Let's simplify what the others are trying to say here.
The inventory is included in the sale I presume. I also assume that when you say $1M in inventory, that $1M is what ***YOU*** paid for the inventory.
So the first thing you will do is deal with the inventory to get your EOY balance to zero. In the COGS section you will show that you sold that inventory "at cost" for $1M. That gets your EOY inventory balance to zero with no taxable income from the inventory. Then subtract $1M from your business sales price and that's what you sold the business for.
