You need to determine for each lot how you're going to report the sale of the stock, then you enter it accordingly.
Assuming that this is a deal that allows you to report gain, but not losses, and the gain is the lesser of the cash received or the actual gain based on the "proceeds", (cash + stock), you DERIVE a basis to use for each trade in order to come to the correct answer.
I don't know how the broker is reporting the proceeds to you - either just the cash or the cash + FMV of the stock - but it doesn't really matter as the process is the same either way:
- Have a loss? Report basis equal to proceeds
- Have a gain? Use whatever basis you need to in order to report that gain.
The actual numbers you use here will depend on what "proceeds" the broker's reporting but the strategy is always the same: use whatever basis against the reported proceeds that gets you the correct answer.
Tom Young
