There was a recent Tax Court case (Nievinski, TC Summary Opinion 2011-10) that challenged the limitation, and the Tax Court ruled in favor of the Service. The argument was that, in a particular document, IRS Publication 4819 “Important Information About the First-Time Homebuyer Credit”, there was no express explanation of this limitation.
Unfortunately for the taxpayer in this case, the Code section 36(c)(3) does expressly prohibit the credit for such a transaction between related persons, and related persons definitely does include parents and other ancestors.
The same would be true in reverse, the parents could not have purchased the home from a child and claim the credit.
In addition, this ban on claiming the credit also applies to heirs buying a home from an estate, as well as to residences that were purchased after November 6, 2009 from an in-law.
The lesson here is that total reliance on IRS publications will not keep you out of dutch if the Code provides a counter or more complete explanation of the rules and regulations. Make sure that you get the complete Code explanation – especially in the case of a move that is a little “on the edge” and seems like it may be too good to be true.