Depending on the types and amounts of depreciation previously deducted on the rental property sold, the gain on the sale will be subject to ordinary income tax rates first and then the remaining portion of the gain will be subject to capital gains tax rates.
TurboTax will calculate the amount of taxable gain on the sale subject to ordinary income tax rates and capital gains tax rates.
The gain reported as ordinary income and capital gains income is included in AGI.
Refer to the following link for additional information on the type of tax you will be seeing on your return for the sale of a fully depreciated rental property when sold at a gain:
Calculation of tax on sale of fully depreciated rental:
