DaveF1006
Expert Alumni

Get your taxes done using TurboTax

Yes, this is all considered Passive Category Income. Also,  you must include that $100,000 of foreign loss in your Form 1116 calculation, even if it means you can't use the credit this year. 

 

Your Foreign Tax Credit is limited by a ratio.  That ratio is (Foreign Taxable Income) /(Worldwide taxable income) X US Tax Liability.  The problem is if you have $1500 of passive income from dividends but a $100,000 capital loss from the house in the same category, your net foreign source income for that category becomes zero (or negative). When the numerator of that fraction is zero, your allowable credit for the year is zero.

 

You can claim the foreign taxes as an itemized deduction on your return, as this may add some relief to your tax situation. This depends on whether your itemized deductions are more than your standard deduction for the year. If they are not, it may not make a difference.

 

@JackSpaniel 

 

 

 

 

 

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