A sole proprietorship can own an interest in a partnership. For example a sole proprietorship designer owns a 50% interest in a partnership. The partnership acts as a clearing house and purchasing agent for the 2 partner designers. Each partner operates their own separate sole proprietorship and as such has expenses that fall outside of the partnership and within the sole proprietorship. The income from the partnership reported on the k-1 by rights, is income earned by the sole proprietorship.
