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SPECIAL GIFT SITUATIONS(d) Unitrust InterestsAn income interest is a unitrust interest only if it is an irrevocable right pursuantto the governing instrument of the charitable remainder unitrust to receive payment,not less often than annually, of a fixed percentage of the net fair marketvalue of the trust assets, determined annually. In computing the net fair marketvalue of the trust assets, all assets and liabilities must be taken into accountwithout regard to whether particular items are taken into account in determiningthe income of the trust. The net fair market value of the trust assets may bedetermined on any one date during the year or by taking the average of valuationsmade on more than one date during the year, provided that the same valuationdate or dates and valuation methods are used each year. When thegoverning instrument of the trust does not specify the valuation date or dates,the trustee is to select the date or dates and indicate the selection on the firstreturn that the trust is required to file with the IRS (Form 1041). Payments undera unitrust interest may be paid for a specified term or for the life or lives of anindividual or individuals, each of whom must be living at the date of transferand can be ascertained at that date. For example, a unitrust interest may be paidfor the life of A plus a term of years. 529An income interest is a unitrust interest only if it is a unitrust interest inevery respect. For example, if the income interest is the right to receive from atrust each year a payment equal to the lesser of a sum certain or a fixed percentageof the net fair market value of the trust assets, determined annually, theinterest is not a unitrust interest. 530When a charitable interest is in the form of a unitrust interest, the governinginstrument of the trust may provide that income of the trust in excess of theamount required to pay the unitrust interest is to be paid to or for the use of acharitable organization. Nevertheless, the amount of the deduction under theserules must be limited to the fair market value of the unitrust interest. 531An income interest in the form of a unitrust interest is not a unitrust interest ifany amount other than an amount in payment of a unitrust interest may be paidby the trust for a private purpose before the expiration of all the income interestsfor a charitable purpose, unless the amount for a private purpose is paid from agroup of assets that, pursuant to the governing instrument of the trust, aredevoted exclusively to private purposes and to which the split-interest trust rulesare inapplicable by reason of an exception. 532 This exception applies only if theobligation to pay the unitrust interest for a charitable purpose begins as of thedate of creation of the trust, and the obligation to pay the unitrust interest for aprivate purpose does not precede in time the obligation to pay the unitrust interestfor a charitable purpose, and only if the governing instrument of the trustdoes not provide for any preference or priority in respect of any payment of theunitrust interest for a private purpose as opposed to any payment for a charitable529 Reg. § 1.170A-6(c)(2)(ii)(A).530 Reg. § 1.170A-6(c)(2)(ii)(B).531 Reg. § 1.170A-6(c)(2)(ii)(C).532 See § 9.22(c), text accompanied by notes 527–528. 340