The wording is confusing. I believe the exact wording on the k-1 worksheet (not the interview) is "sourced or allocated at the beneficiary level" or at "trust level."
What is going on is that some trust income (and deductions/credits for foreign taxes) stay with the trust and some go to the beneficiaries depending upon the wording of the trust itself and what was paid in a given year.
Given your facts of trust income actually distributed to you, it would all be "sourced" or "allocated" to the beneficiary.
For the foreign tax credit, what TT needs is the amount of foreign tax paid from your income (e.g. trust distributions to you) AND the amount of trust income allocated/distributed to you from US sources and from foreign sources. Then it can calculate how much of a credit you can tax.
TT needs to compute the ratio for your total (not just trust but all income) from foreign sources compared to US sources. Why? Because your credit is limited to the smaller of
(foreign income / worldwide income ) * US tax
and foreign tax paid.
This effectively means you can rarely use your whole credit unless you have a high ratio of foreign income (not likely for US residents with minor overseas investments).
Also note that for small amounts (<$600 I think) of foreign tax paid credit from mutual funds there is a simplified reporting/calculation.
Does that help? If not please ask for more clarification.
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