Deposit (CDs), there will be tax consequences to consider. When Jack takes the distribution of his company stock, income tax will be due on the gain, which is the difference between the stock purchase price (also known as the basis) and the value at the time of sale. This will be recognized in the year the distribution occurs and is subject to individual income tax rates. Once invested in CDs, the interest income generated is taxable income as received, further increasing Jack's tax liability for the year.