@Stsxoz
But the PAL is merely suspended. You get to take that when you have other passive gains or when you sell the property. That is just a timing issue.
There are sections about losses in the 1116 instructions and pub 514. They are astonishingly complex. I suspect because there are many ways to game the system (especially using losses in one category to offset another).
Remember the FTC is not designed to let you recoup foreign taxes. That is a common misconception.
Rather it is to allow you to recoup US tax on US foreign source income. If the US doesn't tax that foreign source income, you don't get an FTC even though you have paid foreign tax. This can easily happen, for example, with long-term capital gains which the US can tax at zero. But other ways as well. (For example more US deductions than foreign deductions allowed for the income.)
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