Hello,
I have a quick question. I understand Foreign tax credit is for prevent taxation on the same "taxable" income twice (i.e. taking FTC for tax paid on dividends in Germany for example).
What happens when someone has US tax exempt bond funds, and they are taxed at 25% in Germany. Is it that since these dividends would not have been taxed in USA, there is obviously no credit
OR
The FTC is still counted as tax paid by US citizen in a foreign state and is used to offset other taxes.
If someone has encountered this or knows publication dealing with this, can you please let me know,
Thanks
Skaufmann
