kiran885,
The precise treatment of ESPP sales does depend upon whether your employer's plan was qualified or unqualified. Most are qualified, but it is worth double checking.
Assuming your plan was qualified, your situation appears to satisfy the favorable tax treatment requirements of a duration of more than 2 years since the grant date (the first day of the period in which funds were accumulated to make a purchase) and more than 1 year after the purchase date.
In that event you pay ordinary income tax on the lesser of (1) the discount offered based on the grant date price or (2) the gain between the actual purchase price and the final sale price. You pay long-term capital gains on the gain in excess of the discount received, if any.
So, yes, use the adjusted cost basis in the supplement for your cost basis in the ESPP sale reported on a 1099-B. The ordinary income associated with the discount would normally appear on a W-2, but if that doesn't happen, e.g. you left the company a long time ago, you would report it as if you had received a W-2.
