@Carl wrote:
Security deposits paid by the tenant to the LLC are not liabilities. It's income.
That is simply not accurate. On a balance sheet, receipt of a security deposit results in a debit to an asset account (typically cash) and a credit to a liability account. When (if) the security deposit is returned, the accounts are reversed.
Security deposits are not included in income if they may be required to be returned to the tenant at the end of the lease.
See https://www.irs.gov/taxtopics/tc414
