No, you will need to account for that when you enter the basis.
For the purchase price, enter the sum of 1/2 the true purchase price plus 1/2 the value on the date of his passing.
Also add any major improvements. Answer the questions carefully since the gain may be excluded from Capital Gains.
According to the IRS:
"when you sell or otherwise give up ownership of a home. If you meet certain conditions, you may exclude the first $250,000 of gain from the sale of your home from your income and avoid paying taxes on it. The exclusion is increased to $500,000 for a married couple filing jointly."
"If you are a widowed taxpayer who doesn't meet the 2-year ownership and residence requirements on your own, consider the following rule. If you sell your home within 2 years of the death of your spouse and you haven’t remarried at the time of the sale, then you may include any time when your late spouse owned and lived in the home, even if without you, to meet the ownership and residence requirements.
Also, you may be able to increase your exclusion amount from $250,000 to $500,000. You may take the higher exclusion if you meet all of the following conditions.
You sell your home within 2 years of the death of your spouse;
You haven’t remarried at the time of the sale;
Neither you nor your late spouse took the exclusion on another home sold less than 2 years before the date of the current home sale; and
You meet the 2-year ownership and residence requirements (including your late spouse's times of ownership and residence if need be)."
