Hello,
I inherited a 30 yr. US savings Bond and paid German inheritance tax on the total bond value of which appr. 75% was interest. I will enter the foreign taxes paid on form 1116 passive activity form Part II line A(t).
The problem is that in the foreign country, I only have to pay 11% inheritance tax over a certain amount.
Can I just use the 11% tax, I have more than the foreign exclusion?
Or:
Must I use a multiplication factor?
Foreign taxes / (Tax free Amount + Foreign Inheritance Interest)
Or is there another way.
I filled out the Schedule K-1 Worksheet Estates And Trusts, but there was no tax-exempt interest. On schedule B the total K-1 interest in included.
