Deductions & credits

It's hard to determine what is happening as it does depend upon how the income is being entered into TurboTax.  See where do I enter the foreign tax credit (Form 1116) or deduction for guidance on reaching the foreign credit section in TurboTax.

Once you go through the screens, you will reach a screen titled "foreign losses."  You will need to enter the loss as a positive number as instructed on the screen.  

In regards to your second question, the $20,000 would only apply if you meet the income limits as established as part of number 1 of the adjustment exception as listed on page 9 of the instructions as both would need to apply.