Yes, that is exactly what is happening. Each beneficiary is allocated the exact proportion of the qualified dividends as their share of the DNI. So, then, is there no way to over-ride this so that the trust pays some of the tax? In my case, the trust is paying zero tax (with write offs a a 3K capital loss) and moving some of the dividends to the trust will save the beneficiaries taxable income.
It is also not accurate when the trust DID keep some of the interest.
