Blocked dividend income, such as dividends restricted in Russia due to sanctions, presents unique challenges for claiming the Foreign Tax Credit (FTC). Generally, the IRS allows taxpayers to defer reporting blocked income until it becomes unblocked and accessible. However, during the deferral period, you cannot claim the FTC for taxes paid on that income.
Once the income is unblocked and included in your taxable income, you may then claim the FTC for any foreign taxes paid, provided all other requirements are met. It's important to follow IRS guidelines, such as filing an information return and declaring the deferral under Rev. Rul. 74-351. This ensures compliance and allows you to claim the credit when the income becomes taxable.
Publication 54
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