Sean, Thanks for joining Community.

If you are a small business taxpayer (average annual gross receipts of less than $25 million), you can choose not to keep an inventory, but you must still use a method of accounting for inventory that clearly reflects income. If you choose not to keep an inventory, you will not be treated as failing to clearly reflect income if your method of accounting for inventory treats inventory as non-incidental material or supplies, or conforms to your financial accounting treatment for inventories. If, however, you choose to keep an inventory, you generally must use an accrual method of accounting and value the inventory each year to determine your cost of goods sold.

If you choose not to keep inventory on the books, you would simply include / debit  the $100K in COGS (purchases) for the year of change and credit inventory to zero it out.

Be sure to discuss the change with your client so they understand the multi-year impact of the change and aren’t surprised when profit pops back up the next year.