What you failed to do on the original return is report the sale on the Sch D & 8949 as required so the IRS doesn't know of the stock basis and they are assigning a ZERO basis and that is where all that tax/penalty/interest is coming from.
All you probably did was report what was on the W-2. To fix this amend the return to add the stock sale and the BASIS and mail it to the IRS to refute their conclusions. Usually the stock sale will show as a loss of the amount of the broker's fee and NOT a large gain as they contend.
