1. Yes, you would report that as capital gain from the sale of the stock the trust sold. You use the tax bracket for individuals because you're reporting the gain on your return, your 1040. Now you have to be aware that the entire distribution is not taxable, just the gain that is distributed to you.
2. Interest from bonds, CDs, high yield savings accounts is all ordinary income, not capital gain. You don't get the favorable tax rates on interest income like you do with capital gains.
