In processing a 2019 tax return, we had a client that had real estate taxes of 7k and state income taxes of 19k, for a total of 26k taxes paid, and was limited to 10k on Schedule A.  That's fine, but in the Foreign Tax Credit Form 1116, line 3a, Lacerte did not put in 7k from Schedule A.  Instead, it calculated 27% (7k RE tax / 26k all tax) and then multiplied by the 10k total tax on Schedule A, so only $2.7k was deducted from foreign income.

Instructions for Form 1116 do not reference any limitation required for this line.  NOTE:  When I reviewed 2017 Form 1116 instructions it DOES require a reduction to line 3a because of the income limitation on Schedule A that was in effect prior to the TJCA. 

Is Lacerte calculating this correctly?