@RobertB4444 Due to the secrecy of the bureaucracy, it is unclear whether the land was sold before or after the ownership transferred from the siblings' estate to the two heirs.
From what you say:
* If the sale happened before the transfer (in sum, they never inherited land), then only a report of the cash gift would be needed. In that case, what happens to the tax deducted from the proceeds of the sale in the foreign country? Can the heirs deduct it from their tax return here (with some "foreign tax credit" or something)?
* If the sale happened after the transfer, then a capital gain/loss would apply and would need to be reported year X+2 but with a basis of year X, like you said. So basically, two appraisals would be needed for years X and X+2. Likewise, if the local government deducts tax from the sale proceeds, how can that be accounted for so that the heirs are not doubly taxed (abroad and in the US)?
Thank you.
