@ramanathan1720 -- Namashkaram ji
(a) The reporting of the sale of stocks , bonds etc. and therefore the Gain / loss per US rules is entered as if you had a 1099-B. You use US$ of the day ( generally ) and from published sources . Keep notes on what exchange rate you used and why ( just in case of a challenge ).
(b) Absent a US-India tax treaty limitation that you wish to avail ( and depending on type of asset ), everything up to this point is just as if these were domestic asset.
(c) For 1116 ( foreign tax credit ) things are really based on double taxation clause of the tax treaty. Thus US is required to give you a credit ( allowable for the year ) based on the lesser of the US tax and that actually paid to India , on the DOUBLY taxed income. In most cases it would be the lesser of the gain computed under US laws and under Indian tax laws. That is your foreign source income.
Does this make sense ?
Is there more I can do for you ? ( you can add to this post or PM me ).
pk
