1116 - Accrued vs Paid - Exchange Rate

[TaxIsFun]

This is a wonderful forum, my first post here! After reading this thread:[url]http://forums.serbinski.com/viewtopic.p ... 4474f92d22[/url], I have decided to use the Accrued method in filing form 1116. It is more appropriate for me as well, as I paid capital taxes on property sold in 2011 well into 2012.

I am now preparing my 2011 US tax returns. In filing form 1116 to determine Foreign Tax Credit, I have 3 types of foreign income: rental income before property sale, capital gain from property sale, interest income from sale proceeds.

Questions:
(a) Can I select the accrued method for all of them?
(b) Is there an additional advantage to using the accrued method in that I can use the average exchange rate for the year?
(c) Can I also use average exchange rate to determine income earned in US $ - capital gain, interest income, and rental income. May be capital gain should be based on exchange rate on specific dates, and the other two can be averages for the year?

Thanks!

[nelsona]

For cap gains, you must use the exchange rate in effect at the time of purchase and the exchage rate at the time of sale.

For periodic payments like rent, wages, etc, an average over the period is acceptable.

The accrues tax can be averaged.