Verified answer

Great question.

A partnership can derive its income from lots of sources including being a partner in another partnership or being a named beneficiary in an estate or trust. Yes, a partnership, not just an individual, can be a partner in another partnership.

When that other partnership issues a K-1 to your partnership, the ordinary income (or loss) from that K-1 goes onto the owning partnership's Form 1065 line 4.

Estates and trusts can belong to a partnership.

www.irs.gov website and use the search box fo 1065K-1 choose the instruction go to the line 4 Box 4. Guaranteed Payments

Generally, amounts on this line are not passive income, and you should report them on Schedule E (Form 1040), line 28, column (j) (for example, guaranteed payments for personal services).

Portfolio Income

Portfolio income or loss (shown in boxes 5 through 9b and in box 11, code A) is not subject to the passive activity limitations. Portfolio income includes income (not derived in the ordinary course of a trade or business) from interest, ordinary dividends, annuities or royalties, and gain or loss on the sale of property that produces such income or is held for investment.

http://www.irs.gov/instructions/i1065sk1/ch02.html...

The form 1065 instructions line 5 can be found on the page 15 of the below website address for this purpose.

http://www.irs.gov/pub/irs-pdf/i1065.pdf

Line 4. Ordinary Income (Loss) From Other Partnerships, Estates, and Trusts

YES and read and try to understand what your are reading or get some good face to face assistance from a professional that specializes in filling out the form 1065 at this time in your life so that you will know what it is all about for your future time and use in these matters.

Hope that you find the above enclosed information useful. 10/21/2011

there are all kinds of entities that can be part of a partnership

just report what is asked for that line