(a) Selling Prices.

1. (1) By taking the means between the highest and lowest quoted selling prices on the nearest date before and the nearest date after the date of gift;
2. (2) By then prorating the difference between such mean prices to the date of gift, considering only the respective numbers of trading days between the selling dates and the date of gift in such proration; and
3. (3) By finally adding or subtracting, as the case may be, the prorated portion of the difference to or from the mean price on the nearest date before the date of gift. For example, assume that a gift of stock is made on Friday, June 15, that sales of the stock nearest such date occurred two trading days before (Wednesday, June 13) and three trading days after (Wednesday, June 20), and that on these days the mean sale prices per share were $10 and $15, respectively. Dividing the difference between the mean sale prices ($5) by the number of trading days before and after the date of gift (2 + 3) gives $1 per trading day. The portion of the difference attributable to the period from the nearest date before the date of gift to the date of gift (2 x $1) is $2. This amount added to the mean price on the nearest date before the date of gift ($10) equals $12. Accordingly, $12 will be taken as representing the market value of a share of the stock on the date of gift. If, instead, on June 13 and June 20 the mean sale prices per share were $15 and $10, respectively, $13 will be taken as representing the market value of a share of the stock on the date of gift. As another example, assume that the gift was made on Sunday, October 7, and that Saturday and Sunday were not trading days. If sales of stock occurred one trading day before (Friday, October 5) at a mean sale price per share of $20 and one trading day after (Monday, October 8) at a mean sale price per share of $23, then the market value per share of stock as of the date of gift is $21.50.

In the case of a gift of stocks or bonds which have a market, on a stock exchange, in an over-the-counter market, or otherwise, the mean between the highest and lowest quoted selling prices on the date of the gift will be deemed the market value per share or bond.

If there were no sales on the date of the gift, but there were sales on dates within a reasonable period both before and after the date of gift, the market value is determined:

(b) Bid and Asked Prices.

1. (1) By taking the means between the bona fide bid and asked prices on the nearest date before and the nearest date after the date of gift, if both such nearest dates are within a reasonable period of the date of gift;
2. (2) By then prorating the difference between such mean prices to the date of gift, considering only the respective numbers of trading days between such nearest dates and the date of gift in such proration; and
3. (3) By finally adding or subtracting, as the case may be, the prorated portion of the difference to or from the mean price on the nearest date before the date of gift.

If the provisions of subdivision (a) of this regulation are inapplicable because actual sales are not available during a reasonable period beginning before and ending after the date of gift, the market value may be determined by taking the mean between the bona fide bid and asked prices on the date of gift, or if none:

(c) Incomplete Selling Prices or Bid and Asked Prices.

If the provisions of subdivisions (a) and (b) of this regulation are inapplicable because no actual sale prices or bona fide bid and asked prices are available on a date within a reasonable period before the date of gift, but such prices are available on a date within a reasonable period after the date of gift, or vice versa, then the mean between the highest and lowest of such sale prices or between such bid and asked prices may be taken as the market value.

(d) Securities Listed on More Than One Exchange.

If a stock or bond is listed on more than one exchange, the records of the exchange where the stock or bond is principally dealt in should be employed in ascertaining market value.

Note: Reference: Section 15551, Revenue and Taxation Code.