stock cost-basis, long/short gain with covered calls?

Let's say you have a long term stock holding (several years) with a sizeable gain, you wish to sell the stock in 2011 but instead of directly selling the stock, you instead sell covered call options (every few months) at a target price (higher than the current price). Some of these options expire, but the last period's options are exercised so the stock is sold. Do the proceeds of the final exercised covered-call(s) get subtracted from the original stock cost basis (or equiv. added to the long-term gain) and are all the other expired options just treated as separate independent short term gains?

Here's an example that will hopefully clarify: E.g.

1/1/2009: buy 100 shrs IBM for $5000 ($50/shr)

1/15/2011: sell March 2011 covered call at strike $100 receive $400 total in option premium (IBM is trading at $95)

3/15/2011: above March 2011 call expires (not exercised IBM still at 95). 4/1/2011: sell May 2011 covered call at strike $100 recieve $500 in premium 5/15/2011: May 2011 call is exercised (closed), IBM stock is sold/ called at $100, for $10000 total

Is the tax reporting ?: a. Long term gain: $10000 - $5000 + $500 (May 2011 exercised call) Short term gain: $400 ( March 2011 expired call) or b. Long term gain: $10000 - $5000 Short term gain: $400 + $500 or c. something different?