My wife's father died and she inherited the house, which she sold. We received a 1099-S for the sale of the home, do we declare that as income?

[bgrabert]

Since she split the sale income with her brother, the 1099-S only shows 50% of the proceeds.

[MinhT1]

Yes. She has to report the sale of her share of the inherited home.

The cost basis of the home is the step-up basis, which is the market value of the home on the decedent's date of death.

[Hal_Al]

This is no designated place, in TurboTax (TT), to enter a 1099-S.  Where it goes, depends on what was sold. Entering it in the "1099-B section"  (Investment Income / Stocks, mutual funds, Bonds, Other) of TT is the correct way, in your case. Real estate is "other".  Answer no when asked if you got a 1099-B. 

When asked when you acquired this property, type the word, INHERITED. That will make the capital gain/loss  long term. 

The cost basis for inherited property is the fair market value (FMV) on the date of death.  If the property was not used for personal use, by you (not the decedent), it can be treated as investment property and any capital loss is deductible.  If you did use it for personal use, after acquiring it, check the box "any loss from this sale is not deductible" on the screen "Select any less common adjustments that apply