if you get a 1099-S you'll need to report the sale but assuming the exclusion is at least equal to the gain there will be no taxes. if you fail to report the sale in this circumstance the IRS will assume your tax basis is $0 and that the entire proceeds are taxable. that will be accompanied by a bill for taxes penalties and interest. then you'll have to go through the process of following the iRS instructions for how to refute the findings and bill.
