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Here is a twist. In India I have paid Capital gain Tax which is assessed at the time of the sale. In India the current rule is to determine the estimated value for 1981 (since house was built in 1971) use a multiplier provided by the goverment between 1981 and 2009 and come up with the proposed current value. This number gets subtracted from the sale value and a capital tax is computed for the profit during sale.
If I understand you correctly, In USA the value of the property for calculating profit/gain is from the time of inheritance to the time of sale. Please confirm.
Lastly who makes the determination of value at the time of inheritance for the purposes of Tax filing in USA
I am not only accepting your response but want to thank you for giving me something to work on. The capital gain in India was very substantial as per the calculated figures. We inherited the property in 2003 after my mothers death but it took us till 2006 to get it registered in our name and become official owners. The property got sold in 2009 and hence the question.
Again thanks for guidance as I will start my extended research now