Capital Gains Tax on Estate in MA

You really have multiple issues - and the calculations can be tricky. So you have been formally appointed as executor of your mother's estate by the Probate Court? Remember that being named in the Will to serve as executor is NOT the same as being appointed by the Court. It is only after you have been appointed that you have the authority to sell the house (or to sign the listing agreement for that matter).
 
If your mother died before 2010, then the federal and state laws are essentially the same. In that case, your basis in the property included in your mother's taxable estate (whether she files an estate tax return or not) is "stepped up" to the date of death value under § 1014 of the code (with one important exception). So basically your gain on the sale of the house - assuming that the house was included in your mother "taxable estate" - will be calculated by comparing the date of death value to the adjusted sale price.
 
If your mother died in the year 2010, then it gets a lot more complicated. For federal purposes the basis adjustment has changed drastically, but the Capital gain exclusion of § 121 is now available for sales by the estate. Massachusetts will still use the date of death value as the new basis. Tax issues are always tricky. Please consider consulting with a qualified CPA of probate attorney who can guide you through this labyrinth.
 
Attorney Peter Bernardin