[jwasbury]

Steve, if you're trying to estimate capital gain income on sale of the land, the key factor is what is the tax basis of that asset. I believe that tax rules for oil and gas production allow you to claim depletion expense against income (this is like depreciation, but for the natural resources of land). If depletion expenses have been claimed over time, generally one would reduce the tax basis of the land by the cumulative depletion expense.

Neil, gifts or bequests are not income to the recipient, so should not give rise to any tax on the receiving end. This is true regardless of whether it comes from a US person or not. IRS is pretty keen to catch tax cheats who hide their money offshore, so this is probably why they want the recipient to report on Form 3520.