My understanding is that we cannot take a 179 exemption and claim the entire amount in one year, is that correct?

I would have to claim the property as my primary residence for 2 of the last 5 years in order to be exempt from it.  

If we built a spec house we could either sell when finished and take the tax hit on gains or 1031 exchange it, or live in it for two years (before or after construction) and qualify for the full capital gains exemption because we lived there for a few years before it was a rental.  

A property owner may be exempt from the licensing requirements of this chapter pursuant to A.R.S. § 32-2121.A.1.

Use of the City's trash collection is optional and you can always opt to hire a private collection company.It does not apply to single family rentals and if a multi-family and the owner lives in one unit then you are exempt from the fee.

I believe the state will look at past tax returns, if homeowners exemptions were claimed, drivers licenses, etc.

Grandmother is eligible for a Principal Residence exemption of 250k from capital gains as she has lived in the home continuously for 30+ years. 

FIRPTA requires escrow officers, closing attorneys or other settlement processors to withhold and remit to the IRS 10% of the gross sale price unless the IRS issues a Withholding Certificate of Exemption to the closing agent. 

Bankruptcy trustee will abandon property unless there is non-exempt equity there, and doesn't sound like there likely is.  

The 2nd way is to request a prohibited transaction exemption, PTE from the IRS and pay your SDIRA fair market value for the real estate.