Oh! Thanks so much.
Yes, it might be your preparer interprets instructions for 1116 as that you do not need to separate different types of incomes resourced by treaty to different "baskets", just submit one form for all of them.
I would agree with them, but the second link I fund is a recent video webinar by IRS (for tax preparers)
https://www.youtube.com/live/YQUiRKM2ddoIt says, I copy from its transcript:
<the three bite rule is - a classical example is US dividends for UK resident/US citizen - when US taxes 15% of dividends, then UK taxes it giving credit for 15%, and then US taxes it again giving credit for UK tax>
1:26:13 : you said the Three-Bite re-sourced income does not go into the treaty basket.
Sure. Even though there is a separate basket from the four general limitation categories for income re-sourced by treaty, there's a different rule with respect to income that's re-sourced under the Three-Bite Rule. And this is outlined in the Section 904-4 regulations, and income that's re-sourced under the Three-Bite Rule doesn't actually go into the treaty basket.
This was a rule that was added in a recent TD. And it's effective, I believe, for tax years after 2018 or specifically 12/31/2017.
So the income would be placed into the assigned to the basket that reflects the kind of income that was earned before any re-sourcing occurs. So if it's dividend income, it would be passive. If it were wage income, it would be general. If it were dividend income that was taxed at a higher rate of taxation, it might be kicked out of passive and put into general.
Here is the full transcript of that video on IRS website:
https://www.irs.gov/newsroom/form-1116-certain-income-re-sourced-by-treaty-youtube-video-text-scriptP.S. Section 904-4 is written in a way which completely breaks my brain...
Probably it means one has to do one 1116 for income resourced by treaty, except when three bite rule applies (say if one has US dividends taxed in US at 20%), in which case income subject to three bite rule does not go into resourced basket..
My goal here is to understand in which form 1116 to put unused UK tax to cary forward (since it could be useful for us next year in fact)