A tiered partnership involves an upper-tier, the parent or holding company, and a lower-tier, the subsidiary. Generally, the partners of the parent company will have pass-through income or losses from the subsidiary that passes through the parent. For tax purposes, the partners of the parent company are treated as owning the subsidiary directly. It is innate to see a venture capital firm structured as a tiered partnership when there are several syndications set up as investment vehicles.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.