Ok ... let me explain this ... you each got 1/3 of the SALES price on the 1099-S which is never the same thing as what you walked away with. Now you must report the sale using the amount on the 1099-S and your cost basis in the property to get to the taxable gain or loss to be reported on the Sch D. The cost basis is the fair market value on the date of death + improvements + cost of sale but not any mortgage payoff.
