You are correct that, if you sell items at or below their cost basis, the gain is not reportable. And you are correct that you inherited items with a cost basis equal to their fair market value when your father died. However, the IRS is entitled to see your detailed explanation of the situation, because the tax regulations assume all income is taxable unless you prove otherwise. Just zeroing out the income is fine, until they ask for details, which they have.
So typically, the IRS would want to see that you kept records, including a description of the item, how you acquired it, the cost basis, how you determined that basis, the selling price, and and gain or loss. Gains are taxable but losses are not deductible. That might be a spreadsheet of your items for sale, along with copies of the eBay listings or other statements from eBay that ties everything together.
You may not be able to file an amended return with Turbotax, because if you report all the capital sales as zero gain, it won't change your tax due, and if there is no change in tax or refund, the program may think an amended return is not needed.
I would start by calling the IRS office that issued the notice and explain the situation. Maybe you can send them a spreadsheet listing the items as I described above, and they will consider that satisfactory without an amended return. (More likely, you would send them a written letter of explanation and include a copy of your statements and eBay documents to back it up.)
If the IRS wants to see a formal amended return, we can help you with that, but call first.
