In 2009, a chain of bakeries, called Buscat Ltd., commenced operation. The industry is highly competitive and because of Mr. Buscat's lack of marketing skills, the corporation incurred losses in the first three taxation years of operations as follows:

On July 1, 2012, Mr. Buscat decided to sell 75% of his common shares to Mr. Bran, owner of Buns Plus Ltd. Mr. Bran has been in the business of supplying bread dough, pastry dough and bun bags for 10 years and has been very successful. Buns Plus Ltd. has two divisions: a bakery and a coffee shop, which it intends to transfer to Buscat Ltd.
The following income tax data relates to Buscat Limited's operationsfrom January 1, 2012 to June 30, 2012:
Buscat bakery.......................................................................... $(55,000)
Buns Plus bakery........................................................................130,000
Coffee shop................................................................................15,000
.............................................................................................$ 90,000

During the later part of the 2012 calendar year, the bakery/coffee shop of Buns Plus Ltd. was transferred to Buscat Ltd. For the six-month period ending on December 31, 2012, Buscat Limited had net income of $90,000 from all its businesses.
The net income earned was as follows:
Buscat bakery............................................................................ $(55,000)
Buns Plus bakery.......................................................................... 130,000
Coffee shop..................................................................................15,000
...............................................................................................$ 90,000
In the 2013 taxation year, Buscat Ltd. expects to earn $250,000, of which $65,000 will be from the original Buscat bakery business and $20,000 from the coffee shop business.
REQUIRED
Prepare an analysis of the income tax implications of the acquisition of shares. In your analysis, consider the two election options from which an election choice is most likely to be made.

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Non-capital losses (business) Capital losses $12,000 8,000 4,000 Taxation year-end $60,000 45,000 Dec. 31, 2010._ . . .. Dec. 31, 2011.. ....25,000 Cos/ACB UCC FMV Inventory Land . . . 85,000 155,000 $65,000 195,000 Bakery equipment