If there was a gain on the sale, then you have to allocate that gain to the beneficiary (and allocate the gain to income) in order for the gain to be available for distribution, which will then appear on the K-1.
If there was a loss, the loss would be netted with other capital gains (if any). If the estate had a net capital loss, that would only be passed through to the beneficiary on the final return.
The worksheet is essentially used for homes that are not inherited (i.e., purchased by a trust or estate). There is more granularity on the worksheet for the entry of the basis and sales price. For your purposes, you can simply list any costs incurred as sales expenses or add the costs to the FMV at the date of death and enter that figure as the basis.
