this reg converts your simple trust into a complex trust
§ 1.661(a)-1 Estates and trusts accumulating income or distributing corpus; general.
Subpart C, part I, subchapter J, chapter 1 of the Code, is applicable to all decedents' estates and their beneficiaries, and to trusts and their beneficiaries other than trusts subject to the provisions of subpart B of such part I (relating to trusts which distribute current income only, or “simple” trusts). A trust which is required to distribute amounts other than income during the taxable year may be subject to subpart B, and not subpart C, in the absence of an actual distribution of amounts other than income during the taxable year. See §§ 1.651(a)-1 and 1.651(a)-3. A trust to which subpart C is applicable is referred to as a “complex” trust in this part. Section 661 has no application to amounts excluded under section 663(a).
if the trust distributed capital gains subpart C applies. it's a complex trust for the year
with a complex trust, you get a deduction only for the actual distribution during the year based on accounting income and allocated between ordinary income and capital gains.
we can see the return so can't be sure whether you distributed more than ordinary accounting income (ie corpus) or answered some questions incorrectly
