@ErnieS0 Sorry I didn't make myself clear: Both the child and the grandchild paid "inheritance tax" to the foreign country for it to process the inheritance (that happened year X+1). Additionally, the child filed an estate return for decedent's estate. Is there any way for them to recover/deduct the money both child and grandchild paid as "inheritance tax" to the foreign government? Or is that "lost money" as far as US taxation is concerned? Should the child have reported it in the "estate tax return" (Form 706) that you mention? Since the decedent was no longer living in the US and had no interests here, the child reported just 0.
Thank you.
