I am of no help with state taxes. Maybe this will help you figure it out.
I assume your brother reported the sale of his half. Since your brother is the one who reported all the rental income/expenses in the past, did your brother also recapture all the depreciation he took? Since you did not report anything on this property on SCH E in any year, you would have no depreciation to recapture. Your brother would be required to recapture it all and pay taxes on that recaptured depreciation.
With the addition of state taxes, I have no doubt this complicates things more than even I can imagine.
