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Musk’s SpaceX Share Gift Meets Treasury’s Trump Account Rule Against Restricted Stock

Aaron Harme

Elon Musk said on X on Monday that he’ll give one of his SpaceX shares to every child in America next year, without saying how. The government channel built for that kind of gift has a condition his shares may not meet. Treasury’s temporary rules, in effect since Sept. 30, let a charity or government send listed stock into children’s Trump Accounts only with Treasury’s approval and only if the stock is not “a restricted security as defined in” the SEC’s Rule 144, which covers shares bought from a company outside a public offering, the Federal Register text says. SpaceX’s June IPO prospectus says every share outstanding before the offering, “including shares held by Mr. Musk and other existing investors, will be deemed ‘restricted securities'” under that rule.

Musk owns about 4.8 billion SpaceX shares, or 6.4 billion counting unvested awards and stock options, a 48.4% stake, CNBC reports from an August SEC filing. His own Schedule 13G shows most of that is Class B stock, which carries 10 votes a share, with about 849 million one-vote Class A shares held by his trusts. The prospectus says a Class B share converts to Class A on almost any transfer, gifts included, so whatever reaches a child would be the one-vote kind.

The account that already exists

Trump Accounts are investment accounts for children under 18 with a Social Security number, created by section 530A of the tax code in last year’s tax law. The statute limits what they hold to mutual funds or exchange-traded funds that track a broad index of mostly U.S. companies and charge no more than 0.1% a year. On Oct. 1 Treasury opened one automatically for every eligible child, saying in a release that “every eligible child under the age of eighteen with a valid Social Security number now has a Trump Account.” The White House puts the total at nearly 70 million.

The Sept. 30 rules carve out a stock exception, and its terms shape any SpaceX gift. The donor has to be a government or a charity, so Musk would give the shares to a charity first, and the rules say his gift to that charity is “deductible under section 170,” the charitable-deduction section, subject to that section’s other requirements. Every child in the chosen group must get “the same amount.” Treasury may approve a request “in the Secretary’s sole discretion,” and for stock “will consider the cost of transferring and administering the shares.” The stock generally can’t be sold for five years or until the end of the year the child turns 17, whichever comes first.

The rules also settle who votes. The auto-opened accounts pool their assets in a master group trust, and Treasury anticipates that neither the trustee nor the Secretary “has discretion with respect to voting.” A child in that system would own a slice of SpaceX without directing a single vote, and SpaceX would likely see one large holder instead of tens of millions of small ones.

In a July 6 post on X, SpaceX’s Gwynne Shotwell said she and her husband would give a share of their SpaceX stock to a Trump Account for each of more than two million children, aimed at kids aged 11 to 17 in lower-income areas. Fortune reported that she announced it before Treasury finalized rules that “now require stock gifts to come through a charity and win Treasury’s approval.”

The route around Treasury

Musk could skip Trump Accounts and give shares outright, which brings in ordinary gift rules. The IRS’s 2026 inflation figures exclude the first $19,000 of gifts to any person, and a share at Friday’s $146.03 close sits far under that, so no gift tax and no gift tax return for a present gift. Under section 1015 the child would take Musk’s cost basis, “the same as it would be in the hands of the donor,” not the market price on the day of the gift.

That route needs an account for each child. A minor’s shares typically sit in a custodial account under each state’s UTMA or UGMA law, where the child “becomes the owner of the property at the time of the gift” but an adult manages it until the age of majority, FINRA says. Tens of millions of those would have to be opened and linked. Musk’s IPO lock-up, his agreement with the underwriters not to sell or transfer his shares, runs to the 366th day after the prospectus, about mid-June 2027, and the prospectus lets him make gifts before then only if the person receiving them signs on to the lock-up.

The prospectus says restricted shares can be sold publicly once they’re registered or qualify for an exemption under the SEC’s resale rules. That puts the next decision with Musk’s lawyers before it reaches any child, and the route they pick decides whether kids end up holding shares in their own names or shares held for them in a Treasury trust.

Sources

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