Cal. Code Regs. tit. 18 § 15104.1
One of the principal elements in a transfer subject to the Gift Tax Law is the complete divestment of the donor's control over the property transferred. If the donor so parts with his dominion and control over the property as to leave him no power to cause the beneficial title to be revested in himself, the transfer is complete. But a transfer, though passing both legal and beneficial title, is still in essence merely formal so long as there remains in the donor a power to cause the revesting of the beneficial title in himself, and the gift remains incomplete during the existence of the power. The relinquishment or termination of the power is regarded as the event which completes the transfer. The receipt of income from the transferred property by the donee during the interim between the formal making of the transfer and the relinquishment or termination of the power operates to free such income from the donor's power to receive it himself, and constitutes a gift of such income in the year of its receipt.
A possibility of reverter does not in and of itself constitute a retention of dominion and control. When a transfer is made involving such a possibility, the tax is computed as though the transfer were made subject to a condition or contingency (see Section 15210).
Cal. Code Regs. Tit. 18, § 15104.1
Note: Reference: Sections 15104 and 15105, Revenue and Taxation Code.