Yes, because the home was gifted (quit claimed) while your mother in law was living. Enter the sale under the Investment section. Even if the home was inherited (title passes after death), the sale would still be entered on your tax return, but the basis would be stepped up to the date of death fair market value (FMV).
You will need to know her adjusted basis and FMV of the home at the time of the transfer. Capital gains/losses are completed in this section.
You used the word 'we'. I'm assuming that is your spouse. If not, then record the sale for just your proportionate share.
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