It depends. If the estate filed a tax return in Canada for the sale and you only received a distribution from the estate as a beneficiary, then 'corpus' would not be taxed. However, it sounds like you are saying you inherited the property and then sold it. If the latter is the case you will file the sale on your tax return (each beneficiary for their share) and use the foreign tax credit to cancel out the tax for the US if there is any tax on the sale at all.
- Example: Fair Market Value on the date of death: $100,000 minus the selling price of $100,000 = zero gain or loss.
- In this example there would be no need for the foreign tax credit even though you did pay tax in Canada.
As I indicated earlier, it's not likely there will be any capital gains because the selling price and the inherited value will be very close and could even be a loss when considering selling expenses.
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