Business & farm

Thanks for the response.  I will provide some commentary and direction:

1. Partnership tax is complicated and you should consult with a tax professional to make sure you arrive at the correct gain and tax impact.
2. There are several items that you need to clear up with the preparer of the partnership return and your K-1:
1. The difference between what you indicate is contributed capital and what was on your initial K-1.  That $20,000 is significant and impacts the determination of your gain.
2. The difference between what you indicate you received for your interest and the amount reflected on the K-1 line 19 code A.  This $4,000 is significant and impacts the determination of your gain.  This $76,000 should not have been reflected on the K-1 unless it was a true distribution; the payment for your interest is not a distribution.
3. Once you clear up the issues in item 2, you need to prepare your basis.  While you indicate that your K-1 section L indicates that the information is on a tax basis, I don't have a real comfortable feeling about that.  You have everything you need to determine your tax basis based on what I see in your facts (assuming you get clarification on the discrepancies noted above and in your facts).  Your basis is a critical component in determining your overall gain and is what is needed to complete your Schedule D and applicable form 8949.
4. Your responses to my question on depreciation and method of accounting lead to additional complexity:
1. These two items are part of what is known as "hot assets" (Section 751 property).  In general, a sale of a partnership interest is considered a capital asset.  However, Section 751 provides an important exception; the seller realizes ordinary income for your share of the hot assets.
2. The preparer of the LLC return should provide some direction in determining your share of the hot assets.
3. Once you understand your share and know your overall gain, you will need to recharacterize some of what would normally be capital gain as ordinary income.  
4. By way of example, let's say your overall gain is $25,000 and your share of hot assets is $10,000.  This would mean that you have ordinary gain of $10,000 (reported on form 4797) and capital gain of $15,000 (reported on Schedule D and applicable form 8949).
5. Another example, let's say your overall gain is $15,000 and your share of hot assets is $25,000.  This would mean you have ordinary gain of $25,000 and a capital loss of $10,000 (same overall gain of $15,000).  These rules are confusing and a trap for the unwary.

As you can see, this is a complicated area.  Determining your overall gain is critical and there are several items that you need to understand before this can be determined.  I recommend you get some professional help as I am sure you want to report this correctly AND should you win the audit lottery will need to be able to support your computation.