foreign tax credit for canadian rental property

[denis4]

Two questions about this:

1. In Canada, claiming depreciation is optional. Are you allowed to take the foreign tax credit if you elected to not take depreciation in Canada?
2. What is a "definitely related" expense? Does the depreciation from Schedule E count as a "definitely related" expense?

[pk]

@denis4 , assuming that you are US citizen / resident ( green card ) / resident for tax purposes , you are taxed on world income by the USA  and  ONLY US tax laws apply ( absent any contravening  clauses  in  US-other country tax treaty ).

(a) Depreciation recognition is   NOT mandatory ( i.e. you can choose not to report it on your  US return ) but the effects are ---- allowable  depreciation counts both towards basis adjustment and   for  recapture purposes when you dispose the property.  Thus there is no advantage in not recognizing  depreciation of income property.

(a1) note that for foreign property   useful  life ,  is either 39.5 years  or 27.5 or 30 ----- see this pub fro the IRS-->

https://www.irs.gov/publications/p527#en_US_2019_publink1000219036

depending the convention and when put in service

(b) depreciation is  definitely related expense  in the sense that it is capital expense -- see pub 527

while answering your queries , I am wondering what you are trying to do / solve/achieve

[pk]

@denis4 , assuming that you are US citizen / resident ( green card ) / resident for tax purposes , you are taxed on world income by the USA  and  ONLY US tax laws apply ( absent any contravening  clauses  in  US-other country tax treaty ).

(a) Depreciation recognition is   NOT mandatory ( i.e. you can choose not to report it on your  US return ) but the effects are ---- allowable  depreciation counts both towards basis adjustment and   for  recapture purposes when you dispose the property.  Thus there is no advantage in not recognizing  depreciation of income property.

(a1) note that for foreign property   useful  life ,  is either 39.5 years  or 27.5 or 30 ----- see this pub fro the IRS-->

https://www.irs.gov/publications/p527#en_US_2019_publink1000219036

depending the convention and when put in service

(b) depreciation is  definitely related expense  in the sense that it is capital expense -- see pub 527

(c) foreign tax credit is available in this situation only to the extent  that this rental income ( net ) is being taxed  as income  i.e. it is an income tax or in lieu thereof

while answering your queries , I am wondering what you are trying to do / solve/achieve