Federal income taxes withheld from a retirement plan distribution, which are listed in box 4 of Form 1099-R, are claimed as a credit on your return against the taxes you owe; they’re reported as taxes that you’ve already paid for the year.
The difference between face value of a bond and lower market price, attributable to rising interest rates. On a sale, gain on the bond is generally taxed as ordinary income to the extent of the discount.