Yes, using your assumptions above the CG exclusion does not apply. If you read my explanation, though, I stated I had not sighted either closing statement so I made no assumptions on the R/E agent's commission. I have come across FSBO (For Sale By Owner) purchases where the buyer simply has their attorney complete the closing statement and there was no commission. But either way, with a loss - which is not deductible by a seller - or a sale where the gain is under the $250K/$500K limit, there are no taxes on the CO residence sale. And, of course, we have even less data on the Indiana residence sale (assuming the IN sale was of their residence, which I don't know for sure) so we don't know the tax liability there, if any.
From my understanding they lived in the house less than two years, therefore they would be unable to deduct any losses on the sale.