Cal. Code Regs. tit. 18 § 15552.6
Where the present value of an annuity actually exceeds the amount of the property or fund out of which the annuity is to be paid the present value of the annuity is the amount of the property or fund. This regulation may be illustrated by the following example:
EXAMPLE.
A gives to B, a female, a life annuity of $5,000 per year, payable out of a fund totaling $35,000. B is 65 years of age at the date of gift. Computed in accordance with Section 15552.1, the present value of an annuity of $5,000 per year for the life of a female of the age of 65 is $46,503 ($5,000 x 9.3005 = $46,503). Since this exceeds the annuity fund of $35,000, the latter figure will represent the present value of B's annuity.
NOTE: Reference: Section 15552, Revenue and Taxation Code.
Cal. Code Regs. Tit. 18, § 15552.6