I think I've had this discussion before. I don't recall finding any IRS guidance specifically addressing this.
Regardless of the valuation used, the total taxable amount once the shares are sold will be essentially the same: the taxable amount from Form 1099-R plus the taxable amount from Form 1099-B. What can differ is the tax rate that applies. If the in-kind-distributed shares are held for more than a year outside of the retirement account, the amount in excess of the basis that was established upon distribution from the retirement account will be taxed at long-term capital gains rates.
