We live in California and my mother in law lives in Canada. she is giving us $78,000, (she is still alive) and we will lose a certain amount because of the currency exchange but my question is what taxes if any will we have to pay...federal? state? What can we do to minimize any taxes?

The receiver of the gift does not pay any federal income tax in the U.S. and also there is no CA tax.
Only if your mother in law is a U.S. citizen or resident, then she must file gift tax return, even she may not owe any gift tax.
Read this
Your U.S. Tax Return: The U.S. Gift Tax (http://taxipay.blogspot.com/2008/03/us-gift-tax.html)