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Good morning. What you are really talking about is an installment sale where she would report part of the gain in 2010 and then the rest when she collected the rest of the money. The only problem would be is that under the Obama administration, it is projected that capital gain tax rates are going to increase from their present 15%. If this is her home, she is going to be entitled to a big capital gains exclusion from the sale of her personal residence.
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The real only way is to stop renting it from her so she can claim it as a residence to qualify for the capital gains exclusion. One other way, though probably too complicated for her to grasp, and not for the feint of heart because the IRS could collapse the two transactions into one, would be to buy it for a lesser amount and then make her a separate gift which you could exclude under the lifetime gift credit and would not be income or gain to her.
I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.