@BillTax , the real issue here is (a) Tax Treaties address ONLY "Income Tax" and (b) whether NIIT is an income tax i.e. it is associated with an foreign source income that is taxed by both contracting countries.. Recognizing that the underlying Foreign Source income that is the causal factor for attracting the NIIT ( an additional tax ) in addition to the normal & allocated US tax liability, it is arguable ( based on exact facts ) that this should be treated as part of the double taxation. I have not yet read through the tax court opinion / analysis, but I would feel comfortable in using NIIT as an additional tax that comes under "income tax " but to the extent that the income itself is foreign source.
So an allocation of the NIIT is required ( i.e. identify that part of NIIT that is being imposed on the foreign income) to sustain a logical argument that this is an additional and income tax ( and not an excise or other taxes that are generally outside the domain of tax treaty.
I will definitely study the tax court opinions -- exact logic followed by the court.
For purposes of the form 1116, you have probably go into forms mode to get the desired results ( this is because in general TurboTax -- and others -- all use the Foreign source income to World income ratio to allocate US tax on the foreign source income ( but the computation probably does not include the NIIT as part of the computed tax liability ).
Does this make sense ?
