Look through the math on Schedule B and specifically at line 10, but work though all of schedule B very, very carefully to understand what the IRS deems as principle (you don’t decide)
Be careful, the requirement is that all the income (excluding capital gains) is deemed to be distributed before any principal
Let’s say there was $20k distributed to beneficiaries and the Trust has $15k of ordinary income and $5k of capital gains
Trust would pay taxes on the $5k; beneficiaries would pay the tax on the $15k and the last $5k would be the principle distribution (tax free) to them - so on this example beneficiaries get $20k but first $15k is the ordinary income realized by the trust and passed via the K-1
