If someone has foreign but his US income tax is already zero is it a good or a stupid idea to file a form 1116? It does not give any reduction in the already zero tax; however it will show an unused foreign tax which might be carried forward to future years.
It you fill out the form might it be usable in the future? And if you do not fill out the form might it still be usable in the future?
I cannot say whether it would make it more likely the IRS would accept the later return if the 1116 produces a carryforward which is later used. And, if the carryforward IS later used, you can amend the current year's return to include the 1116, per IRC section 6511(d)(3) and IRM 4.61.10.
If (you or) your software prepares the required statement for form 1116 line 10, it will make it easier for (you or) your software to prepare form 1116 (including that statement) in later years, where it may make a difference.
I do it for my clients, and I would recommend that you do it.
-- Arthur L. Rubin, CRTP, ATSP Brea, CA
You need to tell us more about your future to get a great answer. What are your future expected sources of foreign income and foreign tax payments? The amount of any existing tax carryforward amounts, such as other credits, might affect the answer as well.
I doubt whether I would ever be able to use it. In all the years I have been filling out the 1116 I have never used up all the foreign taxes paid. However, this is the first year that I had zero tax even without the 1116. So I was curious and asked whether I should file it.
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