For tax purposes, the sales price is what you actually receive.
So if you receive $350,000 and your Adjusted Basis is $340,000, then $10,000 will be subject to taxes.
The depreciation is taxed at your regular tax rate, up to 25%, a Gain of $10,000 would likely result in $2500 in Federal taxes (but it could affect other things on your tax return as well).
However, your child's Basis will also be $350,000. So if your child were to immediately sell it for $450,000, your child would have a $100,000 taxable gain.
