Example: applying item tax

An organization uses ibuprofen for first aid kits in the administration office and in the hospital. This table shows how the item records for ibuprofen are set up:

Item Record	Taxable Status
Item Master Record	Non-taxable
Item Location - Admin. Office	Taxable
Item Location - Hospital	Non-taxable

Purchase Order	Taxable Status
PO Default Tax	Y - Taxable
Item Tax	Default

Given this situation, you can add a purchase order for ibuprofen for the administration office. The result is that the ibuprofen is taxable on the purchase order. The item is taxable because the Item Location record for the administration office overrides the item master record. Using the item tax option for the purchase order line, you can override this status when creating a purchase order.