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I have three different types of foreign taxes I paid last year.  The ones reported on 1099-DIV ($1,000), ones reported on a foreign equivalent of 1099-INT ($500), and then the foreign taxes withheld on sale of the money losing inherited property ($15,000) (I have a 1099-S equivalent documentation from the foreign country for this sale.)  

 

First:

Please confirm this is all PASSIVE CATEGORY INCOME.  I don't see how the inherited house sale is GENERAL CATEGORY INCOME based on 1116 instructions.

 

Second:

When answering interview questions regarding the foreign tax credit, the 1099-DIV and pretend 1099-INT info carries over into 1116 automatically.  However, for the sale of the house, which I have already reported on 8949, the capital loss information obviously does NOT carry into 1116.  I can add $15,000 under passive income category for that country as other foreign taxes paid.  However, my question is this: do I need to add the capital loss information of $100,000 from 8949 for inherited house sale manually into the following 1116 interview question (see below)?  This results in a complete inability to claim any foreign tax credit this year, with a carry over into 10 years which I will not even use a fraction of as I am closing the bank account in the foreign country (done there) and my 1099-DIV foreign taxes are small year to year.  I know I have the option of deduction vs. credit, but first I need to know the answer to my question so I am thinking about this correctly.

 
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