Nice try, but you are confusing "holding period" under Section 1223 with "owned" under Section 121.  (From the language of your post, I don't think you are confused, but simply hoping IRS would be.)  

There are cases where mortgage interest and property taxes were allowed the equitable owner even when the legal title was held by a relative.  You could try to extend the theory of "constructive trust" to this situation.  First, though, have you calculated how much capital-gains tax would be owed?  If the daughter's income is low enough, the gain may be in the zero bracket anyway.  But then, of course, you might have to deal with state income tax.