A Code 1 in Box 7 of a Form 1099-R indicates an Early Distribution, with no known exception, which would generate a 10% Penalty.
Depending on what type of Retirement Account the distribution was from, here's more info on IRA Early Withdrawal Penalty Exceptions and Penalty Exception for Non-IRA's.
After entering your 1099-R, TurboTax will ask about any Penalty Exceptions you may qualify for.
Keep this 1099-R handy for when you sell the ESOP shares. The amount reported in Box 2a will be the Cost Basis when reporting the sale later, with a Form 1099-B.
Here's more info on ESOP Distributions on Form 1099-R.
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