sole propriator, business shut down?

Yes, you need to report the sale. Any depreciable assets must retain tax records even when the business shuts down.  A sale or trade will always be a taxable event. If there is a gain taxes may increase, if there is a loss taxes may decrease.

Report the machine as follows and have your previous depreciation expense totaled from prior year returns.  If there has been personal use since the business closed, you must calculate business use days and days used for business to arrive at the business use percentage.

Sale of Business Property:

1. Income and Expenses at the top
2. Scroll down to Other Business Situations
3. Select Sale of Business Property
4. Select Sales of business or rental property that you haven't already reported.
5. Answer 'Yes' to Do all of the following apply...?
6. Enter your sales information:
   1. Description of the Property (Machine Type)
   2. Sales Price/Sales Expenses 
   3. Date acquired and date sold
   4. Cost
   5. Depreciation