@muralinn ji, I would generally disagree with your conclusion ----
(a) Double taxation clause in all its forms in The Tax treaty allows mitigation of double taxation effects by allowing for foreign tax credit --- irrespective of the type of income ( there are of course lots of "ands" , "ifs" and "buts"
(b) Alienation of personal property ( i.e. non income producing ) showing gains may be taxed ( and per the tax laws of each contracting country ) by each country -- sometimes there are limits on the tax rate by one or both countries.
(c) But you are correct in that per US tax code a US person's passive incomes are generally sourced to the resident state or US. However, when the source is foreign such as Foreign dividends ( Foreign source )and taxed by a foreign Tax authority with whom US has a treaty, under the terms of the treaty these Foreign taxes are eligible for Foreign Tax credit.
(d) Additionally , if a US person resides in a foreign country and gets a passive income from home country and the Tax home country then taxes this income ( i.e. double taxation by both US home country and the tax home country ) then one uses "Re-sourced by Treaty" technique/ category to ameliorate double taxation -- foreign tax credit/ deduction is used.
(e) Humbly disagree that this is a very complex situation and needs a CPA --- CPAs are mainly/predominantly accounting specialists -- not necessarily tax expert ( even though many do and the IRS is full of CPAs ) . If you are uncomfortable with my position, then please do consult an EA ( Enrolled Agent -- certified by IRS; Tax Lawyer and a CPA well versed in International taxing.
I rest my case.
Namaste ji
pk
