My Father-in-law died in 2006. His estate was left to his 3 children now ages 65,61 and 57. The home is ready to sell. What are the "tax implications" we might face when sold. The home was paid off more than 20 years ago.

There is no federal inheritance tax in the U.S.
Only if the estate of your father-in-law is more than 2 million, then there is estate tax implication. Also if his income is more than the filing requirement, then some one must file his tax return.

For the inheritance, your cost basis of the house is the fair market value of the house at the date of his death (not the cost basis of your father in law).
Read this: Your U.S. Tax Return: Tax on Inheritances

There are two option in this matter.

1) The ESTATE can sell the house, then split the net proceeds three ways. This is easier in terms of handling the sale.

OR

2) The ESTATE can distribute the house itself to the three heirs, titling the house one-third each, THEN the three heirs can sell the house.

The amount of money received would probably be the same, but there is a potential tax advantage by using Option #2.

Under Option #1, there would NO requirement to report the money received on each heir's tax return, because distributions from an estate are NOT subject to state or federal income taxes.

Under Option #2, however, the sale of the house would have to be reported on Schedule D, and taxes would be paid on any capital gains realized from the sale of the house.

However, it is LIKELY that there is NO capital gain, and, in fact, there is a CAPITAL LOSS in the sale of the house.

Let's all remember that, for the past year or so, real estate values have declined precipitiously in the United States. In some parts of the country, real estate values have gone down as much as 50%.

It is possible this house, valued at say $302,000, is NOW worth about $200,000.

That's a capital loss of $34,000 PER heir, which is a NICE tax deduction that, though capped at $3,000 per year, can carry forward until completely used up.

The details need to be handled by a local, competent tax professional, but it is something that needs to be looked at closely.

Also the profit from the sale of the house is a long term capital gain, even if the house is sold after a day of the inheritance.
Profit from an inherited property is always a long term capital gain.