As you go through the rental section entering the details about your property, TurboTax will ask you to enter both values. It will ask for your purchase price, cost of improvements you have made, and the cost of the land. Then, you will also be asked to enter the fair market value minus the land on the date that you converted it to a rental property. TurboTax will then compare the numbers and choose the one that is to be used as your basis for depreciation.
The lower of the two numbers will be chosen.
For more information, see the following from the IRS: Publication 527 Residential Rental Property - basis