[MBAtarga]

Mom passed away in July. We sold the house within a few months - so no net gain in value in that short term. The selling price then set the basis of value and the full sale price was our inheritance. Split with my 4 siblings - it was all tax free, as was the cash in her estate.

In your Mom's situation, she needs an appraisal for what the land was worth at the time of inheritance. The gain in value based on the selling price is a taxable event to her.

Note - IANAL, but we just went through this with options of selling the house vs holding it for a period of time. We decided to sell based on current housing market.