"I am creating their return since they did not file for the gain realized"

"They" implies more than one owner/seller.  Was she single when the property was purchased?  If not, when did the co-owner die?  Who prepared the 2021 return?  Has anyone asked that person why the sale was not reported?  

The house was obviously refinanced, if the mortgage payoff was twice the original purchase price.  That's an additional reason that mortgage payoffs are not deductible from the gain.  Otherwise, everyone with a taxable gain would just refinance before selling.