Your understanding is correct. The IRS may send a request for information. If they do, just provide the same information, she lived in the home for years and qualifies for the sale of main home exemption of $250,000 which is more than the sales price. She didn't use it as business property and depreciate it since 1997, nothing weird to make any of it taxable. All is well. Tuck the form away with a note just in case you get a letter later.
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