A taxpayer can claim an American Opportunity credit or a Lifetime Learning credit for a tax year and exclude from gross income amounts distributed (both the principal and the earnings portion) from a Coverdell account for the same student, as long as the distribution is not used for the same educational expenses for which a credit was claimed. (Com Rept, see ¶ 5015)

If For Any Individual - The aggregate distributions during the year from a Coverdell account and from a qualified state tuition program, exceed the total amount of qualified education expenses (after application of the rules coordinating distributions from Coverdell accounts with the American Opportunity and Lifetime Learning credits, discussed above), then the taxpayer will have to allocate those expenses among those distributions for purposes of determining the amount of the exclusion from income under the rules on distributions from Coverdell accounts and the rules on distributions from qualified state tuition programs. (Code Sec. 530(d)(2)(C)(ii))