This is an interesting one...in 2016 I had zero taxable income due to FEIE, capital losses, and Schedule E loss. I elected to carry forward the NOL to 2017. In 2017 I am back stateside for the whole year, but had 2017 foreign income to cover foreign tax liability. I'm hitting the foreign tax credit limit because my foreign income was only the tax payment plus a couple thousand, so it's a small fraction of my overall income.

So if I carry the foreign tax credit back to 2016, this will increase the NOL, which I would then carry forward to 2017. Is that how it should work?