No, the implication does not fit the requirement. You must meet the ownership portion of the test, and although you meet the use test, you do not meet the ownership test.
- Per IRS Topic 701 - In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test.
The sale of inherited property can be entered using the following instructions.
- Open or continue your return (you can choose the Search box and type 'sale of second home' then use the Jump to link to enter your inherited sale) or follow the menu.
- Under Wages & Income scroll to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2021? screen
- If you land on the Your investment sales summary screen, select Add More Sales
- On the OK, let's start with one investment type screen, select Other, then Continue
- On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
- On the next screen, select Other (choose this also for inherited homes) then select I inherited it under How did you receive this investment?
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