Interactive Brokers (IB) reports a withholding tax on dividends paid by foreign stock on the 1099-DIV. The IB Activity Statement records an additional tax "Transaction Tax" assessed by some exchanges (e.g., Hong Kong or United Kingdom) when you buy or sell a stock on those exchanges. Where should the transaction tax be reported for US tax purposes?
You could report it on Form 1116 Foreign Tax Credit, or adjust your cost basis in the stock. Adjust cost basis in stock is probably the most correct thing to do but nightmarishly complex because of how IB reports it. Is there any basis for claiming this as a Schedule A line 14 Interest Expense? There is a sense in which these taxes are like points on a loan assessed at the time the stock is purchased.