@sparames1
(a) generally and in the presence of 1099-B ( if you are using a US broker ) you just take the information ( i.e. the stock name, dates of purchase and sale, basis and sales price etc. ) of the sale and TurboTax will compute your US gain and tax on this ( capital gain treatment or ordinary ).
(b) if you are selling the stock through an Indian broker, then obviously you will not have the benefit of 1099-B. In such a case you use Schedule-D -- essentially what you do is tell TurboTax that you have sale of stocks, but no 1099-B. Turbo will guide you through entering the requisite details and compute the gain and tax thereon.
(c) in either of the above situation, you then go to "Credits & deductions tab, select "Foreign Tax Credit " and fill out form 1116. This will ask for your foreign source income {-- in this this is the gain computed in step (a) or (b) } and also the foreign taxes paid and to which country. This will allow Turbo to compute your foreign tax credit. Your foreign source income category here is "passive"
Note that while under the treaty, the total foreign taxes paid for the category is recognized in full, the amount allowed for the tax year is the lesser of actual paid and the US tax on the same income. The rest is banked and can be used one year back or 10 years forward.
Does this make sense ?
Is there more I can do for you ?
