There are usually two main areas to address concerning calculation of fair market value of stock: charitable contributions, and capital gains or losses.

CHARITABLE CONTRIBUTIONS
According to the IRS, calculating fair market value of stock for purposes of charitable contributions is a very simple formula.

1. Choose a valuation date (date the stock is contributed to the charity).

2. Calculate from that day the average (mean) between the highest and lowest stock selling price. This is your fair market value for stock contributions (FMV).

http://www.irs.gov/newsroom/article/0,,id=118196,00.html

While the formula above gives you the basic definition, there may be many specific rules for individual cases. The best guide to these rule is http://www.irs.gov/publications/p561/ar02.html#d0e216/ IRS publication 561. It is quite lengthy and contains very specific rules for many types of charitable contributions, including stocks and bonds.

CAPITAL GAINS OR LOSSES

If you are figuring additions to or subtractions from your income due to sale or trade of investments, fair market value of your stock is based on the information found in
http://www.irs.gov/publications/p550/ch04.html/ IRS Publication 550, and http://www.irs.gov/publications/p550/ch04.html#en US publink100010430/ IRS Publication 14.
Source(s):
http://www.irs.gov/publications/p561/ar02.html#d0e216
http://www.irs.gov/publications/p550/ch04.html
http://www.irs.gov/publications/p550/ch04.html#en_US_publink100010430
http://www.irs.gov/newsroom/article/0,,id=118196,00.html


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