Assuming the house was legally retitled to the group of siblings before the death of the parent, you would calculate your capital gain income or loss based on the amount she paid for the house, i.e. the "transferred basis" value. The transferred basis includes any adjustments to the cost basis of the home, including qualifying capital improvements made over the years, and any gift tax paid on the transfer to the new sibling owners. See the details in IRS pub. 551 Basis of Assets in the section, Property Received as a Gift.
You would not use basis which is stepped-up to the FMV, as this would be the treatment for transfers occurring at the time of death, not beforehand.
Learn more:
TurboTax - 5 Things You Should Know About Capital Gains Tax
IRS - Estate and Gift Taxes.
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