Dear @girigiri , it is essentially the first option ---- to explain why
(a) you entered your assets/equity sales on form 8949 --- where line 1 (c) shows your Gross proceeds I.e. sales price less commission/ sales related costs, 1(d) your Acquistion cost/ basis AND 1(h) the computed gain/loss ( i.e. 1(d) LESS 1(e).
(b) US taxes you on this "Gain" under its own tax laws ( generally unhindered by treaty conditions/ assertions )
(c) when you did the "foreign" country return you also recognized the asset disposal based gain and foreign taxes based on the laws of that land ( generally unhindered by tax treaty ).
Therefore on form 1116, you enter the gain from form 8949 as "Gross Foreign Source In come" --- note that this is summation of all foreign source income by country and by type ( Part-I, line 1(a) ) -- columns A / B /C
Similarly you enter the taxes paid top each country in Part-II
The reason for this is that the "gross " income that is being doubly taxed is really the US gain ( in actual fact though in some very specific cases it may be the lower of US gain and the Foreign gain ).
Does this make sense ?
Regards,
Namaste
pk
