Contents Important Change   .............................. 1 Important Reminder  ........................... 1 Introduction  ........................................ 2 Employee Compensation   .................. 2 Miscellaneous Compensation  ......... 2 Fringe Benefits ................................ 4 Sickness and Injury Benefits  .......... 7 Stock Options  ................................. 8 Special Rules for Certain Employees 9 Clergy .............................................. 9 Foreign Employer  ........................... 11 Military ............................................. 11 Volunteers ....................................... 11 Miscellaneous Taxable Income   ........ 11 Bartering  ......................................... 15 Canceled Debts  .............................. 16 Partnership Income ......................... 16 S Corporation Income ..................... 17 Recoveries ...................................... 17 Rental of Personal Property  ........... 19 Repayments .................................... 20 Royalties ......................................... 20 Income Not Taxed  .............................. 20 Life Insurance Proceeds  ................. 22 Survivor Benefits ............................. 22 Accelerated Death Benefits  ............ 23 Long-Term Care Insurance Contracts .................................. 23 Welfare and Other Public Assistance Benefits .................................... 23 Standard Deduction Tables   .............. 25 Worksheet for Recoveries of Itemized Deductions—Deducted After 1986  ..................................... 28 How To Get More Information   .......... 29 Index  .................................................... 30 Important Change Photographs   of   missing   children. The Internal Revenue Service is a proud partner with the National Center for Missing and Ex- ploited   Children.   Photographs   of   missing children selected by the Center may appear in this publication on pages that would other- wise  be  blank. You  can  help  bring  these children home by looking at the photographs and calling  1–800–THE–LOST (1–800–843– 5678) if you recognize a child. Important Reminder Foreign source income. If you are a U.S. citizen, you must report income from sources outside the United States (foreign income) on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form W–2 or 1099 from the foreign payer.   This applies to earned income (such as wages and tips) as well as unearned income (such as interest, dividends, capital Department of the Treasury Internal Revenue Service Publication 525 Cat. No. 15047D Taxable and Nontaxable Income For use in preparing 1999  Returns