Since he passed more than 2 years from the sale of the home the exclusion option will not be available but you do need to calculate the updated basis. Using this word formula you can enter in the figures to come up with the needed figures for reporting the sale in the TT program.
Original purchase price of the home + cost to buy + improvements up to the date of death = cost basis to DOD ... Each spouse gets 1/2 of that cost basis.
DOD value is determined and the surviving spouse now gets 1/2 of the DOD value + the 1/2 of the cost basis prior to DOD + improvements made after the DOD + cost to sell = cost basis for surviving spouse
Selling price - cost basis for surviving spouse = profit/loss
Surviving spouse can excluse up to $250K of the profit ... any excess profit is taxable at a long term capital gain rate.
