This is also a very complex area. I'm not sure what you're suggesting is right, but I don't for sure. You should probably seek the advice of a CPA, enrolled agent, or tax attorney with a lot of foreign tax experience.
See the 1116 instructions, which seems to say re-sourced income on 1116 doesn't apply if you are a US citizen living in the foreign country. Perhaps it isn't US income or is removed somewhere else. I don't know. https://www.irs.gov/pub/irs-pdf/i1116.pdf page 5:
f. Certain Income Re-Sourced by Treaty
If a sourcing rule in an applicable
income tax treaty treats U.S. source
income as foreign source, and you elect
to apply the treaty, the income will be
treated as foreign source.
Important. You must compute a
separate foreign tax credit limitation for
any income for which you claim benefits
under a treaty, using a separate Form
1116 for each amount of re-sourced
income from a treaty country. This rule
does not apply to income that is
re-sourced by reason of the relief from
double taxation rules in any U.S. income
tax treaty that is solely applicable to
U.S. citizens who are residents of the
foreign treaty country. See sections
865(h), 904(d)(6), and 904(h)(10) and
the regulations under those sections
(including 1.904-4(k)) for any grouping
rules and other exceptions. Add the
amounts from line 22 of each separate
Form 1116 and enter the total on line 28
of your summary Form 1116 (that is, the
Form 1116 for which you are completing
Part IV). In addition, you may be
required to file Form 8833,
Treaty-Based Return Position
Disclosure Under Section 6114 or
7701(b), for the re-sourced income.
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