you have what is referred to as income in respect of a descendant which makes it taxable to the recipient. the fact that the underlying property had a FMV is irrelevant. the property was sold so it was no longer owned by the estate
The beneficiary reports the same gross profit percentage and interest income as the decedent would have reported. For asset where the deceased deferred income for tax purposes, the beneficiary does not receive a step-up-in-basis, but rather is put in the same position as the decedent.
