I was thinking about the question from Moi-Aussi as to how the the amount of the foreign tax refund reported as US income is offset against the carryover FTC amount. Won’t it take care of itself? If you are reporting the foreign tax refund as extra foreign income for the tax year you receive it, then the IRS will use that higher income amount to calculate your current U.S. tax burden. The U.S. will thus tax the foreign tax refund as income which will increase the amount you owe the U.S. and consequently it will reduce your FTC for current year and thus also reduce your FTC amount that carries over to the following year. Is my reasoning logical?
