When you receive form 1099-S, you need to report the sale of the home on your tax return even if the capital gains are excluded from taxation in the case of the sale of a residential home.
If the IRS has enquired about the form 1099-S which you received, I suggest that you reply to the IRS letter and explain that you did not report the form 1099-S as the capital gains are excluded from taxation with the details of your dates of occupancy and all the circumstances of the sale including the calculation of your capital gains. You do not need to amend your return if the capital gains on the sale are not taxable.
Please read this IRS document for more information:
https://www.irs.gov/publications/p523/ar02.html
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