Client has gains from the sale of a Canadian stock. He also has a large foreign tax credit carryover. How do I report a foreign gain so it will be included on Form 1116?

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@bethbrake wrote:

My client is a resident of FL.

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But my question is not about tax residence but tax home.  Your client may be a tax resident of FL but the fundamental question is where your client's tax home was.

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He did not have taxes CA withheld on the sale in CA of the stock

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Whether foreign taxes were withheld is irrelevant.  Tax home is what determines whether gains/losses from stock sale and §988 transactions are US or foreign-source.

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I am trying to increase his foreign source income to use his FTC carry forward. Therefore I don't think I need to make a capital gains adjustment .  I find the instructions to Form 1116 vague and confusing.

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Did the sale of stock result in STCG?  If not, adjustment needs to be made to account for the tax differential unless certain conditions are met.  What is your technical basis for thinking that no adjustment would need to be made?

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@bethbrake wrote:

He is also reporting currency losses from the exchange between CA and the US.

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How did these foreign currency losses arise?  A bit more context would help.