While you may have entered it in TT correctly, the Sch M-2 and Sch L (balance sheet) are based on your external books and records.
So I don't know if you maintain your books and records in QuickBooks, excel, etc. but the tax return and your books and records are generally not the same; which is why there is the Sch M-1 which reflects numerous lines to accommodate differences between book and tax.
As stated previously, Sch M-2 line 3 and Sch M-1 line 1 should always agree; both of these amounts represent book income not tax income.
I am not in a Windows environment to be able to walk through the software, but I do know what the end result should be, and as indicated previously, your facts indicate that your book income does not reflect the sale of the asset.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
