Completing Form 1116 for dividends paid in two currencies from the same source country

[rokhead]

I own Swiss company stock (e.g. Novartis) in two different accounts - one account is overseas (no 1099), and the other is a US-based brokerage that issues a form 1099-DIV.  The overseas account paid dividends and withheld taxes in CHF (Swiss Franc).  The US brokerage paid dividends and withheld taxes in US dollars.

How do I enter this onto Form 1116?  Can I enter the country of Switzerland 2 times as columns on Form 1116 - once for entering the US Dollar information reporting on my 1099-DIV (Date Paid defaults to "1099 taxes" on Part II) and the second time using the dividends and taxes withheld overseas in CHF?

The amount of taxes withheld a country on Part II is supposed to be entered  EITHER in US Dollars (if withheld in dollars) OR in the Foreign Currency with an Exchange Rate explanation for its conversion into US Dollars. Using Switzerland twice would allow the entry of taxes withheld in USD to be separate from the taxes withheld in CHF and converted to USD equivalent. 

Trying to enter both the US dollar taxes withheld AND the CHF taxes withheld in the same country column on Part II results in a seemingly incorrect exchanges rates (too little CHF was withheld overseas to represent the total US dollar amount withheld by Switzerland when I combine the taxes withheld at both  accounts).

[rogge1722]

TT only works with USD. That part in f1116 asking for foreign currency is informational only. In the explanation statement you could state that the conversion rate was used only for the foreign payer.

TT wants the total income from all sources and the total foreign tax paid in USD. Switzerland will occupy one column in f1116.

I am assuming that in the income section, you filled out a blank 1099-DIV to account for the foreign payer.
The amounts are in USD using the conversion rate on the default date of 12/31/2021. You can run both 1099's thru the foreign tax credit interview and TT will post all the data on Column A which is dedicated only to Switzerland.

[rokhead]

Thanks  for the quick response.

I follow you - if the value entered for Taxes Withheld In Foreign Currency is just informational, and no computer is going to "reality check" that value versus the US Dollar value entered, then I just need to get the US Dollar value correct and provide the explanation statement as to how it is arrived at.  Great !!!

Do you know if the explanation statements entered on Form 1116, Part II get included automatically when I e-file?  Or do these need to be mailed separately to the IRS after submitting the e-file?

Answering your question - I DID enter 1099-DIV forms into TurboTax in order to report the Dividend Income and Tax Withheld by the Foreign Payer, one for each Country with foreign income, even though the Foreign Payer does not submit 1099s.  Is that what you meant by a "blank 1099-DIV" ? 

In order to keep track of accounts and countries for the Schedule B and Form 1116 interview, I did enter a Payer Name on these 1099-DIVs - a name that will not mean anything to the IRS.  That should not matter for the IRS or for e-filing, correct?

[rogge1722]

The explanation statements will be attached to the return for e-filing.

Yes, that is what I meant by using "blank 1099-DIV" forms.

The payer's name on the 1099-DIV's will not be an issue for the IRS or for e-filing.