Dear Customer (name blocked for privacy),
I think that the capital gains tax would be based on the amount you actually sell it for. It would not matter what it appraised at or what the value of it was at the time the will was made; or even what the fair market value of it is at this very moment. If you sell it to an independent bonafide purchaser for value in an arms length transaction; then what you actually pay taxes on in any given situation is the income realized from the transaction. So let's say they pay you fair market value or an amount close to it, then you will pay taxes based on what you ACTUALLY sold it for. If it is considered an investment property then that is where the capital gains tax would come in. There are even exceptions to that if you live in the house. People buy and sell their primary home every few years and there are special rules that apply but you can do that a certain number of times before you actually pay taxes on it.You really need to double check with an experienced tax lawyer to see what the current rule is as they change them every year. I find it hard to believe that none of the above people you listed could tell you the answer. I didn't have Tax on the bar exam so my knowledge comes from what I learned in my tax class the third year of law school and from family who have had similar situations.
Hope this gets you close to the answer you are seeking.
Sincerely,
JurisD7603