@pk
Thanks pk, that does help.
A small clarification, I always thought that US source dividends, interests and capital gains go in the "passive category" for form 1116 (and not the re-source by treaty). Is that not true.
The confusion arises when one read this statement on the IRS publication 514, section "certain income re-source by treaty", 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.
