@rbynaker   Read §121(d)(6) again, and then look up the reference to §1250(b)(3).
https://www.law.cornell.edu/uscode/text/26/1250#b_3


@taylor0509   The Basis is lowered whether you claim depreciation or not.  If you did not actually claim depreciation, the Basis is lowered by what you COULD have claimed.

Yes, it is should be fully excluded.  If there isn't a 1099-S, you could even just not enter it.  Otherwise, it seems like you are mientering something on the Home Sale Worksheet.