@Gordo5 , I am not going to convince you to follow the KISS principle ( of which I am firm believer and practitioner). Schedule-H is only being used as an adjunct to Schedule-C in recognizing adjustments to be made between Foreign Book keeping ( local rules ) and essentially GAAP preferred by IRS. Thus ,in my view ,if you have kept your books pretty much in line with US book keeping norms ( GAAP ) and have included your inventory position/ recognition as part of COGS on schedule-C ( page 2 of the form 8858 ) and followed inventory usage discipline/ methods under section 471, 472 ( and refs to sections 263 and 481 ), there would really be no inventory adjustments on Schedule-H.
Note that the ONLY reason a foreign entity / sole proprietorship comes under the purview of US Taxation is because the owner is a US person . Thus my advice would be to look at what you are trying to achieve -- pay taxes on your sole proprietorship income to the US ( as a US person ) and find the path of least resistance / most expeditious way.
pk
