Income on Form 1041 Schedule K-1 in Boxes 1 & 2 is considered portfolio income, while most other K-1 items are passive income. The two types of income cannot be used to offset each other in the case of a loss.
For this reason. interest, U.S. Bonds, and dividends in boxes 1 and 2a will transfer to your Schedule B. You should see a line item with the name of the trust and the amount you entered from the K-1. Interest under Part I and Dividends under Part II.
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