there is a step up to Fair Market Value which should eliminate most of the gain if sold shortly after his death.
the problem I saw was that the irrevocable trust and not an individual as required by section 121 sold the property. however, I found that under certain conditions that weren't specified the IRS may deem her as the beneficiary and the trust to be one and the same and thus she would be deemed the seller so the trust would qualify for the HSE. check with a tax pro because state law may affect the results.
