Robert Corporation was organized ten (10) years ago as a retail Sporting Goods operation. Eight (8) years ago, Robert Corporation began to operate a separate Oil Refining division. Due to a slow down in the oil business, Robert Corporation discontinues the Oil Refining division. Robert Corporation sells the assets of the Oil Refining division for $4,000,000 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 $600,000 each which both acquired ten (10) years ago. Robert Corporation continues to operate the retail Sporting Goods operation. Robert 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?

		Carl Corporation has a Long-Term Capital Gain of $2,000,000.
		Carl Corporation has a Long-Term Capital Gain of $1,400,000.
		Carl Corporation has Dividend Income of $1,400,000.
		Carl Corporation has Dividend Income of $700,000.