As per Defect# 99071, this is working as designed. Even though the inactive item has an on hand quantity as of a specific date (Example: December 31, 2016), if the inventory value is Zero, the item will not be displayed on the Inventory Valuation Report as of December 31, 2016.
This is currently logged under Enhancement 184957 Custom Inventory Valuation Summary filtered by Location > Show value in one line regardless if Item is Inactive or not.