Yes The Basis step's up as of the fathers death.

No the Holding Period DOES NOT begin with the fathers date of death.

The beneficiary does NOT need to hold the property for a year and a day to get long term treatment. For long term capital gain purposes the father's ownership, and any time an Estate owned it are combined with the beneficiaries time of ownership to determine long-term or short -term.

Example :Father owned the property for 10 years. Beneficiary sold the property 3 months after receiving it due to Fathers death. Sale would be a Long-Term sale.

Of Course, in this case with a loss, the holding period, as a practical matter, makes minimal difference.