@ThomasM125 and @bosso3 - in case you are interested, our accountant consulted a tax attorney contact, who said it's NOT ordinary income, and rather that Jack held the property in a “constructive trust” for his siblings. (See https://en.wikipedia.org/wiki/Constructive_trust) So we can treat it as a capital transaction with a step up in basis... which we did, and now we can all sleep at night knowing this was an acceptable way to handle it. Thanks again for your input!
