  We present a 20-pc, volume-limited sample of M7-L8 dwarfs created through
spectroscopic follow-up of sources selected from the Two Micron All Sky Survey
(2MASS) Second Incremental Release Point Source Catalog. In this paper, we
present optical spectroscopy of 198 candidate nearby ultracool dwarfs,
including 12 late-M and L dwarfs likely to be within 20 pc of the Sun and 94
more distant late-type dwarfs. We have also identified five ultracool dwarfs
with spectral signatures of low-gravity. Combining these data with previous
results, we define a sample of 99 ultracool dwarfs in 91 systems within 20 pc.
These are used to estimate the J- and K-band luminosity functions for dwarfs
with optical spectral types between M7 and L8 (10.5<M_J<15, 9.5<M_K<13). We
find a space density of 4.9 x 10^-3 pc^-3 for late-M dwarfs (M7-M9.5) and a
lower limit of 3.8 x 10^-3 pc^-3 for L dwarfs.
