The same way you reported the income in prior years with 50% ownership through Schedule E it will ask if you have sold the property that year and when, it will then take you through all the schedules/forms required based on your answers and circumstances which can vary. It can result in capital gains or not. I also sold property last year and I found it necessary to read up on the subject and make sure I had the correct information. I even had to amend my state taxes for AZ because they passed a law to reduce captial gains on investments purchased and sold after December 31, 2011 which Turbo tax did not properly report in my case based on my purchase date. So I highly recommend investing some time in researching the IRS rules which you can do a search and find on IRS.gov.
