For a number of reasons, the estate cannot claim a deduction for a loss on the sale of this property.
One - The estate did not incur a loss on the sale; it only received what the property was worth in the estate's hands. Since a beneficiary had the preexisting right to purchase the property at a "discount", means the value of the property in the hands of the estate was whatever the beneficiary's exercise price price was (70% of assessed value?). The concept of FMV (and resulting loss) would not apply since someone had (and exercised) a contractual right to purchase the property at a pre-determined price.
Two - The sale was made to a related party, and losses on sales to related parties are not deductible.
Even if the purchaser (a beneficiary) had no right to a "discounted price", any sale to a related party for less than FMV would not qualify for capital loss treatment. See Loss on sale of property to a relative or related party
Three - Sales of personal property (residence and adjacent land) do not qualify for capital loss treatment. If the "farmland" had been in production, that part of the sale may have qualified for loss treatment except for the previously listed reasons it did not.
