Tom is a full-time student in his first year of college. He is pursuing a degree in chemistry and is not claimed as dependent on anyone else’s return. Tom paid $4,000 in tuition and another $1,000 on books. Tom also received $1,000 in student loans and a scholarship in the amount of $6,000 (including a Pell grant for $1,000). Which of the following statements is correct?
a. Tom is eligible for the American Opportunity Credit.
b. Tom is eligible for the Lifetime Learning Credit.
c. Tom is not eligible for an education credit and does not need to claim any scholarship income.
d. Tom is not eligible for an education credit and must claim $1,000 in scholarship income.
e. Tom is not eligible for an education credit and must claim $2,000 in scholarship income.

If a student does not qualify for the refundable portion of the American Opportunity Credit, this will be noted by checking the box on line 7 of Form 8863.
a). True.
b). False.