Canada taxed income that the U.S. seems to treat as U.S.-source. Is treaty re-sourcing the reason people use a separate Form 1116 basket?
I am a Canadian founder who became a U.S. resident but still has compensation items that Canada continues to tax. My preparer mentioned 'certain income re-sourced by treaty' and said it may require a separate Form 1116. I have never used that category before and I am nervous about getting the basket wrong.
I am trying to understand the concept, not memorize every treaty article. If the treaty can turn an item that looks U.S.-source under domestic rules into foreign-source for foreign tax credit limitation purposes, that sounds like the key to avoiding double tax here.
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