By deductions, I am referring to the standard or itemized deductions that are allocated to foreign sourced income on page 1 of form 1116 effectively lowering the foreign source ratio. I was thinking that for the resourced due to treaty 1116, no allocation would be made thereby increasing the foreign source ratio. Again, the problem is even after re-sourcing the income, the allowable foreign tax credit after applying the radio is less than the incremental foreign tax imposed on the IRA distrubution. Therefore, since the full credit can't be used, there is double taxation to an extent, albeit less since most of the credit is able to be used. Again my dilemma, how to completely use the credit so that amount of foreign tax paid on the distribution is credited on the 1040. Thank you so much for your time.
