When are nonrecoverable taxes calculated on Intercompany transactions?

When trade receipt accrual occurs in the receiving organization, the receipt accounting distributions are created for:

• internal material transfers

• internal drop shipments

• intercompany returns

When creating receipt accounting distributions, both recoverable and nonrecoverable taxes are calculated and accounted. The item cost includes both transfer price and nonrecoverable exclusive tax accrued in the receiving organization.

For material return transactions, tax is calculated only if the referenced transaction has taxes on it.