A ministerial reply (Dubernard AN March 25, 1996, p.1603, no.29549) addresses the tax treatment of gifts of shares with a quasi-usufruct reservation. Under civil law, where a gift is made under the quasi-usufruct reservation, the grantor retains the property of the given goods and may freely exercise his right to dispose of such goods. If he does choose to dispose of the goods, he is obliged, at the end of the duration of the quasi-usufruct period, to return to the owner of the remainder interest the equivalent of the given goods either in kind or in cash. The administration, which has not ruled as to the validity of a quasi-usufruct of shares, considers that the capital gain realized on the sale of the shares by the holder of the quasi-usufruct is taxable in his name. This capital gain amounts to the difference between the sale price and the purchase price of the shares or, if acquired for no consideration, the fair market value of the shares at the date of their acquisition.
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