With all due respect Robert, that doesn't answer my very specific and somewhat nuanced question. As a citizen of Canada and the USA and now Italy, where I am living and a tax resident, I of course understand that I have a filing obligation in the USA too because that is citizenship based. Not so in Canada, where I haven't resided for many years and have no tax filing responsibility. My question relates to Form 1116 and the FTC and how to accurately address the Canadian sourced interest income. Of course Italy will tax my worldwide interest income because I am tax resident there. The USA will of course provide a FTC for the tax that I pay on my USA sourced interest income and I am aware that I have to "re-source" that USA based interest income on Form 1116 in order to under tax treaty essentially pretend that the USA based interest income was sourced in Italy, as that will then provide the USA FTC re tax paid on that USA based interest income paid to Italy. It is the Canada sourced interest income and Form 1116 that I am concerned about. Would that also be "re-sourced" by ticking that box on Form 1116 just like I am doing for the USA based interest income? Or alternatively, would the Canada sourced interest income be considered "passive income" with that box ticked on Form 1116? As it relates to my USA tax and the FTC, I should of course get credit for the Italian tax that I will pay on BOTH my USA sourced and my Canada sourced interest income, so this is more of a technical question as it relates to Form 1116 and what box to tick for the Canada sourced interest income.
