I was told to include WIP in taxable income by just adding it on line 126 of Schedule 1 of a T2 and completing Schedule 13. Then in future years update Schedule 13 so that each year I’m picking up the net change in WIP.
But S13 feeds line 413 not 126. Line 126 seems to come from S13WS.
Can someone help with what exactly I need to do in each year? Assume Year 1 WIP is $40,000 to be included in taxable income. Year 2 WIP is $30,000.
Using Schedule 13 and your examples… everything seems to flow properly.
For year 1 you would enter your 40,000 in box C (Net addition or deduction) of the S13WS
This correctly flows 40,000 to only line 126 of the T2S1.
For year 2 on the S13WS you would enter your 40,000 in box A (Balance at beginning of year) and negative 10,000 in Box C (Net addition or deduction) and it will automatically populate the balance of 30,000 for box D (Balance at end of year).
In this case it will properly show 30,000 on line 126 of the T2S1 and 40,000 on line 414 of the T2S1.