@EA17 , just to clarify
(a) you a US person ( citizen/ GreenCard ), have a foreign Tax home, have Foreign earned Income exclusion to avoid double taxation on active income ( form 2555).
(b) you also have foreign capital gain that is being taxed by both your host country and by the USA -- hence the need for foreign tax credit --form 1116
( 1) The disposal of foreign capital assets are recognized by filling out various forms -- 4797, 8949,Schedule-D etc. depending on the type and usage character of the asset . There is no difference in treatment whether this is domestic or foreign asset.
(2) Any foreign taxed paid on un-excluded foreign earned income is reported on form 1116 under general category foreign income. Note that here TurboTax may not automatically show the un-excluded i foreign earned income and definitely not the allocated foreign tax associated with that un-excluded income. You have to make sure these are entered correctly ( and keep record of how you arrived ta that figure including exchange rate used ).
(3) Additionally , if you have foreign Passive income , ( then under "Credits & Deductions" tab, you will need to choose foreign tax credit , form 1116 for Passive income and then enter Foreign sourced income ( note that this amount in case of disposal of foreign asset is the amount computed as gain under US laws --generally shown on form 8949 or Schedule-D --- the gain under foreign/ host country rules may be different. than that under US tax laws), allocated foreign tax paid on this income ( this may get complicated , especially if the rate of taxation is dependent on the type of income in the host country , but quite doable ).
(4) Note that while US will recognize all foreign taxes paid , the actual amount available ( allowable foreign tax credit ) for the current tax year is based on a ratio of foreign source income to world income.
Hopefully I have answered all your questions . Is there more I can do for you ? Please feel welcome to ask for more help ( if need be ) and one of us volunteers will definitely help.
If you have questions that are specific to your case , you are welcome to PM me (without Personally Identifiable info ).
pk
