Which one of the following statements is incorrect regarding investment interest expense?
1) Excess investment interest expense cannot be carried forward into succeeding tax years.
2) Interest paid or accrued to purchase or carry tax-exempt investments is not deductible.
3) Investment interest expense is deductible up to the amount of the net investment income.
4) Net investment income is the taxpayer's investment income–typically interest, nonqualified dividends, and short-term capital gains.