@qbteachmt Thanks again for your valuable comments and your speculations may be proven to be right (see below).
Just received further clarifications from TP as follows:
The gross proceeds on 2021 f1099-B was $67,000 and TP had received such amount minus bank charge of $10 in 2021. For our discussion below, I will disregard $10.
The $67,000 gross proceeds can be broken down into 2 components as follows:
1. In October, 2017, $30,000 was set aside as an escrow from the merger consideration to be received in the future (2021). He $30,000 was not set aside from the stock sale proceeds reported in 2017 tax return.
2. Between 2019 and 2021, 3 deposits ($12,000 in 2019, $12,000 in 2021 and $13,000 in 2021) were made into the escrow fund based on milestones that were achieved. The total deposits of these milestones were $37,000.
The 2021 originally filed f1040 included the $67,000 as part of wages. Shortly after TP e-filed, he received the 2021 f1099-B containing $67,000 as its gross proceeds.
I am seeking your comment as well as advice as to whether the 2021 f1040-X is correct as follows:
a) 2021 f1040-X will include Sch D/f8949 with gross proceeds of $67,000 and a basis of zero resulting a $67,000 long-term capital gain. ($30,000 as a long-term capital gain Box E Sch D (being the escrow fund) and a long-term capital gain of $37,000 Box E Sch D (being the milestones deposits).
b) 2021 f1040 will be amended to reduce wages from $67,000 to zero.
Your thoughts on this? Again, many thanks in advance for your advice.