Edit:  I was multi-tasking and was responding as if mom had died.  It would still be taxable to the kids even if it was a Life Estate, according to their percentages based on the actuarial tables.

Receiving some of the proceeds may mess things up.  It may be difficult to claim a Life Estate when the kids benefited from the sale (in other words, it was not 100% mom's property).

*IF* it was a Life Estate, it all goes on mom's return, nothing on kids' returns (other than the possible reporting the 1099-S and backing it out to avoid an IRS notice).

If it was NOT a Life Estate, it is split between the owners and kids pay taxes.  But not at 25% each - it is divided based on the IRS actuary tables for a Life Estate.  As you mentioned, there would be step up in Basis when the dad died (either 100% or 50%).