California Code of Regulations
Title 18 - Public Revenues
Division 2.5 - State Controller
Chapter 2 - Gift Tax
Article 2 - Imposition and Computation of Tax
Section 15210 - Contingent or Conditional Gift

If a taxable transfer is made subject to a contingency or condition upon the occurrence of which the interest of any donee in the property transferred may, in whole or in part, be created, defeated, extended, or abridged, the tax is computed at the highest rate possible upon the happening of the contingency or condition. For example, A gives B a life interest in property valued at $100,000, and C, D, and E, or the survivor, a remainder interest in the property at B's death. C is not related to A. D and E are brothers of A. In such case the tax on the remainder will be computed on the supposition that the property will go to C, since a tax on a remainder to C would be computed at higher rates than on a remainder going to D or E (see Revenue and Taxation Code Sections 15110 through 15113 and 15205 through 15208). Any person who pays the tax so computed may secure a refund in the event that D or E survive B's death, in an amount equal to the difference between the tax paid and the tax which would have been payable had it been computed on the basis of a transfer to the actual survivor or survivors (see Revenue and Taxation Code Section 16224).

The payment of a tax due on a contingent or conditional gift may be deferred on the filing of a bond (see Revenue and Taxation Code Sections 15931 through 15937), and may under proper circumstances be the subject of a compromise (see Revenue and Taxation Code Sections 15951 and 15952).

NOTE: Reference: Section 15210, Revenue and Taxation Code.