It is not all that clear why you received a W-2 or what the amounts on the W-2 represent. But because your question references an ISO deferred gain, we will provide some general background information regarding ISOs and an 83b election.
An Incentive Stock Option is a benefit given to employees and allows them to purchase stock in the company at a discounted price. This option requires employees to pay taxes on the stock at the time of purchase. A tax may be applied at the time of sale, but that is dependent on how long the stock was held. Employees have to wait until their stock has vested before they can exercise the option.
An ISO gives employees the ability to file something called an 83b election. An 83b election is a provision under the Internal Revenue Code. If your company gave you an ISO, and it appears they did, you had 30 days to complete form 83b and file it with the IRS. Had you made the 83b election, of if your start-up made it on your behalf, you would have had the option to pay taxes on the pre-vested, pre-exercised options, at their current price. Assuming the value of your ISOs increased, this would have lessened your tax burden when the ISOs vested or you exercised the option represented by the ISO.
Your question is more complicated given that the start-up is no longer in business (you indicated it had been sold) and you need to account for your ISOs. You also mentioned that you have deferred gains but generally with an ISO that has been exercised, any gain in the underlying stock is not taxed until sold. However, the plan governing your ISOs and subsequent exercise may have provisions that impact the way in which you report all of this for tax purposes. Thus, you can follow-up with additional information, but this may involve tax advice beyond what we can provide.
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