When you are going through the "asset" in the rental section to indicate it was sold, say "YES" when it asks you about "Special Handling".
Then report the sale in the "Sale of Business Property" section. Use your $350,000 purchase price, $40,000 of depreciation, and a $320,000 sales price, you would have about a $10,000 gain.
HOWEVER, after factoring in selling costs (and exact numbers, rather than rounded numbers), using those numbers MIGHT show a loss, which is NOT allowed in your case. *IF* that happens, TurboTax is not set up for that, and you will either need to manually manipulate things to show a $0 gain/loss or go to a tax professional.
