That restriction apparently is new as I was not aware of it. I’ve seen in the past where several users had the same situation as yours; namely foreign income, carryovers, but no foreign tax paid for the current year. The TT interview will still generate a complete f1116 with foreign tax credit even though there is no foreign tax paid for the current year as long as there are carryovers available.
It seems odd that if you had opened up a Canadian bank account paying a paltry interest amount with only a few dollars of foreign taxes paid for the current year, that would have cleared the decks for any amount of capital gains and all the carryovers available.
Any carryovers not used for the current year can be carried forward to next year. Be aware that any portion over 10 years old is lost.
