This answer only pertains to "federal" taxes as I know nothing about Arkansas taxes.
When you inherit "property" the basis in that property - your "cost" for purposes of determining gain or loss if you subsequently sell that property - is typically "stepped up" to the fair market value of the property as of the date of death. (There's a possible alternative date to value the property, that being 6 months after the date of death, but that's unusual and the executor of the estate should inform you if this later date was used.)
When you sell the property you can have a gain or a loss due to the difference between your net proceeds from the sale and your stepped up basis. This would be considered a "long term" gain or loss irrespective of how long you actually owned the property before you sold it.
I believe most states follow a similar strategy for state income tax purposes but you need to make that determination yourself.
Tom Young
