Henry Corporation was organized ten (10) years ago as a retail Sporting Goods operation. Eight (8) years ago, Henry Corporation began to operate a separate Oil Refining division. Due to a slow down in the oil business, Henry Corporation discontinues the Oil Refining division. Henry Corporation sells the assets of the Oil Refining division for $2,000,000 and distributes the proceeds equally to its two (2) equal shareholders, Curtis, an individual, and Carl Corporation, for ten percent (10%) of the total shares outstanding from each shareholder. Both Curtis and Carl Corporation have a basis in the redeemed stock of $400,000 each which both acquired ten (10) years ago. Henry Corporation continues to operate the retail Sporting Goods operation. Henry Corporation has Earnings And Profits (E&P) of $3,200,000 at the time of the distribution. As a result of the distribution, which of the following is the correct tax treatment for Carl Corporation?