What do you mean by “it was withdrawn”? And was this a regular brokerage account or was it an IRA?
If it was a regular brokerage account, you paid taxes on dividends each year as you received the money — even if it was left sitting in your account. You would have received a 1099 form and added the income to your taxes.
But if YOU withdrew it from an IRA, yes you would have to pay ordinary income taxes on the withdrawal. AND, if you’re under age 59-12, you’d owe a 10% early withdrawal penalty.
So it really matters what kind of account, your age, and your tax status. Ask your accountant how to handle this, depending on your situation.