N.Y. Comp. Codes R. & Regs. tit. 20 § 137.6
Where a nonresident partner is a member in a partnership, 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 nonresident partner's distributive share of each partnership item 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 sections 137.1 and 137.5 of this Part. Such source and character are not changed by reason of the fact that such item flows through the upper tier partnership to such nonresident partner.
N.Y. Comp. Codes R. & Regs. Tit. 20 § 137.6