If they sold their primary personal residence and they lived in and owned the home for at least two years in the five year period on the date of sale, they do not have to report the sale if their gains are less then the exclusion amount of $500,000 when filing Married Filing Jointly (and both lived in the home for two years).
If they had a gain greater then the exclusion amounts then they would have to report the sale. Also, if they received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.
