what was being done with the property during the 14 years or so between inheritance and sale?
but the bad news first
If you sell property to a related party, you may not deduct your loss on the sale. The loss-disallowance rule applies to any sale or exchange with a related party, even bona fide sales at a fair market price. Under this rule, you may not deduct any loss on sale. On the other hand, you recognize in full all gains on related-party sales. IRC 267 governs losses on transactions between related parties.
The persons referred to in subsection (a) are:
(1)Members of a family, as defined in subsection (c)(4);
(2)An individual and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual;
(3)Two corporations which are members of the same controlled group (as defined in subsection (f));
(4)A grantor and a fiduciary of any trust;
(5)A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts;
(6)A fiduciary of a trust and a beneficiary of such trust;
(7)A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts;
(8)A fiduciary of a trust and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;
(9)A person and an organization to which section 501 (relating to certain educational and charitable organizations which are exempt from tax) applies and which is controlled directly or indirectly by such person or (if such person is an individual) by members of the family of such individual;
(10)A corporation and a partnership if the same persons own—
(A)more than 50 percent in value of the outstanding stock of the corporation, and
(B)more than 50 percent of the capital interest, or the profits interest, in the partnership;
(11)An S corporation and another S corporation if the same persons own more than 50 percent in value of the outstanding stock of each corporation;
(12)An S corporation and a C corporation, if the same persons own more than 50 percent in value of the outstanding stock of each corporation; or
(13)Except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of such estate.
(c)(4)The family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants;
