Well, it's definitely long term so that's out of the way.
Your cost basis is up to you. Cash in lieu of shares is a purchase - they bought fractional amounts of your investment and that reduced what you own. You have the option to put zero and then the basis that you have (the amount that you have spent over the years) remains the same on the investment still in the company. If you would rather you can reduce your basis in the company and use some of it here to reduce gain on the sale.
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