Thanks. With the benefit of the worksheet, I was able to figure this out. Form 1116 Instructions say that you have to adjust foreign qualified dividends by a specific fraction unless you meet criteria to not adjust or meet adjustment exception. And I guess I didn't meet that criteria.
"How to make adjustments. To adjust your foreign source qualified dividends, multiply your foreign source qualified dividends in each separate category by 0.4054 if the foreign source qualified dividends are taxed at a rate of 15%, and by 0.5405 if they are taxed at a 20% rate. Include the results on line 1a."
