@Juancar , while I understand the underlying logic behind requiring recognition of "constructive receipt " for domestic entities -- i.e. you recognize the interest earnings ( quarterly or whatever the contract calls out as "update/ increase period " ) even though you have no right to it without breaking the contract and therefore paying a penalty, my struggle is with the undue & associated penalty that you incur because of foreign tax --- e.g. say the interest at 4% annual , is deposited/ recorded quarterly. Thus you using the "constructive receipt " recognize the gain and are taxed thereon. But the foreign govt does not follow the same rule and recognizes the gain only once the three year term is complete. So you then have US taxes on an yearly basis but with no Foreign tax credit . Then at the end of the three years you have a large Foreign tax , but very little US tax ( because most of the interest earnings have already been taxed by the US already ). This means your foreign tax credit is pretty small -- credit is the lesser of Foreign taxes paid and US tax on the same income.
IMHO , one should ignore the crediting of the interest till it is actually available and therefore the US tax is on the same income as the foreign taxed income.
I have no statute to support my position and have no case law to back it up. But it seems logical
pk
