You do not have to create or issue a K-1 if there are no distributions of income or gain attributable to the beneficiary (i.e., the trust will pass nothing through to the beneficiary).
Your interest from PAB activity is entered on Line 7 of Schedule I and the tax exempt interest input was explained earlier.
You really should consider using tax software because the error-rate for manually prepared 1041s is certainly very high (although the audit rate is very low).
Regardless, note that it is likely you will also have to prepare and file a CO return for the trust so that will add another layer of complexity.
See https://tax.colorado.gov/estates-trusts
