It is definitely wrong and there is some sort of error. If you're distributing 100% of the capital gains, that should appear on Line 3 or 4a of your K-1s (ST or LT).
You should get an IDD of, for example, $10,000 if you distributed $10,000 in capital gain to the beneficiaries; nothing should be left to be taxed on the 1041 and there should be no more than the $10,000 in gain on the K-1s (assuming that is the only income item being distributed).
