Responses as follows -
1) Generally US tax law provisions allow only a "proportionate" credit i.e. in the ratio of India Income/Total Income (India + US) - in your in-laws case if US income is nil or very little, then there is a chance they can get almost full credit. They'll have to file Form 1116 with their 1040.
2) It depends on the state tax law. To the best I know, California wont give credit to India tax. Georgia also doesnt. Please check with a state CPA for more clarity.
3) You'll have to check the tax residency laws & tax incidence based on residential status of the state. States like California have domicile requirements instead of no. of days.
