You're both right, but it's a little complicated. To be a REIT, PZN has to pay out not only 95% of this year's taxable income, but also 100% of CCA's "earnings and profits" that were accumulated as of 12/31/98. The only timing requirement is that they be paid out by the end of 1999.
Currently, PZN has been paying .05/share of the special dividend quarterly. In addition, the quarterly operating dividend is about .04/share higher than required under the 95% rule, so that excess comes out of CCA's E&P, which also reduces the amount that has to be paid as a special dividend ine December.
If PZN continues to pay .60 per share each quarter this year, but taxable income decreases, then the additional excess over the 95% requirement will also come out of CCA's E&P, thus further reducing the amount required to be paid in December.
You understand correctly that the CCA E&P is a fixed amount. The only variable is when it is paid. The more that is paid in the quarterlies, the less will be paid in Dec.