Foreign tax credit

[ABCD149]

Can I claim foreign tax credit for income rental income from India getting offset against passive income from USA?

For example (income is above 200K where passive losses from rental would be carried forward if not getting offset)

Rental loss from USA $20

Gain on sale of rental property in foreign county $40 and taxes paid in other country $10

I m claiming credit on 1116 of $ 10 however the losses of $20 is getting offset against income of $40.

so in current year is kind of double dipping, not paying taxes on total gain and claiming foreign tax credit as well.

However I would consider it right to claim the foreign tax credit as I an not carrying forward the losses any more.

Any comments? 

[sjrcpa]

The purpose of the foreign tax credit is to reduce the effect of double taxation. The US taxable income for rental activity is only $20, not $40. Therefore $20 is the base for computing the foreign tax credit.