IRS is inquiring about a 1099-S that they received but is not on client's tax return. $578,000 was the sale amount. This is the client's personal residence that he sold. He took the 121 exclusion of $500,000 after calculating improvements and expenses of sale. There was no reportable gain. I didn't report it. Am I incorrect on this? I would think that IRS doesn't really know that this is a personal residence thats being reported on the 1099-S.