You have a few options for reporting the income. You could enter it as Miscellaneous Income, then make a negative entry in the same place with the description 'exclusion of tax treaty income'. However, you would need to mail in your return, with Form 8833 attached (TurboTax does not support Form 8833).
Or, as you suggested, report it as an Investment Sale, with a Capital Gain/Loss, if you can determine your Cost Basis (and document that) other than $0.
Or, wait until next year, report it as Foreign Income and take the Foreign Tax Credit.
Here's info for Reporting Tax Treaty Income and Reporting a Timber Sale.
@lgal63
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