@sweerkaul
for the interest case , if your account value was $100, which generated $10 interest and was taxed $2 then for 2020 -- 1. your basis is $100 ; adjusted basis is also $100; 2. your foreign income is $10 and your foreign taxes paid is $2. For 2021 tax year, if you leave your earnings in the account then your adjusted basis would be $120
for the dividend case, if you bought stocks for $100, that declared dividend of $40 and Israel taxed you paid was $15, the for 2020 tax year you basis and adjusted basis is $100, adjusted basis is $100. However, if the stock/bond also gave you a capital return of $10 in addition to above then your basis would be $100 but your adjusted basis would be $90 ( $100 less return of capital $10 ).
Does that make sense ?
BTW -- from your visible name , I am assuming that you are from Srilanka or similar places in the Indian Ocean --- just curious
Stay safe
