TT is subtracting the depreciation previously taken from the exclusion
Recaptured depreciation is not included in the exclusion. It's taxable no matter what. IRS publication 523 at https://www.irs.gov/pub/irs-pdf/p523.pdf on page 11 states: If the space you usedfor business or rental purposes was within the living area of the home, then your usage doesn't affect your gain or loss calculations (except for an adjustment to basis for depreciation, taken after May 6, 1997, to be recaptured and reported as ordinary income).
So recaptured depreciation is not treated as part of the excluded gain. It's treated as ordinary income and taxed accordingly, anywhere from 0% to a maximum of 25%
