Wow...I know this is old but it's shocking how much you misinterpreted the question. Security Deposits paid to the LLC ARE INDEED LIABILITIES TO THE LLC AND ARE RECOURSE DEBT TO THE PARTNERS BASIS. Meaning If the partners take that money and spend it the Renter has the right to go after the partners for taking money that doesn't belong to them. IT IS ABSOLUTELY NOT INCOME!!!! YOU HAVE NO IDEA WHAT YOU ARE WRITING ABOUT AND WOULD DO EVERYONE A GIANT FAVOR IF YOU JUST STOPPED. I AM A CPA. I REPEAT SECURITY DEPOSITS ARE NOT INCOME. THEY BECOME INCOME ONLY IF DAMAGE OCCURS AND THE LANDLORD THEN KEEPS THE SECURITY DEPOSIT TO COVER DAMAGES OR UNPAID RENT.
