NC State Return instructions make no sense for Expenses Allocable to Income Exempt or Excluded From Gross Income

Please review below where we enter an amount for "Addition to income in NC handled differently from Federal" . The LEARN MORE instructions make no sense because they are saying to include expenses allocable to income not subject to North Carolina income tax, which would make NC tax exempt income  taxable. The language in the entire Learn More instructions makes no sense especially the last sentence. 

I believe the problem originates from NC Form 400 Schedule S line 12 instructions.

Under:

 Here's the income that North Carolina handles differently > Other Adjustments to Federal Adjusted Gross Income > Addition: >Expenses Allocable to Income Exempt or Excluded From Gross Income Learn More it states:

Expenses Allocable to Income Exempt or Excluded From Gross Income: North Carolina law requires a taxpayer to add to federal adjusted gross income all expenses allocable to income that is either wholly excluded from federal gross income or wholly exempt from North Carolina income tax to the extent those expenses are excluded from federal adjusted gross income. Enter the amount of expenses allocable to income not subject to North Carolina income tax.

If you enter expenses allocable to income not subject to NC income tax it will become taxable!  

What are specific examples of the expenses the instructions are referring to?