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@mark8 wrote:

Also with depreciation you might actually not have a profit in the US but a loss so not FTC allowed but might have excess credits. 

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@mark8 It gets more complicated than that.  Your example would result in an SLL and may even create an OFL, depending on the types and amounts of foreign income the taxpayer has.  SLL allocation will affect limitation for other baskets and both types of losses are subject to recapture.

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The UK tax year ended on 5 April so you must use the tax due for the year ended 5 April 2023.

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It would be helpful to clarify that this is not absolute.  Cash basis taxpayer may claim the credit based on taxes paid/withheld prior to the end of the fiscal year to the extent it is reasonably expected not to be refundable.  All events test is only relevant to the accrual of foreign tax.

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Another problem is that most properties in and around London are apartments so the landlord does not normally own the freehold but has a long lease so cannot depreciate the building but must amortize the lease over 99 years as most leases are more than 99 years.

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It is true most apartments in the UK are on leasehold.

It is interesting that you suggest that landlords with UK leasehold properties are not allowed depreciation and that the cost must be amortized instead.  Could you share your citation for this position?

Not only could this impact current year deductions, it could also have a trailing impact when the leasehold property is sold, by producing favorable results for capital gains without the need for recapture even though "amortization" would offset taxable income at marginal rates.  On the flip side, however, if the IRS disagrees with this position, it could be to the detriment of your clients because the Service will ascertain that cost basis should be adjusted for the greater of depreciation allowed or allowable.

Didn't think there's any controversy as the matter is well settled both in courts and with the IRS.  In fact, leases of land and §1250 properties are classified as intangible real properties subject to §167 depreciation when used in the taxpayer's business trade or business.  §1.1250-1(3) even has an example of that.

Would be happy to consider your position and understand the level of authority you rely on which, in turn, determines whether disclosure should be required on the return.