Can you provide more details regarding your distribution because now I am puzzled. Why would the loss, that was presumably offset at the trust level, be passed through to the beneficiary on the K-1?
No offense, but there has to be an input error somewhere along the line. If you have a net gain of $17,000 ($20,000 gain less $3,000 loss), then you can allocate that figure to income and distribute it to the beneficiary if you have the authority in the trust doc to do so, and that should be reflected (as a gain) on the K-1.
