Sec. 3-13.6. Tiered partnerships

Where a taxpayer is a partner in a partnership and is using the aggregate method pursuant to section 3-13.3 of this Subpart or is a foreign corporate limited partner that has made an election with respect to such partnership pursuant to the provisions of section 3-13.5 of this Subpart, and such partnership (hereinafter referred to as the "upper tier partnership") is a partner in another partnership (hereinafter referred to as the "lower tier partnership"), the source and character of such taxpayer's distributive share or proportionate part (see section 3-13.3[a][1], [2] and [3] of this Subpart), as the case may be, of each partnership item of receipts, income, gain, loss, deduction, asset, liability, and activity of the upper tier partnership which is attributable to the lower tier partnership retains the source and character determined at the level of the lower tier partnership using the provisions of section 3-13.3(a) of this Subpart. Such source and character are not changed by reason of the fact that such item flows through the upper tier partnership to such partner. Also see section 3-13.2(c) of this Subpart for information relating to tiered partnerships.