Also, don't forget about the net investment income tax as well in completing your estimates of tax. 

If this was normal transaction between direct  buyer and seller, there would be no tax as seller is in the loss position. 1) If this house was used and reported as rental from the sister to brother, the sister could use the loss to offset her other income. 2)) if this was not a rental, and sister had just let the bother live in the house, sister cannot use the loss.

You will pay ordinary income rate and possibly self employment tax as well. 

Can I set up a holding corp that shows no income (paying no tax) as a through entity?

Well, none these affect your cap gains tax.  

@Sean Holland1) You will be paying some form of federal tax as a result of the sale.2) If the property or the state you live in has a state income tax, be prepared to also pay a state income tax.A CPA will be able to provide you a good estimate of how much tax you will be paying.

You could even rent it for a while from Mar 2020 onward if you wanted, and you would still have the option to sell without capital gains tax as long as you did it before Mar 2023.My gut says your could get a better cash-on-cash return and take on less long-term risk by selling the home and reinvesting in another SFH or small multifamily. 

@Caleb Callahan  Not sure about Texas, but in parts of BC they charge a tax (a large one) if the homes are vacant. 

Yet your taxes stay the same at $20,000 because only $100,000 is subject to tax as the $2,400 in net operating rental income is tax-free (technically they would decrease due to the passive loss which I'll touch on in a second).

Just a bit about myself:I'm originally from São Paulo Brazil, where I attended to law school, I was an intern at a law firm and criminal attorney for about 6 years.