Deductions & credits

For questions 1 and 3, the answer is yes. you will report the gross proceeds on that form 8949 in Turbotax desktop Premier as follows 

Wages and income

Less Common income

then; Sale of your main home

then Sold A Home

then Adress of the Home you Sold-put the foreign adress

then here

Then to claim the foreign tax credit, you would do as follows;

Type in the magnifying glass in the upper right hand corner foreign tax credit

then hit Jump to foreign tax credit

then Foreign Taxes

then Tell Us About your Foreign Taxes

then Foreign Taxes

then Do You Want the Deduction or Credit, say take the Credit

then Reporting Foreign Taxes Paid

then No Other Income or Expenses, hit No

then Completing form 1116

then Foreign Tax credit worksheet

then Choose Income type, General category income

then Add a country

then Country name

the Other Gross Income- don't put in anything as you already entered the income on Sch D

then continue, continue and continue till you hit this screen

And that's where you enter the taxes paid on the property.

As far as filling out Form 3520, it seems that it is a requirement for "trusts" and gifts if you as a US citizen receiving from a nonresident alien 100,000 or more. No where do you mention whether this inherited property was set up in some kind of trust or what have you. As far as considering the inherited property as a gift, gifts and inheritances are treated entirely differenty for federal tax purposes. For example there is a gift tax for a mother gifting  a property during her lifetime. while there is an estate tax applicable only at the time of a mother's death. Like in your situation. you would only be taxed on the profits incurred from this inherited property as U.S. tax offsetted by the foreign tax paid on this profit in the other country.  In your situation, since the actual gift you received from your nonresident siblings is less than 100,000, you would not be required to file Form 3520. See HERE      Who Must file  #4

Good luck!