Schedule D. If there was an actual appraisal from a certified appraiser, I might accept the appraisal value as her basis, and take the Capital Loss. 

If the appraisal was "County Tax Records" or a "Brokers Price Opinion" I would probably talk to the client about spending a few hundred bucks on a certified appraisal.

I would also want to have some conversation about why the property sold for less than half the appraisal, (IE was there any partial gift involved if sold to a relative or close friend).  

That's just me, I'm pretty conservative about sticking my neck out for a client, and we are not seeing 50% loss of value of real estate in the current market around my area.

The holding period begins when the father acquired the property, not when it came to her.