Identify which of the following statements is true.
A. Tax-exempt income is allocated among beneficiaries in the proportion that total tax-exempt income bears to total distributable net income (DNI).
B. Both income required to be distributed currently and discretionary income distributions are included in tier-1 distributions.
C. Under the tier system, tier-2 beneficiaries are the first to absorb income.
D. All of the above are false.