If this is the first year you claim the foreign tax credit, you would check the box for "First year I am eligible for the election".
The other two options are for if you have claimed the foreign tax credit and made the election in the past. Please continue to read:
For foreign tax credit, there seem to be 2 elections that can be made:
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If the amount is less than $300 (or $600 for married filing jointly) then you can claim FTC without filing Form 1116. [1]. This amount can also be used directly as FTC for AMT purposes. [2]
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If you have both AMT and FTC, then you can elect for "Simplified Limitation" which lets you use the same foreign source income for AMT as for regular taxes.
The second election has the condition that you have to make the choice the first time you have the option and that applies for all later tax years
You may elect to use a simplified section 904 limitation to figure your AMTFTC. If you do, when figuring your AMTFTC, you will use the same net foreign source income for AMT that you used for regular tax. (The amount on line 17 of your AMT Form 1116 will be the same as the amount on line 17 of your regular tax Form 1116.) You must make the election for the first tax year after 1997 for which you claim an AMTFTC. If you don’t make the election for that year, you may not make it for a later year. Once made, the election applies to all later tax years and may be revoked only with IRS consent. [3]
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