I agree with you that since (f)(4) is excluded in 1.1411-5, it is subject to the NIT.
I think your work around gets you the correct result.
TT software is designed for the masses and quirky situations such as yours may never get addressed. Most likely not in their top 50 list.
Commendable in your diligence in following up on this issue.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
