If the property was given to your parents by a relative, then their cost basis is whatever the relative originally paid for the property, plus the cost of any permanent improvements (new roof, etc.), minus depreciation that was claimed or could have been claimed if the property was used in business (commercial, residential rental, etc.) (Unless the relative died and they inherited the property, then the rules are different but your statement is unclear.)
Their capital gains is the difference between the selling price and the cost basis. They will need to make diligent efforts to prove what their cost basis is (their relative's cost plus improvements). If they are audited, the auditor does not have to allow any basis that can't be reasonably proven.
For example, if the property cost $500,000 and the brother made $100,000 of improvements before gifting it to your parents, the cost basis is $600,000. Then they would have a capital gain of $900,000. However, if the property was commercial, and it had been owned by the brother, it would have been subject to about $300,000 of depreciation, so the cost basis becomes 500 + 100 - 300 or $300,000 and they have a $1.2million gain.
They may need to work with a tax professional to properly report this gain.
There is a lifetime limit of $5.4 million that can be gifted or transferred in an estate tax-free; over that amount, gifts and estates become taxable. For a $1 million gift, no tax will be owed but a gift tax return must be reported so the IRS can record the gift against their lifetime tax-free limit.
