If you report the total value of the sale, you will be responsible for taxes on that amount. It is not a capital gain, it is an inheritance. If you are the executor, make sure you are using estate forms and numbers. Keep your income, and 1040 separate fro%m your role as executor. If this is not clear, talk to a professional. We made a mistake on entering just one number reporting bonds in the estate, (and that was on the 1041) and we suddenly owned almost $10k. When we fixed the 1041, accounted for distribution & costs of the funeral, we owed nothing more. Don't guess on this. If you are not sure, it is worth it to talk to a tax advisor who deals with estate taxes. Up to $5 million is not subject to Federal tax. The exclusion on state tax varies. In NJ, it is $650K. But the forms for the executor are not the forms you use for personal tax returns. I am not a financial expert. I learned this from making mistakes on my father's estate.
