There's a problem with this mechanism. when entering the data associated with the foreign rental tax, you are asked to pick a category. The only category fitting rental income is "passive" category....
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There's a problem with this mechanism. when entering the data associated with the foreign rental tax, you are asked to pick a category. The only category fitting rental income is "passive" category. Unfortunately, someone in their infinite wisdom decided that foreign financial assets belong in the same category, AND therefore they also decided in their infinite wisdom to pull in completely unrelated domestic investment interest expenses from Schedule A as "definitely related". Generally, the 1116 worksheet is challenging, i get that. It pulls all income and expenses in the entire TR to figure out the ratio of US tax to foreign tax, to figure out how to limit the foreign tax credit. However, the domestic investment interest expense is pulled in as "definitely related" at 100% impact, without giving you an opportunity to object. You are notified that this is happening, and if you have an issue you can go back to "deductions", but there's really nothing you can do in the "deductions". In addition, during smartcheck i got asked to fill in a basis for the non-existent financial asset for this item. some people say to enter 0 or 1 as the basis but that makes no sense. I shouldn't have to enter any basis whats o ever for non-existent items... I tried to remove the domestic investment interest expense manually from the 1116 worksheet itself in "forms mode", but the software doesn't allow me to erase the number. It also doesn't allow me to change the ratio of its impact from 100% to whatever % was calculated for non-related expenses. Perhaps the workaround is to do the entire 1116 worksheet in forms mode, although the code might try to still force the investment interest expense into the form when i get back to step-by-step mode. Appreciate any thoughts about a workaround until this is fixed.