at this stage, probably worth getting local help that is knowledgeable in foreign tax treaties - that stated, here is the Japan / US treaty.
https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/japantreaty.pdf
if you read simply the title of the treaty from this link, it's all about ensuring you are not double taxed nor avoiding paying tax
So I would expect that, in your example, the $70,000 is a return of her after-tax contributions, so not taxable at all (she paid any tax due when she earned it, either in Japan or the US).
However, the $50,000 of earnings / profit is taxable now because she never paid taxes to either Japan or the US and to not pay on it would be the avoidance described in the title of the treaty.
