AMERICAN TAX CREDIT PROPERTIES III LP - FORM 10-K

Attached files

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EX-32.2 - EX-32.2 - AMERICAN TAX CREDIT PROPERTIES III LP	v189040_ex32-2.htm
EX-31.2 - EX-31.2 - AMERICAN TAX CREDIT PROPERTIES III LP	v189040_ex31-2.htm
EX-31.1 - EX-31.1 - AMERICAN TAX CREDIT PROPERTIES III LP	v189040_ex31-1.htm
EX-32.1 - EX-32.1 - AMERICAN TAX CREDIT PROPERTIES III LP	v189040_ex32-1.htm
EX-99.20 - EX-99.20 - AMERICAN TAX CREDIT PROPERTIES III LP	v189040_ex99-20.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 30, 2010

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

0-19217

(Commission File Number)

American Tax Credit Properties III L.P.

(Exact Name of Registrant as Specified in its Governing Instruments)

Delaware		13-3545006
(State or Other Jurisdiction of Organization)		(I.R.S. Employer Identification No.)

Richman Tax Credit Properties III L.P.
340 Pemberwick Road
Greenwich, Connecticut		06831
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code:		(203) 869-0900

Securities Registered Pursuant to Section 12(b) of the Act:

None		None
(Title of Each Class)		(Name of Each Exchange on Which Registered)

Securities Registered Pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in a definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer,” large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨ Smaller Reporting Company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Registrant has no voting common equity. There is no established public trading market for Registrant’s Units. Accordingly, accurate information as to the market value of a Unit at any given date is not available. As of June 25, 2010, there are 35,883 units outstanding. The aggregate sales price for such units was $35,883,000.

Documents incorporated by reference:

Pages 14 through 19, 20 through 31, 44 through 71 and 78 through 80 of the Registrant’s prospectus dated February 7, 1990, as supplemented by Supplement No. 1, Supplement No. 2, Supplement No. 3, Supplement No. 4, Supplement No. 5 and Supplement No. 6 dated June 6, 1990, November 21, 1990, December 20, 1990, October 30, 1991, December 26, 1991 and January 15, 1992, respectively, filed pursuant to Rule 424(b)(3) under the Securities Act of 1933, and filed as Exhibits hereto, are incorporated by reference into Part I of this Annual Report.

.PART I

Item 1.

Business.

General Development of Business and Narrative Description of Business

American Tax Credit Properties III L.P. (the "Registrant"), a Delaware limited partnership, was formed on September 21, 1989 to invest primarily in leveraged low-income multifamily residential complexes (the “Property” or “Properties”) that qualified for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the "Low-income Tax Credit"), through the acquisition of limited partner equity interests (the “Local Partnership Interests”) in partnerships (the "Local Partnership" or "Local Partnerships") that are the owners of the Properties. The Local Partnerships hold their respective Properties in fee. Registrant considers its activity to constitute a single industry segment.

Richman Tax Credit Properties III L.P. (the "General Partner"), a Delaware limited partnership, was formed on September 21, 1989 to act as the General Partner of Registrant. The general partner of the General Partner is Richman Housing Credits Inc. ("Richman Housing"), a Delaware corporation that is wholly owned by Richard Paul Richman. Richman Housing is an affiliate of The Richman Group, Inc. ("Richman Group"), a Delaware corporation founded by Richard Paul Richman in 1988.

The Amendment No. 2 to the Registration Statement on Form S-11 was filed with the Securities and Exchange Commission (the "SEC") on February 1, 1990 pursuant to the Securities Act of 1933 under Registration Statement File No. 33-31390 and was declared effective on February 2, 1990. Reference is made to the prospectus dated February 7, 1990, as supplemented by Supplement No. 1, Supplement No. 2, Supplement No. 3, Supplement No. 4, Supplement No. 5 and Supplement No. 6 dated June 6, 1990, November 21, 1990, December 20, 1990, October 30, 1991, December 26, 1991 and January 15, 1992, respectively, filed with the SEC pursuant to Rule 424(b)(3) under the Securities Act of 1933 (the "Prospectus"). Pursuant to Rule 12b-23 of the SEC's General Rules and Regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the description of Registrant's business set forth under the heading "Investment Objectives and Policies" at pages 44 through 66 of the Prospectus is hereby incorporated into this Annual Report by reference.

On March 12, 1990, Registrant commenced, through Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), the offering of up to 150,000 units of limited partnership interest (the "Units") at $1,000 per Unit to investors (the “Limited Partners”). On June 13, 1990, December 27, 1990, December 31, 1991 and January 23, 1992 the closings for 19,730, 9,622, 5,227 and 1,304 Units, respectively, took place, amounting to aggregate Limited Partners’ capital contributions of $35,883,000.

Registrant's primary objective, to provide Low-income Tax Credits to the Limited Partners, has been completed. The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”). The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2003. The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period"). The Compliance Period of all of the Local Partnerships had expired as of December 31, 2007. In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”). Note that the existence of Extended Use Provisions does not extend the Compliance Period of the respective Local Partnerships. However, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.

Disposal of Local Partnership Interests

Registrant is in the process of disposing of its Local Partnership Interests. As of March 30, 2010, Registrant owns thirty-nine of the forty-three Local Partnership Interests originally acquired. Registrant has served a demand on the local general partners (the “Local General Partners”) of all remaining Local Partnerships to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests. Following the final disposition of its Local Partnership Interests, Registrant intends to dissolve. It is uncertain as to the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. There can be no assurance as to when Registrant will dispose of its remaining Local Partnership Interests.

Item 1. Business (Continued).

Financial Information About Industry Segments

Registrant is engaged solely in the business of owning a Local Partnership Interest in each of the Local Partnerships. A presentation of information regarding industry segments is not applicable and would not be material to an understanding of Registrant’s business taken as a whole. See Item 8 below for a summary of Registrant's operations.

Competition

Pursuant to Rule 12b-23 of the SEC's General Rules and Regulations promulgated under the Exchange Act, the description of Registrant's competition, general risks, tax risks and partnership risks set forth under the heading "Risk Factors" at pages 20 through 31 of the Prospectus is hereby incorporated into this Annual Report by reference.

Employees of Registrant

Registrant employs no personnel and incurs no payroll costs. All management activities of Registrant are conducted by the General Partner. An affiliate of the General Partner employs individuals who perform the management activities of Registrant. This entity also performs similar services for other affiliates of the General Partner.

Regulation

The following is a brief summary of certain regulations applicable to Registrant and is not, nor should it be considered, a full summary of the law or all related issues. Other than as set forth above and below, Registrant is not aware of any existing or probable federal, state or local governmental regulations, or any recent changes to such governmental regulations, which would have an effect on Registrant’s business.

Virtually all of the Properties owned by the Local Partnerships have some form of a government funded rental subsidy that affords the low-income tenants the ability to reside at the Properties. During the period that a subsidy agreement between the United States Department of Housing and Urban Development (“HUD”) and a Local Partnership is in existence, the Local Partnership Interest of such Local Partnership may not be sold, and the Property may not be transferred by the Local Partnership to another entity, without HUD’s approval, which may be subject to various conditions. In particular, the transfer of title of the Properties by the Local Partnerships is expected to be required to be closed in escrow pending HUD approval. In addition, as a condition to certain disposals, Registrant anticipates that HUD will require the Local Partnerships to dedicate resources to maintenance in order to correct deficiencies in the physical condition of the Properties. Correction of such deficiencies will probably require expenditures of significant amounts of funds, thus effectively reducing the amount of any net proceeds from the sale of the Property. There can be no assurance that the required governmental agencies will approve any of the requested transfers, that such approvals will be received in a timely manner or that other conditions will not be imposed for such approvals. The failure to obtain or a delay in obtaining any required approvals would have adverse consequences to the Limited Partners.

In the case of certain of the Local Partnerships, the local housing authority has the right, for a period of time, to find a purchaser for the Property prior to the Local General Partner beginning its own efforts to sell the Property. There can be no assurance that the local housing authorities will be successful in finding purchasers for such Properties, which may adversely impact the timing of Property sales.

Certain of the Local Partnerships are subject to restrictions on the amount of annual cash distributions to partners under the terms of such Local Partnerships’ loan, regulatory or other agreements.

Registrant is not aware of any non-compliance by the Local Partnerships with respect to federal, state and local provisions regulating the discharge of material into the environment or otherwise relating to the protection of the environment, and is not aware of any condition that would have a material effect on the capital expenditures or competitive position of Registrant.

Item 1A. Risk Factors.

Risks Relating to Registrant’s Business and Industry

There is no guarantee that the Properties will be sold or, if sold, that Registrant would receive any proceeds.

As noted above in Item 1 - Business, Registrant has served a demand on the Local General Partners of all remaining Local Partnerships to commence a sale process to dispose of the Properties. However, the market of interested buyers of the Properties is limited. Some of the factors which negatively impact the marketability of the Properties, or equivalently, the Local Partnership Interests, include:

the Extended Use Provisions;

the substantial remaining mortgage balances on the Properties, which are typically very near the initial balances as a result of the heavily subsidized debt of the Local Partnership and the lengthy (usually near 40-year) amortization period of the debt; and

poor economic conditions.

It is generally expected, therefore, that in the event a sale of a Property by a Local Partnership can be consummated, the net proceeds of such sale, after repayment of any outstanding debt and other liabilities, are not likely to be significant. Moreover, a portion of the net proceeds from the sale of a Property by a Local Partnership may be payable to the Local General Partner for prior operating advances and deferred fees. As such, there will likely not be significant proceeds, if any, upon a sale of a Property that will be available for distribution by the Local Partnership to Registrant. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests. However, it is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.

The Local Partnerships may be required to continue to maintain the low-income nature of the Properties beyond the Compliance Period under agreements with state tax credit agencies.

As noted above in Item 1 - Business, certain of the Local Partnerships entered into agreements containing Extended Use Provisions with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period. Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.

Properties owned by the Local Partnerships are subject to certain risks relating to the real estate industry in general that are outside of the control of the Local Partnerships or Registrant and that may have an adverse affect on Registrant’s investment in such Local Partnerships.

Registrant’s investment in the Local Partnerships is subject to the risks associated with multi-family rental property and real estate in general, including retail, commercial and residential real estate. Such risks, which are subject to change and are not in the control of Registrant, include risks related to:

the adverse use of adjacent or neighborhood real estate;

regulated rents, which may adversely impact rent increases;

utility allowances, which may adversely impact rents charged to tenants from year to year in certain locations;

the inability of tenants to pay rent in light of current market conditions;

changes in the demand for or supply of competing properties;

changes in state or local tax rates and assessments;

Item 1A. Risk Factors (Continued).

increases in utility charges;

unexpected expenditures for repairs and maintenance;

the discovery of previously undetected environmentally hazardous conditions;

costs associated with complying with the Americans with Disabilities Act;

uninsured losses relating to real property or excessively expensive premiums for insurance coverage;

lawsuits from tenants or guests in connection with injuries that occur on the Properties;

changes in local economic conditions; and

changes in interest rates and the availability of financing (including changes resulting from current market conditions).

The occurrence of any of the above risks could have a negative impact on the operating results of such Properties and the respective Local Partnerships and, in turn, may render the sale or refinancing of the Properties difficult or unattractive, which could adversely affect Registrant’s investment in such Local Partnerships.

The modification or elimination of government rental subsidies on which the Local Partnerships rely would require the Local Partnerships to use existing funds or obtain additional funds to continue to operate the respective Properties. Because Registrant’s investments in the Local Partnerships are highly leveraged, it would be highly difficult to obtain such additional funds.

Virtually all of the Properties owned by the Local Partnerships have some form of a government funded rental subsidy, which affords the low-income tenants the ability to reside at the Properties. The Local Partnerships are extremely reliant on such subsidies. If the respective rental subsidy programs were to be materially modified or eliminated, the Local Partnerships’ rental revenue would likely be significantly reduced. To the extent that revenues are not sufficient to meet operating expenses and service the respective mortgages of the Properties, such Local Partnership would be required to use reserves and any other funds available to avoid foreclosure of the subject Property. Registrant’s investments in the Local Partnerships are highly leveraged, and there can be no assurance that additional funds would be available to any Local Partnership or Registrant, if needed. In addition, there can be no assurance that, when a Property is sold, the proceeds from a sale will be sufficient to pay the balance due on the mortgage loans or any other outstanding indebtedness to which the Local Partnership is subject.

Limited Partners may not be able to use all of the carried forward Low-income Tax Credits.

While a limited exception is provided for Low-income Tax Credits in the case of individuals, tax losses and credits allocated to a Limited Partner who is an individual, trust, estate or personal service corporation generally may be used to reduce the Limited Partner’s tax liability only to the extent that such liability arises from passive activities. Therefore, tax losses and credits allocated to such a Limited Partner are not expected to be available to offset tax liabilities that arise from salaries, dividends and interest and other forms of income. In addition, Low-income Tax Credits cannot be used to offset alternative minimum tax. Accordingly, there is no guarantee that Limited Partners will be able to utilize all of the carried forward Low-income Tax Credits.

Risks Relating to Ownership of Units of Limited Partnership Interest of Registrant

There is no existing market for the Units.

There is no trading market for Units and there are no assurances that any market will develop. In addition, the Units may be transferred only if certain requirements are satisfied, including requirements that such transfer would not impair Registrant’s tax status for federal income tax purposes and would not be a violation of federal or state securities laws. Accordingly, Limited Partners may not be able to sell their Units promptly and bear the economic risk of their investment for an indefinite period of time.

Item 1A. Risk Factors (Continued).

Under certain circumstances, Limited Partners of Registrant may incur out-of-pocket tax costs.

At some point, Registrant’s operations (including the sale or refinancing of the Properties owned by the Local Partnerships) may generate less cash flow than taxable income, and the income, as well as the income taxes payable with respect to Registrant’s taxable income, may exceed cash flow available for distribution to the Limited Partners in such years. This may result in an out-of-pocket tax cost to the Limited Partners. In addition, a Limited Partner may experience taxable gain on disposition of Units or upon a disposition of the Local Partnership Interests or of the Properties even though no cash is realized on the disposition; in such circumstances, the Limited Partners may experience an out-of-pocket tax cost.

Limited Partners of Registrant may not receive a return of any portion of their original capital investment in Registrant.

To date, the Limited Partners of Registrant have not received a return of any portion of their original capital. Accordingly, the only benefit of this investment may be the Low-income Tax Credits.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The executive offices of Registrant and the General Partner are located at 340 Pemberwick Road, Greenwich, Connecticut 06831. Registrant does not own or lease any properties. Registrant pays no rent; all charges for leased space are borne by an affiliate of the General Partner.

Registrant originally acquired Local Partnership Interests in forty-three Local Partnerships. As discussed above in Item 1 - Business, the Compliance Period of all of the Local Partnerships expired as of December 31, 2007 and, accordingly, Registrant is in the process of disposing of its Local Partnership Interests. As of March 30, 2010, Registrant owns thirty-nine of the forty-three Local Partnership Interests originally acquired. Registrant has served a demand on the Local General Partners of all remaining Local Partnerships to commence a sale process to dispose of the Properties, which Registrant intends will result in a termination of Registrant’s Local Partnership Interests and ultimately the dissolution of Registrant.

During the year ended March 30, 2010, Registrant withdrew from Westminster Apartments Limited Partnership (“Westminster”), assigned one-half of its 99% Local Partnership Interest in Sydney Engel Associates L.P. (“Sydney Engel”) to an affiliate of the Local General Partner of Sydney Engel and sold its Local Partnership Interest in Justin Associates (“Justin”) to an affiliate of the Local General Partner of Justin. Registrant received $10 in connection with Westminster; there were no other proceeds in connection with these transactions. See further discussion in Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations herein.

In the event a sale of the remaining Properties cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests. It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. In addition, certain of the Local Partnerships entered into agreements with Extended Use Provisions with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period. While the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted. There can be no assurance as to when the Local Partnerships will dispose of the Properties, when Registrant will dispose of the Local Partnership Interests or the amount of proceeds which may be received in such dispositions. In addition to amounts that remain outstanding under the terms of the debt structure of the respective Local Partnerships, certain Local Partnerships have outstanding obligations to the Local General Partners and/or affiliates thereof for operating advances made over the years and for certain fees that were deferred.

Item 2. Properties (Continued).

The Local Partnership Interests were acquired by Registrant from 1990 through 1992. Although Registrant generally owns a 98.9% - 99% Local Partnership Interest in the Local Partnerships, Registrant and American Tax Credit Properties II L.P. ("ATCP II"), a Delaware limited partnership whose general partner is affiliated with the General Partner, together, in the aggregate, own a 99% Local Partnership Interest in the following Local Partnerships:

	Registrant			ATCP II

Batesville Family, L.P.		61.75	%		37.25	%
Bruce Housing Associates, L.P.		61.75			37.25
Ivy Family, L.P.		61.75			37.25
Lawrence Road Properties, Ltd.		61.75			37.25
Mirador del Toa Limited Partnership		59.06			39.94
Purvis Heights Properties, L.P.		61.75			37.25
Queen Lane Investors		48.50			50.50

Many of the Local Partnerships receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8") (see descriptions of the subsidies below). The subsidy agreements expire at various times. Since October 1997, HUD has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract. Registrant cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income before debt service (“NOI”) and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies. Two Local Partnerships’ Section 8 contracts are currently subject to renewal under applicable HUD guidelines.

Item 2. Properties (Continued).

						Mortgage
Name of Local Partnership	Number					loans payable as of			Subsidy
Name of apartment complex	of rental		Capital			December 31,			(see
Apartment complex location	units		contribution			2009			footnotes)

April Gardens Apartments II Limited Partnership
April Gardens Apartments
Las Piedras, Puerto Rico		48	$	485,581		$	1,919,017		(1b&c)

Ashland Park Apartments, L.P. (4), (6)
Ashland Park Apartments
Ashland, Nebraska		24		235,732			—	(4)

Auburn Family, L.P.
Auburn Apartments
Louisville, Mississippi		16		95,412			435,391		(1b&c)

Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi		48		239,716	(2)		1,388,997			(1b)

Bay Springs Elderly, L.P.
Bay Springs Manor
Bay Springs, Mississippi		24		208,820			650,941		(1b&c)

Brisas del Mar Apartments Limited Partnership
Brisas del Mar Apartments
Hatillo, Puerto Rico		66		668,172			2,539,009		(1b&c)

Bruce Housing Associates, L.P.
Bruce Family Apartments
Bruce, Mississippi		40		183,155	(2)		1,058,397		(1b&c)

Carrington Limited Dividend Housing Association Limited Partnership (3), (5)
Carrington Place
Farmington Hills, Michigan		100		2,174,720	(2)		—	(3)

Chestnut Park Associates, L.P.
Chestnut Park Apartments
East Orange, New Jersey		59		4,204,576			4,201,606		(1a&f)

Chowan Senior Manor Associates Limited Partnership
Azalea Garden Senior Manor Apartments
Murfreesboro, North Carolina		33		278,405			1,183,484		(1b&c)

Christian Street Commons Associates
Christian Street Commons Apartments
Philadelphia, Pennsylvania		18		581,645			507,616			(1b)

Item 2. Properties (Continued).

						Mortgage
Name of Local Partnership	Number					loans payable as of		Subsidy
Name of apartment complex	of rental		Capital			December 31,		(see
Apartment complex location	units		contribution			2009		footnotes)

Country View Apartments
Country View Apartments
Pembroke, Maine		16	$	279,183		$	900,561	(1b&c)

Desarrollos de Belen Limited Partnership
Vista de Jagueyes II Apartments
Aguas Buenas, Puerto Rico		41		422,929			1,807,250	(1b&c)

Desarrollos de Emaus Limited Partnership
Hucares II Apartments
Naguabo, Puerto Rico		72		631,404			3,071,495	(1b&c)

Ellinwood Heights Apartments, L.P.
Ellinwood Heights Apartments
Ellinwood, Kansas		24		156,261			661,047	(1b&c)

Fulton Street Houses Limited Partnership
Fulton Street Townhouse Apartments
New York, New York		35		1,948,081			3,869,930		(1b)

Hayes Run Limited Partnership
Mashburn Gap Apartments
Marshall, North Carolina		34		322,074			1,370,693	(1b&c)

Howard L. Miller Sallisaw Apartments II, L.P.
Sallisaw II Apartments
Sallisaw, Oklahoma		24		130,158			592,943	(1b&c)

Hurlock Meadow Limited Partnership
Hurlock Meadow Apartments
Hurlock, Maryland		30		284,218			1,218,066	(1b&c)

Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi		32		135,528	(2)		722,550	(1b&c)

Justin Associates (9)
Locust Tower Apartments
Philadelphia, Pennsylvania		40		1,809,723			2,070,292

LaBelle Commons, Ltd.
LaBelle Commons
LaBelle, Florida		32		253,580			972,598	(1b&c)

Lawrence Road Properties, Ltd.
Hillcrest Apartments
Newton, Mississippi		24		123,799	(2)		729,334	(1b&c)

Item 2. Properties (Continued).

						Mortgage
Name of Local Partnership	Number					loans payable as of		Subsidy
Name of apartment complex	of rental		Capital			December 31,		(see
Apartment complex location	units		contribution			2009		footnotes)

Loma Del Norte Limited Partnership
Loma Del Norte Apartments
Anthony, New Mexico		40	$	314,865		$	1,384,131	(1b&c)

Long Reach Associates Limited Partnership
Oak Ridge Apartments
Bath, Maine		30		448,922			1,422,983	(1b&c)

Mirador del Toa Limited Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico		48		284,847	(2)		1,799,524	(1b&c)

Moore Haven Commons, Ltd.
Moore Haven Commons
Moore Haven, Florida		28		213,402			891,738	(1b&c)

NP-89 Limited Dividend Housing Association Limited Partnership
Newport Apartments
Clinton Township, Michigan		168		2,372,292			2,678,344	(1a,b&f)

Nash Hill Associates, Limited Partnership
Nash Hill Place
Williamsburg, Massachusetts		28		302,575			1,411,518	(1b,c&d)

North Calhoun City, L.P.
North Calhoun City Apartments
Calhoun City, Mississippi		18		146,565			442,614	(1b&c)

Orange City Plaza, Limited Partnership (10)
Orange City Plaza Apartments
Orange City, Iowa		32		576,580			361,020		(1e)

Puerta del Mar Limited Partnership
Puerta del Mar Apartments
Hatillo, Puerto Rico		66		630,570			2,417,459	(1b&c)

Purvis Heights Properties, L.P.
Pineview Apartments
Purvis, Mississippi		40		191,512	(2)		1,103,621		(1b)

Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania		29		597,050	(2)		1,955,583		(1b)

Somerset Manor, Ltd.
Somerset Manor
Central City, Pennsylvania		24		208,465			864,146	(1b&c)

Sugar Cane Villas, Ltd.
Sugar Cane Villas
Pahokee, Florida		87		751,560			3,182,404	(1b&c)

Item 2. Properties (Continued).

					Mortgage
Name of Local Partnership	Number				loans payable as of			Subsidy
Name of apartment complex	of rental		Capital		December 31,			(see
Apartment complex location	units		contribution		2009			footnotes)

Summerfield Apartments Limited Partnership
Summerfield Apartments
Charlotte, North Carolina		52	$	1,088,667	$	1,393,021			(1b)

Sydney Engel Associates L.P.
(formerly known as Sydney Engel Associates) (8)
The Castle
New York, New York		224		3,201,874		16,403,175			(1b)

Union Valley Associates Limited Partnership
Union Valley Apartments
Union Township, Pennsylvania		36		371,589		1,392,677			(1b)

Walnut Grove Family, L.P.
Walnut Grove Apartments
Walnut Grove, Mississippi		24		191,695		817,729		(1b&c)

Waynesboro Apartments Limited Partnership
Waynesboro Apartments
Waynesboro, Pennsylvania		36		360,859		1,424,179			(1b)

West Calhoun City, L.P.
West Calhoun City Apartments
Calhoun City, Mississippi		28		230,212		657,902		(1b&c)

Westminster Apartments Limited Partnership (4), (7)
Westminster Apartments
Philadelphia, Pennsylvania		42		1,047,993		—	(4)

			$	29,384,966	$	73,874,985

(1)

Description of subsidies:

(a)

Section 8 of Title II of the Housing and Community Development Act of 1974 allows qualified low-income tenants to pay thirty percent of their monthly income as rent with the balance paid by the federal government.

(b)

The Local Partnership’s debt structure includes a principal or interest payment subsidy.

(c)

The Rural Housing Service (formerly the Farmers Home Administration) of the United States Department of Agriculture Rental Assistance Program allows qualified low-income tenants to receive rental subsidies.

(d)

The Commonwealth of Massachusetts participates in a rental assistance program.

(e)

The Northwest Regional Housing Authority provides qualified tenants with a rental subsidy.

(f)

The Local Partnerships’ Section 8 contracts are currently subject to renewal under applicable HUD guidelines.

(2)

Reflects amount attributable to Registrant only.

Item 2. Properties (Continued).

(3)

The Local Partnership Interest is no longer owned by Registrant; there are no assets or liabilities related to such Local Partnership included in the combined balance sheets of the Local Partnerships as of December 31, 2009 and 2008 in Note 6 to the accompanying financial statements.

(4)

The Local Partnership Interest is no longer owned by Registrant; there are no assets or liabilities related to such Local Partnership included in the combined balance sheet of the Local Partnerships as of December 31, 2009 in Note 6 to the accompanying financial statements.

(5)

Registrant assigned its Local Partnership Interest to one of the Local General Partners in February 2007. The combined statement of operations of the Local Partnerships for the year ended December 31, 2007 included in Note 6 to the accompanying financial statements does not include any results of operations for such Local Partnership.

(6)

Registrant withdrew from the Local Partnership in February 2009. The combined statement of operations of the Local Partnerships for the year ended December 31, 2009 included in Note 6 to the accompanying financial statements does not include any results of operations for such Local Partnership.

(7)

Registrant withdrew from the Local Partnership in July 2009. The combined statement of operations of the Local Partnerships for the year ended December 31, 2009 included in Note 6 to the accompanying financial statements includes results of operations for such Local Partnership through the date of withdrawal (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).

(8)

Registrant assigned one-half of its 99% Local Partnership Interest to an affiliate of the Local General Partner in December 2009 (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).

(9)

Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in March 2010 (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).

(10)

Capital contribution includes voluntary advances made to the Local Partnership.

Item 3.

Legal Proceedings.

None.

Item 4.

Reserved.

PART II

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information and Holders

There is no established public trading market for the Units. Accordingly, accurate information as to the market value of a Unit at any given date is not available. The number of record holders of Units as of approximately June 15, 2010 was approximately 1,390, holding an aggregate of 35,883 Units.

Merrill Lynch follows internal guidelines for providing estimated values of limited partnerships and other direct investments reported on client account statements. Pursuant to such guidelines, estimated values for limited partnership interests reported on Merrill Lynch client account statements (such as Registrant’s Units) are provided to Merrill Lynch by independent valuation services, whose estimated values are based on financial and other information available to them. In addition, Registrant may provide an estimate of value to Unit holders from time to time in Registrant's reports to Limited Partners. The estimated values provided by the independent services and Registrant, which may differ, are not market values and Unit holders may not be able to sell their Units or realize either amount upon a sale of their Units. Unit holders may not realize such estimated values upon the liquidation of Registrant.

Distributions

Registrant owns a Local Partnership Interest in Local Partnerships that are the owners of Properties that are leveraged and receive government assistance in various forms of rental and debt service subsidies. The distribution of cash flow generated by the Local Partnerships may be restricted, as determined by each Local Partnership's financing and subsidy agreements. Accordingly, Registrant does not anticipate that it will provide significant cash distributions to its Limited Partners in the future. There were no cash distributions to the Limited Partners during the years ended March 30, 2010 and 2009.

Low-income Tax Credits, which are subject to various limitations, may be used by the Limited Partners to offset federal income tax liabilities. Registrant generated total Low-income Tax Credits from investments in Local Partnerships of approximately $1,559 per Unit. The Ten Year Credit Period with respect to the Properties was fully exhausted as of December 31, 2003 and the Compliance Periods of the Local Partnerships had expired as of December 31, 2007. Registrant has served a demand on the Local General Partners of all remaining Local Partnerships to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests. It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.

Recent Sales of Unregistered Securities

None.

Item 6.

Selected Financial Data.

Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Capital Resources and Liquidity

Registrant admitted limited partners (the “Limited Partners”) in four closings with aggregate Limited Partners’ capital contributions of $35,883,000. In connection with the offering of the sale of units (the “Units”), Registrant incurred organization and offering costs of approximately $4,419,000 and established a working capital reserve of approximately $2,153,000. The remaining net proceeds of approximately $29,311,000 (the “Net Proceeds”) were available to be applied to the acquisition of limited partner interests (the “Local Partnership Interests”) in partnerships (the “Local Partnerships”) that own low-income multifamily residential complexes (the “Property” or “Properties”) that qualified for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the “Low-income Tax Credit”). The Net Proceeds were utilized in acquiring a Local Partnership Interest in forty-three Local Partnerships.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

As of March 30, 2010, Registrant has cash and cash equivalents and investment in mutual fund totaling $825,089, which is available for operating expenses of Registrant and circumstances which may arise in connection with the Local Partnerships. Future sources of Registrant funds are expected to be primarily from interest earned on working capital and limited cash distributions from Local Partnerships. In addition, although it is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property, Registrant may be entitled to sales proceeds of certain Local Partnerships’ Properties.

During the year ended March 30, 2010, Registrant received cash from interest revenue and distributions from Local Partnerships and utilized cash for operating expenses. Cash and cash equivalents and investment in mutual fund decreased, in the aggregate, by approximately $122,000 during the year ended March 30, 2010.

During the year ended March 30, 2010, the investment in local partnerships decreased as a result of cash distributions received from Local Partnerships of $20,000 (excluding $53,075 of distributions classified as other income from local partnerships), partially offset by Registrant’s equity in the Local Partnerships’ net income for the year ended December 31, 2009 of $6,193. Accounts payable and accrued expenses and payable to general partner and affiliates in the accompanying balance sheet as of March 30, 2010 include cumulative deferred administration fees and management fees of $3,657,862.

Results of Operations

Registrant’s operating results are dependent, in part, upon the operating results of the Local Partnerships and are impacted by the Local Partnerships’ policies. In addition, the operating results herein are not necessarily the same for tax reporting. Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting. Accordingly, the investment is carried at cost and is adjusted for Registrant’s share of each Local Partnership’s results of operations and by cash distributions received. In the event the operations of a Local Partnership result in a loss, equity in loss of each investment in Local Partnership allocated to Registrant is recognized to the extent of Registrant’s investment balance in each Local Partnership. Equity in loss in excess of Registrant’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership. The combined statements of operations of the Local Partnerships reflected in Note 6 to Registrant’s financial statements include the operating results of all Local Partnerships, irrespective of Registrant’s investment balances.

Cumulative losses and cash distributions in excess of investment in local partnerships may result from a variety of circumstances, including a Local Partnership's accounting policies, subsidy structure, debt structure and operating deficits, among other things. In addition, the book value of Registrant’s investment in each Local Partnership (the “Local Partnership Carrying Value”) may be reduced if the Local Partnership Carrying Value is considered to exceed the estimated value derived by management. Accordingly, cumulative losses and cash distributions in excess of the investment or an adjustment to a Local Partnership’s Carrying Value are not necessarily indicative of adverse operating results of a Local Partnership.

Registrant’s operations for the years ended March 30, 2010, 2009, and 2008 resulted in net losses of $413,184, $474,101, and $551,682, respectively. The decrease in net loss from fiscal 2009 to fiscal 2010 is primarily attributable to a decrease in administration and management fees in the cumulative amount of approximately $93,000 as a result of Registrant’s disposal of its Local Partnership Interests in Westminster Apartments Limited Partnership (“Westminster”) and Justin Associates (“Justin”) and one-half of its Local Partnership Interest in Sydney Engel Associates L.P. (“Sydney Engel”) (see discussion below under Local Partnership Matters), partially offset by a decrease in equity in income of investment in local partnerships of approximately $19,000, which decrease is attributable to a decrease in the net operating income of the Local Partnership in which Registrant continues to have an investment balance. The decrease in net loss from fiscal 2008 to fiscal 2009 is primarily attributable to a decrease in equity in loss of investment in local partnerships of approximately $93,000, which decrease is primarily the result of a decrease in the net operating loss of the Local Partnership in which Registrant continues to have an investment balance.

The Local Partnerships’ net loss of approximately $2,151,000 for the year ended December 31, 2009 includes depreciation and amortization expense of approximately $3,835,000 and interest on non-mandatory debt of approximately $351,000, and does not include required principal payments on permanent mortgages of approximately $897,000. The Local Partnerships’ net loss of approximately $2,394,000 for the year ended December 31, 2008 includes depreciation and amortization expense of approximately $3,880,000 and interest on non-mandatory debt of approximately $375,000, and does not include required principal payments on permanent mortgages of approximately $882,000. The Local Partnerships’ net loss of approximately $2,712,000 for the year ended December 31, 2007 includes depreciation and amortization expense of approximately $3,938,000 and interest on non-mandatory debt of approximately $392,000, and does not include required principal payments on permanent mortgages of approximately $826,000. The results of operations of the Local Partnerships for the year ended December 31, 2009 are not necessarily indicative of the results that may be expected in future periods.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Local Partnership Matters

Registrant's primary objective, to provide Low-income Tax Credits to its Limited Partners, has been completed. The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”). The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2003. The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period"). The Compliance Period of all of the Local Partnerships had expired as of December 31, 2007. In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”). Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted. Registrant is in the process of disposing of its Local Partnership Interests. As of March 30, 2010, Registrant owns thirty-nine of the forty-three Local Partnership Interests originally acquired. Registrant has served a demand on the local general partners (the “Local General Partners”) of all remaining Local Partnerships to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests. Following the final disposition of its Local Partnership Interests, Registrant intends to dissolve. It is uncertain as to the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. There can be no assurance as to when Registrant will dispose of its remaining Local Partnership Interests.

The Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States and Puerto Rico. Many of the Local Partnerships receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8"). The subsidy agreements expire at various times. Since October 1997, the United States Department of Housing and Urban Development (“HUD”) has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract. Registrant cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income (“NOI”) before debt service and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies. Two Local Partnerships’ Section 8 contracts are currently subject to renewal under applicable HUD guidelines.

The Local Partnerships have various financing structures which include (i) required debt service payments ("Mandatory Debt Service") and (ii) debt service payments which are payable only from available cash flow subject to the terms and conditions of the notes, which may be subject to specific laws, regulations and agreements with appropriate federal and state agencies ("Non-Mandatory Debt Service or Interest"). Registrant has no legal obligation to fund any operating deficits of the Local Partnerships.

In July 2009, Registrant withdrew from Westminster, in connection with which Registrant received $10. Such amount is reflected as gain on sale of limited partner interests/local partnership properties in the accompanying unaudited statement of operations for the year ended March 30, 2010. Registrant’s investment balance in Westminster, after cumulative equity losses, became zero during the year ended March 30, 1999.

In December 2009, Registrant assigned one-half of its 99% Local Partnership Interest in Sydney Engel to an affiliate of the Local General Partner of Sydney Engel. Registrant did not receive any proceeds in connection with the assignment. Registrant’s investment balance in Sydney Engel, after cumulative equity losses, became zero during the year ended March 30, 1997.

In March 2010, Registrant sold its Local Partnership Interest in Justin to an affiliate of the Local General Partner of Justin. Registrant did not receive any proceeds in connection with the sale. Registrant’s investment balance in Justin, after cumulative equity losses, became zero during the year ended March 30, 2002.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

The Local General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a result of a dispute between the local housing agency (the “Agency”) and the Local General Partner of Queen Lane regarding the adequacy of certain unit repairs mandated by the Agency, the Local General Partner of Queen Lane requested that the Agency cancel the Section 8 voucher contract in connection with the Property. As a result, the Property has been vacant since October 2007. Two of Queen Lane’s mortgages matured in 2007 but have not been repaid or formally extended, representing principal and accrued interest of approximately $2,015,000 as of June 2010. The Local General Partner of Queen Lane further represents that the lender has not issued a notice of default and that real estate taxes are in arrears approximately $19,000 as of June 2010. The Local General Partner of Queen Lane is attempting to refinance the mortgages and make the necessary repairs to the Property. Registrant’s investment balance in Queen Lane, after cumulative equity losses, became zero during the year ended March 30, 2001.

Inflation

Inflation is not expected to have a material adverse impact on Registrant’s operations.

Contractual Obligations

Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.

Off - Balance Sheet Arrangements

Registrant does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Registrant’s financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires Registrant to make certain estimates and assumptions. A summary of significant accounting policies is provided in Note 1 to the accompanying financial statements. The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s financial condition and results of operations. Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the accompanying financial statements.

Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting.

If the book value of Registrant’s investment in a Local Partnership exceeds the estimated value derived by management, Registrant reduces its investment in any such Local Partnership and includes such reduction in equity in loss of investment in local partnerships. Registrant makes such assessment at least annually in the fourth quarter of its fiscal year or whenever there are indications that a permanent impairment may have occurred. A loss in value of an investment in a Local Partnership other than a temporary decline would be recorded as an impairment loss. Impairment is measured by comparing the investment carrying amount to the estimated residual value of the investment.

Registrant does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10, because Registrant is not considered the primary beneficiary. Registrant’s balance in investment in local partnerships represents the maximum exposure to loss in connection with such investments. Registrant’s exposure to loss on the Local Partnerships is mitigated by the condition and financial performance of the underlying Properties as well as the financial strength of the Local General Partners.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Recent Accounting Pronouncements

ASC Topic 740; Subtopic 10 requires all taxpayers to analyze all material positions they have taken or plan to take in all tax returns that have been filed or should have been filed with all taxing authorities for all years still subject to challenge by those taxing authorities. If the position taken is “more-likely-than-not” to be sustained by the taxing authority on its technical merits and if there is more than a 50% likelihood that the position would be sustained if challenged and considered by the highest court in the relevant jurisdiction, the tax consequences of that position should be reflected in the taxpayer’s GAAP financial statements. Because Registrant is a pass-through entity and is not required to pay income taxes, ASC Topic 740; Subtopic 10 does not currently have any impact on its financial statements.

ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC Topic 820 applies to other accounting pronouncements that require or permit fair value measurements. Accordingly, ASC Topic 820 does not require any new fair value measurements. ASC Topic 820 is effective for fiscal years beginning after November 15, 2007. Registrant adopted ASC Topic 820 effective March 31, 2008. On February 6, 2008 FASB deferred the effective date of ASC Topic 820 by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. The partial adoption of ASC Topic 820 for financial assets and liabilities did not have a material impact on Registrant’s financial position, results of operations or cash flows. Registrant adopted ASC Topic 820 as of March 31, 2008, with the exception of the application of this topic to nonrecurring nonfinancial assets and nonfinancial liabilities. Nonrecurring nonfinancial assets and liabilities for which Registrant had not applied the provisions of ASC Topic 820 to include investment in local partnerships, which is accounted for under the equity method of accounting. Registrant’s full adoption of ASC Topic 820 as of March 31, 2009 did not have an impact on its financial statements.

ASC Topic 825; Subtopic 10 permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. ASC Topic 825; Subtopic 10 is effective for fiscal years beginning after November 15, 2007. On March 31, 2008, Registrant adopted ASC Topic 825; Subtopic 10 and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of ASC Topic 825; Subtopic 10 had no effect on Registrant’s financial statements.

ASC Topic 825; Subtopic 10 requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as well as annual statements. ASC Topic 825; Subtopic 10 is effective for Registrant as of June 30, 2009 and its adoption did not impact Registrant’s financial condition or results of operations. Registrant had no financial instruments during any interim reporting period during the year ended March 30, 2010.

In May 2009, FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general guidelines of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by Registrant for the quarter ended June 29, 2009. The adoption did not have a significant impact on the subsequent events that Registrant reports, either through recognition or disclosure, in the financial statements. In February 2010, FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore Registrant did not include the disclosure in the notes to the accompanying financial statements.

ASC Topic 810; Subtopic 10 amends existing consolidation guidance for variable interest entities, requires ongoing reassessment to determine whether a variable interest entity must be consolidated, and requires additional disclosures regarding involvement with variable interest entities and any significant changes in risk exposure due to that involvement. ASC Topic 810; Subtopic 10 is effective for Registrant’s fiscal year beginning March 31, 2010 and its adoption did not have an impact on Registrant’s financial statements.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

In January 2010, ASC Topic 820 was amended to increase disclosure requirements regarding recurring and nonrecurring fair value measurements. Registrant adopted ASC 820, as amended, for the period ending March 30, 2010, except for the disclosures about activity in Level 3 fair value measurements which are effective for Registrant’s fiscal year beginning March 31, 2010. The initial adoption of ASC Topic 820 and the full implementation thereof did not have a material impact on Registrant’s financial statements.

Forward-Looking Information

As a cautionary note, with the exception of historical facts, the matters discussed in this annual report on Form 10-K are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition. Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements. Registrant may also provide written forward-looking statements in other materials released to the public. Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act. Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.

Item 7a. Quantitative and Qualitative Disclosure About Market Risk.

Registrant’s investment in mutual fund (the “Fund”) is subject to certain risk. The fixed income securities in which the Fund invests are subject to interest rate risk, credit risk, prepayment risk, counterparty risk, municipal securities risk, liquidity risk, management risk, government security risk and valuation risk. Typically, when interest rates rise, the market prices of fixed income securities go down. The Fund is classified as “non-diversified,” and thus may invest most of its assets in securities issued by or representing a small number of issuers. As a result, the Fund may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers. These risks could adversely affect the Fund’s net asset value (“NAV”), yield and total return.

AMERICAN TAX CREDIT PROPERTIES III L.P.

Item 8.

Financial Statements and Supplementary Data.

Table of Contents

	Page

Report of Independent Registered Public Accounting Firm	20

Balance Sheets	21

Statements of Operations	22

Statements of Changes in Partners' Equity (Deficit)	23

Statements of Cash Flows	24

Notes to Financial Statements	26

No financial statement schedules are included because of the absence of the conditions under which they are required or because the information is included in the financial statements or the notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners

American Tax Credit Properties III L.P.

We have audited the accompanying balance sheets of American Tax Credit Properties III L.P. (the “Partnership”) as of March 30, 2010 and 2009, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years ended March 30, 2010, 2009 and 2008. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. As of and for the years ended March 30, 2010, 2009 and 2008, we did not audit the financial statements of certain investee partnerships, which investments represent $516,163 and $529,970, respectively, in total assets as of March 30, 2010 and 2009, and $6,193, $25,363 and $(52,205), respectively, of total income (losses) for the years ended March 30, 2010, 2009 and 2008. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to those investee partnerships, is based solely on the reports of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits, and the reports of the other auditors, provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of American Tax Credit Properties III L.P. as of March 30, 2010 and 2009, and the results of its operations, changes in partners’ equity (deficit) and its cash flows for the years ended March 30, 2010, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/Reznick Group, P.C.

Sacramento, California

June 25, 2010

AMERICAN TAX CREDIT PROPERTIES III L.P.

BALANCE SHEETS

MARCH 30, 2010 AND 2009

	2010			2009

ASSETS

Cash and cash equivalents	$	312,127		$	946,612
Investment in mutual fund		512,962
Investment in local partnerships		516,163			529,970

	$	1,341,252		$	1,476,582

LIABILITIES AND PARTNERS' DEFICIT

Liabilities

Accounts payable and accrued expenses	$	518,831		$	523,447
Payable to general partner and affiliates		3,217,189			2,934,719

		3,736,020			3,458,166

Commitments and contingencies

Partners' deficit

General partner		(2,394,768	)		(1,981,584	)
Limited partners (35,883 units of limited partnership interest outstanding)		—			—

		(2,394,768	)		(1,981,584	)

	$	1,341,252		$	1,476,582

See Notes to Financial Statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

STATEMENTS OF OPERATIONS

YEARS ENDED MARCH 30, 2010, 2009 AND 2008

	2010			2009			2008

REVENUE

Interest	$	2,430		$	14,626		$	56,703
Other income from local partnerships		53,075			46,186			26,118

TOTAL REVENUE		55,505			60,812			82,821

EXPENSES

Administration fees - affiliate		174,361			220,825			221,540
Management fees - affiliate		174,361			220,825			221,540
Professional fees		98,004			96,342			80,084
State of New Jersey filing fees		12,939			19,969			21,412
Printing, postage and other		15,227			5,815			22,543

TOTAL EXPENSES		474,892			563,776			567,119

		(419,387	)		(502,964	)		(484,298	)

Equity in income (loss) of investment in local partnerships		6,193			25,363			(67,384	)

Loss prior to gain on sale of limited partner interests/local partnership properties		(413,194	)		(477,601	)		(551,682	)

Gain on sale of limited partner interests/local partnership properties		10			3,500

NET LOSS		(413,184	)		(474,101	)		(551,682	)

Other comprehensive income (loss), net					(3,426	)		5,104

COMPREHENSIVE LOSS	$	(413,184	)	$	(477,527	)	$	(546,578	)

NET LOSS ATTRIBUTABLE TO

General partner	$	(413,184	)	$	(474,101	)	$	(551,682	)
Limited partners		—			—			—

	$	(413,184	)	$	(474,101	)	$	(551,682	)

NET LOSS per unit of limited partnership interest (35,883 units of limited partnership interest)	$	—		$	—		$	—

See Notes to Financial Statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)

YEARS ENDED MARCH 30, 2010, 2009 AND 2008

	General			Limited		Accumulated Other Comprehensive
	Partner			Partners		Income (Loss), Net			Total

Partners' deficit, March 30, 2007	$	(955,801	)	$	—	$	(1,678	)	$	(957,479	)

Net loss		(551,682	)							(551,682	)

Other comprehensive income, net							5,104			5,104

Partners' equity (deficit), March 30, 2008		(1,507,483	)		—		3,426			(1,504,057	)

Net loss		(474,101	)							(474,101	)

Other comprehensive loss, net							(3,426	)		(3,426	)

Partners' deficit, March 30, 2009		(1,981,584	)		—		—			(1,981,584	)

Net loss		(413,184	)							(413,184	)

Partners' deficit, March 30, 2010	$	(2,394,768	)	$	—	$	—		$	(2,394,768	)

See Notes to Financial Statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

STATEMENTS OF CASH FLOWS

YEARS ENDED MARCH 30, 2010, 2009 AND 2008

	2010			2009			2008

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received	$	2,430		$	9,796		$	8,385
Cash paid for
Administration fees		(16,252	)		(14,226	)		(15,517	)
Management fees		(50,000	)		(214,000	)		(100,000	)
Professional fees		(101,402	)		(90,178	)		(89,880	)
State of New Jersey filing fees		(16,369	)		(20,412	)		(22,369	)
Printing, postage and other expenses		(13,015	)		(26,714	)		(3,972	)

Net cash used in operating activities		(194,608	)		(355,734	)		(223,353	)

CASH FLOWS FROM INVESTING ACTIVITIES

Investments in mutual fund		(513,281	)
Redemptions from mutual fund		319
Proceeds in connection with sale of limited partner interests/local partnership properties		10			3,500
Voluntary advances to local partnerships								(15,179	)
Distributions received from local partnerships		73,075			46,186			46,118
Maturities/redemptions and sales of bonds					872,000			409,061

Net cash provided by (used in) investing activities		(439,877	)		921,686			440,000

Net increase (decrease) in cash and cash equivalents		(634,485	)		565,952			216,647

Cash and cash equivalents at beginning of year		946,612			380,660			164,013

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	312,127		$	946,612		$	380,660

SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized gain (loss) on investments in bonds, net				$	(3,426	)	$	5,104

See reconciliation of net loss to net cash used in operating activities on page 25.

See Notes to Financial Statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

STATEMENTS OF CASH FLOWS - CONTINUED

YEARS ENDED MARCH 30, 2010, 2009 AND 2008

	2010			2009			2008

RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Net loss	$	(413,184	)	$	(474,101	)	$	(551,682	)

Adjustments to reconcile net loss to net cash used in operating activities

Equity in loss (income) of investment in local partnerships		(6,193	)		(25,363	)		67,384
Gain on sale of limited partner interests/local partnership properties		(10	)		(3,500	)
Other income from local partnerships		(53,075	)		(46,186	)		(26,118	)
Accretion of zero coupon bonds					(4,830	)		(48,318	)
Increase in payable to general partner and affiliates		282,470			213,424			327,563
Increase (decrease) in accounts payable and accrued expenses		(4,616	)		(15,178	)		7,818

NET CASH USED IN OPERATING ACTIVITIES	$	(194,608	)	$	(355,734	)	$	(223,353	)

See Notes to Financial Statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS

MARCH 30, 2010, 2009 AND 2008

1.	Organization, Purpose and Summary of Significant Accounting Policies

American Tax Credit Properties III L.P. (the "Partnership") was formed on September 21, 1989 and the Certificate of Limited Partnership of the Partnership was filed under the Delaware Revised Uniform Limited Partnership Act. There was no operating activity until admission of the limited partners (the “Limited Partners”) on June 13, 1990. The Partnership was formed to invest primarily in leveraged low-income multifamily residential complexes (the “Property” or “Properties”) that qualified for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the “Low-income Tax Credit”), through the acquisition of limited partner equity interests (the "Local Partnership Interests") in partnerships (the "Local Partnership" or "Local Partnerships") that are the owners of the Properties. Richman Tax Credit Properties III L.P. (the "General Partner") was formed on September 21, 1989 to act as the General Partner of the Partnership.

Basis of Accounting and Fiscal Year

The Partnership's records are maintained on the accrual basis of accounting for both financial reporting and tax purposes. For financial reporting purposes, the Partnership's fiscal year ends March 30 and its quarterly periods end June 29, September 29 and December 30. The Local Partnerships have a calendar year for financial reporting purposes. The Partnership and the Local Partnerships each have a calendar year for income tax purposes.

Accounting Standards Codification

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Codification (the “Codification”). Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”). The Codification is intended to reorganize, rather than change, existing GAAP. Accordingly, all references to currently existing GAAP have been removed and have been replaced with plain English explanations of the Partnership’s accounting policies. The adoption of the Codification did not have a material impact on the Partnership’s financial position or results of operations.

Investment in Local Partnerships

The Partnership accounts for its investment in local partnerships in accordance with the equity method of accounting, under which the investment is carried at cost and is adjusted for the Partnership's share of each Local Partnership’s results of operations and by cash distributions received. Equity in loss of each investment in Local Partnership allocated to the Partnership is recognized to the extent of the Partnership’s investment balance in each Local Partnership. Equity in loss in excess of the Partnership’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership. Previously unrecognized equity in loss of any Local Partnership is recognized in the fiscal year in which equity in income is earned by such Local Partnership or additional investment is made by the Partnership. Distributions received subsequent to the elimination of an investment balance for any such investment in a Local Partnership are recorded as other income from local partnerships.

The Partnership assesses the carrying value of its investment in local partnerships at least annually in the fourth quarter of its fiscal year or whenever there are indications that a permanent impairment may have occurred. If the carrying value of an investment in a Local Partnership exceeds the estimated value derived by management, the Partnership reduces its investment in any such Local Partnership (unless the impairment is considered to be temporary) and includes such reduction in equity in loss of investment in local partnerships. Impairment is measured by comparing the investment carrying amount to the estimated residual value of the investment.

The Partnership does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities as defined by the Codification, because the Partnership is not considered the primary beneficiary. The Partnership's balance in investment in local partnerships represents the maximum exposure to loss in connection with such investments. The Partnership's exposure to loss on the Local Partnerships is mitigated by the condition and financial performance of the underlying Properties as well as the financial strength of the local general partners (the “Local General Partners”).

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

1.	Organization, Purpose and Summary of Significant Accounting Policies (Continued)

Advances and additional capital contributions (collectively the “Advances”) that are not required under the terms of the Local Partnerships’ partnership agreements but which are made to the Local Partnerships are recorded as investment in local partnerships. Certain Advances are considered by the Partnership to be voluntary loans to the respective Local Partnerships and the Partnership may be reimbursed at a future date to the extent such Local Partnerships generate distributable cash flow or receive proceeds from sale or refinancing.

Fair Value Measurement

ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value measurements. ASC Topic 820 applies to other accounting pronouncements that require or permit fair value measurements. Accordingly, ASC Topic 820 does not require any new fair value measurements. ASC Topic 820 is effective for fiscal years beginning after November 15, 2007. The Partnership adopted ASC Topic 820 effective March 31, 2008. On February 6, 2008 FASB deferred the effective date of ASC Topic 820 by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. The partial adoption of ASC Topic 820 for financial assets and liabilities did not have a material impact on the Partnership’s financial position, results of operations or cash flows. The Partnership adopted ASC Topic 820 as of March 31, 2008, with the exception of the application of this topic to nonrecurring nonfinancial assets and nonfinancial liabilities. Nonrecurring nonfinancial assets and liabilities for which the Partnership had not applied the provisions of ASC Topic 820 include investment in local partnerships, which is accounted for under the equity method of accounting. The Partnership’s full adoption of ASC Topic 820 as of March 31, 2009 did not have an impact on its financial statements.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates market value.

Investment in Mutual Fund

The Partnership carries its investment in mutual fund at estimated fair value. Capital gains (losses) are included in (offset against) interest revenue. Investment in mutual fund is classified as available-for-sale and unrealized gains or losses are included as items of comprehensive income (loss) and are reported as a separate component of owners' equity (deficit).

Investments in Bonds

Investments in bonds were classified as available-for-sale and represented investments that the Partnership intended to hold for an indefinite period of time but not necessarily to maturity. Any decision to sell an investment was based on various factors, including significant movements in interest rates and liquidity needs. Investments in bonds were carried at estimated fair value and unrealized gains or losses are included as items of comprehensive income (loss) and are reported as a separate component of partners’ equity (deficit).

Premiums and discounts on investments in bonds were amortized (accreted) using the effective yield method over the life of the investment. Amortized premiums offset interest revenue, while the accretion of discounts and zero coupon bonds were included in interest revenue. Realized gain (loss) on redemptions or sales of investments in bonds were included in, or offset against, interest revenue on the basis of the adjusted cost of each specific investment redeemed or sold. All such investments had matured and/or been redeemed or sold as of March 30, 2009.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

1.	Organization, Purpose and Summary of Significant Accounting Policies (Continued)

Income Taxes

The Partnership is a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income and deductions are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. In accordance with ASC Topic 740; Subtopic 10, the Partnership has included in Note 8 disclosures related to differences in the financial and tax bases of accounting.

ASC Topic 740; Subtopic 10 requires all taxpayers to analyze all material positions they have taken or plan to take in all tax returns that have been filed or should have been filed with all taxing authorities for all years still subject to challenge by those taxing authorities. If the position taken is “more-likely-than-not” to be sustained by the taxing authority on its technical merits and if there is more than a 50% likelihood that the position would be sustained if challenged and considered by the highest court in the relevant jurisdiction, the tax consequences of that position should be reflected in the taxpayer’s GAAP financial statements. Because the Partnership is a pass-through entity and is not required to pay income taxes, ASC Topic 740; Subtopic 10 does not currently have any impact on its financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

ASC Topic 825; Subtopic 10 permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. ASC Topic 825; Subtopic 10 is effective for fiscal years beginning after November 15, 2007. On March 31, 2008, the Partnership adopted ASC Topic 825; Subtopic 10 and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of ASC Topic 825; Subtopic 10 had no effect on the Partnership’s financial statements.

ASC Topic 825; Subtopic 10 requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as well as annual statements. ASC Topic 825; Subtopic 10 is effective for the Partnership as of June 30, 2009 and its adoption did not impact the Partnership’s financial condition or results of operations. The Partnership had no financial instruments during any interim reporting period during the year ended March 30, 2010.

In May 2009, FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general guidelines of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 29, 2009. The adoption did not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Partnership did not include the disclosure in the notes to the accompanying financial statements.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

1.	Organization, Purpose and Summary of Significant Accounting Policies (Continued)

ASC Topic 810; Subtopic 10 amends existing consolidation guidance for variable interest entities, requires ongoing reassessment to determine whether a variable interest entity must be consolidated, and requires additional disclosures regarding involvement with variable interest entities and any significant changes in risk exposure due to that involvement. ASC Topic 810; Subtopic 10 is effective for the Partnership’s fiscal year beginning March 31, 2010 and its adoption did not have an impact on the Partnership’s financial statements.

In January 2010, ASC Topic 820 was amended to increase disclosure requirements regarding recurring and nonrecurring fair value measurements. The Partnership adopted ASC Topic 820, as amended, for the period ending March 30, 2010, except for the disclosures about activity in Level 3 fair value measurements which is effective for the Partnership’s fiscal year beginning March 31, 2010. The initial adoption of ASC Topic 820 and the full implementation thereof did not have a material impact on the Partnership’s financial statements.

Reclassifications

Certain prior year Local Partnership balances (see Note 6) have been reclassified to conform to the current year presentation.

2.	Capital Contributions

On March 12, 1990, the Partnership commenced the offering of units (the “Units”) through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Selling Agent"). On June 13, 1990, December 27, 1990, December 31, 1991 and January 23, 1992, under the terms of the Amended and Restated Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"), the General Partner admitted the Limited Partners to the Partnership in four closings. At these closings, subscriptions for a total of 35,883 Units representing $35,883,000 in Limited Partners' capital contributions were accepted. In connection with the offering of Units, the Partnership incurred organization and offering costs of $4,418,530, of which $75,000 was capitalized as organization costs and $4,343,530 was charged to the Limited Partners' equity as syndication costs. The General Partner contributed $100 to the Partnership.

Net loss is allocated 99% to the Limited Partners and 1% to the General Partner in accordance with the Partnership Agreement, until such time as the Limited Partners' capital reaches zero as a result of loss allocations, after which all losses are allocated to the General Partner.

3.	Cash and Cash Equivalents

As of March 30, 2010, the Partnership has $312,127 in cash and cash equivalents. Of such amount, $269,120 is held in accounts at two financial institutions in which the aggregate amount on deposit at each institution is insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The entire amount is FDIC insured as of March 30, 2010. The remaining $43,007 is held in a financial institution in which such amount is invested in a portfolio of securities that are direct obligations of the U.S. Treasury and are backed by the full faith and credit of the United States of America.

4.	Investment in Mutual Fund

The Partnership carries its investment in mutual fund (the “Fund”) at estimated fair value. The Fund is a short duration bond fund organized as a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended, that seeks maximum current income consistent with liquidity and stability of principal. In selecting portfolio securities for the Fund, the investment advisor of the Fund (the (“Advisor”) will select investments so that substantially all of the Fund’s assets will be rated “A” or better by a nationally recognized statistical rating organization (“NRSRO”) such as Moody’s Investor Services, Inc. (“Moody’s”) and/or by Standard & Poor’s Financial Services, LLC (“S&P”) or, if a rating is not available, deemed to be of comparable quality by the Advisor. It is anticipated that approximately 90% or more of the Fund’s assets (excluding floating rate or fixed to float securities issued by banking institutions having assets in excess of $200 billion) will be rated “AA” or better by an NRSRO or, if a rating is not available, deemed to be of comparable quality by the Advisor. The Fund is valued at $10 per share in the accompanying balance sheet as of March 30, 2010.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

4.	Investment in Mutual Fund (Continued)

The Advisor is an affiliate of the General Partner. For its services, the Advisor is entitled to receive an annual advisory fee of 0.50% of the average daily net assets of the Fund. The Advisor may, in its discretion, voluntarily waive its fees or reimburse certain Fund expenses; however, the Advisor is not required to do so. The Advisor has waived 60% of its fee earned through March 30, 2010.

The Codification clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability and establishes the following fair value hierarchy:

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access;

Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; and

Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions as there is little, if any, related market activity.

For instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety.

The fair value of the Partnership’s investment in mutual fund is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements. No other assets or liabilities of the Partnership are measured at fair value under the guidance on Fair Value Measurements as of March 30, 2010 and 2009.

5.	Investments in Bonds

The Partnership carried its investments in bonds as available-for-sale because such investments were used to facilitate and provide flexibility for the Partnership's obligations, including resolving circumstances that may have arisen in connection with the Local Partnerships. All such investments had matured and/or been redeemed or sold as of March 30, 2009.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships

As of March 30, 2010, the Partnership owns a Local Partnership Interest in the following Local Partnerships:

1.		April Gardens Apartments II Limited Partnership;
2.		Auburn Family, L.P.;
3.		Batesville Family, L.P.;
4.		Bay Springs Elderly, L.P.;
5.		Brisas del Mar Apartments Limited Partnership;
6.		Bruce Housing Associates, L.P.;
7.		Chestnut Park Associates, L.P. (“Chestnut Park”)*;
8.		Chowan Senior Manor Associates Limited Partnership;
9.		Christian Street Commons Associates;
10.		Country View Apartments;
11.		Desarrollos de Belen Limited Partnership;
12.		Desarrollos de Emaus Limited Partnership;
13.		Ellinwood Heights Apartments, L.P.;
14.		Fulton Street Houses Limited Partnership;
15.		Hayes Run Limited Partnership;
16.		Howard L. Miller Sallisaw Apartments II, L.P.;
17.		Hurlock Meadow Limited Partnership;
18.		Ivy Family, L.P.;
19.		LaBelle Commons, Ltd.;
20.		Lawrence Road Properties, Ltd.;
21.		Loma Del Norte Limited Partnership;
22.		Long Reach Associates Limited Partnership;
23.		Mirador del Toa Limited Partnership;
24.		Moore Haven Commons, Ltd.;
25.		NP-89 Limited Dividend Housing Association Limited Partnership (“NP-89”);
26.		Nash Hill Associates, Limited Partnership;
27.		North Calhoun City, L.P.;
28.		Orange City Plaza, Limited Partnership (“Orange City”);
29.		Puerta del Mar Limited Partnership;
30.		Purvis Heights Properties, L.P.;
31.		Queen Lane Investors (“Queen Lane”);
32.		Somerset Manor, Ltd.;
33.		Sugar Cane Villas, Ltd.;
34.		Summerfield Apartments Limited Partnership;
35.		Sydney Engel Associates L.P. (formerly known as Sydney Engel Associates) (“Sydney Engel”);
36.		Union Valley Associates Limited Partnership;
37.		Walnut Grove Family, L.P.;
38.		Waynesboro Apartments Limited Partnership; and
39.		West Calhoun City, L.P.

*Affiliates of the General Partner are a general partner of and provide services to Chestnut Park.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

Although the Partnership generally owns a 98.9% - 99% Local Partnership Interest in the Local Partnerships, the Partnership and American Tax Credit Properties II L.P. ("ATCP II"), a Delaware limited partnership whose general partner is affiliated with the General Partner, together, in the aggregate, own a 99% interest in the following Local Partnerships:

	The Partnership			ATCP II

Batesville Family, L.P.		61.75	%		37.25	%
Bruce Housing Associates, L.P.		61.75			37.25
Ivy Family, L.P.		61.75			37.25
Lawrence Road Properties, Ltd.		61.75			37.25
Mirador del Toa Limited Partnership		59.06			39.94
Purvis Heights Properties, L.P.		61.75			37.25
Queen Lane Investors		48.50			50.50

The Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States and Puerto Rico. The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period"). The rents of the Properties are controlled by federal and state agencies pursuant to applicable laws and regulations. Under the terms of each of the Local Partnership's partnership agreements, as of March 30, 2010 the Partnership is committed to make capital contributions in the aggregate amount of $29,384,966, which includes Advances made to a certain Local Partnership and all of which has been paid. As of December 31, 2010, the Local Partnerships have outstanding mortgage loans payable totaling approximately $73,875,000 and accrued interest payable on such loans totaling approximately $5,895,000, which are secured by security interests and liens common to mortgage loans on the Local Partnerships' real property and other assets.

Equity in loss of investment in local partnerships is limited to the Partnership’s investment balance in each Local Partnership; any excess is applied to other partners' capital in any such Local Partnership (see Note 1). The amount of such excess losses applied to other partners' capital was $2,045,768, $2,292,014, and $2,461,655 for the years ended December 31, 2009, 2008 and 2007, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 6.

The difference between the Partnership’s investment in local partnerships as of March 30, 2010 and 2009 and the amounts reflected as the Partnership’s investment balance in the combined balance sheets of the Local Partnerships as of December 31, 2009 and 2008 herein Note 6 represents cumulative carrying value adjustments made by the Partnership (see Note 1) in the amount of $1,540,622.

In July 2009, the Partnership withdrew from Westminster Apartments Limited Partnership (“Westminster”), in connection with which the Partnership received $10. Such amount is reflected as gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations of the Partnership for year ended March 30, 2010. The Partnership’s investment balance in Westminster, after cumulative equity losses, became zero during the year ended March 30, 1999.

In December 2009, the Partnership assigned one-half of its 99% Local Partnership Interest in Sydney Engel to an affiliate of the Local General Partner of Sydney Engel. The Partnership did not receive any proceeds in connection with the assignment. The Partnership’s investment balance in Sydney Engel, after cumulative equity losses, became zero during the year ended March 30, 1997.

In March 2010, the Partnership sold its Local Partnership Interest in Justin Associates (“Justin”) to an affiliate of the Local General Partner of Justin. The Partnership did not receive any proceeds in connection with the sale. The Partnership’s investment balance in Justin, after cumulative equity losses, became zero during the year ended March 30, 2002.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

The Local General Partner of Queen Lane represents that, as a result of a dispute between the local housing agency (the “Agency”) and the Local General Partner of Queen Lane regarding the adequacy of certain unit repairs mandated by the Agency, the Local General Partner of Queen Lane requested that the Agency cancel the Section 8 voucher contract in connection with the Property. As a result, the Property has been vacant since October 2007. Two of Queen Lane’s mortgages matured in 2007 but have not been repaid or formally extended, representing principal and accrued interest of approximately $2,015,000 as of June 2010. The Local General Partner of Queen Lane further represents that the lender has not issued a notice of default and that real estate taxes are in arrears approximately $19,000 as of June 2010. The Local General Partner of Queen Lane is attempting to refinance the mortgages and make the necessary repairs to the Property. The Partnership’s investment balance in Queen Lane, after cumulative equity losses, became zero during the year ended March 30, 2001.

Effective February 2009, the Partnership withdrew from Ashland Park Apartments, L.P. (“Ashland Park”), in connection with which the Partnership received $3,500. Such amount is reflected as gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations of the Partnership for the year ended March 30, 2009. The Partnership’s investment balance in Ashland Park, after cumulative equity losses, became zero during the year ended March 30, 1999.

The Partnership made Advances of $15,179 to Orange City for the year ended March 30, 2008 to fund operating deficits. Cumulative Advances as of March 30, 2010 and 2009 are $120,490. The Partnership’s investment balance in Orange City, after cumulative equity losses, became zero during the year ended March 30, 2002 and Advances made by the Partnership have been recorded as investment in local partnerships and offset by additional equity in loss of investment in local partnerships in the accompanying financial statements.

The combined balance sheets of the Local Partnerships as of December 31, 2009 and 2008 and the combined statements of operations of the Local Partnerships for the years ended December 31, 2009, 2008 and 2007 are reflected on pages 34 and 35, respectively.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

The combined balance sheets of the Local Partnerships as of December 31, 2009 and 2008 are as follows:

	2009			2008

ASSETS

Cash and cash equivalents	$	1,745,227		$	1,685,633
Rents receivable		504,964			485,248
Escrow deposits and reserves		5,115,688			5,036,286
Land		3,608,404			3,710,215
Buildings and improvements (net of accumulated depreciation of $68,583,356 and $66,823,930)		43,096,982			45,436,519
Intangible assets (net of accumulated amortization of $625,138 and $601,103)		400,175			263,106
Other assets		1,379,059			1,328,980

	$	55,850,499		$	57,945,987

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

Accounts payable and accrued expenses	$	1,216,538		$	1,344,773
Due to related parties		5,301,656			5,212,785
Mortgage loans		73,874,985			75,984,949
Accrued interest		5,895,042			6,015,631
Other liabilities		730,814			764,520

		87,019,035			89,322,658

Partners' equity (deficit)

American Tax Credit Properties III L.P.
Capital contributions, net of distributions		23,922,311			26,819,283
Cumulative loss		(21,865,526	)		(24,748,691	)

		2,056,785			2,070,592

General partners and other limited partners
Capital contributions, net of distributions		196,361			(1,134,122	)
Cumulative loss		(33,421,682	)		(32,313,141	)

		(33,225,321	)		(33,447,263	)

		(31,168,536	)		(31,376,671	)

	$	55,850,499		$	57,945,987

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

The combined statements of operations of the Local Partnerships for the years ended December 31, 2009, 2008 and 2007 are as follows:

	2009			2008			2007

REVENUE

Rental	$	12,346,413		$	12,349,316		$	11,813,515
Interest and other		458,431			313,636			384,392

TOTAL REVENUE		12,804,844			12,662,952			12,197,907

EXPENSES

Administrative		2,912,171			3,016,090			2,684,920
Utilities		1,653,578			1,784,854			1,785,113
Operating and maintenance		3,445,870			3,029,077			3,009,870
Taxes and insurance		1,094,092			1,164,195			1,232,301
Financial		2,015,688			2,182,047			2,260,472
Depreciation and amortization		3,834,817			3,880,345			3,937,524

TOTAL EXPENSES		14,956,216			15,056,608			14,910,200

NET LOSS	$	(2,151,372	)	$	(2,393,656	)	$	(2,712,293	)

NET INCOME (LOSS) ATTRIBUTABLE TO

American Tax Credit Properties III L.P.	$	6,193		$	25,363		$	(67,384	)
General partners and other limited partners (includes $2,045,768, $2,292,014 and $2,461,655 of Partnership loss in excess of investment)		(2,157,565	)		(2,419,019	)		(2,644,909	)

	$	(2,151,372	)	$	(2,393,656	)	$	(2,712,293	)

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

Investment activity with respect to each Local Partnership for the year ended March 30, 2010 is as follows:

Name of Local Partnership	Investment in Local Partnership balance as of March 30, 2009		Investments (voluntary advances) during the year ended March 30, 2010		Partnership's equity in income for the year ended March 30, 2010			Adjustment to carrying value during the year ended March 30, 2010		Cash distributions received during the year ended March 30, 2009 (2)			Investment in Local Partnership balance as of March 30, 2010

April Gardens Apartments II Limited Partnership	$	—	$	—	$	—	(1)	$	—	$	—		$	—
Auburn Family, L.P.		—		—		—	(1)		—		—			—
Batesville Family, L.P.		—		—		—	(1)		—		—			—
Bay Springs Elderly, L.P.		—		—		—	(1)		—		—			—
Brisas del Mar Apartments Limited Partnership		—		—		—	(1)		—		—			—
Bruce Housing Associates, L.P.		—		—		—	(1)		—		—			—
Chestnut Park Associates, L.P.		—		—		—	(1)		—		—			—
Chowan Senior Manor Associates Limited Partnership		—		—		—	(1)		—		—			—
Christian Street Commons Associates		—		—		—	(1)		—		—			—
Country View Apartments		—		—		—	(1)		—		—			—
Desarrollos de Belen Limited Partnership		—		—		—	(1)		—		—			—
Desarrollos de Emaus Limited Partnership		—		—		—	(1)		—		—			—
Ellinwood Heights Apartments, L.P.		—		—		—	(1)		—		—			—
Fulton Street Houses Limited Partnership		—		—		—	(1)		—		—			—
Hayes Run Limited Partnership		—		—		—	(1)		—		—			—
Howard L. Miller Sallisaw Apartments II, L.P.		—		—		—	(1)		—		—			—
Hurlock Meadow Limited Partnership		—		—		—	(1)		—		—			—
Ivy Family, L.P.		—		—		—	(1)		—		—			—
Justin Associates		—		—		—	(1)		—		—			—
Lawrence Road Properties, Ltd.		—		—		—	(1)		—		—			—
Labelle Commons, Ltd.		—		—		—	(1)		—		—			—
Loma Del Norte Limited Partnership		—		—		—	(1)		—		—			—
Long Reach Associates Limited Partnership		—		—		—	(1)		—		—			—
Mirador del Toa Limited Partnership		—		—		—	(1)		—		—			—
Moore Haven Commons, Ltd.		—		—		—	(1)		—		—			—
NP-89 Limited Dividend Housing Association Limited Partnership		529,970		—		6,193			—		(20,000	)		516,163
Nash Hill Associates, Limited Partnership		—		—		—	(1)		—		—			—
North Calhoun City, L.P.		—		—		—	(1)		—		—			—
Orange City Plaza, Limited Partnership		—		—		—	(1)		—		—			—
Puerta del Mar Limited Partnership		—		—		—	(1)		—		—			—
Purvis Heights Properties, L.P.		—		—		—	(1)		—		—			—
Queen Lane Investors		—		—		—	(1)		—		—			—
Somerset Manor, Ltd.		—		—		—	(1)		—		—			—
Sugar Cane Villas, Ltd.		—		—		—	(1)		—		—			—
Summerfield Apartments Limited Partnership		—		—		—	(1)		—		—			—
Sydney Engel Associates L.P.		—		—		—	(1)		—		—			—
Union Valley Associates Limited Partnership		—		—		—	(1)		—		—			—
Walnut Grove Family, L.P.		—		—		—	(1)		—		—			—
Waynesboro Apartments Limited Partnership		—		—		—	(1)		—		—			—
West Calhoun City, L.P.		—		—		—	(1)		—		—			—
Westminster Apartments Limited Partnership		—		—		—	(1)		—		—			—

	$	529,970	$	—	$	6,193		$	—	$	(20,000	)	$	516,163

(1)

Additional equity in loss of investment is not allocated to the Partnership until equity in income is earned or additional investment is made by the Partnership.

(2)

The total excludes $53,075 of distributions received classified as other income from local partnerships.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

Investment activity with respect to each Local Partnership for the year ended March 30, 2009 is as follows:

Name of Local Partnership	Investment in Local Partnership balance as of March 30, 2008		Investments (voluntary advances) during the year ended March 30, 2009		Partnership's equity in income for the year ended March 30, 2009			Adjustment to carrying value during the year ended March 30, 2009		Cash distributions received during the year ended March 30, 2008 (2)		Investment in Local Partnership balance as of March 30, 2009

April Gardens Apartments II Limited Partnership	$	—	$	—	$	—	(1)	$	—	$	—	$	—
Ashland Park Apartments, L.P.		—		—		—	(1)		—		—		—
Auburn Family, L.P.		—		—		—	(1)		—		—		—
Batesville Family, L.P.		—		—		—	(1)		—		—		—
Bay Springs Elderly, L.P.		—		—		—	(1)		—		—		—
Brisas del Mar Apartments Limited Partnership		—		—		—	(1)		—		—		—
Bruce Housing Associates, L.P.		—		—		—	(1)		—		—		—
Chestnut Park Associates, L.P.		—		—		—	(1)		—		—		—
Chowan Senior Manor Associates Limited Partnership		—		—		—	(1)		—		—		—
Christian Street Commons Associates		—		—		—	(1)		—		—		—
Country View Apartments		—		—		—	(1)		—		—		—
Desarrollos de Belen Limited Partnership		—		—		—	(1)		—		—		—
Desarrollos de Emaus Limited Partnership		—		—		—	(1)		—		—		—
Ellinwood Heights Apartments, L.P.		—		—		—	(1)		—		—		—
Fulton Street Houses Limited Partnership		—		—		—	(1)		—		—		—
Hayes Run Limited Partnership		—		—		—	(1)		—		—		—
Howard L. Miller Sallisaw Apartments II, L.P.		—		—		—	(1)		—		—		—
Hurlock Meadow Limited Partnership		—		—		—	(1)		—		—		—
Ivy Family, L.P.		—		—		—	(1)		—		—		—
Justin Associates		—		—		—	(1)		—		—		—
Lawrence Road Properties, Ltd.		—		—		—	(1)		—		—		—
Labelle Commons, Ltd.		—		—		—	(1)		—		—		—
Loma Del Norte Limited Partnership		—		—		—	(1)		—		—		—
Long Reach Associates Limited Partnership		—		—		—	(1)		—		—		—
Mirador del Toa Limited Partnership		—		—		—	(1)		—		—		—
Moore Haven Commons, Ltd.		—		—		—	(1)		—		—		—
NP-89 Limited Dividend Housing Association Limited Partnership		504,607		—		25,363			—		—		529,970
Nash Hill Associates, Limited Partnership		—		—		—	(1)		—		—		—
North Calhoun City, L.P.		—		—		—	(1)		—		—		—
Orange City Plaza, Limited Partnership		—		—		—	(1)		—		—		—
Puerta del Mar Limited Partnership		—		—		—	(1)		—		—		—
Purvis Heights Properties, L.P.		—		—		—	(1)		—		—		—
Queen Lane Investors		—		—		—	(1)		—		—		—
Somerset Manor, Ltd.		—		—		—	(1)		—		—		—
Sugar Cane Villas, Ltd.		—		—		—	(1)		—		—		—
Summerfield Apartments Limited Partnership		—		—		—	(1)		—		—		—
Sydney Engel Associates L.P.		—		—		—	(1)		—		—		—
Union Valley Associates Limited Partnership		—		—		—	(1)		—		—		—
Walnut Grove Family, L.P.		—		—		—	(1)		—		—		—
Waynesboro Apartments Limited Partnership		—		—		—	(1)		—		—		—
West Calhoun City, L.P.		—		—		—	(1)		—		—		—
Westminster Apartments Limited Partnership		—		—		—	(1)		—		—		—

	$	504,607	$	—	$	25,363		$	—	$	—	$	529,970

(1)

Additional equity in loss of investment is not allocated to the Partnership until equity in income is earned or additional investment is made by the Partnership.

(2)

The total excludes $46,186 of distributions received classified as other income from local partnerships.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

Property information for each Local Partnership as of December 31, 2009 is as follows:

Name of Local Partnership	Mortgage loans payable		Land		Buildings and improvements		Accumulated depreciation

April Gardens Apartments II Limited Partnership	$	1,919,017	$	39,984	$	2,571,888	$	(1,914,383	)
Auburn Family, L.P.		435,391		20,000		700,291		(340,469	)
Batesville Family, L.P.		1,388,997		52,000		1,902,733		(1,039,102	)
Bay Springs Elderly, L.P.		650,941		38,000		938,296		(498,904	)
Brisas del Mar Apartments Limited Partnership		2,539,009		100,280		3,525,312		(2,614,962	)
Bruce Housing Associates, L.P.		1,058,397		16,000		1,668,814		(1,029,811	)
Chestnut Park Associates, L.P.		4,201,606		781,700		8,715,836		(5,890,740	)
Chowan Senior Manor Associates Limited Partnership		1,183,484		86,101		1,620,729		(1,075,357	)
Christian Street Commons Associates		507,616		—		—		—
Country View Apartments		900,561		35,698		1,314,750		(597,516	)
Desarrollos de Belen Limited Partnership		1,807,250		96,190		2,519,166		(1,455,783	)
Desarrollos de Emaus Limited Partnership		3,071,495		214,000		4,115,793		(2,260,523	)
Ellinwood Heights Apartments, L.P.		661,047		10,000		1,039,293		(491,959	)
Fulton Street Houses Limited Partnership		3,869,930		2		5,983,089		(3,903,811	)
Hayes Run Limited Partnership		1,370,693		85,060		1,714,574		(856,803	)
Howard L. Miller Sallisaw Apartments II, L.P.		592,943		39,000		837,234		(350,157	)
Hurlock Meadow Limited Partnership		1,218,066		49,525		1,653,890		(1,103,083	)
Ivy Family, L.P.		722,550		11,000		1,239,462		(762,642	)
Justin Associates		2,070,292		27,472		4,384,882		(2,866,978	)
LaBelle Commons, Ltd.		972,598		98,947		1,263,737		(781,096	)
Lawrence Road Properties, Ltd.		729,334		50,000		988,256		(536,499	)
Loma Del Norte Limited Partnership		1,384,131		84,874		2,057,207		(960,503	)
Long Reach Associates Limited Partnership		1,422,983		118,446		1,940,133		(968,023	)
Mirador del Toa Limited Partnership		1,799,524		105,000		2,393,997		(1,791,380	)
Moore Haven Commons, Ltd.		891,738		73,645		1,199,226		(834,425	)
NP-89 Limited Dividend Housing Association Limited Partnership		2,678,344		150,000		8,008,425		(5,259,302	)
Nash Hill Associates, Limited Partnership		1,411,518		123,876		1,814,111		(884,813	)
North Calhoun City, L.P.		442,614		12,000		681,627		(374,441	)
Orange City Plaza, Limited Partnership		361,020		53,904		1,051,852		(549,917	)
Puerta del Mar Limited Partnership		2,417,459		115,000		3,279,123		(2,391,813	)
Purvis Heights Properties, L.P.		1,103,621		47,000		1,616,972		(793,650	)
Queen Lane Investors		1,955,583		60,301		2,841,369		(1,729,552	)
Somerset Manor, Ltd.		864,146		53,383		1,140,303		(777,728	)
Sugar Cane Villas, Ltd.		3,182,404		58,500		4,093,772		(2,839,720	)
Summerfield Apartments Limited Partnership		1,393,021		195,411		2,893,128		(1,258,715	)
Sydney Engel Associates L.P.		16,403,175		284,305		22,039,952		(13,795,998	)
Union Valley Associates Limited Partnership		1,392,677		97,800		1,758,877		(842,708	)
Walnut Grove Family, L.P.		817,729		30,000		1,130,022		(642,428	)
Waynesboro Apartments Limited Partnership		1,424,179		76,000		1,814,995		(882,888	)
West Calhoun City, L.P.		657,902		18,000		1,227,222		(634,774	)
	$	73,874,985	$	3,608,404	$	111,680,338	$	(68,583,356	)

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

Property information for each Local Partnership as of December 31, 2008 is as follows:

Name of Local Partnership	Mortgage loans payable		Land		Buildings and improvements		Accumulated depreciation

April Gardens Apartments II Limited Partnership	$	1,930,431	$	39,984	$	2,565,230	$	(1,812,522	)
Ashland Park Apartments, L.P.		1,001,691		50,160		1,293,736		(837,252	)
Auburn Family, L.P.		439,806		20,000		670,068		(323,057	)
Batesville Family, L.P.		1,396,285		52,000		1,892,764		(989,635	)
Bay Springs Elderly, L.P.		654,239		38,000		938,296		(475,388	)
Brisas del Mar Apartments Limited Partnership		2,556,919		100,280		3,505,988		(2,457,550	)
Bruce Housing Associates, L.P.		1,064,826		16,000		1,643,636		(972,130	)
Chestnut Park Associates, L.P.		4,337,275		781,700		8,715,836		(5,568,980	)
Chowan Senior Manor Associates Limited Partnership		1,194,083		86,101		1,611,708		(1,023,552	)
Christian Street Commons Associates		521,832		—		—		—
Country View Apartments		905,761		35,698		1,314,750		(559,551	)
Desarrollos de Belen Limited Partnership		1,817,596		96,190		2,519,166		(1,373,000	)
Desarrollos de Emaus Limited Partnership		3,089,078		214,000		4,115,793		(2,126,711	)
Ellinwood Heights Apartments, L.P.		664,920		10,000		1,036,661		(456,326	)
Fulton Street Houses Limited Partnership		3,869,930		2		5,983,089		(3,679,123	)
Hayes Run Limited Partnership		1,378,596		85,060		1,703,131		(796,891	)
Howard L. Miller Sallisaw Apartments II, L.P.		596,258		39,000		823,657		(327,881	)
Hurlock Meadow Limited Partnership		1,225,472		49,525		1,647,845		(1,038,310	)
Ivy Family, L.P.		731,946		11,000		1,238,287		(718,876	)
Justin Associates		2,084,848		27,472		4,378,882		(2,707,691	)
LaBelle Commons, Ltd.		978,339		98,947		1,263,737		(732,820	)
Lawrence Road Properties, Ltd.		733,946		50,000		982,221		(510,645	)
Loma Del Norte Limited Partnership		1,391,814		84,874		2,031,383		(894,984	)
Long Reach Associates Limited Partnership		1,431,058		118,446		1,940,133		(917,195	)
Mirador del Toa Limited Partnership		1,811,472		105,000		2,393,997		(1,687,038	)
Moore Haven Commons, Ltd.		896,963		73,645		1,199,226		(792,337	)
NP-89 Limited Dividend Housing Association Limited Partnership		2,895,016		150,000		7,987,623		(4,949,362	)
Nash Hill Associates, Limited Partnership		1,419,789		123,876		1,797,040		(832,089	)
North Calhoun City, L.P.		448,576		12,000		676,338		(358,639	)
Orange City Plaza, Limited Partnership		372,119		53,904		1,051,852		(526,427	)
Puerta del Mar Limited Partnership		2,433,052		115,000		3,273,573		(2,261,005	)
Purvis Heights Properties, L.P.		1,110,322		47,000		1,602,756		(757,323	)
Queen Lane Investors		1,884,424		60,301		2,841,369		(1,729,552	)
Somerset Manor, Ltd.		868,979		53,383		1,132,970		(736,473	)
Sugar Cane Villas, Ltd.		3,200,620		58,500		4,093,772		(2,694,248	)
Summerfield Apartments Limited Partnership		1,441,951		195,411		2,829,678		(1,184,884	)
Sydney Engel Associates L.P.		15,270,199		284,305		20,403,211		(13,008,966	)
Union Valley Associates Limited Partnership		1,400,527		97,800		1,758,877		(799,753	)
Walnut Grove Family, L.P.		821,643		30,000		1,128,222		(612,532	)
Waynesboro Apartments Limited Partnership		1,431,989		76,000		1,794,917		(839,441	)
West Calhoun City, L.P.		672,387		18,000		1,197,295		(599,851	)
Westminster Apartments Limited Partnership		1,607,972		51,651		1,281,736		(1,152,440	)
	$	75,984,949	$	3,710,215	$	112,260,449	$	(66,823,930	)

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

6.	Investment in Local Partnerships (Continued)

The summary of property activity during the year ended December 31, 2009 is as follows:

	Balance as of December 31, 2008			Net change during the year ended December 31, 2009			Balance as of December 31, 2009

Land	$	3,710,215		$	(101,811	)	$	3,608,404
Buildings and improvements		112,260,449			(580,111	)		111,680,338
		115,970,664			(681,922	)		115,288,742
Accumulated depreciation		(66,823,930	)		(1,759,426	)		(68,583,356	)
	$	49,146,734		$	(2,441,348	)	$	46,705,386

The Partnership’s investment in NP-89 represents more than 20% of the Partnership’s total assets as of March 30, 2010 and 2009. The following financial information represents certain balance sheet and operating statement data of NP-89 as of and for the years ended December 31, 2009 and 2008:

	2009		2008

Total assets	$	3,324,230	$	3,587,024

Total liabilities	$	2,739,318	$	2,988,368

Revenue	$	1,288,664	$	1,291,259

Net income	$	6,256	$	25,619

7.	Transactions with General Partner and Affiliates

Pursuant to the Partnership Agreement, the Partnership incurs an annual management fee (the “Management Fee”) and an annual additional management fee (the “Additional Management Fee”) payable to the General Partner for its services in connection with the management of the affairs of the Partnership. The annual Management Fee is equal to .14% of all proceeds as of December 31 of any year, invested or committed for investment in Local Partnerships plus all debts of the Local Partnerships related to the Properties ("Invested Assets"). The Partnership incurred a Management Fee of $122,053, $154,578, and $155,078 for the years ended March 30, 2010, 2009 and 2008, respectively. The annual Additional Management Fee is equal to .06% of Invested Assets. The Partnership incurred an Additional Management Fee of $52,308, $66,247 and $66,462 for the years ended March 30, 2010, 2009 and 2008, respectively. Such amounts are aggregated and reflected under the caption management fees - affiliate in the accompanying statements of operations. Unpaid Management Fees and Additional Management Fees in the cumulative amount of $1,487,164 and $1,362,803 are included in payable to general partner and affiliates in the accompanying balance sheets as of March 30, 2010 and 2009, respectively.

In addition, pursuant to the Partnership Agreement, the Partnership is authorized to contract for administrative services provided to the Partnership. From the inception of the Partnership through November 23, 1999, such administrative services were provided by ML Fund Administrators Inc. (“MLFA”), an affiliate of the Selling Agent, pursuant to an Administrative Services Agreement. MLFA resigned the performance of its basic services under the Administrative Services Agreement effective November 23, 1999, with certain transitional services continued through April 30, 2000. The General Partner transitioned the administrative services to an affiliate of the General Partner without any changes to the terms of the Administrative Services Agreement. Pursuant to such agreement, the Partnership incurs an annual administration fee (the “Administration Fee”) and an annual additional administration fee (the “Additional Administration Fee”) for administrative services provided to the Partnership. The Partnership incurred an Administration Fee of $122,053, $154,578, and $155,078 for the years ended March 30, 2010, 2009 and 2008, respectively. The annual Additional Administration Fee is equal to .06% of Invested Assets. The Partnership incurred an Additional Administration Fee of $52,308, $66,247 and $66,462 for the years ended March 30, 2010, 2009 and 2008, respectively. Such amounts are aggregated and reflected under the caption administration fees - affiliate in the accompanying statements of operations. Unpaid Administration Fees and Additional Administration Fees due to MLFA in the cumulative amount of $440,673 are included in accounts payable and accrued expenses in the accompanying balance sheets as of March 30, 2010 and 2009. Unpaid Administration Fees and Additional Administration Fees due to an affiliate of the General Partner in the cumulative amount of $1,730,025 and $1,571,916 are included in due to general partner and affiliates in the accompanying balance sheets as of March 30, 2010 and 2009, respectively.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

7.	Transactions with General Partner and Affiliates (Continued)

The amount reflected above as due to MLFA and certain amounts due to the General Partner and affiliates are payable pursuant to the terms of an agreement between the Partnership, the General Partner and MLFA (the “Deferred Fee Agreement”). Such amounts are payable to the extent proceeds from the sales of limited partner interests/local partnership properties become available, as described in the Deferred Fee Agreement.

For the years ended December 31, 2009, 2008 and 2007, Chestnut Park paid and/or incurred the following amounts to an affiliate of the General Partner in connection with services provided to Chestnut Park:

	2009				2008				2007
	Paid		Incurred		Paid		Incurred		Paid		Incurred

Property management fees	$	45,448	$	45,502	$	44,607	$	45,598	$	42,128	$	40,010

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

8.	Taxable Loss

A reconciliation of the financial statement net loss of the Partnership for the years ended March 30, 2010, 2009 and 2008 to the tax return income (loss) for the years ended December 31, 2009, 2008 and 2007 is as follows:

	2010			2009			2008

Financial statement net loss for the years ended March 30, 2010, 2009 and 2008	$	(413,184	)	$	(474,101	)	$	(551,682	)

Add (less) net transactions occurring between
January 1, 2007 and March 30, 2007		—			—			17,889
January 1, 2008 and March 30, 2008		—			(125,165	)		125,165
January 1, 2009 and March 30, 2009		(120,348	)		120,348			—
January 1, 2010 and March 30, 2010		97,168			—			—

Adjusted financial statement net loss for the years ended December 31, 2009, 2008 and 2007		(436,364	)		(478,918	)		(408,628	)

Adjustment to management and administration fees pursuant to Internal Revenue Code Section 267		203,312			327,562			327,560

Differences arising from equity in loss of investment in local partnerships		(1,923,864	)		(1,850,619	)		(2,617,547	)

Differences in gain on sale of limited partner interests/local partnership properties		4,775,725			—			248,246

Other income from local partnerships		(56,173	)		(36,063	)		(15,698	)

Nondeductible flow through expenses		461			39			—

Other differences		(1,604	)		1,988			(748	)

Tax return income (loss) for the years ended December 31, 2009, 2008 and 2007	$	2,561,493		$	(2,036,011	)	$	(2,466,815	)

The differences between the investment in local partnerships for tax and financial reporting purposes as of December 31, 2009 and 2008 are as follows:

	2009			2008

Investment in local partnerships - financial reporting	$	516,163		$	529,970
Investment in local partnerships - tax		(22,667,175	)		(25,445,556	)

	$	23,183,338		$	25,975,526

Payable to general partner and affiliates in the accompanying balance sheets represents accrued management and administration fees, which are not deductible for tax purposes until paid pursuant to Internal Revenue Code Section 267.

AMERICAN TAX CREDIT PROPERTIES III L.P.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

MARCH 30, 2010, 2009 AND 2008

9.	Fair Value of Financial Instruments

The estimated fair value amounts have been determined using available market information, assumptions, estimates and valuation methodologies.

Investment in Mutual Fund

The investment in mutual fund is carried at estimated fair value.

Cash and Cash Equivalents

The carrying amount approximates fair value.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed by Registrant in reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms. Registrant periodically reviews the design and effectiveness of its disclosure controls and procedures, including compliance with various laws and regulations that apply to its operations. Registrant makes modifications to improve the design and effectiveness of its disclosure controls and procedures, and may take other corrective action, if its reviews identify a need for such modifications or actions. In designing and evaluating the disclosure controls and procedures, Registrant recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of Richman Housing, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the year ended March 30, 2010. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of Richman Housing concluded that Registrant’s disclosure controls and procedures were effective as of March 30, 2010.

Item 9A(T). Management’s Annual Report on Internal Control over Financial Reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Registrant is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer of Richman Housing, Registrant conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, management has concluded that Registrant’s internal control over financial reporting was effective as of March 30, 2010.

This Annual Report does not include an attestation report of Registrant’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by Registrant’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit Registrant to provide only management’s report in this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes in Registrant’s internal control over financial reporting during the three months ended March 30, 2010 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Registrant has no officers or directors. The General Partner manages Registrant's affairs and has general responsibility and authority in all matters affecting its business. The responsibilities of the General Partner are currently carried out by Richman Housing. The executive officers and director of Richman Housing are:

	Served in present
Name	capacity since1	Position held

Richard Paul Richman	September 21, 1989	Director
David A. Salzman	February 1, 2001	President
James Hussey	January 20, 2009	Vice President and Treasurer
Gina K. Dodge	September 21, 1989	Secretary
Charles L. Krafnick	February 1, 2001	Assistant Treasurer

1Director holds office until his successor is elected and qualified. All officers serve at the pleasure of the Director.

Richard Paul Richman, age 62, is the sole Director of Richman Housing. Mr. Richman is the Chairman and a stockholder of Richman Group. Mr. Richman is involved in the syndication, development and management of residential property. Mr. Richman is also a director of Wilder Richman Resources Corp., an affiliate of Richman Housing and the general partner of Secured Income L.P., a director of Wilder Richman Historic Corporation, an affiliate of Richman Housing and the general partner of Wilder Richman Historic Properties II, L.P., a director of Richman Tax Credit Properties Inc., an affiliate of Richman Housing and the general partner of the general partner of American Tax Credit Properties L.P., a director of Richman Tax Credits Inc., an affiliate of Richman Housing and the general partner of the general partner of American Tax Credit Properties II L.P. and a director of Richman American Credit Corp., an affiliate of Richman Housing and the manager of American Tax Credit Trust, a Delaware statutory business trust.

David A. Salzman, age 49, is the President of Richman Housing and is a stockholder and the President of Richman Group. Mr. Salzman has been employed by Richman Group or an affiliate since 1986 and is responsible for the acquisition of residential real estate for syndication for Richman Group.

James Hussey, age 49, is a Vice President and the Treasurer of Richman Housing. Mr. Hussey, the Treasurer of Richman Group, is engaged primarily in the finance operations of Richman Group. In addition, Mr. Hussey is a Vice President and the Treasurer of Richman Asset Management, Inc. (“RAM”), an affiliate of Richman Housing. Mr. Hussey’s is engaged primarily in the partnership management and finance operations of RAM. Prior to joining RAM, Mr. Hussey, a Certified Public Accountant, was the Chief Financial Officer of WCI Communities Inc. NE Region and Spectrum Communities, LLC. From 1989 to 1998, Mr. Hussey held various positions with Center Development Corp, a developer of affordable housing in the New York metropolitan area.

Gina K. Dodge, age 54, is the Secretary of Richman Housing and is a Vice President and the Secretary of Richman Group. Ms. Dodge has been employed by Richman Group or an affiliate since 1988 and, as the Director of Investor Services, is responsible for communications with investors.

Charles L. Krafnick, age 48, is the Assistant Treasurer of Richman Housing and is the Assistant Treasurer of Richman Group. Mr. Krafnick has been employed by Richman Group or an affiliate since 1994 and is engaged primarily in the finance operations of Richman Group. In addition, Mr. Krafnick is the Assistant Treasurer of RAM. Mr. Krafnick's responsibilities in connection with RAM include various finance and partnership management functions.

Registrant is not aware of any family relationship between the director and executive officers listed in this Item 10.

Registrant is not aware of the involvement in certain legal proceedings with respect to the director and executive officers listed in this Item 10.

Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant (the “Audit Committee”). Each of Mr. Richman, Mr. Hussey and Mr. Krafnick meets the qualifications of an audit committee financial expert. Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under the Nasdaq Stock Market independence standards; however Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee.

Item 10.

Directors, Executive Officers and Corporate Governance (Continued).

The Board of Director of Richman Housing has adopted a code of ethics for senior financial officers of Registrant, applicable to Registrant's principal executive officer, principal financial officer and comptroller or principal accounting officer, or persons performing similar functions. Registrant will provide to any person without charge a copy of such code of ethics upon written request to the General Partner at 340 Pemberwick Road, Greenwich, Connecticut 06831, Attention: Secretary.

Item 11. Executive Compensation.

Registrant has no officers or directors. Registrant does not pay or accrue any fees, salaries or other forms of compensation to the officers or director of Richman Housing and did not pay any such compensation during the year ended March 30, 2010 or during the prior two fiscal years. During the year ended March 30, 2010 and during the prior two fiscal years, Richman Housing did not pay any compensation to any of its officers or its director. The director and certain officers of Richman Housing receive compensation from certain affiliates of Richman Housing for services performed for various affiliated entities which may include services performed for Registrant.

Under the terms of the Partnership Agreement, Registrant has entered into certain arrangements with the General Partner and certain of its affiliates which provide for compensation to be paid to the General Partner and certain of its affiliates. See Note 7 to the audited financial statements included in Item 8 - “Financial Statements and Supplementary Data” of this Annual Report.

Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this Annual Report. As noted above, Registrant has no executive officers. The levels of compensation payable to the General Partner and/or its affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

JJJ Fund, LLC and an affiliate, having the mailing address 7463 E. Beryl, Scottsdale, Arizona 85258 are the owners of 2,788 Units, representing approximately 7.8% of all such Units. Prizm Investments and certain affiliates thereof, having the mailing address P.O. Box 47638, Phoenix, Arizona 85068 are the owners of 2,691 Units, representing approximately 7.5% of all such Units. As of approximately June 15, 2010, no person or entity, other than the entities and affiliates identified above herein Item 12, was known by Registrant to be the beneficial owner of more than five percent of the Units.

Neither the General Partner, Richman Housing nor the director or any officer of Richman Housing own any Units. Richman Housing is wholly owned by Richard Paul Richman.

Item 13. Certain Relationships and Related Transactions and Director Independence.

Transactions with Related Persons

The General Partner and certain of its affiliates are entitled to receive certain fees and reimbursement of expenses and have received/earned fees for services provided to Registrant as described in Note 7 to the audited financial statements included in Item 8 - "Financial Statements and Supplementary Data" herein. Such fees will continue to be incurred by Registrant during the fiscal year ending March 30, 2011.

Review, Approval or Ratification of Transactions with Related Parties

Pursuant to the terms of the Partnership Agreement, Registrant has specific rights and limitations in conducting business with the General Partner and affiliates. To date, Registrant has followed such provisions of the Partnership Agreement. Registrant's unwritten policies for transacting business with related parties are to first refer to the Partnership Agreement in connection with conducting such business or making payments and then, if circumstances arise for which a new related party transaction is contemplated, present the proposed transaction to certain officers of Richman Housing for review and approval. If any matter in connection with such transaction might be unclear under the terms of the Partnership Agreement, such matter is presented to general or outside counsel for review prior to any such transaction being entered into by Registrant.

Indebtedness of Management.

No officer or director of Richman Housing or any affiliate of the foregoing was indebted to Registrant at any time during the years ended March 30, 2010 and 2009.

Item 13. Certain Relationships and Related Transactions and Director Independence (Continued).

Corporate Governance

As discussed elsewhere in this annual report, Registrant does not have any directors, although as noted above Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant. Under Nasdaq Stock Market independence standards, Mr. Richman, Mr. Hussey and Mr. Krafnick would not be considered independent as they serve as officers of Richman Housing. Although Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under Nasdaq rules, Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee. Registrant is not a listed issuer whose securities are listed on a national securities exchange, or an inter-dealer quotation system which has requirements that a majority of the board of directors be independent, and Registrant is not required to have an audit committee which consists of independent directors and meets the other requirements of the Securities Exchange Act of 1934 and the rules promulgated thereunder.

Item 14. Principal Accountant Fees and Services.

Registrant’s independent registered public accounting firm billed Registrant the following fees for professional services rendered in the years ended March 30, 2010 and 2009:

	2010		2009

Audit Fees	$	40,500	$	45,000
Audit-Related Fees		—		—
Tax Fees	$	13,500	$	15,000
All Other Fees		—		—

Audit fees consist of fees for the annual audit and review of Registrant’s financial statements and assistance with and review of documents filed with the SEC. Tax fees generally represent fees for annual tax return preparation. There were no other accounting fees incurred by Registrant in fiscal 2010 and 2009.

The Audit Committee has adopted a set of pre-approval policies and procedures under which, pursuant to the requirements of the Sarbanes-Oxley Act of 2002, all audit and permitted non-audit services to be performed by the independent registered public accounting firm require pre-approval by the Audit Committee.

The Audit Committee approved all fiscal 2010 and 2009 principal accountant fees and services.

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

(a) Financial Statements, Financial Statement Schedules and Exhibits

(1) Financial Statements

See Item 8 - "Financial Statements and Supplementary Data."

(2) Financial Statement Schedules

(3) Exhibits

		Incorporated by
	Exhibit	Reference to

4.1	Amended and Restated Agreement of Limited Partnership of Registrant	Exhibit A to Registrant’s Prospectus filed February 15, 1990 (File No. 33-31390)

10.1	April Gardens Apartments II Limited Partnership (A Delaware Limited Partnership) Amended and Restated Agreement of Limited Partnership	Exhibit 10.1 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.2	Ashland Park Apartments, L.P. Second Amended and Restated Agreement of Limited Partnership	Exhibit 10.2 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.3	Auburn Family, L.P. Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.1 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.4	Amended No. 2 to the Batesville Family, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.2 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.5	Batesville Family, L.P. Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership	Exhibit 10.2 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.6	Bay Springs Elderly, L.P. (A Mississippi Limited Partnership) Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.1 to Form 10-Q Report for the period ended September 29, 1991 (File No. 0-19217)

10.7	Brisas del Mar Apartments Limited Partnership (A Delaware Limited Partnership) Amended and Restated Agreement of Limited Partnership	Exhibit 10.3 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.8	Amendment No. 1 to the Bruce Housing Associates, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.8 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

		Incorporated by
	Exhibit	Reference to

10.9	Amendment No. 2 to the Bruce Housing Associates, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.4 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.10	Bruce Housing Associates, L.P. Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership	Exhibit 10.3 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.11	Carrington Limited Dividend Housing Association Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.1 to Form 10-Q Report for the period ended September 29, 1990 (File No. 33-31390)

10.12	Carrington Limited Dividend Housing Association Limited Partnership Second Amended and Restated Agreement of Limited Partnership	Exhibit 10.2 to Form 10-Q Report for the period ended September 29, 1990 (File No. 33-31390)

10.13	Carrington Limited Dividend Housing Association Limited Partnership Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership	Exhibit 10.5 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.14	Chestnut Park Associates, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.3 to Form 10-Q Report for the period ended September 29, 1990 (File No. 33-31390)

10.15	Chowan Senior Manor Associates Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.15 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.16	Christian Street Commons Associates Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.16 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.17	Country View Apartments Second Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.17 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.18	Desarrollos de Belen Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.18 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.19	Desarrollos de Emaus Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.19 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.20	Ellinwood Heights Apartments, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.1 to Form 10-Q Report for the period ended June 29, 1991 (File No. 0-19217)

10.21	Fulton Street Houses Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.21 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

		Incorporated by
	Exhibit	Reference to

10.22	Hayes Run Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.2 to Form 10-Q Report for the period ended June 29, 1991 (File No. 0-19217)

10.23	Howard L. Miller Sallisaw Apartments II, L.P. Third Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.10 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.24	Hurlock Meadow Limited Partnership Amended and Restated Limited Partnership Agreement	Exhibit 10.24 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.25	Amendment No. 1 to the Ivy Family, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.6 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.26	Ivy Family, L.P. Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership	Exhibit 10.4 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.27	Justin Associates Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.7 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.28	LaBelle Commons, Ltd. Amended and Restated Agreement of Limited Partnership	Exhibit 10.13 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.29	LaBelle Commons, Ltd. Amendment No. 1 to Amended and Restated Agreement of Limited Partnership	Exhibit 10.29 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.30	Amendment No. 2 to the Lawrence Road Properties, Ltd. Amended and Restated Agreement of Limited Partnership	Exhibit 10.8 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.31	Lawrence Road Properties, Ltd. Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership	Exhibit 10.5 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.32	Loma Del Norte Limited Partnership Amended and Restated Limited Partnership Agreement	Exhibit 10.2 to Form 10-Q Report for the period ended September 29, 1991 (File No. 0-19217)

10.33	Long Reach Associates Limited Partnership Sixth Amended and Restated Agreement of Limited Partnership	Exhibit 10.15 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.34	Mirador del Toa Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.16 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

		Incorporated by
	Exhibit	Reference to

10.35	Amendment No. 1 to the Mirador del Toa Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.17 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.36	Moore Haven Commons, Ltd. Amended and Restated Agreement of Limited Partnership	Exhibit 10.9 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.37	NP-89 Limited Dividend Housing Association Limited Partnership Second Restated and Amended Agreement of Limited Partnership	Exhibit 10.3 to Form 10-Q Report for the period ended June 29, 1991 (File No. 0-19217)

10.38	Nash Hill Associates, Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.37 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.39	North Calhoun City, L.P. (A Mississippi Limited Partnership) Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.3 to Form 10-Q Report for the period ended September 29, 1991 (File No. 0-19217)

10.40	Orange City Plaza, Limited Partnership Amended and Restated Partnership Agreement	Exhibit 10.40 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

10.41	Puerta del Mar Limited Partnership (A Delaware Limited Partnership) Amended and Restated Agreement of Limited Partnership	Exhibit 10.10 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.42	Amendment No. 2 to the Purvis Heights Properties, L.P. Amended and Restated Agreement of Limited Partnership	Exhibit 10.11 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.43	Purvis Heights Properties, L.P. Amendment No. 3 to the Amended and Restated Agreement of Limited Partnership	Exhibit 10.6 to Form 10-Q Report for the period ended December 30, 1991 (File No. 0-19217)

10.44	Queen Lane Investors Amendment No. 1 to Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.12 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.45	Somerset Manor, Ltd. Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.13 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.46	Sugar Cane Villas, Ltd. Amended and Restated Agreement of Limited Partnership	Exhibit 10.23 to Form 10-K Report for the year ended March 30, 1991 (File No. 33-31390)

10.47	Summerfield Apartments Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.47 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

		Incorporated by
	Exhibit	Reference to

10.48	Amendment No.1 to the Summerfield Apartments Limited Partnership Amended and Restated Agreement of Limited Partnership	Exhibit 10.48 to Form 10-K Report for the year ended March 30, 1999 (File No. 0-19217)

10.49	Sydney Engel Associates Second Amended and Restated Agreement of Limited Partnership	Exhibit 10.4 to Form 10-Q Report for the period ended September 29, 1990 (File No. 33-31390)

10.50	First Amendment to Second Amended and Restated Agreement of Limited Partnership of Sydney Engel Associates	Exhibit 10.49 to Form 10-K Report for the year ended March 30, 1997 (File No. 0-19217)

10.51	Second Amendment to Second Amended and Restated Agreement of Limited Partnership of Sydney Engel Associates L.P.	Exhibit 10.50 to Form 10-K Report for the year ended March 30, 1997 (File No. 0-19217)

10.52	Third Amendment to Second Amended and Restated Agreement of Limited Partnership of Sydney Engel Associates L.P.	Exhibit 10.51 to Form 10-K Report for the year ended March 30, 1997 (File No. 0-19217)

10.53	Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Sydney Engel Associates L.P.	Exhibit 10.52 to Form 10-K Report for the year ended March 30, 1997 (File No. 0-19217)

10.54	Union Valley Associates Limited Partnership Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.14 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.55	Walnut Grove Family, L.P. (A Mississippi Limited Partnership) Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.4 to Form 10-Q Report for the period ended September 29, 1991 (File No. 0-19217)

10.56	Waynesboro Apartments Limited Partnership Amended and Restated Agreement and Certificate of Limited Partnership	Exhibit 10.15 to Form 10-Q Report for the period ended December 30, 1990 (File No. 33-31390)

10.57	West Calhoun City, L.P. (A Mississippi Limited Partnership) Amended and Restated Limited Partnership Agreement and Certificate of Limited Partnership	Exhibit 10.5 to Form 10-Q Report for the period ended September 29, 1991 (File No. 0-19217)

10.58	Westminster Apartments Limited Partnership Second Amended and Restated Agreement of Limited Partnership	Exhibit 10.53 to Form 10-K Report for the year ended March 30, 1992 (File No. 33-31390)

*31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

*31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

*32.1	Section 1350 Certification of Chief Executive Officer.

		Incorporated by
	Exhibit	Reference to

*32.2	Section 1350 Certification of Chief Financial Officer.

99.1	Pages 20 through 31 of Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.1 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.2	Pages 44 through 71 of Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.2 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.3	Pages 78 through 80 of Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.3 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.4	Pages 14 through 19 of Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.4 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.5	Supplement No. 1 dated June 6, 1990 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.5 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.6	Supplement No. 2 dated November 21, 1990 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.6 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.7	Supplement No. 3 dated December 20, 1990 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.7 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.8	Supplement No. 4 dated October 30, 1991 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.8 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.9	Supplement No. 5 dated December 26, 1991 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.9 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.10	Supplement No. 6 dated January 15, 1992 to Prospectus dated February 7, 1990 filed pursuant to Rule 424(b)(3) under Securities Act of 1933	Exhibit 99.10 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.11	Report of Independent Registered Public Accounting Firm of Carrington L.D.H.A. Limited Partnership as of and for the year ended December 31, 2004	Exhibit 99.9 to Form 10-K Report for the year ended March 30, 2005 (File No. 0-19217)

		Incorporated by
	Exhibit	Reference to

99.12	Independent Auditor’s Report of Ellinwood Heights Apartments, L.P. as of and for the years ended December 31, 2004 and 2003	Exhibit 99.10 to Form 10-K Report for the year ended March 30, 2005 (File No. 0-19217)

99.13	Independent Auditors’ Report of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2004	Exhibit 99.11 to Form 10-K Report for the year ended March 30, 2005 (File No. 0-19217)

99.14	Audited Financial Statements of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2005	Exhibit 99.12 to Form 10-K Report for the year ended March 30, 2006 (File No. 0-19217)

99.15	Report of Independent Registered Public Accounting Firm of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2005	Exhibit 99.13 to Form 10-K Report for the year ended March 30, 2006 (File No. 0-19217)

99.16	Audited Financial Statements of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2006	Exhibit 99.14 to Form 10-K Report for the year ended March 30, 2007 (File No. 0-19217)

99.17	Report of Independent Registered Public Accounting Firm of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2007	Exhibit 99.15 to Form 10-K Report for the year ended March 30, 2008 (File No. 0-19217)

99.18	Deferred Fee Agreement between Registrant, the General Partner and ML Fund Administrators Inc.	Exhibit 99.18 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

99.19	Report of Independent Registered Public Accounting Firm of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2008	Exhibit 99.19 to Form 10-K Report for the year ended March 30, 2009 (File No. 0-19217)

*99.20	Report of Independent Registered Public Accounting Firm of NP-89 Limited Dividend Housing Association Limited Partnership as of and for the year ended December 31, 2009

*Filed herewith.

(b) Exhibits

See (a)(3) above.

See (a)(2) above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN TAX CREDIT PROPERTIES III L.P.
	(a Delaware limited partnership)

	By:	Richman Tax Credit Properties III L.P.,
		General Partner

	By:	Richman Housing Credits Inc.,
		general partner

Dated: June 25, 2010	/s/David Salzman
	David Salzman
	Chief Executive Officer

Dated: June 25, 2010	/s/James Hussey
	James Hussey
	Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Signature	Title	Date

/s/David Salzman	Chief Executive Officer of the general	June 25, 2010
(David Salzman)	partner of the General Partner

/s/James Hussey	Chief Financial Officer of the general	June 25, 2010
(James Hussey)	partner of the General Partner

/s/Richard Paul Richman	Director of the general partner of the	June 25, 2010
(Richard Paul Richman)	General Partner

AMERICAN TAX CREDIT PROPERTIES III LP - FORM 10-K - June 25, 2010

Attached files

AMERICAN TAX CREDIT PROPERTIES III LP Reports