Thank you for your reply.
The investment interest is all passive investment income (dividends, coupons, etc.).
The investment interest was deducted on 1040 schedule A line 9.
The IRS instructions for form 8960 (net investment income tax) do state “If Form 4952 includes investment interest expense that’s deducted on Schedule E (Form 1040) and already taken into account on line 4a, don’t include the same amount on line 9a.” but that sounds so unintuitive because it's like the IRS is saying "you can deducted your interest expense from your investment income (form 4952) because you only pay income taxes on the amount that is profit, but you still have to pay the 3.8% net investment income tax (form 8960) on the full amount of investment income you received regardless of expenses incurred to produce it." From an accounting perspective it seems odd to be paying taxes on amounts that are not profit.
UPDATE: Reading that closer. The IRS instructions say to exclude it if it was included on Schedule E...which I did not have. So now I'm not sure why the IRS rejected by inclusion of the investment interest expense on form 8960. Back to square one.
