My wife has/had an out of home sales business. While working on our 2017 filing I discovered I used the wrong number on our year end inventory for 2016. About $4k more than it should have been, mainly due to an error in my excel spreadsheet. During 2017, she sold it all off and closed the business. Most of what she sold off was barely over cost. So with a 2017 YEI amount of zero, it looks like we had a huge loss this year, when we did just a bit better than break even (I know last years "profit" would have been lower, so does it matter?). Should I go back and update 2016, or do I just update my starting year inventory and apply an explanation. I really want to just be done with this stupid business. I am guessing I will get some money back from 2016 if I go back and update it, maybe, but I really don't want to get audited. Any advice is appreciated. To add, in some cases sales and inventory was poorly tracked. I have done everything I can to make all the records and amounts as accurate as I can make them, but dread someone else trying to look at them and audit.
