Lisa, as an example, if it's rental property, then "all" income received in that capacity is reported as rental income. So if the rent is say, $1000/mo and includes an allowance of say, $200/mo for utilities paid by the landlord, if the renter pays the landlord for excess utility use, the landlord counts that excess as part of the rent received, and it's taxable.
Then the landlord could claim the total amount paid for utilities, as a tax deductible rental expense. That's but one possible scenario where this stuff comes into play.
