Low Capacity Magazines (10 or less) Are Unregulated
Calfornia does not regulate magazines with a capacity of 10 or fewer rounds. Low-capacity magazines such as these are legal to buy, sell, import, trade, or build small doghouses out of. California Penal Code 12020, the same section which regulates short barreled rifles and shotguns, as well as a surprising assortment of martial arts weapons, is what regulates large capacity magazines.
Definition of Large Capacity Magazine
CPC 12020c: (25) As used in this section, "large-capacity magazine" means any ammunition feeding device with the capacity to accept more than 10 rounds, but shall not be construed to include any of the following:
(A) A feeding device that has been permanently altered so that it cannot accommodate more than 10 rounds.
(B) A .22 caliber tube ammunition feeding device.
(C) A tubular magazine that is contained in a lever-action firearm.
As written, it is worth noting that the various "10/30" and other 10rd magazines sold in California with longer bodies for cosmetic or ergonomic reasons, are legal as long as the alterations are permanent. However, there are no standards of permanence encoded in the law. It is very safe to assume that welded steel magazines are permanent, however.
Observations on California Magazine Law
As of Jan 1, 2014, "large capacity magazine rebuild kits" (i.e. a disassembled large capacity magazine) are regulated approximately the same as an assembled large capacity magazine. In short, the same restrictions apply to purchasing, importing, or otherwise acquiring a magazine in parts, as to an assembled magazine. You may continue to possess a magazine rebuild kit which you possessed prior to Jan 1st 2014, but you may not acquire more, and because they're separately regulated, it doesn't mean you can now assemble the kits you have into standard capacity magazines.
The relevant text of CPC 12020 is reproduced for you below, taken from the California Office of the Attorney General's Website as it appeared on 10/29/2007. Before you get into the minutiae, it is worthwhile to bring its summary to your attention, colored with some other items:
For simplicity's sake, this article is written for the average individual, not law enforcement or armored car company employees or other specially empowered classes of folks.
You may not buy magazines in another state and drive them, assembled or not, into California! This is obvious enough from the penal code, but it bears re-statement, as it is a common misperception in California. That is importation of a large capacity magazine, and is a crime unless you fall into an exempted class. It is legal to purchase magazines out of state and store them out of state (storage shed, friend's closet, box buried in the desert... as long as they don't enter the state, you aren't importing them).
A belt is a magazine. Rounds linked together in belts are magazines. The law is vague on whether you may shoot a large capacity belt (with disintegrating links) entirely, and then reassemble it to its original capacity. Strictly speaking, separating a belt into two belts of 11 or more rounds of capacity would be the creation of a new large capacity magazine. It is legally safest to keep the last 12-13 rounds of your belts loaded with snap caps or other inert rounds, so that at no point does your belt ever cease to be a large capacity magazine. If you are assembling a belt of ammunition from links, you may link no more than 10 rounds together unless you are attaching them to an existing belt with 10 rounds or more of capacity. It is unquestionable that you may legally attach an infinite number of rounds to an existing large capacity belt.
You do not have to have receipts for your magazines. The burden of proof is entirely upon the state, to prove that you unlawfully acquired large capacity magazines. If you moved into California after 1/1/2000, or the magazines are for a gun that was first distributed after 2000, however, proof will probably be fairly easy. Note that "LE/MIL Restricted" stamps on magazine bodies are not adequate proof that you acquired the magazines after the ban, due to the parts replacement section below.
Further clarifications from the Department of Justice, which do not appear in the print of CPC 12020, are:
"Assembling" is equivalent to "Manufacturing", according to the DOJ. While common usage would consider the prohibited act of "manufacturing" a magazine to involve folding sheet metal and making a new magazine, the DOJ feels that assembling a magazine from pre-manufactured parts does constitute manufacture. This has not been contested; it is probably wise not to contest it.
Individual magazine parts are not regulated; complete magazines and "kits" are. California does not have constructive possession; disassembled magazines do not constitute magazines. It was once legal to do whatever you wanted with a magazine as long as the parts were disassembled; however, on Jan 1st 2014 the law changed. Summary: You could bring any single part of a magazine safely, but now bringing disassembled mag parts into the state may constitute a "rebuild kit", even if one or two parts are withheld.
Relevant text of CPC 32311 is that you can't be "any person in this state who knowingly manufactures or causes to be manufactured, imports into the state, keeps for sale, or offers or exposes for sale, or who gives, lends, buys, or receives any large capacity magazine conversion kit", defined as "For purposes of this section, a “large capacity magazine conversion kit” is a device or combination of parts of a fully functioning large-capacity magazine, including, but not limited to, the body, spring, follower, and floor plate or end plate, capable of converting an ammunition feeding device into a large-capacity magazine".
You may replace any part you want on a lawfully owned large capacity magazine. As long as the magazine continues to function in the same weapon, you are not manufacturing a new magazine, but simply repairing an old one. It is illegal to rebuild a new magazine out of the leftover parts. However, you are not required to dispose of them, or to smash them, or anything like that. If you are really worried, folks have advocated smashing the original magazine body flat and retaining it as proof that your shiny new magazine body is simply the current incarnation of an older magazine. Also, there is no single part which constitutes "the magazine". Bodies, springs, floorplates, may all be replaced at will, and there is no requirement that any part of the original magazine remain in the new one.
A large capacity magazine may be 11 rounds, or 100 rounds. In California, the "magic switch" is when a magazine holds more than 10 rounds. Because, as noted above, you may replace parts on a lawfully owned magazine, you could replace the body and spring from a 20rd AK-47 magazine with that of a 40rd AK-47 magazine, and thus legally upgrade a lawfully owned large capacity magazine without violating the law. However, if you tried this with a magazine which was not a large capacity magazine, you would be manufacturing a new one. Don't do that.
If a modified magazine ceases to work in the original firearm it was intended for, you have criminally manufactured a new magazine. This is why folks in California get excited about the Olympic Arms no-mods-required Sten magblock, if they already own Sten magazines, and don't get very excited about the Uzi magblocks which require modifications that make the mags stop working in Uzis.
January 1st, 2000 was the deadline to import, make, had one sold to you (tricky wording, for a reason), or been given a large capacity magazine. If you were born after that date, or moved into the state after that date, you are basically out of luck according to the traditional reading of CPC. But, see below for exemptions.
January 1st, 2014 was the deadline to acquire a magazine rebuild kit (the parts of a magazine). Per an adjustment effective Jan 1st 2014, it does not appear to be illegal to acquire parts in individual transactions, as the law specifically references a "combination of parts".
Possession of large capacity magazines is not a crime. The burden of proof falls to the state, to prove that a crime was committed a crime by either importing or manufacturing the magazine. There are legal paths to acquire a new large capacity magazine, however they are improbable. It is not illegal to keep a large capacity magazine should you find it. Some folks claim to have found large capacity magazines in desert shooting areas, or abandoned at shooting ranges. It is not illegal to keep magazines which were found in those circumstances.
It is not illegal to buy a large capacity magazine! The prohibited actions are, "manufactures or causes to be manufactured, imports into the state, keeps for sale, or offers or exposes for sale, or who gives, or lends, any large-capacity magazine", and there are various exemptions for temporary loans and such. Note that it is illegal for most folks to sell a large capacity magazine. If you were to buy a magazine from someone who is committing a crime in selling it to you, you are guilty of conspiracy to commit a crime. The interesting wrinkle in this is that, although the spirit of the law is clearly meant to restrict large capacity magazine sales to certain protected classes, as written there are certain classes of folks who can lawfully sell large capacity magazines to anyone.
All Gun Shops, potentially: Exemption #21 states that "a person licensed pursuant to Section 12071" may sell large capacity magazines, without stipulating to whom they may sell them. While the spirit of the law probably intended to restrict this to LEOs or whatnot, the law does not actually state this restriction. However, the linguistic "construction" of the law does result in anomalous grammar/syntax when read in this light, which is generally held to void this interpretation.
Armored Car Companies: Exemption #27 allows the owners of armored car companies to legally sell large capacity magazines to anyone. Because it is not illegal to buy it, and not illegal for them to sell it, an armored car company or its operator (not the employees) may sell large capacity magazines all they want in California.
A "large capacity magazine permit" is an import permit. It is required in order to import them from out of state, not to purchase them from a company which is authorized to sell them. Any gun shop which loses its large capacity magazine permit (perhaps as retribution for selling magazines to the general public as permitted above), can purchase its magazines from any gun shop or armored car company with a valid permit.