Hi JimO65!
My condolences on your mother's passing.
Your questions lead to some additional questions. Texas not having an inheritance tax is unrelated to the federal taxes on personal and estate income. There is not a federal inheritance tax, but there is a federal estate tax. The federal estate tax generally applies to assets over $12.06 million in 2022. Did you file a form 1041 for your mother's estate, or did you just do a final 1040?
It's possible that the IRS is looking for the income to be reported somewhere, even if it ends up be non-taxable. Without seeing the CP2000 it's difficult to know exactly where they're coming from.
Generally, life insurance proceeds after the insured's death aren't reported as income to the beneficiaries. However, any interest on the proceeds (such as when the proceeds are delayed) are reportable. The beneficiaries should receive a Form 1099-INT with the amount of the interest paid. If you received one of these forms it would need reported. If any other income indicated on the notice from the IRS is showing as reported by others, it's possible you received some type of form that required reporting either on the final 1040 or on a form 1041.
I would be clear on what exactly the IRS needs before giving any personal information on my siblings.
It may be easier to call us at (800) 446-8848 and one of our tax experts can go over the notice with you.
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