When the Included In Price setting is enabled, the tax calculated by the formula is subtracted from the line item price to determine the extended amount for the line item. This setting is used when the Price of Inventory Items already includes the Sales Tax.
For example, if the tax rate is 10% and the item's Base Price is $1.10. The extended amount will be $1.00 on a line item with a qty of 1. The $0.10 will be added and shown below as the tax amount.
Note: Since the Round on Each Item setting should normally be enabled when the Included in Price setting is enabled, it is turned On/Off when Included in Price is changed (unless it has already been set to be different).
See:
Tax Tables - General Information
Configuration Manager Contents