Why is the capital gain income excluded from Amelia's Schedule K$-1($Form $1041)?$ Because

A$.$ It is considered principal for trust accounting purposes, and only income was distributed.

B$.$ It was held long term, and items taxed at long term capital gain rates must be taxed at the trust level.

C$.$ The fiduciary may choose whether to pay the tax at the trust level or to pass it through to the beneficiaries, and in this case it is more beneficial to pay the tax at the trust level.

D$.$ It is considered investment income for the purpose of the net investment income tax, and all investment income must be taxed at the trust level.