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As the other expert indicated, you may want to review the transaction with a tax professional. Here is the worst case scenario:
If the property was an unconditional gift and you received full title to the property at the time of the gift, then you also received your father‘s cost basis in the property. His cost basis is what he originally paid, plus any improvements that you can prove. Then, you can further increase your cost basis by the cost of improvements that you can prove. Your capital gains is the difference between the selling price and your adjusted cost basis. The fair market value of the property on the date it was transferred to you, or on the date your father passed away, has no bearing on the matter.
Improvements are permanent changes to real property (meaning land and anything permanently attached to the land) that increases the value of the property. You can only adjust your basis by the costs of the improvements, you cannot consider the value of your own labor. For example, if you built a hunting cabin on the land with your own labor, you could only include the cost of materials. A new fence would be an improvement, but making repairs to the fence only maintains the value of the property rather than increasing the value of the property, so maintenance and repairs are not adjustments to cost basis.
If you claim an adjusted cost basis based on the value of the improvements that you and your father made, and you are unlucky enough to be audited, the IRS will not award you any basis adjustment that you can’t prove.
If your father retained a life estate, or you jointly owned the property, your basis calculation would be different, and you would probably have a higher basis and a lower capital gain, so it might be to your advantage to have the deed of transfer reviewed by a tax professional.
