Deductions & credits

The lines 7 and 8 referred to may mean Part II of IRS form 1116 Foreign Tax Credit.  See here.

By 'using' two 1099-DIV's, he means to make two passes under the form 1116 screen for the two types of income, one for income from Germany and one not assigned to Germany.

See the statement:  "A separate Form 1116 must be used for each category of foreign income for which you paid taxes."

One will be listed in column A and one will be listed in column B.