My grandparents passed away and left 2 cds totally $35,00.00 to my sister. The cds were listed under my grandparents name and then my sister's name upon their death. She did withdraw the money, but our question is does she have to pay any taxes on this money that was taken out. Or does she just have to worry about the interest? We are located in California. Thanks

There is no tax on inheritances.
Interest earned on CDs after death of grandparents is income on your sister.