$52,322 - 11,800 = $40,522. That's not much different than the $40, 515 in box 1 of the 1098-T.
So, the answer is the same: 51,460 - 40,515 = $10,945 of her scholarship is already taxable. If you claim $4000 for the AOTC, her taxable amount becomes $14,945.
Theoretically, you enter the 1098-T on both your return and her return and carefully follow the interviews and TurboTax will come up with those results. But, it tends to get messy. Since we've already done the math, the short cut is enter the 1098-T, on your return with $4000 in box 1 and box 5 blank. On her return enter the 1098-T with box 1 blank and $14,945 in box 5. Enter no other numbers.
The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income.
If you claim the tuition credit, you do need to report that you got one.
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. If you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.
