@ivatan This is tricky but it's ok. The amount being paid to you on your 1099-R is the cost basis of your stock trade. It's going to be taxed as regular income. Which is why it's on your 1099-R. You need to take it and put it as the basis on your 1099-B so that you aren't taxed on the income twice. The IRS will have copies of both of these forms and will understand why you have made this adjustment. A long term sale occurs over a year after the purchase of the stock sold. In your case because it is less than a year between purchase and sale you will enter short term.
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