And then let your exchange die in 2021 which would mean the rest of the $350K would be taxable in 2021. 

On top of this, I also receive $3,200 monthly from VA (medically retired Army) and $3,400 for being a full time student using my education benifits (both not taxable).

The main area of concern is how lines 20-26g on the 4797 don't seem to have any provision for the deferred gain that is the whole point of the exchange, so when filled out it seems to show the whole gain as taxable capital gains.  

I need to get a down payment because I am selling at the top of the market, so the down payment will be taxable as well. 

And a certain amount of every payment is taxable as well as interest as you go forward. 

The S corp I own, along with the fact that my wife and I are the only two employees, has allowed me to open a SOLO 401K to reduce taxable income.

I know any "profits" from the insurance payout minus repairs are taxable.

I know banks want to see reported taxable income and I don’t want to cause any red flags or have IRS get involved.

If you sold for $550K gain you'd max out the exclusion at $250K and have $300K taxable gain.

. - What you are saying is completely true and also ridiculous that most lenders only look at taxable income.