Line 18 is subject to adjustment. From TT's guidance:
Form 1116, Line 18 Adjustment Exception Worksheet:
If you qualify for the Form 1116, line 18 adjustment exception, you do not need to make any adjustment to capital gains or qualified dividends. To qualify for the adjustment exception, both of the following requirements must be met:
1. Line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or Line 18 of the Schedule D Tax Worksheet does not exceed:
* $340,100 if married filing jointly or qualifying surviving spouse;
* $170,050 if married filing separately;
* $170,050 if single; or
* $170,050 if head of household.
AND
The total amount of foreign source qualified dividends plus foreign source net capital gain is less than $20,000.
The program will automatically calculate the adjustment exception if the income limit for the filing status used is not exceeded and the total amount of foreign qualified dividend and capital gain income from Line 1 of all copies of Form 1116 is less than $20,000. If both these conditions are met, the program will check the Line C Adjustment Exception box to indicate the adjustment exception is met.
If the total amount of foreign source qualified dividends and net capital gains included on all copies of the Form 1116, line 1 is less than $20,000, the program will automatically check the box on Line A and check the Line C Adjustment Exception box to indicate the adjustment exception is met; if not, the program will check the Line B box and calculate the Line 18 worksheet and enter this calculated amount on Form 1116, line 18.
The Adjustment Exception will NOT calculate if either Line 5 of the Qualified Dividends and Capital Gain Tax Worksheet or Line 18 of the Schedule D Tax Worksheet exceed the income limits OR the checkbox in the Line 1 Smart Worksheet is checked.
See Form 1116 instructions for line 18 on p. 23 for additional information.
