Cal. Code Regs. tit. 18 § 13408.1
If the power is general in nature, or if it is limited in nature but the donee may use or otherwise receive benefit from the property subject to the power, the value of the property subject to the power is aggregated with the value of the property bequeathed or devised, and the tax is computed as though there had been a single transfer to the recipient, the rates applicable being those in effect at the date of the transferor's death.
If the power is limited in nature, and the donee cannot use or receive benefit from the property subject to the power, the value of the property subject to the power is not united with the value of the property included in the outright gift for the purpose of tax computation, as in the case of a general power. On the contrary, each item is treated individually for the purpose of tax computation. The specific exemption allowable is governed by Section 13801.3(a)(2); the dates applicable are those in effect at the transferor's death. The provisions of this paragraph may be illustrated by the following examples:
EXAMPLE (1). A at his death in 1970 by will gives B, his adult son, property valued at $50,000; and by the same instrument gives B a limited power of appointment over a remainder in other property, such remainder also being valued at $50,000. B cannot use or otherwise benefit from the property subject to the power. The tax is computed as follows:
| Tax | |||||
| Value of outright gift.......................... | $50,000 | ||||
| 5,000 exempt | |||||
| 20,000 at 3%.......................... | $ 600 | ||||
| 25,000 at 4%.......................... | 1,000 | ||||
| $1,600 | |||||
| Value of property subject to power.......................... | $50,000 | ||||
| 25,000 at 3%.......................... | $ 750 | ||||
| 25,00 at 4%.......................... | 1,000 | ||||
| 1,750 | |||||
| $3,350 |
EXAMPLE (2). The facts are the same as in the example immediately preceding, except that the value of the outright gift is $2,000. The tax is computed as follows:
| Tax | |||||
| Value of outright gift.......................... | $2,000 | ||||
| 2,000 exempt | |||||
| Value of property subject to power.......................... | $50,000 | ||||
| 3,000 exempt | |||||
| 22,000 at 3%.......................... | $ 660 | ||||
| 25,000 at 4%.......................... | 1,000 | $1,660 |
Should any person receive property pursuant to an incomplete inter vivos transfer (see Section 13304.2) made on or after July 27, 1917 (the effective date of the Inheritance Tax Act of 1917), but prior to June 25, 1935, and on or after the latter date receive from the same transferor a power of appointment subject to the Inheritance Tax Law over other property, the computation of the tax is governed by subdivision (a) of this Section.
Should any person receive property pursuant to a complete inter vivos transfer (see Section 13304.1) made on or after July 27, 1917, but prior to June 25, 1935, and on or after the latter date receive from the same transferor a power of appointment subject to the Inheritance Tax Law over other property, the computation of the tax is governed by the following:
If the power is general in nature, or if it is limited in nature but the donee may use or otherwise benefit from the property subject to the power, the tax is computed in accordance with Section 13408(c).
If the power is limited in nature, and the donee cannot use or receive any benefit from the property subject to the power, the tax is computed separately on the value of each unit of property, as in the case where an outright gift and limited power are given to the same person on or after June 25, 1935. The tax rates governing the computation of the tax in respect to the inter vivos transfer are those in effect at the time of the transfer; the rates governing the computation in regard to the power, those in effect at the transferor's death. In making the computation, the specific exemption in effect at the date of the inter vivos transfer is allowable against the value of such transfer; no specific exemption is allowable against the value of the property subject to the power, except as provided in Section 13801.3(c)(2).
Cal. Code Regs. Tit. 18, § 13408.1
Note: Reference: Section 13408, Revenue and Taxation Code.