Allocate the $6341 room and board to the $4000 529 plan distribution. None of the 1099-Q is taxable. You have $2341 R&B not allocated. But R&B is not a QEE for anything else (scholarship or credit).
$10,526 in box 1 of the 1098-T minus $4895 restricted scholarship = $5631 available Tuition expense. Use $4000 for the AOTC. That leaves $1631 tuition not yet allocated.
$1631 + $784 books = $2415 QEE for the scholarship. $9567 Sch – 4895 restricted tuition – 2415 additional QEE = $2257 taxable scholarship.
