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As a beneficiary of an estate, you are not taxable on any assets received (money or property) unless it would have been taxable to the decedent (i.e. an IRA or pension account). Thus, you are not taxable on your inheritance of cash or real estate by the U.S. directly. Your basis in the real estate inherited is generally its fair market value as of the date of death of the decedent.
If the sale of the property was conducted by the estate, with the estate on the title, then the estate will report the transaction and pay any income tax due. The cash you received from the sale is therefore in payment of a bequest and is not subject to income tax in the U.S. (although interest and dividends earned on the invested money will be taxable).
However, if you inherited the property and your name was placed on the title before the sale, then you will have a reportable transaction on your 2005 return. Specifically, you would report your share of the sale proceeds on schedule D to form 1040. Your cost basis on schedule D will be the fair market value of the property (plus any post death improvements) plus any allocable expenses of the sale (i.e. commissions, title insurance, etc.). The net of the two numbers is either a gain or loss, which is offset by any other capital gains or losses you incur during the tax year. the net of all your gains and losses is then transferred from Schedule D to line 13 of the 1040. Remember, if the net of your gains and losses is a net loss, the most you can deduct in any one year is $3,000. Capital losses in excess of $3,000 may be carried forward to future years.
I suggest you speak with the executor to see how the estate is reporting the transaction. If the estate is reporting the transaction then you have no reportable event. If the estate is not reporting the transaction (i.e. you were on the title) then you do have the reportable event I described above (you should ask th executor to provide you with the info you need). You should know if you are on the title, because the executor would have asked you to sign several documents including a deed.