"Form 1099B have 2 entries. 4500 stocks cashed out on 1/2016 and the
escrow payment of 4500 stock on 8/2016. Here we only had exercised 4500
stocks in total, so not sure how to deal with this."
That sentence is not really very clear. I take it that you owned 4,500 shares, shares acquired via ISO's. It looks to me like you've received the full amount of proceeds in 2016 so I don't see the problem. You can enter that at two trades or combine then as one trade, (the IRS's position is that if an installment is "in escrow" then you count that as "proceeds" in the year of sale, even if you receive it in a later year), it doesn't really make a difference I'd simply enter that 1/2016 trade date with the full amount of proceeds reported.
"Btw the rest of the ISO stocks in 1/2016 was converted to the acquiring company stocks."
That sentence is even more confusing because "ISO stocks" seems to suggest that exercised all your ISO's but previously you said you'd exercised ISO's for 4,500 shares. I think you are saying that the unexercised ISO's were simply "rebranded" as "acquiring company stock" such that when and if you do exercise the ISO's you'll receive stock in the company that acquired your old company. If that's correct there should be no income tax reporting required.
Tom Young
