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I just had a class in cryptocurrency, and had to deal with a client that had tons of little bits of crypto ‘earned’ from god knows what. I’m too old to deal with this!

Did they have unemployment taxed on original returns?

Here's a good instructor: https://www.bigmarker.com/tax-practice-pro-inc1/Cryptocurrency-Update-The-IRS-is-Closing-In?utm_bmcr_source=email&utm_source=Tax+Practice+Pro%2C+Inc&utm_campaign=6a8b861f03-EMAIL_CAMPAIGN_2020_10_26_12_54_COPY_01&utm_medium=email&utm_term=0_e8d6f6fd06-6a8b861f03-30289501&mc_cid=6a8b861f03&mc_eid=fa3d1fe03e If you see any Crypto courses by Knox Wimberly/Knox Taxes, Knox is really good.

Understand completely. We want to avoid the appearance of "back door boot". He has other rental property, and if he does this, it will probably be used to improve other rental property or maybe buy more. If he waits a couple years, he will probably be off the radar, regardless of what the proceeds are used for. Thanks again - you are absolutely magnificent in researching and answering these questions.

Yes, as I said, if you use Crypto, you have to report it. You have a Schedule D sale proceeds, in your scenario $160,000. You have the $10,000 basis, that I think you meant. But depending on how/when you bought the coins and how/when you "sold" them, you might have several lines to report instead of just one on Form 8949. If you didn't go on your buying spree until January, you wouldn't have anything to report on the current year return.