Ok, @lameri, you asked two very distinct questions and I'm going to deal with them in reverse order.
The valuation for year X is just fine. Satisfies the requirement nicely.
The second question is more complicated. If the land was sold and then the proceeds were distributed to the heirs (one eighth, as you say) then the heirs had nothing to do with the sale of the land. They received an inheritance of cash and if it is over $100,000 and they are US residents or citizens they will report it on form 3520. The sale of the land does not enter into consideration because only cash was received by the heirs. No taxable event has occurred.
If they received a piece of the land (again, one eighth) then, like @JulieS says above, no taxable event occurs when they get the land, only when they sell it. And if they didn't find out until X+2 that they had received the property then they actually got it in X+2 (The basis is still the valuation from X, though). So the 3520 is due in X+2, not X.
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