The parents used their $10,000 for room and board, so they could claim the AOTC. Room and board is not a qualified expense for AOTC, but it is a qualified expense for the 529. For full details, see 529 for Room and Board.
All $50,000 of the Q money was used on qualified expenses so there isn't anything left to claim as income. Nothing goes on her return. The 529 is for all qualified expenses
Reference: About Publication 970, Tax Benefits for Education
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