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@lw06880 wrote:

...without the adjustment the FTC is now $12k, which is greater than the 15% tax charged on the foreign income. This that ok?

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These rules are meant to mitigate the effect of tax rate differentials but are not structured to be exact.  You don't need to dig deep into §1.904(b)-1 to find evidence of that.  For example, instead of considering the actual tax bracket of the taxpayer, tax rate differentials are adjusted based on the top marginal rate.  I suppose the Congress and the Treasury could have been more precise but the rules are already complicated enough as they stand (not that convolution ever deterred either party).