Did Reid declare the profit and pay taxes on it?
Yes, so far as we can tell, he reported the sale in 2004 and paid taxes.
He did NOT report the transfer to his holding company in 2001. According to Reid it was a personal handshake deal, and he transferred it at the original price. That shouldn't have generated a taxable event, although I'd consult a tax lawyer for that.
I don't think he did anything wrong in the area of making money or reporting the money made -- he even put that on his disclosure.
The issue is that in 2001 he transferred the property to a holding company, creating a partnership with Brown, which he failed to disclose. He had a financial tie with this person, which nobody knew about. He then seems to have taken action as a Senator that benefitted his family and this person, but since he hadn't disclosed their relationship voters and the media didn't know to check that out to see if there was a connection.