Hello Richard,
In order of solution preference I would go AvaTax, Tax Line Item, then Misc.
AvaTax: I know it is a 3rd party product, but state by state tax is a nightmare. This is almost a must have for companies doing business in other states.
Tax Line item: Best Ease of Use answer, it check the boxes for reporting, analysis and posting to the GL. Even makes customization easier, if you only want to add the line for when shipping to just CO.
Misc: Out of the document totals this is the best to use as using the Document Tax total would require to you to break the balancing to the line item tax totals, which opens a whole other can of worms.
Have a client who is on GP2013 (moving to F&O), had to write a tax customization to recalc California tax amount based on zip code and if the item was a MFG item. Cool customization, but it almost would have been easier to update to a later version of GP/Avatax build so that AvaTax could have done the calc for them (Hugely customized environment).
