My brothers and I (2 brothers) inherited my mothers' house that was in a trust. We recently sold the property and the proceeds are to be distributed evenly.
The house was sold at $176,500.00 and at the time of my mother's death the FMV was approximately $174,500.00. After expenses we netted $130,911.00.
So 1/3 would be $52,970.00. Do we need to pay income tax state and federal on the $43,637.00?

You will owe ZERO taxes.

The amount taxed is the DIFFERENCE between the FMV (with the expenses of the sale added) and the sale price.

Assuming the normal 3% cost of the sale, you actually will show a loss on the sale, which must be reported on Schedule D, but is NOT deductible.

n/a

Closing costs plus commissions.