The IRS has a short information piece which does lead you back to IRS Publication 4681 as provided by @JamesD1.
The worksheet is included to help you figure out the actual gain and it doesn't always matter what you actually received in the foreclosure. The IRS Publication 523 describes a Health Related Move.
Health-Related Move:
You meet the requirements for a partial exclusion if any of the following health-related events occurred during your time of ownership and residence in the home.
- You moved to obtain, provide, or facilitate diagnosis, cure, mitigation, or treatment of disease, illness, or injury for yourself or a family member.
- You moved to obtain or provide medical or personal care for a family member suffering from a disease, illness, or injury. A family member includes your:
- Parent, grandparent, stepmother, stepfather;
- Child (including adopted child, eligible foster child, and stepchild), grandchild;
- Brother, sister, stepbrother, stepsister, half brother, half sister;
- Mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law;
- Uncle, aunt, nephew, or niece.
- A doctor recommended a change in residence for you because you were experiencing a health problem.
The above is true of your spouse, a co-owner of the home, or anyone else for whom the home was his or her residence.
@poisonlady7563
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