Mike9241's Solution is great. Just a small clarification of the answer: your K-1 package will give you the Adj Cost Basis (on mine Cumulative Adjs to Basis is subtracted (well actually added as it's a negative number) from the Purchase Price/Original Cost Basis).
Subtracting that new Adj Cost Basis from your Sales Proceeds will give you the total gain. However, this gain is divided between Capital Gain and Ordinary Income.
As instructed: do not enter the sale on the K-1 just the amount that is Ordinary Income. As instructed that will flow through to Form 4797 and onto your Schedule 1 line 4.
To have the Capital Gain calculated correctly on Schedule D (from Form 8949) you will need to add the Adj Cost Basis and the Ordinary Gain to get the correct amount to enter as the Cost Basis. Then your total gain will be properly allocated between Capital Gain and Ordinary Income. The point of the exercise is that both are taxed differently.
I have not said anything Mike9241 didn't say, just trying to provide some additional notes for those who may have the same question.
