My mother died in CA on July 6, 2010. Me and my two sisters inherited her only asset, her house, which was in a trust and was not required to go through probate. I am a resident of FL with no personal income tax. My sisters are residents of CALIF. We sold the house for $265K in Jan 2011. This is pretty close to the fair market stepped value on the date of her death. The 3 of us realized sale proceeds of about $170 ($57K each) on Jan 19, 2011after two liens to Medi-Cal and LA County redevelopment agency were repaid. Other items including agent commissions that were paid from the sale proceeds were detailed on the Final HUD-1 form. No 1099-S was issued.

How do I report this on my 2011 form 1040? I have heard it is reported as a long-term capital gain since it is inherited property on Schedule D, but information is scant on how to prepare the form. Plus the instructions for Schedule D refer you to IRS Publication 4895, if the death occurred after 2009. That publication has not yet been published by the IRS.

Any help you can give me in this regard would be very enlightening