I haven't run this exact situation but here is what is supposed to happen tax-wise.
First, when the property is placed in service as a rental, the owner needs to select a basis for depreciation. That is the cost basis or FMV, whichever is lower. In a recently inherited property, they are the same. But, land never depreciates so you have to account for that. If the property is worth $150K but the land is worth $20K, the basis for depreciation should be $130K, not $150K.
Next, when sold, the taxpayer pays capital gains, which is the difference between the adjusted cost basis and the selling price. The cost basis must be reduced by the depreciation that was taken or could have been taken while the property was used as a rental. This is taxed as ordinary income, as depreciation recapture, and the rest of the gain is taxed as long term capital gains at a lower rate. Suppose the property sold for $200,000 and there was $19,000 of deprecation. The capital gains is $69K, with $19K taxed as depreciation recapture and the rest as long term capital gains.
When you enter that you sold an asset and you choose a house at the type of asset, one of the first questions should be, was there a 1099-S and what sales price was reported. The question about land value is probably being used to calculate the depreciation that could have been taken. Look for a way to bypass this by indicating that you know the amount of depreciation from past tax returns. If not, you will need an estimate of the land value. This may be on the property tax bill or you may need to ask the local assessor or a real estate agent. It should be the same land value estimate used in 2014 when the property was placed in service.
(If your sister and b-i-l used the full property value for depreciation, that was an error and they deducted excess depreciation. If you can enter the actual depreciation taken in Turbotax instead of calculating it, use that. If not, you may want to consult an accountant to determine the best way to fix the prior excess depreciation.)
