Hi and welcome to Just Answer!Inheritance taxes are added to the basis of the property.The basis of inherited property is generally a fair market of the property at the time the decedent died.However if the decedent died after Dec 31, 2009 - the a different law applies - the basis would be the same as decedent had - but may be increased up to the fair market value - but such increase may not be more than $1,300,000.The basis may not be deducted estimated life expectancy of the beneficiary.However when the property is sold - the basis will reduce the capital gain.
The capital gain = (selling price) - (basis) - (selling expenses) Let me know if you need any help.
The FMV of an inherited life estate MAY NOT be deducted for income tax purposes.
There is no such law to allow the deduction as you stated.
Please feel free to ask if you need any clarification.