The income is always listed on the child's tax return. However, it is also correct that the tax may be calculated at your rate on the child's return (via Form 8615, aka "Kiddie Tax")
In order for this dreaded Kiddie Tax to be an issue, the unearned income (which would include taxable scholarships) has to exceed $2100.
You simply enter the taxable amount in the education section as a scholarship (on his return). You don't need to enter the 1098-T and go through all the steps. You can if you want, but the only output that matters is that the taxable amount ends up on line 7 of the 1040. All the input with his 1098-T, books, etc.. is unnecessary work just to get a single figure on to his tax return.
