My brother died in Jan. of this year. I am the only living relative and trying hard to understand this process. The only asset is a house, and it will be sold. Are there any type of taxes I should be aware of and should pay up front ? Also I just learned I have to file final tax returns for him even though he did not work at all last year. Is this correct.

Thanks for the help

Yes, someone must file all the unfiled tax returns and the final tax return. So in this case, you must do it.

There is no federal tax on inheritances. CA also does not have any inheritance tax.

You cost basis of the house is the fair market value of the house on the date of death of your brother. After that you sell the house, you may have a gain or loss. If there is a gain, you must report it.
For more information read this blog: Your U.S. Tax Return: Tax on Inheritances (http://taxipay.blogspot.com/2008/02/tax-on-inheritances.html)

It is possible that your brother had no legal requirement to file a tax return. This would be the case if his income was less than $3,400 for 2007, or his only income source was non-taxable items like Social Security.

If this is the case, there will be no requirement to file income tax returns.

If a house is his only asset, there will be no estate tax return as well.