I recently sold an S-Corp business as one of 3 partners.
My initial investment (basis?) was 30k. Over three years, losses brought that to 18.5K. Now, we sold the business and my share of the sale price came to 20k, which was distributed according to ownership %.
Will I be taxed individually on 20k distribution or the 1.5 difference?

The capital gain for the S corporation is really the extent of the sale price (that is equal to your pro-rata share or % ownership) less original investment further reduced by losses. In other words, your adjusted S corporation basis is 30k - 12.5k = 18.5 k. Your sale price is $20k. Hence gain to you would be 20k - 18.5k = 1.5k.

The distribution has no tax impact as you have sufficient basis to take the distributution. In conclusion, the taxable impact of this transaction is a net K-1 capital gain of 1.5k, which is really a long term capital gain.

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