Agreed, too much is unclear.
Without doing more investigation, the basis she can currently prove is half the fair market value in 1996. If audited, you would need a valuation from a qualified person, not a guess. A real estate professional can use historical records to tell you what the fair market value was.
To improve her basis, we would need to know more, such as why she only inherited half. Who had the other half? Maybe her brother "constructively" owned the entire property even if not on paper, so your wife "constructively" inherited the whole thing. That would require legal advice and research into the situation.
Before starting, you probably want to think about how much tax you would save if you could prove she inherited the whole property in 1996 and got the entire FMV basis instead of half. If it would cost more in attorney fees to investigate and prove a higher basis than the tax you would save, it might not be worth pursuing.
