"Is this a mistake, if so, how can I correct it."
If the trust instrument requires that you, presumably as trustee, distribute all of the income currently, then the trust is entitled to a $300 exemption, regardless of whether the trust distributes additional amounts.
The problem is TurboTax assumes the trust is entitled to a $100 exemption if the trust is a complex trust and a $300 exemption if the trust is a simple trust and that is incorrect. You can, however, change the $100 exemption amount in Forms Mode by simply entering "300" in place of "100" directly on Form 1041 (see screenshot).
