Cal. Code Regs. tit. 18, § 25131
As a general rule the average value of property owned by the taxpayer shall be determined by averaging the values at the beginning and ending of the income year. However, the Franchise Tax Board may require or allow averaging by monthly values if such method of averaging is required to properly reflect the average value of the taxpayer's property for the tax period.
Averaging by monthly values will generally be applied if substantial fluctuations in the values of the property exist during the income year or where property is acquired after the beginning of the income year or disposed of before the end of the income year.
EXAMPLE:
The monthly value of the taxpayer's property was as follows:
Total
January
$2,000
July
$15,000
February
2,000
August
17,000
March
3,000
September
23,000
April
3,500
October
25,000
May
4,500
November
13,000
June
10,000
December
2,000
$25,000
$95,000
$120,000
The average value of the taxpayer's property includible in the property factor for the income year is determined as follows:
$120,000 / 12 = $10,000
Averaging with respect to rented property is achieved automatically by the method of determining the net annual rental rate of such property as set forth in Reg. 25130(b).