To give a simplified explanation:

Your employer pledges that you have shares as part of compensation. Setting aside which sort of stock agreements are taxable when, the point is that this is compensation, so it will be taxable. Typically, you are going to see this on W2, even if the person doesn't have possession of those shares.

When they sell the shares, the point at which it was "awarded" is that taxable event and that is the point of Basis. That's why it is more usual to need them to find their old W2.

And then the selling is either inhouse, or done through a brokerage, and that triggers the 1099-B, as usual.

So, in the case of your taxpayer, ESOP shares were released (triggering a taxable event and the 1099-R) and then sold (converted to cash, apparently) and hence, the 1099-B.

Find out if the taxpayer asked for this distribution, or if the employer terminated the ESOP, or your taxpayer is now disabled? There are scenarios that are exempt from the penalty.

Hope that helps.