In March 2009, Tonette, who is fond of jewelries, bought a diamond ring for P750,000.00, a bracelet for P250,000.00, a necklace for P500,000.00, and…

The question

In March 2009, Tonette, who is fond of jewelries, bought a diamond ring for P750,000.00, a bracelet for P250,000.00, a necklace for P500,000.00, and a brooch for P500,000.00. Tonette derives income from the exercise of her profession as a licensed CPA. In October 2009, Tonette sold her diamond ring, bracelet, and necklace for only P1.25 million incurring a loss of P250,000.00. She used the P1.25 million to buy a solo diamond ring in November 2009 which she sold for P1.5 million in September 2010. Tonette had no other transaction in jewelry in 2010. Which among the following describes the tax implications arising from the above transactions? (2011 Bar Question)

1. A.Tonette may deduct his 2009 loss only from her 2009 professional income.
2. B.Tonette may carry over and deduct her 2009 loss only from her 2010 gain.
3. C.Tonette may carry over and deduct her 2009 loss from her 2010 professional income as well as from her gain.
4. D.Tonette may not deduct her 2009 loss from both her 2010 professional income and her gain.

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