So if you are filing a return as Single, or Head of Household with your mother as a dependent, your exclusionary gain would be 250K. Both of you would need to file returns to report the income, even though it is not a taxable gain. So you can file a return as Head of Household, and still claim your mother as a dependent, but she would need to file a return and indicate someone is claiming her as a dependent, and report the income even though it is an excludable taxable gain.
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