In determining the adjusted net income of an operating foundation for taxable years beginning after 1981, the income portion of a distribution from a split-interest trust to a private foundation is the greater of:
- The amount of the distribution that is treated as trust income (under the governing instrument and local law), or
- The guaranteed annuity, or fixed percentage of the fair market value of the trust property as determined annually, that the private foundation is entitled to receive for a particular tax year, regardless of when the amount is actually received.