Moved Out 30 Years Ago. Still Qualifies for Exclusion

[BobKamman]

Taxpayer divorced in 1991.  Decree allowed former spouse to live in home for as long as she wanted.  Title was kept in both names.  Now, former spouse has moved into nursing home and the house is being sold.  This jogged my memory enough that I looked up Section 121(d)(3)(B), and the nonresident spouse qualifies for $250,000 exclusion because the ex qualifies.  (Or would it be only $125k?  In this case, it doesn't matter.) Even when the law wasn't changed until 1997.  

This reminds me of a unicorn I saw back in 1994, when the old rules applied.  Taxpayer sold two primary residences in same year (or maybe it was a two-year period).  Gain was rolled over from first to third house.  Gain on second house was taxable.  

[qbteachmt]

"Title was kept in both names."

As JTROS or TIC?

Community property State or common law?

Maybe there is not going to be any gain, anyway.

[BobKamman]

Originally JTWROS but state law changes that to TIC upon divorce.  Since the ex-wife is alive and not well in a nursing home, step-up in basis doesn't apply.