Here's how I look at it, based on my interpretation of your scenario.
You'll report the sale in the "sale of business property" section.
First screen you select "sale of business or rental property not already reported" and continue.
next screen says select YES if you sold a depreciable asset. So you will select NO on that screen.
Next screen asks if you sold property that can not be depreciated. You'll select YES here.
You'll indicate was held more than a year, then continue.
Enter the description and sales data and continue. That does it for that part only.
Your cost basis can be the entire value you assigned to the land (front loading) or a percentage of the land value equal to the percentage of land actually sold.
Then in the business section where you deal with the Business Assets/depreciation (SCH C I presume) you'll change the amount in the COST box by subtracting the amount you entered earlier as your cost basis on what you sold. Then you will also subtract the cost basis of what you sold from the amount int he "COST OF LAND" box.
Doing this will lower the overall cost basis of the asset without changing the cost basis of the structure being depreciated. This will keep depreciation "on track" while showing a correct cost basis -which of course will be necessary in the future when the property is sold or otherwise disposed of.
Then what you reported in the "sale of business property" section will show either a loss or a gain, depending on the numbers of course. If sold at a loss, the business deduction is allowed. If sold at a gain, then of course it will be taxed as a business sale (which is what it is) as opposed to a personal sale.
