Does the student pay the taxes n 529 distributions if he is claimed on a parents tax return?

Here is the scenario;

Regarding my grandson,  My daughter is preparing his taxes for him through TurboTax.  She is divorced, and claims him as a dependent.  She files head of household.  He is 19 years old and is a freshman at college.
He received the 1098-T from the school and 3 separate 1099-Q forms from when his father cashed out of some 529 plans and paid those directly to the school.  UTMA based 529 with his father as the custodian.
My daughter entered in all (3) 529's into turbo tax (About $19K) and now her son owes about $1400 to the IRS.  It says he is not able to claim the tax break because he can be claimed on someone else's tax return. 
Does this sound right?  His father says to just not report the 1099-Q's.