@nchank
(a) which country was your LT asset in ? There may be treaty considerations.
(b) Should one assume that you are a US person ( citizen/GreenCard / Resident for tax purposes )? And you current tax home is US ( if you are not a citizen ).
(c) How did you acquire the prop? How was it used during acquisition and disposition?
(d) Has the foreign tax levied by the local taxing authority finalized or is it still a case of "taxes held at source" -- TDS ?
Generally, for US purposes, form 1116 only considers the US gain as the doubly taxed foreign source income. There is rarely ( unless treaty articles intervene) any adjustments to this). The limiting ratio is based on this foreign source income. Note that while ( and under Double taxation article ) US recognizes the full amount of foreign taxes paid/ accrued, the allowable credit is the lesser of actual foreign taxes paid and that allocated US taxes on the same foreign source income.
I will circle back once I hear from you ?
