It should be reported as one sale.
However, figuring out how to do that in TurboTax may be quite tricky.
As a rental, it should be reported on Form 4797. However, I don't think TurboTax will help you with reporting in on that form and using the Home Exclusion (although I think you can use the Home Exclusion when you see a Rental in the Rental Section, I think the "Special Handling" due to it being PARTLY for business is going to mess things up).
I think you would either need to report it in the wrong form (Schedule D, as the Sale of Home), or use the CD/Download version and enter the information directly on the Form 4797 using "Forms Mode".
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Another option would be to use a tax professional this year.
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