The utility payments passing through should be reported as income when you receive them and expenses when you pay the utility company. You need to account for the cash you received and the cash you paid out. Since they are a wash, they will not affect your taxes.
Security deposits held are not reported as income nor expense.
Here is a link for more information: https://www.irs.gov/businesses/small-businesses-self-employed/rental-income-and-expenses-real-estate...
