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@DGEmbry wrote:

The exception #5 does not apply in this case.

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I've never dealt with this, but if I'm reading things correctly:

If the exceptions don't apply, that section says that the deduction for Capital Gain Property is the FMV (in your case, $84,000).

However, it is partly Ordinary Income Property (because of the depreciation) and partly Capital Gain Property.  So the $19,000 (that would have been ordinary income due to the depreciation) lowers that deduction.  So the actual deduction would be $65,000 (and be sure you are not actually reporting the $19,000 as a recognized gain).