@dfs49 - please read this link from the IRS and specifically the part on "health related move"
https://www.irs.gov/publications/p523#en_US_2021_publink10008937
read this statement in particular:
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.
If you meet the requirements of the entire paragraph (I only snipped part of it), then you would be eligible for 11/24 of the $500,000 or 229,000 would be the exemption - not $500,000
also, the 'cost basis' should be what your mother-in-law paid for it plus improvements since she bought the house. is that how you derived the estimated $300,000 capital gains?
