The best I can tell looking at the photo, you proliferation is just low down on the scape. I had a couple like that today. If I am seeking it correctly, when you cut it, for the upper cut just cut about a half inch above the proliferation (for a thumb placement), but if you are not planning on having to push the proliferation into the soil, just cut it even with the proliferation. For the lower cut there still looks like an inch of so below the proliferation to soil level, and part of if will be even lower, so just cut it as low as you can. It might even snap off below the soil level. You want enough of the scape to act like an anchor and keep the plant upright when it is potted.