1) there were $62k of sources - the $37k from the 529 distribution and $25k from the scholarships
The $25K gets applied first, and it can not be applied to room and board. It can only be applied to the 47K of qualified expenses. That leaves $22K left.
$22K of the 529 is applied to the remaining qualified expenses, meaning that nobody qualifies for any tax credits or deductions at all. Not a penny. But there's still $15K left over from that 529 distribution which is applied to the room and board. There's nothing left over that's taxable (don't know why I came up with $10K taxable before) but the point is, nobody qualifies for any education credits or deductions of any kind. Not a penny.
