@mdsaronson while I generally agree with your position of using adjustments to the income to achieve the taxing rates , it is much more complicated method. If the intent is to reduce the burden of "double taxation" i.e. same income being taxed by both the source country and the resident country ( arises when each country is using "world income" of the resident ), then the easier path is to get foreign tax credit for taxes paid to the other taxing authority. Thus for dividends and interest income from, US sources that are taxed by both the UK and US on a beneficial owner whom is a UK resident ( e.g. US citizen/ GreenCard ) , one can use "Resourced by Treaty on form 1116 to essentially reduce the US tax on this doubly taxed income.
By using the adjustment mechanism ( allowed max tax by treaty ) and depending on exact facts and circumstances, may not be useful.
My reference here is US-UK Tax treaty and explanatory notes -- > United Kingdom (UK) - Tax treaty documents | Internal Revenue Service
Is there more I can do for you ?
pk
