What makes you think the trust was irrevocable?  If this were a typical grantor trust, the sale would go on the individual's 1040 and the Section 121 exclusion would apply.  But the result might be different, depending on the terms of an irrevocable trust.  And have you seen the deed?  It could have reserved a life estate for the owner -- who then would have to have been paid for it, since she was still alive at time of sale.    

Just another Tangled Web © case.