In California some types of vehicles do not require insurance. These include off-road vehicles, trailers, special equipment vehicles, and those registered as PNO (planned nonoperation). The CA DMV states that if it is time to renew the registration for a vehicle that you do not plan to use, you may place your vehicle on Planned Non-Operation status. You mentioned your car is registered as a PNO and thus does not need auto insurance coverage while it is inoperable and off the road. With a car that is listed as a PNO you cannot drive the vehicle legally and it cannot be parked on a public street. If you to drive the car under PNO, you will need to register it. So if you plan on selling it to someone that will test drive it and drive it away from where you have it stored or garaged then you will need to take the PNO off and thus register and insure the car so that it is back on the road legally. So you can sell the car with PNO, but it cannot be parked on a public street or test driven. [Let CarInsurance.com help you find affordable auto insurance now.] You can contact the California DMV for clarification of what to do when selling a car that is listed as a PNO however remember when you request a PNO there is an affidavit of non-use in which you certified under the penalty of perjury that the vehicle listed would not be operated or parked on any California roadway and that if the car is operated or parked on any CA roadway prior to complying with applicable registration and financial responsibility laws that you will be subject to a citation. Selling a car shouldn't be considered "use", but the activities related to selling the car may be considered "use". Upon receipt of this Affidavit of Non Use the CA DMV will cancel the registration. The vehicle cannot be operated on a California highway until proof of insurance is received by the department. The DMV notes specifically that if at any time the vehicle is operated or parked where it may be subject to citation, then full registration fees and penalties for that year become due. You should contact the CA DMV to find out what steps you should take to remove the PNO if you are going to be selling the vehicle and it will thus be going back on the roadway, there may be some concessions that are made.
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As for the smog issue, whenever there is a change of ownership, the DMV refers to the transaction as a "transfer." The California DMV says that the seller is required to obtain smog certification when a vehicle is transferred so you would actually be responsible for the smog check. The CA Department of Consumer Affairs notes that many vehicles only need a Smog Check when they are being sold or are being registered in California after previously being registered in another state. So the smog issue would be on you as the seller of the vehicle so it again is something you should check with the CA DMV about when you also discuss the PNO issue in terms of selling the vehicle you have listed as non-operational. | 
