@CalMaple even though the treat uses "may be", generally it would be interpreted as "will" for this case i.e. US would tax that income also but at not more than at 15%., whereas France can tax it at its rate for this type of income ( dividend ). There are at least two things you have to do for this situation:
(a) First you complete the France Return , so you the amount of Foreign tax you pay.
(b) then assuming the French Tax allocable to this passive income is not greater than safe harbor amount ( US$300 per filer i.e. US$600 for joint filers ), you just claim that and without using form 1116.
(c) If the amount of foreign tax imposed on this is substantially more than the safe-harbor amount then you have to use the form 1116. In this case you have to do two things
1. you have claim "Resourced by Treaty " status on form 1116 -- thus the US dividend income is sourced to France for the purposes of form 1116 only;
2. You have to enter the Total and resourced income as foreign income and then enter the adjustment called out in the instructions for form 1116 ( this is because US is limited i to tax rate of 15%, by treaty ).
This will result in the correct tax computation of Foreign Tax Credit for you.
Is there more I can do for you /
pkm
