These rules apply only to those capital gains and losses from sources in the United States that are not effectively connected with a trade or business in the United States. They apply even if you are engaged in a trade or business in the United States. These rules do not apply to the sale or exchange of a U.S. real property interest or to the sale of any property that is effectively connected with a trade or business in the United States.

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What is foreign tax credit?

Whether you have received earned income, interest, dividends, and rental income from foreign sources, you may have to pay income taxes to foreign countries. If you are a U.S. citizen or resident, you are generally subject to U.S. income tax on your worldwide earnings.  The foreign tax credit is intended to keep you from being taxed on the same income by both the U.S. and the foreign country. Unlike foreign earned income exclusion,

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