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If there are capital gains to be reported (sales proceeds minus the fair market value of the property on day of inheritance) those will be included in your taxable income on your federal and state return. On your federal return you can claim the foreign tax credit for taxes you paid in India so the credit will offset your federal tax liability. However, there's no such credit on NY state tax return. Your accountant is correct. Capital gains will be claimed on both, your federal and state return, but the credit only offset your federal tax liability, but not state.
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