For the foreign tax credit can capital gain distributions reported on a 1099-DIV from a mutual fund (AEPGX) be considered foreign income?
The foreign income by country worksheet on the fund's website:
David Friedman
See page 6ff of the form 1116 instructions for adjustments that might be required for reporing foreign capitalgains distributions.
Capital gains distributions reported by a mutual fund is a form of passive income that on the surface seems to be valid foreign source income and so might seem that it could be reported.
On the other hand, I doubt you have any data reported to you on the foreign tax paid on those foreign capital gains?
So you are limited to reporting foreign regular and qualified dividends and the foreign tax paid on that foreign source income.
But if I am wrong, and you are told how much foreign tax you paid just on the foreign capital gains distributions, then see p6 of the form 1116 instructions for the adjustments to be made.
The 1099-DIV reports how much foreign tax was paid, but it doesn't state whether that foreign tax was paid only because of the dividends or also because of the capital gains.
Perhaps the most likely thing is that the tax was paid only because of the dividends. Assuming this the tax would be about 10%, but assuming otherwise it would be about 2 or 3 percent.
David Friedman
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