@jeeppadre89 the step-up occured already. That occured on date of death. Whether a) the Estate is the seller or b) the beneficiaries inherit and later sell, the same "step-up" occured. Use the property value on the date of death as the cost basis in either scenario.
Maybe the term "step up" needs to be explained? that is a good thing and not something that adds to income (so I do not see how it would impact insurance premium determiniation).
Upon death, assuming the estate is worth less than $15 million, there is no estate tax. All the appreciation that occured from the time your parents originally purchased the land (and other assets) until the date of death is forever forgotten. And since it is forgotten, so is any capital gains tax related to that appreciation forgotten.
The capital gains is measured by taking the sales price minus the value of the date of death. That difference is income.
I am assuming the owners of the land prior to death was NOT an irrevocable trust - then the rules are different.
