Your family's basis in the property is $161,000 (I assume the appraisal was done around the time of death), and the sale proceeds are $70,000, so there is a loss here of $91,000.  Due to the flood, this is a casualty loss if there was no insurance coverage to fully compensate the difference.

The children should claim their share of the loss ($13,000) as casualty losses.  Please read on for more help and check out this IRS website as well.  https://www.irs.gov/taxtopics/tc515.html

https://ttlc.intuit.com/replies/3301959