Ok now I see that the line 14 is not your biggest problem.

Now sure on the answer with distributing the Capital Gain...Most of the Trust's I work with are set up so the Capital Gains remain in the Trust, and the Trust pays the tax on that amount. 

Sorry I can't help with that part, but I would look at Lisa's comment above, above

"there's a place on the Sch D to allocate cap gains to beneficiaries...is that what you're looking for?   

Sch D  Part III"