Education

1098-T only shows amount for Box 1. 

Not sure, but it appears TurboTax is not calculating line 2c accurately - due to some reason it decided to deduct the entire $7802 tuition expense (instead of $4000), from $13675 total expense, and put the remaining $5873 on line 2c.

So, to avoid all this confusion, I am going with your original recommendation of not entering 1099-Q at all. TurboTax interview flow as well recommends the same (screen shot below) . I am going to click on "Skip" and move on. Thanks for all your inputs.