Thank you for clarifying. You are responsible for the capital gains on the portion of proceeds that you proportionally received into the trust that was set up for your brother and you. Receiving the proceeds into the newly established trust does not exempt you from capital gains tax. Furthermore, the fact that you chose to gift these funds to your children, does not exempt you from any tax either. You may very likely receive a form 1099-S from escrow. Whether or not you receive the form, you are still required to report the the transaction and your portion of the gain.
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