Since the trust sold the real estate, the trust recognizes income or loss.
Since your fair estimate of the value of the property was $325K at the date of death, then that would be used as the cost basis.
Your total cost basis is the $325K value when the trust received the property, plus any capital improvements since that time. Your cost basis is also increased by the selling expenses of the sale,such as the realtor fees and seller paid closing costs.
The difference between the selling price and the cost basis is the capital gain that is taxed.
The income tax applies at the federal level. If the estate is based in New Hampshire, this state has no income tax, and as such, no state tax is due on the gain.
Once the income tax has been paid, the remaining proceeds can be distributed to the beneficiaries of the estate. There is no inheritance tax. Since the amount of the estate appears to have been less than the estate tax exemption in 2000, there is no estate tax due either.