please show all work/explanations.

18. Illinois Trust receives $5,000 interest on U.S. Treasury bonds and $10,000 interest on State of Wisconsin bonds. All $25,000 is distributed to the trust beneficiary, Leon. Which of the following statements is correct? A) Leon has $15,000 of ordinary gross income. B) Leon has $5,000 of taxable interest income and $10,000 of tax-free interest income. C) Leon has no taxable income because the trust must pay the tax. D) Leon has $5,000 of capital gain and $10,000 of tax-free interest income