How does your adjusted basis on your worksheet= $87, 991? First of all, you omitted depreciation. In the example taken from @ErnieS0, this is how it is figured on the Form 4797. You should be reporting the sale on that form, so you can include the depreciation.
In the simplest math possible, not taking appliances and land into the equation, I get:
$138K purchase
+$11,264 closing costs
-$29,000 depreciation
_______________________
$120,264 basis that you would subtract from sales price for gain.
