LLC received Security Deposit

Forum|Forum|1 year ago
January 29, 2025
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The partnership, owned by my spouse and myself only (we file personal taxes Jointly) received the 2024 1099-MISC from our one and only tenant. This year, the lease was extended for another 5 years and the tenant paid us an additional amount (for conversation let's say $3,000) to their security deposit. Our books show the original security deposit as a liability. As a result, when I received the $3,000, I booked the additional security deposit amount as a liability. Here's my problem...The $3,000 is included in the amount of the1099-MISC. I'm wondering what I'm supposed to do with Quickbooks entry or if TT will ask a question later that will fix this discrepancy. I appreciate the assistance.

DavidD66

If your business is using the Cash method of accounting (which you probably are) then you should report the $3,000 deposit as income. When, and if you return the deposit, you will report it as and expense.

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rhondajoy125Author

Thank you. I understand for TT that it is income yet I’m wondering how I reflect the liability on my QB file.

DavidD66

If you want to show it as liability in QuickBooks you would simply record the transaction as a debit to cash (which is automatic for a bank deposit) and a credit to a liability account (e.g. Tenant Deposits). If you were recording it as revenue the credit would be to a revenue account (e.g. rent received). You can also do it with a Journal Entry if it's already been recorded.

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