U.S. Citizen/UK resident cashed in UK pensions and paid tax in UK. The combined amount of regular income and distributions kick him over the Form 2555 limit. The IRS interpretation of the saving clause and Article 17(2) of the treaty is that US can tax such lump sum distributions. (Letter Ruling 08-0024). Two questions:

1. Am I reading the ruling correctly?

2. Where do we report the distributions/ how to claim an offset for tax paid in UK on those distributions. 

Thank you!