Yes, you each incurred $10,000 in capital gains, at first look.
Your parents had a life lease which means you inherited the condo at the date of death. In addition, you may have had expenses of selling that can be added to the basis.
As for reporting it, the IRS gets the 1099S and it is good when the numbers are easy to follow. Your sales price is half the 1099S. Your basis is where the numbers change.
List your basis as: half of FMV on date inherited PLUS half of any sales expenses
List the sale price as: half of $165,000 = $82,500
For a comprehensive look at your question, please see this article on home sale. The section that applies to you is farther down.
@rjs has added a great answer
{Edited 01/24/2020 | 6:40 PST]
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