@cmkyeung while the general rule is allowable FTC for the year is the lesser of Foreign Taxes Paid and that imposed by the US on the same foreign income. However , if taken literally, it would mean that carried forward ( unused) Foreign Tax credit can never be used. It all depends on the exact meaning of " Foreign Taxes Paid " -- is it the amount paid in the current year or is it the sum of amount paid in the current year plus any carried / unused Foreign Tax credit? If the latter, then yes your allowable FTC for the year may be larger than the FT for the year -- enough to soak-up the US taxes on the Foreign source income for the year. Note that Tax Treaties generally require that US recognize the total Foreign Taxes Paid ( to that country ).
Obviously I am speaking in generalities since I do not have the exact facts and circumstances nor the names of countries involved.
Does this help ?
Is there more I can do for you ?
