ANSWER:
YES. The new Tax Code allows a Surviving Spouse who has not yet remarried to qualify if the Deceased Spouse qualified; further, the Surviving Spouse may file a Joint Return for the year a spouse dies, exempting $500,000 of profit.

However, if you sell the house in the year after your husband died, you cannot file a Joint Return and can only exempt $250,000 of profit.

More importantly, the Step-Up in Basis applies.

For more information, see 1997 Tax Act
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