My accountant has been in the hospital but I now have an answer to the question I posted about using carried over foreign tax credits to pay the capital gains on selling your UK residence. (the UK doesn't tax the sale of your primary residence so you may well have gains not offset by UK tax paid; you have to pay US tax on any gain over $250,000). It is unfortunately as I had vaguely suspected. Tax credits (carried over or otherwise) have to be applied category by category. So for example, all of my ftc's are in the category of "General Limitation Income" (I have no idea what the words mean, but it's what income and pension distributions are). Capital gains are in the "passive income" category. So I can't apply credits in the 'general' category to taxes on gains in the 'passive income' category. Or, to put it another way, only ftc's from the 'passive income' category can be applied to the capital gains.
I once asked an #800 an hour accountant if there was any way you could arrange things so as not to end up owing tax on such a sale. The answer was a short, flat, No.
