Thank you, @pk for your reply. By now, I have filed.
Here's what I found:
1) I can include both foreign source dividends and capital gains on foreign source sales in the basis.
2) I do not need to only include the specific income that was taxed, it can all count against the tax.
3) It does not need to be segmented country by country, but can all be summed together as foreign source income (all countries) and foreign source taxes (all countries.)
4) You bring up the issue of tax treaties, but I believe this has a lot more to do with people who are resident internationally. I do not think it usually applies to passive income like this for non-residents (of foreign countries that have tax treaties [usually about how to treat residents in each others' countries.])
5) As you mention, there is a de minimus exclusion where I don't need to even document it. I think until this year that has always worked for me.
Note: The importance of figuring the basis is that if the tax rate is higher than my US tax rate, then only a portion of the tax is tax-deductible and the rest needs to be deferred to another year and counted against other foreign income. But the fact that this is allowed shows the consistency of including all foreign income against all foreign tax, kind of like including all business income against all business losses.
IF anything I'm saying is wrong here, please let me know!
