Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.
Please consider this an assist to Steve (he's probably watching football).
The code section you're looking for is:
26 CFR 1.1014-1 - Basis of property
acquired from a decedent.
Read more: http://cfr.vlex.com/vid/1-1014-basis-property-acquired-decedent-19706946#ixzz19pdRdHrr
The fact that the estate is paying no taxes has nothing to do with it. You need to determine the FMV of the asset
at the date of your father's death.
So, everything Steve told you is right on the money & this is just a little extra to answer your additional question/comment.
Note; You could have a deductible
long term loss if the REITs lost value between the time your Dad died and they were sold. Maybe the IRS owes you money! :]
You don't need to answer these comments; if you do I'll send them to Steve unless it is a Yes or No answer.