Yes! You not only are allowed, that is the proper way to report the sale. It does seem odd that your 1099 Consolidated has two different amounts for the cost basis. You should check the paperwork that shows the actual cost basis and make sure it is not a supplemental schedule. Typically, for company stock issued by an employer, the broker reports the cost basis as zero, and the actual cost basis (the value of the stock, and the amount you were taxed on when you recieved it) has to be added as an adjustment to the cost basis. Another possibility is that Morgan Stanley issued a Corrected 1099 Consolidated. If so, it will be clearly marked as such on the form. If that's the case, be sure to use the corrected version and disregard the other one. Either way, you will report a cost basis of $10,552.59.
If you have not capital gains to offset with your loss, you will be able to realize a loss of $3,000 on this year's tax return. The unused loss will roll forward to the next year, and you can take another $3,000 loss. This will continue until the loss is used to offset capital gains or used up $3,000 per year.
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