Per Sch E instruction "Use Schedule E to report income or (loss) from rents, royalties,
partnerships, S corporations, estates, and trusts. Resident Trust and
estates report all sources of income. Nonresident Trust and estates
will report only income sources from property owned or business
transacted in Alabama." , if it is a resident trust, then all source income is reported on Sch E.  In program there is a smart worksheet on the top of Sch E to allocate the AL source and outside of AL source income (Sch E AL Source Income Smart Wks). The income is allocated based on the address of the property. This smart worksheet is used to calculate the AL source of income for nonresident beneficiary K-1. The income reported on Sch E should tie to Sch C line 5a and 5b. And Sch E income/expense info can be transferred from Federal. 

Regarding allocating federal expenses between two states, if AL tax return is filed as the resident trust, then again all source expenses should be reported on Form 41 and a credit can be claimed on Sch FC Section B Part A for income tax paid to other states. In program the fourth column on Sch C "Enter AL Source Amount" column is used to report AL source income/deductions for nonresident beneficiary K-1 purpose. If you want to report the AL source income/deduction on a resident trust tax return, it can be reported there.  But this column is created for calculation purpose and it is not part of Sch C graphic. And please check the instruction or tax law for how to report income/expenses for the other state you are going to file the tax return for. 

Hope this helps.