pk, thanks for the response. Country is India which has treaty with US for Double Taxation credit. Cost basis in India is based on the price it was acquired last and not step up like the US. Hence, the capital gains will be much higher there. Income computed in the US is not taxed in India. So, my concern is when i show the sale in the US on 8949, capital gains is almost 0. But the capital gain is much higher in India, which I have paid full taxes on.
Should I compute the US capital gains on 8949 similar to the capital gains calculation in India (basically using the cost basis rule used there)?. In which case, I will be confident to apply for full foreign tax credit(FTC).
TurboTax tax specialist recommended showing just the step up basis in the US and claim then FTC for taxes paid in India. I am not too confident with that approach.
Also, I have a carryover losses from prior years which is higher than the capital gains that I have on this sale. That amount will be deducted against the losses but i will still be entitled for the FTC, right?
