"the holding period for a gift tacks."

Oh, ding ding ding! There's the final piece of the puzzle. Certainly true for determining short or long term, and of course that applies to gain from gifted real estate. So, basis and ownership will transfer, and since he also already lived there 2 of 5 years, he wouldn't even need to also be a current owner for the exclusion to be the full $250,000. Interesting.