The James Henry Living Trust is a nongrantor trust with a single beneficiary, Philippa. This year, the trust had distributive net income (DNI) of $11,000. After the allocaations of deductions, this total includes the following amounts: net rental income of $9,000 and Tax-exempt interest of $2,000. Philippa's 2023 distribution was $4,000. How much of Philippa's distribution will be treated as tax-exempt interest? A. $0 B. $727 C. $889 D. $2,000