Since you have a 1099-B that shows you sold 80 share (of EMC I assume) why are you using 40 shares in your calculation? Makes the proceeds $2,034.47. And where did the $1240.87 basis figure come from? Basis should be ($1,524.40 x .8677) = $1,322.72. I figure you have a gain of $711.75 .
"So I assume my cost basis would be allocated to the EMC shares and the DVMT shares based on value."
Where are you getting that? Step 5 above tells you how to calculate the basis of all the DVMT stock received. I say $420.87.
"40 shares x 3.88 = $155.20 - basis ($1240.87 x .1323 = $164.17 = loss of -$8.97 which is deductible."
Again, why are you using the 40 shares figure? You sold 80 shares according to the 1099-B. And what's with the $1,240.87 basis figure? Your numbers aren't making sense. Assuming we are dealing with 80 EMC shares at a basis of $1.524.40 I get a Redemption gain of $108.72.
