it is included in the calculation of NIIT.
It is not part of the numerator (which is the interest income)
Look at the form..look at Line 13, which is MAGI. With few exceptions, that is AGI from form 1040 Line 11. And AGI includes the taxable portionof social security income.
https://www.irs.gov/pub/irs-pdf/f8960.pdf
