After searching online, I found another post in Cisco forum for somewhat related issue that suggested upgrading ATA firmware twice and reseting everything to factory. I don't know if it was the double firmware upgrade that did it because I did a factory reset of ATA after upgrading the firmware a second time to v. 1.4.0, but my phone now registers with base. If you find yourself in having the same issue:
1) Upgrade firmware on ATA 2x
2) Reset ATA and handset to factory default
3) Attempt normal registration
You should see the wireless indicator stop flashing and Page/Reg button on ATA turns solid. Also, I noticed that the time and date changed on handset. After letting system sit for a while, the handset upgraded itself.
I hope this helps someone out there!