SECTION 4. SAFE HARBOR

VALUATION METHODS AND MEASURING PERIODS

This section 4 sets forth the Safe Harbor Valuation Methods and the Measuring Periods taxpayers may use to avail themselves of the safe harbor in section 5 of this revenue procedure in determining the value of Exchange Traded Stock. The safe harbor is available only if the transaction satisfies the requirements in section 3 of this revenue procedure, and if the method used to determine the value of the Exchange Traded Stock is a Safe Harbor Valuation Method described in section 4.01 of this revenue procedure that uses the appropriate Measuring Period described in section 4.02 of this revenue procedure.

.01 Safe Harbor Valuation Methods .

To avail themselves of the safe harbor provided in section 5 of this revenue procedure, taxpayers may use any of the Safe Harbor Valuation Methods set forth in paragraphs (1), (2), and (3) of this section 4.01 to determine the value of Exchange Traded Stock.

(1) Average of the Daily Volume Weighted Average Prices . For each class of Exchange Traded Stock, taxpayers may use the average of the daily volume weighted average prices of a share of that class of Exchange Traded Stock, on the specified exchange, as determined on each day of the Measuring Period ( see section 4.02 of this revenue procedure).

(2) Average of the Average High-Low Daily Prices . For each class of Exchange Traded Stock, taxpayers may use the average of the daily average high-low trading prices of a share of that class of Exchange Traded Stock, on the specified exchange, as determined on each day of the Measuring Period.

(3) Average of the Daily Closing Prices . For each class of Exchange Traded Stock, taxpayers may use the average of the daily closing prices of a share of that class of Exchange Traded Stock, on the specified exchange, as determined on each day of the Measuring Period.

February 05, 2018 350 Bulletin No. 2018–6

.02 Measuring Period .

A Measuring Period is a number of consecutive trading days, based on the trading days of the specified exchange, used in connection with a Safe Harbor Valuation Method described in section 4.01 of this revenue procedure. The Measuring Period used to determine the value of a share of each class of Exchange Traded Stock must include at least five but not more than 35 consecutive trading days.

The Measuring Period must end no later than the Closing Date, if the Closing Date is a trading day on the specified exchange. If the Closing Date is not a trading day, the Measuring Period must end no later than the last trading day before the Closing Date. If the Signing Date Rule applies to the transaction, the Measuring Period must end no earlier than three trading days before the Pre-signing Date. If the Closing Date Rule applies to the transaction, the Measuring Period must end no earlier than three trading days before the Closing Date.