My sister's estate included commercial property that was listed for sale a couple of months before her death in Aug. It is scheduled to close in Dec 2012 . Will I need to get a formal appraisal to determine the value at time of death for capital gains purposes or will the current valuation based on the sale price suffice as fair market value at time of death... therefore no capital gains?

If the property has already sold, then, in my opinion, no formal appraisal is necessary.

However, if the property has NOT sold, then the Fair Market Value (FMV) of the property at the time of your sister's death (or at the six month anniversary of her death) must be determined, and for that, an appraisal will be needed.

By the way, the property's vakue is automatically stepped up to the FMV at the time of her death, so there likely will be NO capital gains in any event.