That answer from Don in GA is similar to what I've received. Most folks are clueless about lawful money. So thanks for speading the word!
If your question was not rhetorical, then yes, taking a Line 21 deduction/reduction for redeemed lawful money seems most appropriate and it's been working right along for us. It's where the IRS instructions indicate the "Foreign Earned Income Exclusion" is to be entered as a negative. And lawful money is certainly foreign to the private "United States" company. Oh doug, I couldn't help but notice this too: "
You cannot exclude or deduct more than your foreign earned income for the year."
https://ttlc.intuit.com/questions/18...come#collapse3
Which sounds to me like ...
You cannot exclude or deduct more than your redeemed lawful money for the year.