@patnaik , Namaste Patnaik ji.
Just to be sure that I understand the situation:
(a) You a US person ( citizen/GreenCard/ Resident for Tax purposes ) inherited a property in India in 2023 with a FMV of US$180,000
(b) You disposed of this asset in 2024 for sales price of US$182,000.. Is this the net amount i.e. Sales price LESS sales Expenses ( like commission. transfer tax, any repairs etc. done for purposes of selling etc. etc. ) ?
(c) You paid US$ 39,000 as capital gains tax ( TDS ? ). Thought India uses a flat 20% TDS and uses indexing (but no step-up) of basis ). Surely your India tax return is not filed yet for 2024/2025 tax year. This will not get settled still for a while -- no ?
General suggestion would be to not file your US tax return ( but go ahead and pay-in any tax liability ) till later in the year when the Indian tax is finalized. Else file now based on TDS and come back and amend the return when Indian taxes are settled/finalized.
As far as foreign tax credit, generally and per US-India Tax Treaty, while US will recognize dollar for dollar what has been paid/settled with India, the allowable credit , for the year ,is always the lower of amount paid to India and what US taxes on the same income ( double taxation mitigation clause ). Thus given the step up value, your capital gain tax in the US is bound to be far ,lower than that you paid in India.
Also note that there is no area in TurboTax ( or US tax ) where a distinction is made between assets disposed of in the USA or abroad.
You are welcome to tell me more ( either here on the public board or PM ) and I will do all I can to help you file a correct return.
Note that for this type of reasonably complex returns , my preference is to use Windows download "Home & Business".
Also note that if the proceeds stayed in any foreign ban account ( in India ) for any length of time you are subject to FBAR and FATCA regs..
Is there more I can do for you.
Namaste ji
pk
