Inherited assets (cash or property) are not taxable to the beneficiary recipient. However, if the asset is sold by the beneficiary recipient, then you must establish the FMV of that property on the date the original owner passed, *NOT* the date you inherited it.
Then, if you sell the property for more than that FMV on the date the original owner passed, you will pay taxes on the difference.
If you received a 1099-S for the sale, then it doesn't matter if you sold at a gain or a loss. You *must* report the sale on your tax return. You don't have a choice.
