20 Trust DNI is $5,000. This consists of $1,500 of tax exempt interest and $3,500 of taxable interest. The Trustee distributes $2,500 to the sole beneficiary. The beneficiary's distribution is deemed to consist of; a taxable interest of $1,750. taxable interest of $1,750 and tax exempt interest of $750. taxable interest of $1,250 and tax exempt interest of $1,250. P zero assuming the trustee elects to have all income taxed to the trust