In the Invoice/Quote module, each line item includes three check boxes:

Check box If the box is checked:
TAX The item will be taxed at the default tax rate.
DEF The item that was returned as defective cannot be resold.

In the Quantity box, indicate a negative amount of returned items to adjust the Qty. Defective count. Do not add the item to the Stock on Hand count.

NET The customer will not receive a Prompt Payment discount on this item.  Previous customer account settings will be overridden.

To learn more, click the title of a Knowledge Base article (KBA).

KBA Title Area
How to change the default tax definition of a customer at checkout Inventory
How to clear and report a defective item Reports
How to set up a prompt for a quantity price discount Set up–Company