@VickiN , reading through your answers and assuming that the capital gains on stocks/bonds/mutuals are items that are not traded in the US markets ( i.e. these are foreign sourced ) :
(a) you will still have to recognize these gains/losses under US tax laws
(b) you then report the gross foreign income and corresponding taxes paid to Denmark on form 1116 under passive category -- TurboTax should then compute the tax rate and if your actual tax rate on these passive incomes by the foreign taxing authorit (y/ies) exceed HTKO ( High Tax Kick Out ) trigger point then it should open a new form 1116 for general category, effectively zero out the taxes on the original passive income 1116. This should all occur through TurboTax , without your having t do this by hand ( I have not tried to see if this occurs automatically or need individual action --- but this is what should happen ). It should then recognize and reconcile unused foreign tax credit available from past years. Please see page 15 ( I think ) of the instructions for form 1116 at www.irs.gov. I also don't know what the rules for Danish capital gain taxation ( indexing of basis, deductions allowed etc. but can obviously look up , to the extent it is published in English. It may not affect because TubroTax would be using final tax paid to gross foreign capital gain for the foreign country as the tax rate fr HTKO determination and transfer to general category.
If you run into any issues, please let me know and I can simulate the situation on my copy of desktop TurboTax ( Home and Business ) and guide you.
As always , it may be advisable to seek help of a tax professional, if you do not feel comfortable doing this by yourself.
Another thing to remember you may have to file both FBAR ( www.FINCEN.gov form 114 on-line ) and FATCA ( form 8938 with your return), depending on actual facts and circumstances.
