I found plenty of documentation that backs using market data on the day of transfer to determine FMV but nothing that supports using prior day closing price. Having an incorrect FMV can be a huge deal with in-kind transfers from IRA to taxable account because the transfer and the sale often times won't occur in the same year, which would result in multiple years of incorrect filings. And discrepency could be by huge amounts as the market can easily swing a few percentage points any given day, not to mention individual stocks can sometimes move double digit percentages. Especially when large positions are held, as is often the case in retirement accounts, this can really create a problem if the FMV is not calculated/reported correctly.
This is definitely not a small or trivial matter. HOW are these large brokerages getting away with this, and refusing to justify their actions? I want to believe there is some actual justification for using prior day closing price but am coming up emtpy so far...
