There's several ways of doing. They very depending on how you plan to frame inside the basement. This is the way I did it. I'm sure someone will chime in with different ideas but mine came out great.
My 2x4s laid flat on the wall. I'm not sure if you can get away with that in your basement. With it laying flat, I put the 2x4s all around the window frame so they were flush with the existing wood bucks inside the window. Then I drywalled over everything. Came out sharp.