What was the time period between the Date of Death, and the date of sale - That would be the only appreciation that is taxable, as the estate should have received a step up basis in the property to FMV as of Date of Death.
I don't believe section 121 is available.
Edited after re-reading your last post. (And I am not sure I understand your statement about step up) The step up basis occurs at the moment of death (so to speak) so assets in the Estate - get the step up basis in computing any gains on sales. (At least that is how I have always seen it done.)
By your comment that you want to use Section 121, there must be a gain on the sale.
It seems to me that if you have a Gain, and want to take an exclusion, you would have to file the return to calculate and report the gain and claim the exclusion.