@jagpreet71 ,
From your post , I get the general picture but lack details to comment. Obviously if you are employing a CPA to argue for you, then you should be in good hands ( assuming that the CPA is familiar with international taxation in general and US-India Tax Treaty, at least for federal purposes.
I am not sure I understand your basis for disagreeing with MI. Please could you tell more about the case -- including the taxpayers' immigration status, was the sale completed when they were NRA, when was the sale completed and when did they enter this country etc. etc.
I look forward to hearing from you .
Namaste ji
