Any time you read something in an IRS Pub ask yourself, “Where did that come from?” Because you are always reading a secondary source and it is always better to find the primary source.

Sometimes that will be in a Revenue Ruling or Regulations. Maybe, even in a Court decision. A good place to start looking, though, is the Internal Revenue Code itself.

The answer to your question is right there in Code Section 121:

(d)(7) Determination of use during periods of out-of-residence care
In the case of a taxpayer who—
(A)becomes physically or mentally incapable of self-care, and
(B)owns property and uses such property as the taxpayer’s principal residence during the 5-year period described in subsection (a) for periods aggregating at least 1 year,
then the taxpayer shall be treated as using such property as the taxpayer’s principal residence during any time during such 5-year period in which the taxpayer owns the property and resides in any facility (including a nursing home) licensed by a State or political subdivision to care for an individual in the taxpayer’s condition.

Which is exactly what the Pub says. Your client was not in the home for at least 12 months of the last five years. Therefore, no exclusion.