UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~December 3031, 2010

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________to_______________________

Commission File Number: 0-21762

Gateway Tax Credit Fund III Ltd.

(Exact name of Registrant as specified in its charter)

Florida		59-3090386
(State or other jurisdiction of incorporation or organization)		(IRS Employer No.)

880 Carillon Parkway		St. Petersburg, Florida 33716
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code:

(727) 567-1000

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 requirements 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 such shorter period that the registrant was required to submit and post such files).

YES [X]

NO [ ]

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 definition of “large accelerated filer,” “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]

PART I – Financial Information

Item 1. Financial Statements

Balance of this page intentionally left blank.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

BALANCE SHEETS

(Unaudited)

	SERIES 7		SERIES 8		SERIES 9
	September 30,	March 31,	September 30,	March 31,	September 30,	March 31,
	December 31,	March 31,	December 31,	March 31,	December 31,	March 31,
	2010	2010	2010	2010	2010	2010
ASSETS
Current Assets:
Cash and Cash Equivalents	$ ~~292~~493,~~495~~629	$ 209,702	$ ~~228~~235,~~370~~792	$ 238,988	$ 95144,~~304~~612	$ 96,912
Receivable - Other	-272,333	-	-	-	~~44,256~~-	-
Total Current Assets	~~292~~765,~~495~~962	209,702	~~228~~235,~~370~~792	238,988	~~139~~144,~~560~~612	96,912
Investments in Project Partnerships, net	~~84,423~~-	84,017	-	-	-	-
Total Assets	$ ~~376~~765,~~918~~962	$ 293,719	$ ~~228~~235,~~370~~792	$ 238,988	$ ~~139~~144,~~560~~612	$ 96,912
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Payable to General Partners	$ 5149,~~522~~041	$ 105,464	$ ~~225~~229,~~482~~035	$ 215,965	$ 7780,~~910~~301	$ 66,214
Distribution Payable	~~163~~358,~~015~~389	5,066	23,385	23,385	1053,~~000~~030	10,000
Deferred Gain on Sale of Project Partnerships	-187,362	-	-	-	~~43,030~~-	-
Total Current Liabilities	~~214~~594,~~537~~792	110,530	~~248~~252,~~867~~420	239,350	~~130~~133,~~940~~331	76,214
Long-Term Liabilities:
Payable to General Partners	~~993~~1,~~291~~007,678	963,160	1,~~074~~095,~~997~~113	1,034,764	~~647~~658,~~556~~870	624,387
Partners' Equity (Deficit):
Limited Partners - 10,395, 9,980, and 6,254
units for Series 7, 8, and 9, respectively,
at September 30, 2010 and March 31, 2010	(834,428)	(782,420)	(1,088,263)	(1,028,499)	(587,711)	(552,816)
at December 31, 2010 and March 31, 2010	(841,925)	(782,420)	(1,104,348)	(1,028,499)	(639,307)	(552,816)
General Partners	35,~~518~~417	2,449	(7,~~231~~393)	(6,627)	(518,~~225~~282)	(50,873)
Total Partners' Deficit	(~~830~~836,~~910~~508)	(779,971)	(1,~~095~~111,~~494~~741)	(1,035,126)	(~~638~~647,~~936~~589)	(603,689)
Total Liabilities and Partners' Deficit	$ ~~376~~765,~~918~~962	$ 293,719	$ ~~228~~235,~~370~~792	$ 238,988	$ ~~139~~144,~~560~~612	$ 96,912

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

BALANCE SHEETS

(Unaudited)

	SERIES 10		SERIES 11		TOTAL SERIES 7 - 11
	September 30,	March 31,	September 30,	March 31,	September 30,	March 31,
	December 31,	March 31,	December 31,	March 31,	December 31,	March 31,
	2010	2010	2010	2010	2010	2010
ASSETS
Current Assets:
Cash and Cash Equivalents	$ ~~144~~147,~~397~~298	$ 153,638	$ ~~182~~176,~~789~~004	$ 209,968	$ ~~943~~1,~~355~~197,335	$ 909,208
Receivable - Other	-	-	-177,667	-	44450,~~256~~000	-
Total Current Assets	~~144~~147,~~397~~298	153,638	~~182~~353,~~789~~671	209,968	~~987~~1,~~611~~647,335	909,208
Investments in Project Partnerships, net	7270,~~966~~612	97,267	~~296~~246,~~720~~828	411,872	~~454~~317,~~109~~440	593,156
Total Assets	$ 217,~~363~~910	$ 250,905	$ ~~479~~600,~~509~~499	$ 621,840	$ 1,~~441~~964,~~720~~775	$ 1,502,364
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current Liabilities:
Payable to General Partners	$ 4850,~~769~~489	$ 54,975	$ 1310,~~941~~859	$ 14,511	$ ~~417~~419,~~624~~725	$ 457,129
Distribution Payable	10,000	10,000	-	-	~~206~~444,~~400~~804	48,451
Deferred Gain on Sale of Project Partnerships	-	-	-125,774	-	43313,~~030~~136	-
Total Current Liabilities	5860,~~769~~489	64,975	13136,~~941~~633	14,511	~~667~~1,~~054~~177,665	505,580
Long-Term Liabilities:
Payable to General Partners	~~194~~202,~~936~~749	179,311	~~119~~126,~~108~~080	105,164	3,~~029~~090,~~888~~490	2,906,786
Partners' Equity (Deficit):
Limited Partners - 5,043 and 5,127 units
for Series 10 and 11, respectively, at
at September 30, 2010 and March 31, 2010	(1,799)	40,732	388,986	543,134	(2,123,215)	(1,779,869)
at December 31, 2010 and March 31, 2010	(10,695)	40,732	380,399	543,134	(2,215,876)	(1,779,869)
General Partners	(34,~~543~~633)	(34,113)	(42,~~526~~613)	(40,969)	(~~132~~87,~~007~~504)	(130,133)
Total Partners' Equity (Deficit)	(3645,~~342~~328)	6,619	~~346~~337,~~460~~786	502,165	(2,~~255~~303,~~222~~380)	(1,910,002)
Total Liabilities and Partners' Equity (Deficit)	$ 217,~~363~~910	$ 250,905	$ ~~479~~600,~~509~~499	$ 621,840	$ 1,~~441~~964,~~720~~775	$ 1,502,364

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 7		SERIES 8		SERIES 9
	2010	2009	2010	2009	2010	2009
Revenues:
Distribution Income	$ 18,~~957~~071	$ 127,~~526~~640	$ 57,~~271~~415	$ 43,~~524~~218	$ 25,~~844~~007	$ 91,~~015~~959
Total Revenues	18,~~957~~071	127,~~526~~640	57,~~271~~415	43,~~524~~218	25,~~844~~007	91,~~015~~959
Expenses:
Asset Management Fee - General Partner	1514,~~067~~387	1815,~~243~~162	20,117	21,445	11,~~585~~314	12,147
General and Administrative:
General Partner	-	2021,~~008~~805	-	-	-	1517,~~279~~181
Other	~~23,192~~(419)	205,~~897~~812	233,~~303~~554	215,~~227~~761	152,~~010~~351	143,~~735~~906
Amortization	73-	73	-	289	-	748
Total Expenses	3813,~~332~~968	5942,~~221~~852	4323,~~420~~671	4227,~~961~~495	2613,~~595~~665	4233,~~909~~982
Loss Before Equity in Loss of Project Partnerships
Loss Before Equity in Income of Project Partnerships
and Other Income	(365,~~374~~897)	(4635,~~695~~212)	(3816,~~149~~256)	(3824,~~437~~277)	(238,~~751~~658)	(3332,~~894~~023)
Equity in Loss of Project Partnerships	(288)	1,084	-	2,541	-	-
Equity in Income of Project Partnerships	288	-	-	-	-	-
Gain on Sale of Project Partnerships	~~157~~195,~~948~~375	~~254,488~~-	-	-	-43,030	-
Interest Income	811	95	79	5	45	32
Net Income (Loss)	$ ~~121~~189,~~294~~777	$ ~~208~~(35,~~886~~207)	$ (3816,~~142~~247)	$ (3524,~~891~~272)	$ ~~(23~~34,~~747)~~377	$ (3332,~~891~~021)
Allocation of Net Income (Loss):
Limited Partners	$ ~~120~~187,~~082~~878	$ ~~198~~(35,~~440~~204)	$ (3716,~~760~~085)	$ (3524,~~532~~029)	$ (238,~~510~~566)	$ (3331,~~553~~701)
General Partners	1,~~212~~899	~~10,446~~(3)	(~~382~~162)	(~~359~~243)	~~(237)~~42,943	(~~338~~320)
	$ 121,294	$ 208,886	$ (38,142)	$ (35,891)	$ (23,747)	$ (33,891)
	$ 189,777	$ (35,207)	$ (16,247)	$ (24,272)	$ 34,377	$ (32,021)
Net Income (Loss) Per Limited Partnership Unit	$ 1118.5507	$ 19(3.0939)	$ (31.7861)	$ (32.5641)	$ (31.7637)	$ (5.3707)
Number of Limited Partnership Units Outstanding	10,395	10,395	9,980	9,980	6,254	6,254

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 10		SERIES 11		TOTAL SERIES 7 - 11
	2010	2009	2010	2009	2010	2009
Revenues:
Distribution Income	$ ~~700~~2,146	$ ~~700~~1,432	$ ~~2,182~~-	$ ~~2,982~~-	$ 1222,~~954~~639	$ 2914,~~747~~249
Total Revenues	~~700~~2,146	~~700~~1,432	~~2,182~~-	~~2,982~~-	1222,~~954~~639	2914,~~747~~249
Expenses:
Asset Management Fee - General Partner	7,~~813~~812	8,356	6,972	7,031	6160,~~554~~602	6764,~~222~~141
General and Administrative:
General Partner	-	910,~~550~~639	~~10,961~~-	78,~~639~~722	~~10,961~~-	5258,~~476~~347
Other	111,~~783~~721	102,~~777~~714	111,~~871~~709	102,~~855~~671	858,~~159~~916	7820,~~491~~864
Amortization	-	167	-	3,~~130~~129	73-	4,~~407~~406
Total Expenses	199,~~596~~533	2821,~~850~~876	298,~~804~~681	2821,~~655~~553	~~157~~69,~~747~~518	~~202~~147,~~596~~758
Loss Before Equity in Loss of Project Partnerships
Loss Before Equity Loss of Project Partnerships
and Other Income	(187,~~896~~387)	(2820,~~150~~444)	(278,~~622~~681)	(2521,~~673~~553)	(~~144~~46,~~792~~879)	(~~172~~133,~~849~~509)
Equity in Loss of Project Partnerships	(181,~~150~~604)	(79,~~270~~856)	~~(110,312)~~-	(3235,~~397~~127)	(~~128~~1,~~750~~316)	(3644,~~042~~983)
Gain on Sale of Project Partnerships	-	-	-	-	~~157~~238,~~948~~405	~~254,488~~-
Interest Income	5	~~710~~722	7	~~807~~822	3137	1,~~534~~556
Net Income (Loss)	$ (378,~~041~~986)	$ (3429,~~710~~578)	$ (~~137~~8,~~927~~674)	$ (5755,~~263~~858)	$ ~~(115~~190,~~563)~~247	$ 47(176,~~131~~936)
Allocation of Net Income (Loss):
Limited Partners	$ (368,~~669~~895)	$ (3429,~~363~~282)	$ (~~136~~8,~~548~~587)	$ (5655,~~690~~299)	$ ~~(114~~145,~~405)~~745	$ 38(175,~~302~~515)
General Partners	(~~372~~91)	(~~347~~296)	(~~1,379~~87)	(~~573~~559)	(144,~~158)~~502	8(1,~~829~~421)
	$ (37,041)	$ (34,710)	$ (137,927)	$ (57,263)	$ (115,563)	$ 47,131
	$ (8,986)	$ (29,578)	$ (8,674)	$ (55,858)	$ 190,247	$ (176,936)
Net Loss Per Limited Partnership Unit	$ (71.2776)	$ (65.81)	$ (261.6367)	$ (1110.0679)
Number of Limited Partnership Units Outstanding	5,043	5,043	5,127	5,127

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 7		SERIES 8		SERIES 9
	2010	2009	2010	2009	2010	2009
Revenues:
Distribution Income	$ 614,~~489~~560	$ 1826,~~964~~604	$ 714,~~446~~861	$ 1316,~~760~~978	$ 510,~~652~~659	$ 1214,~~853~~812
Total Revenues	614,~~489~~560	1826,~~964~~604	714,~~446~~861	1316,~~760~~978	510,~~652~~659	1214,~~853~~812
Expenses:
Asset Management Fee - General Partner	3044,~~132~~518	3652,~~864~~026	4060,~~233~~350	4264,~~890~~335	2334,~~169~~483	2436,~~294~~441
General and Administrative:
General Partner	-	4567,~~641~~446	-	-	-	3350,~~204~~385
Other	26,~~876~~457	2430,~~779~~591	2731,~~594~~148	2631,~~081~~842	1720,~~736~~087	1721,~~827~~733
Amortization	146	~~146~~219	-	~~578~~867	-	12,~~496~~244
Total Expenses	5771,~~154~~121	~~107~~150,~~430~~282	6791,~~827~~498	6997,~~549~~044	4054,~~905~~570	76110,~~821~~803
Loss Before Equity in Income (Loss) of Project
Loss Before Equity Loss of Project
Partnerships and Other Income	(5056,~~664~~561)	(88123,~~466~~678)	(6076,~~381~~637)	(5580,~~789~~066)	(3543,~~253~~911)	(6395,~~968~~991)
Equity in Loss of Project Partnerships	~~(288)~~-	-	-	(11,312)	-	(301)
Gain on Sale of Project Partnerships	~~157~~353,~~948~~323	301,008	-	-	-43,030	-
Interest Income	1324	1621	1322	1116	611	68
Net Income (Loss)	$ ~~107~~296,~~009~~786	$ ~~212~~177,~~558~~351	$ (6076,~~368~~615)	$ (6791,~~090~~362)	$ (~~35,247~~870)	$ (6496,~~263~~284)
Allocation of Net Income (Loss):
Limited Partners	$ ~~105~~293,~~940~~818	$ ~~156~~120,~~021~~817	$ (5975,~~764~~849)	$ (6690,~~419~~448)	$ (3443,~~895~~461)	$ (6395,~~620~~321)
General Partners	12,~~069~~968	56,~~537~~534	(~~604~~766)	(~~671~~914)	~~(352)~~42,591	(~~643~~963)
	$ 107,009	$ 212,558	$ (60,368)	$ (67,090)	$ (35,247)	$ (64,263)
	$ 296,786	$ 177,351	$ (76,615)	$ (91,362)	$ (870)	$ (96,284)
Net Income (Loss) Per Limited Partnership Unit	$ 1028.1927	$ 1511.0162	$ (57.9960)	$ (69.6606)	$ (56.5895)	$ (1015.1724)
Number of Limited Partnership Units Outstanding	10,395	10,395	9,980	9,980	6,254	6,254

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 10		SERIES 11		TOTAL SERIES 7 - 11
	2010	2009	2010	2009	2010	2009
Revenues:
Distribution Income	$ 46,~~439~~585	$ 23,~~512~~944	$ 2,982	$ 3,582	$ 2749,~~008~~647	$ 5165,~~671~~920
Total Revenues	46,~~439~~585	23,~~512~~944	2,982	3,582	2749,~~008~~647	5165,~~671~~920
Expenses:
Asset Management Fee - General Partner	1523,~~626~~438	1625,~~712~~068	1320,~~944~~916	1421,~~062~~093	~~123~~183,~~104~~705	~~134~~198,~~822~~963
General and Administrative:
General Partner	-	2031,~~753~~392	20,774	1625,~~602~~324	20,774	~~116~~174,~~200~~547
Other	1315,~~633~~354	1315,~~015~~729	1315,~~669~~378	1315,~~109~~780	99108,~~508~~424	94115,~~811~~675
Amortization	-	~~334~~501	-	69,~~260~~389	146	813,~~814~~220
Total Expenses	2938,~~259~~792	5072,~~814~~690	4857,~~387~~068	5071,~~033~~586	~~243~~313,~~532~~049	~~354~~502,~~647~~405
Loss Before Equity in Income (Loss) of Project
Loss Before Equity in Loss of Project
Partnerships and Other Income	(2432,~~820~~207)	(4868,~~302~~746)	(4554,~~405~~086)	(4668,~~451~~004)	(~~216~~263,~~523~~402)	(~~302~~436,~~976~~485)
Equity in Loss of Project Partnerships	(1819,~~150~~754)	(919,~~367~~223)	(110,312)	(5893,~~592~~719)	(~~128~~130,~~750~~066)	(79124,~~572~~555)
Gain on Sale of Project Partnerships	-	-	-	-	~~157~~396,~~948~~353	301,008
Interest Income	914	12,~~400~~122	1219	12,~~600~~422	5390	34,~~033~~589
Net Loss	$ (42,961)	$ (56,269)	$ (155,705)	$ (103,443)	$ (187,272)	$ (78,507)
Net Gain (Loss)	$ (51,947)	$ (85,847)	$ (164,379)	$ (159,301)	$ 2,975	$ (255,443)
Allocation of Net Income (Loss):
Allocation of Net Gain (Loss):
Limited Partners	$ (4251,~~531~~427)	$ (5584,~~706~~989)	$ (~~154~~162,~~148~~735)	$ (~~102~~157,~~409~~708)	$ (~~185~~39,~~398~~654)	$ (~~132~~307,~~133~~649)
General Partners	(~~430~~520)	(~~563~~858)	(1,~~557~~644)	(1,~~034~~593)	(142,~~874)~~629	5352,~~626~~206
	$ (42,961)	$ (56,269)	$ (155,705)	$ (103,443)	$ (187,272)	$ (78,507)
	$ (51,947)	$ (85,847)	$ (164,379)	$ (159,301)	$ 2,975	$ (255,443)
Net Loss Per Limited Partnership Unit	$ (810.4320)	$ (1116.0585)	$ (3031.0774)	$ (1930.9776)
Number of Limited Partnership Units Outstanding	5,043	5,043	5,127	5,127

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 7			SERIES 8
	Limited	General		Limited	General
	Partners	Partners	Total	Partners	Partners	Total
Balance at March 31, 2009	$ (568,361)	$ (54,077)	$ (622,438)	$ (891,845)	$ (28,479)	$ (920,324)
Net Income (Loss)	~~156~~120,~~021~~817	56,~~537~~534	~~212~~177,~~558~~351	(6690,~~419~~448)	(~~671~~914)	(6791,~~090~~362)
Distributions	(301,008)	-	(301,008)	-	-	-
Balance at September 30, 2009	$ (713,348)	$ 2,460	$ (710,888)	$ (958,264)	$ (29,150)	$ (987,414)
Balance at December 31, 2009	$ (748,552)	$ 2,457	$ (746,095)	$ (982,293)	$ (29,393)	$ (1,011,686)
Balance at March 31, 2010	$ (782,420)	$ 2,449	$ (779,971)	$ (1,028,499)	$ (6,627)	$ (1,035,126)
Net Income (Loss)	~~105~~293,~~940~~818	12,~~069~~968	~~107~~296,~~009~~786	(5975,~~764~~849)	(~~604~~766)	(6076,~~368~~615)
Distributions	(~~157~~353,~~948~~323)	-	(~~157~~353,~~948~~323)	-	-	-
Balance at September 30, 2010	$ (834,428)	$ 3,518	$ (830,910)	$ (1,088,263)	$ (7,231)	$ (1,095,494)
Balance at December 31, 2010	$ (841,925)	$ 5,417	$ (836,508)	$ (1,104,348)	$ (7,393)	$ (1,111,741)

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 9			SERIES 10
	Limited	General		Limited	General
	Partners	Partners	Total	Partners	Partners	Total
Balance at March 31, 2009	$ (413,640)	$ (59,568)	$ (473,208)	$ 159,923	$ (43,010)	$ 116,913
Net Income (Loss)	(6395,~~620~~321)	(~~643~~963)	(6496,~~263~~284)	(5584,~~706~~989)	(~~563~~858)	(5685,~~269~~847)
Balance at September 30, 2009	$ (477,260)	$ (60,211)	$ (537,471)	$ 104,217	$ (43,573)	$ 60,644
Balance at December 31, 2009	$ (508,961)	$ (60,531)	$ (569,492)	$ 74,934	$ (43,868)	$ 31,066
Balance at March 31, 2010	$ (552,816)	$ (50,873)	$ (603,689)	$ 40,732	$ (34,113)	$ 6,619
Net Income (Loss)	(3443,~~895~~461)	~~(352)~~42,591	(~~35,247~~870)	(4251,~~531~~427)	(~~430~~520)	(4251,~~961~~947)
Balance at September 30, 2010	$ (587,711)	$ (51,225)	$ (638,936)	$ (1,799)	$ (34,543)	$ (36,342)
Distributions	(43,030)	-	(43,030)	-	-	-
Balance at December 31, 2010	$ (639,307)	$ (8,282)	$ (647,589)	$ (10,695)	$ (34,633)	$ (45,328)

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 11			TOTAL SERIES 7 - 11
	Limited	General		Limited	General
	Partners	Partners	Total	Partners	Partners	Total
Balance at March 31, 2009	$ 729,531	$ (39,086)	$ 690,445	$ (984,392)	$ (224,220)	$ (1,208,612)
Net Income (Loss)	(~~102~~157,~~409~~708)	(1,~~034~~593)	(~~103~~159,~~443~~301)	(~~132~~307,~~133~~649)	5352,~~626~~206	(78255,~~507~~443)
Distributions	-	-	-	(301,008)	-	(301,008)
Balance at September 30, 2009	$ 627,122	$ (40,120)	$ 587,002	$ (1,417,533)	$ (170,594)	$ (1,588,127)
Balance at December 31, 2009	$ 571,823	$ (40,679)	$ 531,144	$ (1,593,049)	$ (172,014)	$ (1,765,063)
Balance at March 31, 2010	$ 543,134	$ (40,969)	$ 502,165	$ (1,779,869)	$ (130,133)	$ (1,910,002)
Net Income (Loss)	(~~154~~162,~~148~~735)	(1,~~557~~644)	(~~155~~164,~~705~~379)	(~~185~~39,~~398~~654)	(142,~~874)~~629	~~(187~~2,~~272)~~975
Distributions	-	-	-	(~~157~~396,~~948~~353)	-	(~~157~~396,~~948~~353)
Balance at September 30, 2010	$ 388,986	$ (42,526)	$ 346,460	$ (2,123,215)	$ (132,007)	$ (2,255,222)
Balance at December 31, 2010	$ 380,399	$ (42,613)	$ 337,786	$ (2,215,876)	$ (87,504)	$ (2,303,380)

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 7		SERIES 8
	2010	2009	2010	2009
Cash Flows from Operating Activities:
Net Income (Loss)	$ ~~107~~296,~~009~~786	$ ~~212~~177,~~558~~351	$ (6076,~~368~~615)	$ (6791,~~090~~362)
Adjustments to Reconcile Net Income (Loss)
to Net Cash (Used in) Provided by Operating Activities:
to Net Cash Provided by (Used in) Operating Activities:
Amortization	146	~~146~~219	-	~~578~~867
Equity in Loss of Project Partnerships	~~288~~-	-	-	11,312
Gain on Sale of Project Partnerships	(~~157~~353,~~948~~323)	(301,008)	-	-
Distribution Income	(614,~~489~~560)	(1826,~~964~~604)	(714,~~446~~861)	(1316,~~760~~978)
Changes in Operating Assets and Liabilities:
Increase (Decrease) in Payable to General Partners	(2312,~~811~~165)	2972,~~428~~207	4973,~~750~~419	6899,~~678~~885
Net Cash Used in Operating Activities	(80,805)	(77,840)	(18,064)	(282)
Net Cash Provided by (Used in) Operating Activities	(83,116)	(77,835)	(18,057)	3,724
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships	513,~~650~~720	2230,~~963~~604	714,~~446~~861	1619,~~301~~519
Net Proceeds from Sale of Project Partnerships	~~157~~353,~~948~~323	301,008	-	-23,000
Net Cash Provided by Investing Activities	~~163~~367,~~598~~043	~~323~~331,~~971~~612	714,~~446~~861	1642,~~301~~519
Cash Flows from Financing Activities:
Distributions Paid to Limited Partners	-	(295,530)	-	-
Net Cash Used in Financing Activities	-	(295,530)	-	-
Increase (Decrease) in Cash and Cash Equivalents	82283,~~793~~927	(4941,~~399~~753)	(103,~~618~~196)	1646,~~019~~243
Cash and Cash Equivalents at Beginning of Year	209,702	246,867	238,988	185,918
Cash and Cash Equivalents at End of Period	$ ~~292~~493,~~495~~629	$ ~~197~~205,~~468~~114	$ ~~228~~235,~~370~~792	$ ~~201~~232,~~937~~161
Supplemental disclosure of non-cash activities:
Increase in Distribution Payable	$ ~~157~~353,~~948~~323	$ -	$ -	$ -
Distribution to Assignees	(~~157~~353,~~948~~323)	-	-	-
Increase in Receivable - Other	272,333	-	-	-
Increase in Deferred Gain on Sale of Project Partnerships	(187,362)	-	-	-
Decrease in Net Investment	(84,709)	-	-	-
Decrease in Payable to General Partners	(262)	-	-	-
	$ -	$ -	$ -	$ -

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 9		SERIES 10
	2010	2009	2010	2009
Cash Flows from Operating Activities:
Net Loss	$ (~~35,247~~870)	$ (6496,~~263~~284)	$ (4251,~~961~~947)	$ (5685,~~269~~847)
Adjustments to Reconcile Net Income (Loss)
Adjustments to Reconcile Net Loss
to Net Cash Used in Operating Activities:
Amortization	-	12,~~496~~244	-	~~334~~501
Accreted Interest Income on Investment in Securities	-	-	-	(12,~~394~~113)
Equity in Loss of Project Partnerships	-	301	1819,~~150~~754	919,~~367~~223
Distribution Income	(5,652)	(12,853)	(4,439)	(2,512)
Gain on Sale of Project Partnerships	(43,030)	-	-	-
Distribution Income	(10,659)	(14,812)	(6,585)	(3,944)
Changes in Operating Assets and Liabilities:
Increase in Payable to General Partners	3348,~~640~~570	1853,~~258~~493	918,~~419~~952	1235,~~238~~947
Net Cash Used in Operating Activities	(75,~~259~~989)	(5755,~~061~~058)	(19,~~831~~826)	(3836,~~236~~233)
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships	510,~~651~~659	1216,~~853~~592	1013,~~590~~486	1214,~~661~~094
Net Cash Provided by Investing Activities	5,651	12,853	10,590	12,661
Net Proceeds from Sale of Project Partnerships	43,030	10,000	-	10,000
Decrease in Cash and Cash Equivalents	(1,608)	(44,208)	(9,241)	(25,575)
Net Cash Provided by Investing Activities	53,689	26,592	13,486	24,094
Cash Flows from Financing Activities:
Distributions Paid to Limited Partners	-	-	-	-
Net Cash Used in Financing Activities	-	-	-	-
Increase (Decrease) in Cash and Cash Equivalents	47,700	(28,466)	(6,340)	(12,139)
Cash and Cash Equivalents at Beginning of Year	96,912	124,326	153,638	121,062
Cash and Cash Equivalents at End of Period	$ 95144,~~304~~612	$ 8095,~~118~~860	$ ~~144~~147,~~397~~298	$ 95108,~~487~~923
Supplemental disclosure of non-cash activities:
Increase in Receivable - Other	$ 44,256	$ -	$ -	$ -
Increase in Distribution Payable	$ 43,030	$ -	$ -	$ -
Increase in Deferred Gain on Sale of Project Partnerships	(43,030)	-	-	-
Distribution to Assignees	(43,030)	-	-	-
Decrease in Payable to General Partners	(1,226)	-	-	-
	$ -	$ -	$ -	$ -

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~SEPTEMBER~~DECEMBER 3031, 2010 AND 2009

(Unaudited)

	SERIES 11		TOTAL SERIES 7 - 11
	2010	2009	2010	2009
Cash Flows from Operating Activities:
Net Loss	$ (155,705)	$ (103,443)	$ (187,272)	$ (78,507)
Net Income (Loss)	$ (164,379)	$ (159,301)	$ 2,975	$ (255,443)
Adjustments to Reconcile Net Income (Loss)
Adjustments to Reconcile Net Loss
to Net Cash Used in Operating Activities:
Amortization	-	69,~~260~~389	146	813,~~814~~220
Accreted Interest Income on Investment in Securities	-	(12,~~589~~407)	-	(24,~~983~~520)
Equity in Loss of Project Partnerships	110,312	5893,~~592~~719	~~128~~130,~~750~~066	79124,~~572~~555
Gain on Sale of Project Partnerships	-	-	(~~157~~396,~~948~~353)	(301,008)
Distribution Income	(2,982)	(3,582)	(2749,~~008~~647)	(5165,~~671~~920)
Changes in Operating Assets and Liabilities:
Increase in Payable to General Partners	1315,~~374~~263	918,~~780~~327	82144,~~372~~039	~~138~~279,~~382~~859
Net Cash Used in Operating Activities	(3541,~~001~~786)	(3343,~~982~~855)	(~~160~~168,~~960~~774)	(~~207~~209,~~401~~257)
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships	7,822	35,~~582~~082	3760,~~159~~548	6885,~~360~~891
Net Proceeds from Sale of Project Partnerships	-	-	~~157~~396,~~948~~353	~~301~~344,008
Redemption of Investment Securities	-	-	-	-
Net Cash Provided by Investing Activities	7,822	5,082	456,901	429,899
Purchase of Investment Securities	-	-	-	-
Net Cash Provided by Investing Activities	7,822	3,582	195,107	369,368
Cash Flows from Financing Activities:
Distributions Paid to Limited Partners	-	-	-	(295,530)
Net Cash Used in Financing Activities	-	-	-	(295,530)
Increase (Decrease) in Cash and Cash Equivalents	(2733,~~179~~964)	(3038,~~400~~773)	34288,~~147~~127	(~~133~~74,~~563~~888)
Cash and Cash Equivalents at Beginning of Year	209,968	204,816	909,208	882,989
Cash and Cash Equivalents at End of Period	$ ~~182~~176,~~789~~004	$ ~~174~~166,~~416~~043	$ ~~943~~1,~~355~~197,335	$ ~~749~~808,~~426~~101
Supplemental disclosure of non-cash activities:
Increase in Distribution Payable	$ -	$ -	$ ~~157~~396,~~948~~353	$ -
Distribution to Assignees	-	-	(~~157~~396,~~948~~353)	-
Increase in Receivable - Other	-177,667	-	44450,~~256~~000	-
Increase in Deferred Gain on Sale of Project Partnerships	-(125,774)	-	(43313,~~030~~136)	-
Decrease in Payable to General Partners	-	-	(1,226)	-
Decrease in Net Investment	(49,893)	-	(134,602)	-
Decrease in Payable to General Partners	(2,000)	-	(2,262)	-
	$ -	$ -	$ -	$ -

See accompanying notes to financial statements.

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

~~SEPTEMBER~~DECEMBER 3031, 2010

(Unaudited)

NOTE 1 - ORGANIZATION:

Gateway Tax Credit Fund III Ltd. (“Gateway”), a Florida Limited Partnership, was formed October 17, 1991 under the laws of Florida. Gateway offered its limited partnership interests in Series (“Series”). The first Series for Gateway is Series 7. Operations commenced on July 16, 1992 for Series 7, January 4, 1993 for Series 8, September 30, 1993 for Series 9, January 21, 1994 for Series 10 and April 29, 1994 for Series 11. Each Series invests, as a limited partner, in other limited partnerships (“Project Partnerships”), each of which owns and operates apartment complexes eligible for Low-Income Housing Tax Credits (“Tax Credits”), provided for in Section 42 of the Internal Revenue Code of 1986. Gateway will terminate on December 31, 2040 or sooner, in accordance with the terms of the limited partnership agreement (the “Agreement”). As of ~~September~~December 3031, 2010, Gateway had received capital contributions of $1,000 from the General Partners and $36,799,000 from the investor Limited Partners.

Raymond James Partners, Inc. and Raymond James Tax Credit Funds, Inc., wholly owned subsidiaries of Raymond James Financial, Inc., are the General Partner and Managing General Partner, respectively and collectively the General Partners.

Gateway received capital contributions of $10,395,000, $9,980,000, $6,254,000, $5,043,000 and $5,127,000 from the investor Limited Partners in Series 7, 8, 9, 10 and 11, respectively. Each Series is treated as though it were a separate partnership, investing in a separate and distinct pool of Project Partnerships. Income or loss and all tax items from the Project Partnerships acquired by each Series are specifically allocated among the Limited Partners of such Series.

Operating profits and losses, cash distributions from operations and Tax Credits from each Series are generally allocated 99% to the Limited Partners in that Series and 1% to the General Partners. Profit or loss and cash distributions from sales of properties by each Series are allocated as specified in the Agreement.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting

Gateway utilizes the accrual basis of accounting whereby revenues are recognized as earned and expenses are recognized as obligations are incurred.

Gateway accounts for its investments as the limited partner in Project Partnerships (“Investments in Project Partnerships”) using the equity method of accounting, because management believes that Gateway does not have a majority control of the major operating and financial policies of the Project Partnerships in which it invests, and reports the equity in loss of the Project Partnerships on a 3-month lag in the Statements of Operations. Under the equity method, the Investments in Project Partnerships initially include:

1)	Gateway's capital contribution,

2)	Acquisition fees paid to the General Partner for services rendered in selecting properties for acquisition,

3)	Acquisition expenses including legal fees, travel and other miscellaneous costs relating to acquiring properties.

Quarterly the Investments in Project Partnerships are increased or decreased as follows:

1)	Increased for equity in income or decreased for equity in loss of the Project Partnerships,

2)	Decreased for cash distributions received from the Project Partnerships,

3)	Decreased for the amortization of the acquisition fees and expenses,

4)	Increased for loans or advances made to the Project Partnerships by Gateway,

5)	Decreased, where appropriate, for impairment.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Pursuant to the limited partnership agreements for the Project Partnerships, cash losses generated by the Project Partnerships are allocated to the general partners of those partnerships. In subsequent years, cash profits, if any, are first allocated to the general partners to the extent of the allocation of prior cash losses.

Since Gateway invests as a limited partner, and therefore is not obligated to fund losses or make additional capital contributions, it does not recognize losses from individual Project Partnerships to the extent that these losses would reduce the investment in those Project Partnerships below zero. In accordance with GAAP, once the net investment in a Project Partnership is reduced to zero, receivables due from the Project Partnership are decreased by Gateway’s share of Project Partnership losses. The suspended losses will be used to offset future income from the individual Project Partnerships. Any cash distributions received from Project Partnerships which have a zero investment balance are accounted for as distribution income in the period the cash distribution is received by Gateway.

Gateway reviews its investments in Project Partnerships to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the sum of the expected remaining low-income housing tax credits and other tax benefits is less than the carrying amount of the investment, Gateway recognizes an impairment loss. Gateway has concluded that any residual value of the Project Partnerships in the present Tax Credit market conditions could not be practicably determined. As a result, Gateway does not include estimates of residual value of the Project Partnerships from the recoverability portion of its impairment analysis. No impairment expense was recognized during each of the ~~six~~nine-month periods ended ~~September~~December 3031, 2010 and 2009. Refer to Note 4 – Investments in Project Partnerships for further details regarding the components of the Investments in Project Partnerships balance. Gateway is continuing to execute its process of disposition of its interest in Project Partnerships that have reached the end of their Tax Credit compliance period. Refer to Note 5 – Summary of Disposition Activities for the most recent update of those on-going activities.

Gateway, as a limited partner in the Project Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility of Tax Credits. If the cost of operating a property exceeds the rental income earned thereon, Gateway may deem it in its best interest to voluntarily provide funds in order to protect its investment. However, Gateway does not guarantee any of the mortgages or other debt of the Project Partnerships. No such funding to Project Partnerships occurred during each of the ~~six~~nine-month periods ended ~~September~~December 3031, 2010 and ~~September~~December 3031, 2009.

Cash and Cash Equivalents

Gateway's policy is to include short-term investments with an original maturity of three months or less in Cash and Cash Equivalents. Short-term investments are comprised of money market mutual funds.

Concentrations of Credit Risk

Financial instruments which potentially subject Gateway to concentrations of credit risk consist of cash investments in a money market mutual fund whose investment advisor is a wholly owned subsidiary of Raymond James Financial, Inc. In July 2010, an unaffiliated third party replaced this investment advisor.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates that affect certain reported amounts and disclosures. These estimates are based on management's knowledge and experience. Accordingly, actual results could differ from these estimates.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Income Taxes

No provision for income taxes has been made in these financial statements, as income taxes are a liability of the partners rather than of Gateway. Gateway files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Gateway is no longer subject to U.S. federal examination by tax authorities for years prior to calendar year 2007. The income tax returns subject to state examination by tax authorities are generally consistent with the federal period.

State Tax Withholding

Certain state tax jurisdictions impose a capital gains tax on the taxable gains associated with the sale of investments in partnerships. As General Partner of Gateway, it is Gateway’s obligation to calculate and withhold the applicable state taxes that are payable by the Partners of Gateway when Project Partnerships are sold or otherwise disposed by Gateway. In most cases, the state taxes are due regardless if proceeds are received from the sale of Project Partnerships. Therefore, Gateway has estimated the withholding taxes payable and the amount is included in Distribution Payable on the Balance Sheet.

Variable Interest Entities

In June 2009, the FASB issued new consolidation guidance applicable to variable interest entities. Gateway adopted this new guidance as of April 1, 2010. The adoption of this new guidance had no impact on Gateway’s financial statements.

Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics, (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ~~ability~~power to ~~make~~direct ~~decisions~~the ~~about~~activities anof the entity’s ~~activities~~that ~~through~~most ~~voting~~significantly oraffect ~~similar~~its ~~rights~~economic performance, (ii) the obligation to absorb the expected losses or the right to receive the expected benefits of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. GAAP requires a VIE to be consolidated in the financial statements of the entity that is determined to be the primary beneficiary of the VIE. Determination of the primary beneficiary of each VIE requires judgment and is based on an analysis of control of the entity and economic factors. A VIE would be required to be consolidated if it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could possibly be significant to the VIE. In the design of Project Partnership VIEs, the overriding concept centers around the premise that the limited partner invests solely for tax attributes associated with the property held by the VIE, while the general partner of the Project Partnership is responsible for overseeing its operations. Based upon its analysis of all the relevant facts and considerations, Gateway has concluded that the general partner of the Project Partnership has the power to direct the activities of the Project Partnership that most significantly impact its economic performance, and the obligation to absorb losses or receive benefits that could be significant to the Project Partnership and therefore, Gateway is not the primary beneficiary.

Gateway holds variable interests in ~~117~~112 VIEs, which consist of Project Partnerships, of which Gateway is not the primary beneficiary. Since its inception, Gateway’s maximum exposure to loss as a result of its involvement with unconsolidated VIEs is limited to Gateway’s capital contributions to and receivables from those VIEs, which is $2423,~~899~~737,~~862~~606 at ~~September~~December 3031, 2010. Over the course of the investment and Tax Credit cycle, this maximum exposure to loss was offset by actual losses experienced by the Project Partnerships recorded by Gateway in its equity accounting. Accordingly, at the current stage of the investment and Tax Credit cycle, the carrying value of Gateway’s interest in the VIEs has been reduced to $~~454~~317,~~109~~440. As Gateway has no further capital funding requirements nor does it guarantee the debt of the Project Partnerships, its further exposure to loss is limited to the extent of any financial support that Gateway voluntarily provides to those Project Partnerships in the future. Gateway does not currently intend to provide such support.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Basis of Preparation

The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included with Gateway's report on Form 10-K for the year ended March 31, 2010. In the opinion of management, these financial statements include adjustments, consisting only of normal recurring adjustments, necessary to fairly summarize Gateway's financial position and results of operations. The results of operations for the periods may not be indicative of the results to be expected for the year.

NOTE 3 - RELATED PARTY TRANSACTIONS:

The Payable to General Partners primarily represents the asset management fees and general and administrative expenses owed to the General Partners at the end of the period. It is unsecured, due on demand and, in accordance with the Agreement, non-interest bearing. Within the next 12 months, the Managing General Partner does not intend to demand payment on the portion of Asset Management Fees payable classified as long-term on the Balance Sheet.

Value Partners, Inc., an affiliate of Gateway, acquired the general partner interest in Logan Heights, one of the Project Partnerships in Series 8, in 2003 (see further discussion in Note 4).

For the ~~six~~nine months ended ~~September~~December 3031, 2010 and 2009, the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows:

Asset Management Fee - The Managing General Partner is entitled to receive an annual asset management fee equal to the greater of (i) $2,000 for each limited partnership in which Gateway invests, or (ii) 0.275% of Gateway's gross proceeds from the sale of limited partnership interests. In either event (i) or (ii), the maximum amount may not exceed 0.2% of the aggregate cost (Gateway's capital contribution plus Gateway's share of the Properties' mortgage) of Gateway's interest in properties owned by the Project Partnerships. The asset management fee will be paid only after all other expenses of Gateway have been paid. These fees are included in the Statements of Operations.

	2010	2009
Series 7	$ 3044,~~131~~518	$ 3652,~~864~~026
Series 8	4060,~~233~~350	4264,~~890~~335
Series 9	2334,~~169~~483	2436,~~294~~441
Series 10	1523,~~626~~438	1625,~~712~~068
Series 11	1320,~~944~~916	1421,~~062~~093
Total	$ ~~123~~183,~~103~~705	$ ~~134~~198,~~822~~963

General and Administrative Expenses - The Managing General Partner is reimbursed for general and administrative expenses of Gateway on an accountable basis. This expense is included in the Statements of Operations. During fiscal year 2011, the Managing General Partner ceased further allocations of General and Administrative expenses to Gateway.

	2010	2009
Series 7	$ -	$ 4567,~~641~~446
Series 8	-	-
Series 9	-	3350,~~204~~385
Series 10	-	2031,~~753~~392
Series 11	20,774	1625,~~602~~324
Total	$ 20,774	$ ~~116~~174,~~200~~547

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS:

As of September 30, 2010, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 7 - 30, Series 8 - 40, and Series 9 - 23) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
As of December 31, 2010, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 7 - 25, Series 8 - 40, and Series 9 - 22) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
The following is a summary of Investments in Project Partnerships as of:
	SERIES 7		SERIES 8		SERIES 9
	September 30,	March 31,	September 30,	March 31,	September 30,	March 31,
	December 31,	March 31,	December 31,	March 31,	December 31,	March 31,
	2010	2010	2010	2010	2010	2010
Capital Contributions to Project Partnerships
and purchase price paid for limited partner
interests in Project Partnerships	$ 54,~~514~~648,~~952~~444	$ 5,721,083	$ 6,941,449	$ 6,941,449	$ 4,599,313	$ 4,703,741
Loan receivable from Project Partnerships	-	-	24,220	24,220	-	-
Cumulative equity in losses of Project
Partnerships (1) (2)	(4,~~976~~533,~~481~~144)	(5,194,990)	(6,877,633)	(6,877,633)	(4,242,472)	(4,353,387)
Cumulative distributions received from
Project Partnerships	(~~209~~177,~~454~~214)	(216,294)	(179,115)	(179,115)	(164,111)	(167,764)
Investment in Project Partnerships before
Adjustment	~~329~~(61,~~017~~914)	309,799	(91,079)	(91,079)	192,730	182,590
Excess of investment cost over the underlying
assets acquired:
Acquisition fees and expenses	~~548~~496,~~761~~983	573,481	513,903	513,903	218,681	231,156
Accumulated amortization of acquisition
fees and expenses	(~~240~~229,~~798~~600)	(246,706)	(161,554)	(161,554)	(103,479)	(105,814)
Reserve for Impairment of Investment in
Project Partnerships	(~~552~~205,~~557~~469)	(552,557)	(261,270)	(261,270)	(307,932)	(307,932)
Investments in Project Partnerships	$ ~~84,423~~-	$ 84,017	$ -	$ -	$ -	$ -
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $5,633,534 in Series 7, $8,436,655 in Series 8, and $3,332,702 in Series 9 for the period ended September 30, 2010; and cumulative suspended losses of $5,438,071 in Series 7, $8,066,825 in Series 8, and $3,237,997 in Series 9 for the year ended March 31, 2010 are not included.
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $5,099,276 in Series 7, $8,819,840 in Series 8, and $3,453,747 in Series 9 for the period ended December 31, 2010; and cumulative suspended losses of $5,438,071 in Series 7, $8,066,825 in Series 8, and $3,237,997 in Series 9 for the year ended March 31, 2010 are not included.
(2) In accordance with Gateway's accounting policy to apply equity in losses of Project Partnerships to receivables from Project Partnerships, $24,220 in losses are included in Series 8 as of September 30, 2010 and March 31, 2010. (See discussion in Note 2 - Significant Accounting Policies.)
(2) In accordance with Gateway's accounting policy to apply equity in losses of Project Partnerships to receivables from Project Partnerships, $24,220 in losses are included in Series 8 as of December 31, 2010 and March 31, 2010. (See discussion in Note 2 - Significant Accounting Policies.)

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

As of September 30, 2010, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 10 - 14 and Series 11 - 12) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
As of December 31, 2010, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 10 - 14 and Series 11 - 11) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
The following is a summary of Investments in Project Partnerships as of:
	SERIES 10		SERIES 11		TOTAL SERIES 7 - 11
	September 30,	March 31,	September 30,	March 31,	September 30,	March 31,
	December 31,	March 31,	December 31,	March 31,	December 31,	March 31,
	2010	2010	2010	2010	2010	2010
Capital Contributions to Project Partnerships
and purchase price paid for limited partner
interests in Project Partnerships	$ 3,716,106	$ 3,716,106	$ 43,~~128~~832,~~042~~294	$ 4,128,042	$ 2423,~~899~~737,~~862~~606	$ 25,210,421
Loan receivable from Project Partnerships	-	-	-	-	24,220	24,220
Cumulative equity in losses of Project
Partnerships (1)	(2,~~343~~344,~~312~~916)	(2,325,162)	(2,~~018~~016,~~451~~915)	(1,908,139)	(20,~~458~~015,~~349~~080)	(20,659,311)
Cumulative distributions received from
Project Partnerships	(~~240~~241,~~891~~641)	(234,740)	(~~211~~199,~~819~~083)	(206,979)	(1961,~~005,390~~164)	(1,004,892)
Investment in Project Partnerships before
Adjustment	1,~~131~~129,~~903~~549	1,156,204	1,~~897~~616,~~772~~296	2,012,924	32,~~460~~785,~~343~~582	3,570,438
Excess of investment cost over the underlying
assets acquired:
Acquisition fees and expenses	174,878	174,878	~~290~~267,~~335~~568	290,335	1,~~746~~672,~~558~~013	1,783,753
Accumulated amortization of acquisition
fees and expenses	(147,889)	(147,889)	(~~222~~200,~~991~~224)	(222,991)	(~~876~~842,~~711~~746)	(884,954)
Reserve for Impairment of Investment in
Project Partnerships	(1,085,926)	(1,085,926)	(1,~~668~~436,~~396~~812)	(1,668,396)	(3,~~876~~297,~~081~~409)	(3,876,081)
Investments in Project Partnerships	$ 7270,~~966~~612	$ 97,267	$ ~~296~~246,~~720~~828	$ 411,872	$ ~~454~~317,~~109~~440	$ 593,156
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $784,372 in Series 10 and $1,461,370 in Series 11 for the period ended September 30, 2010; and cumulative suspended losses of $719,103 in Series 10 and $1,392,126 in Series 11 for the year ended March 31, 2010 are not included.
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $857,874 in Series 10 and $1,525,091 in Series 11 for the period ended December 31, 2010; and cumulative suspended losses of $719,103 in Series 10 and $1,392,126 in Series 11 for the year ended March 31, 2010 are not included.

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 7 and Series 8 as of June 30 and the respective summarized statements of operations for the six months ended June 30 of each year:
In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 7 and Series 8 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 7		SERIES 8 (1)
	2010	2009	2010	2009	~~2009~~
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$ 3,~~450~~099,~~800~~586	$ 3,~~594~~657,~~374~~899	$ 4,~~423~~376,~~474~~054	$ 4,745,962	~~$ 4,697,568~~
Investment properties, net	1413,~~838~~799,~~861~~275	16,~~556~~319,~~628~~613	20,~~683~~334,~~891~~569	22,745,223	~~23,119,796~~
Other assets	3114,~~784~~401	4132,~~995~~935	~~349~~356,~~988~~849	335,717	~~287,963~~
Total assets	$ 1816,~~321~~913,~~445~~262	$ 20,~~192~~010,~~997~~447	$ 25,~~457~~067,~~353~~472	$ 27,826,902	~~$ 28,105,327~~
Liabilities and Partners' Deficit:
Current liabilities	$ ~~723~~671,~~527~~569	$ ~~713~~746,~~193~~803	$ 1,~~359~~357,~~919~~243	$ 1,438,787	~~$ 1,470,212~~
Long-term debt	2321,~~307~~306,~~541~~909	24,~~669~~666,~~423~~597	33,354,386	35,579,018	~~35,579,018~~
Total liabilities	2421,~~031~~978,~~068~~478	25,~~382~~413,~~616~~400	34,~~714~~711,~~305~~629	37,017,805	~~37,049,230~~
Partners' deficit
Partners' Deficit
Limited Partner	(54,~~394~~789,~~428~~148)	(45,~~932~~143,~~090~~290)	(8,~~566~~948,~~537~~849)	(8,422,794)	~~(8,178,828)~~
General Partners	(~~315~~276,~~195~~068)	(~~257~~259,~~529~~663)	(~~690~~695,~~415~~308)	(768,109)	~~(765,075)~~
Total partners' deficit	(5,~~709~~065,~~623~~216)	(5,~~189~~402,~~619~~953)	(9,~~256~~644,~~952~~157)	(9,190,903)	~~(8,943,903)~~
Total liabilities and partners' deficit	$ 1816,~~321~~913,~~445~~262	$ 20,~~192~~010,~~997~~447	$ 25,~~457~~067,~~353~~472	$ 27,826,902	~~$ 28,105,327~~
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$ 12,~~905~~603,~~739~~372	$ 12,~~980~~977,~~593~~595	$ 24,~~683~~019,~~210~~935	$ 4,149,000	~~$ 2,750,725~~
Expenses:
Operating expenses	12,~~517~~074,~~956~~876	12,~~581~~412,~~690~~447	23,~~009~~209,~~087~~518	3,205,102	~~2,118,069~~
Interest expense	~~238~~327,~~408~~995	~~258~~387,~~376~~565	~~346~~519,~~293~~439	551,292	~~367,528~~
Depreciation and amortization	~~482~~650,~~563~~979	~~500~~751,~~779~~169	~~698~~1,~~643~~047,965	1,123,804	~~749,326~~
Total expenses	23,~~238~~053,~~927~~850	23,~~340~~551,~~845~~181	34,~~054~~776,~~023~~922	4,880,198	~~3,234,923~~
Net loss	$ (~~333~~450,~~188~~478)	$ (~~360~~573,~~252~~586)	$ (~~370~~756,~~813~~987)	$ (731,198)	~~$ (484,198)~~
Other partners' share of net loss	$ 16,959	$ (2,874)	$ (983)		$ (6,989)
Other partners' share of net income (loss)	$ 25,709	$ (1,224)	$ (3,972)	$ (10,023)
Gateway's share of net loss	$ (~~350~~476,~~147~~187)	$ (~~357~~572,~~378~~362)	$ (~~369~~753,~~830~~015)	$ (721,175)	~~$ (477,209)~~
Suspended losses	~~349~~476,~~859~~187	~~357~~572,~~378~~362	~~369~~753,~~830~~015	709,863	~~465,897~~
Equity in Income (Loss) of Project Partnerships	$ (288)	$ -	$ -		$ (11,312)
Equity in Loss of Project Partnerships	$ -	$ -	$ -	$ (11,312)

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

(1) As discussed in Note 3, an affiliate of the General Partner (Value Partners, Inc.) is the operating general partner in one of the Project Partnerships included in Series 8 above (Logan Heights). The Logan Heights Project Partnership is not consolidated in Gateway's financial statements as Gateway's investment in Logan Heights is accounted for under the equity method. The information below is included for related party disclosure purposes. The Project Partnership's financial information for the periods ending June 2010 and June 2009 is as follows:
(1) As discussed in Note 3, an affiliate of the General Partner (Value Partners, Inc.) is the operating general partner in one of the Project Partnerships included in Series 8 above (Logan Heights). The Logan Heights Project Partnership is not consolidated in Gateway's financial statements as Gateway's investment in Logan Heights is accounted for under the equity method. The information below is included for related party disclosure purposes. The Project Partnership's financial information for the periods ending September 2010 and September 2009 is as follows:
	June 2010	June 2009
	September 2010	September 2009
Total Assets	$ ~~426~~427,~~600~~139	$ ~~457~~438,~~374~~462
Total Liabilities	~~800~~802,~~540~~512	~~802~~803,~~571~~920
Gateway Deficit	(~~341~~342,~~551~~970)	(~~313~~333,~~096~~155)
Other Partner's Deficit	(32,~~388~~403)	(32,~~101~~303)
Total Revenue	5284,~~905~~801	6293,~~862~~012
Net Loss	$ (57,~~742~~176)	$ (2041,~~957~~218)

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 9 and Series 10 as of June 30 and the respective summarized statements of operations for the six months ended June 30 of each year:
In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 9 and Series 10 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 9		SERIES 10
	2010	2009	2010	2009	~~2009~~
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$ 2,~~107~~199,~~730~~747	$ 2,~~411~~360,~~912~~620	$ 2,~~049~~085,~~308~~261	$ 2,178,747	~~$ 2,190,970~~
Investment properties, net	12,~~701~~520,~~605~~332	1413,~~019~~837,~~550~~720	10,~~167~~058,~~968~~063	10,847,568	~~10,969,179~~
Other assets	5452,~~435~~179	5345,~~452~~889	4245,~~881~~113	28,718	~~28,395~~
Total assets	$ 14,~~863~~772,~~770~~258	$ 16,~~484~~244,~~914~~229	$ 12,~~260~~188,~~157~~437	$ 13,055,033	~~$ 13,188,544~~
Liabilities and Partners' Deficit:
Current liabilities	$ ~~434~~465,~~354~~111	$ ~~429~~421,~~565~~171	$ 440,~~067~~551	$ 429,177	~~$ 462,239~~
Long-term debt	18,083,323	19,~~453~~445,~~468~~872	11,952,788	12,824,266	~~12,826,121~~
Total liabilities	18,~~517~~548,~~677~~434	19,~~883~~867,~~033~~043	12,~~392~~393,~~855~~339	13,253,443	~~13,288,360~~
Partners' deficit
Partners' Equity (Deficit)
Limited Partner	(3,~~221~~342,~~020~~066)	(23,~~959~~181,~~486~~934)	~~(494~~291,~~217)~~124	298,624	~~395,880~~
General Partners	(~~432~~434,~~887~~110)	(~~438~~440,~~633~~880)	~~361~~(496,~~519~~026)	(497,034)	~~(495,696)~~
Total partners' deficit	(3,~~653~~776,~~907~~176)	(3,~~398~~622,~~119~~814)	(~~132~~204,~~698~~902)	(198,410)	~~(99,816)~~
Total liabilities and partners' deficit	$ 14,~~863~~772,~~770~~258	$ 16,~~484~~244,~~914~~229	$ 12,~~260~~188,~~157~~437	$ 13,055,033	~~$ 13,188,544~~
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$ 12,~~382~~097,~~726~~626	$ 12,~~460~~192,~~983~~329	$ ~~941~~1,~~457~~413,025	$ 1,462,951	~~$ 972,682~~
Expenses:
Operating expenses	1,~~113~~677,~~437~~510	1,~~090~~750,~~470~~158	~~690~~1,~~425~~075,755	1,140,884	~~727,718~~
Interest expense	~~183~~275,~~646~~469	~~197~~296,~~387~~080	97145,~~057~~586	162,135	~~108,090~~
Depreciation and amortization	~~362~~543,~~545~~817	~~395~~592,~~320~~980	~~219~~329,~~823~~736	364,958	~~243,306~~
Total expenses	12,~~659~~496,~~628~~796	12,~~683~~639,~~177~~218	1,~~007~~551,~~305~~077	1,667,977	~~1,079,114~~
Net loss	$ (~~276~~399,~~902~~170)	$ (~~222~~446,~~194~~889)	$ (65138,~~848~~052)	$ (205,026)	~~$ (106,432)~~
Other partners' share of net loss	$ (2,768)	$ 2,442	$ 17,571		$ 2,391
Other partners' share of net income (loss)	$ (3,991)	$ (3,922)	$ 20,474	$ 2,224
Gateway's share of net loss	$ (~~274~~395,~~134~~179)	$ (~~224~~442,~~636~~967)	$ (83158,~~419~~526)	$ (207,250)	~~$ (108,823)~~
Suspended losses	~~274~~395,~~134~~179	~~224~~442,~~335~~666	65138,~~269~~772	188,027	~~99,456~~
Equity in Income (Loss) of Project Partnerships	$ -	$ (301)	$ (18,150)		$ (9,367)
Equity in Loss of Project Partnerships	$ -	$ (301)	$ (19,754)	$ (19,223)

NOTE 4 – INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 11 and Total Series 7 - 11 as of June 30 and the respective summarized statements of operations for the six months ended June 30 of each year:
In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 11 and Total Series 7 - 11 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 11		TOTAL SERIES 7 - 11
	2010	2009	2010	2009
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$ 1,~~166~~224,~~163~~481	$ 1,~~225~~240,~~322~~468	$ 1312,~~197~~985,~~475~~129	$ 14,~~120~~183,~~146~~696
Investment properties, net	8,~~768~~637,~~962~~973	9,~~220~~169,~~083~~170	6765,~~161~~350,~~287~~212	7372,~~885~~919,~~236~~294
Other assets	~~273~~271,~~316~~135	~~312~~297,~~885~~854	~~752~~739,~~404~~677	~~724~~741,~~690~~113
Total assets	$ 10,~~208~~133,~~441~~589	$ 10,~~758~~707,~~290~~492	$ 8179,~~111~~075,~~166~~018	$ 8887,~~730~~844,~~072~~103
Liabilities and Partners' Equity (Deficit):
Liabilities and Partners' Deficit:
Current liabilities	$ ~~364~~354,~~783~~587	$ ~~475~~490,~~660~~754	$ 3,~~322~~289,~~650~~061	$ 3,~~550~~526,~~869~~692
Long-term debt	9,799,866	9,916,521	9694,497,~~904~~272	102,~~444~~432,~~551~~274
Total liabilities	10,~~164~~154,~~649~~453	10,~~392~~407,~~181~~275	9997,~~820~~786,~~554~~333	105,~~995~~958,~~420~~966
Partners' equity (deficit)
Partners' Equity (Deficit)
Limited Partner	~~466~~404,~~474~~287	~~760~~696,~~025~~633	(1716,~~209~~384,~~728~~652)	(1415,~~914~~752,~~499~~761)
General Partners	(~~422~~425,~~682~~151)	(~~393~~396,~~916~~416)	(12,~~499~~326,~~660~~663)	(2,~~350~~362,~~849~~102)
Total partners' equity (deficit)	43(20,~~792~~864)	~~366~~300,~~109~~217	(18,~~709~~711,~~388~~315)	(1718,~~265~~114,~~348~~863)
Total liabilities and partners' equity (deficit)	$ 10,208,441	$ 10,758,290	$ 81,111,166	$ 88,730,072
Total liabilities and partners' deficit	$ 10,133,589	$ 10,707,492	$ 79,075,018	$ 87,844,103
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$ ~~950~~1,~~673~~430,471	$ ~~896~~1,~~437~~368,621	$ 711,~~863~~564,~~805~~429	$ 812,~~061~~150,~~420~~496
Expenses:
Operating expenses	~~770~~1,~~223~~131,563	~~668~~1,~~089~~022,046	69,~~101~~169,~~128~~222	69,~~186~~530,~~036~~637
Interest expense	~~104~~156,~~247~~371	~~106~~159,~~498~~746	~~969~~1,~~651~~424,860	1,~~037~~556,~~879~~818
Depreciation and amortization	~~261~~392,~~979~~969	~~261~~392,~~740~~611	2,~~025~~965,~~553~~466	23,~~150~~225,~~471~~522
Total expenses	1,~~136~~680,~~449~~903	1,~~036~~574,~~327~~403	913,~~096~~559,~~332~~548	914,~~374~~312,~~386~~977
Net loss	$ (~~185~~250,~~776~~432)	$ (~~139~~205,~~890~~782)	$ (1,~~232~~995,~~527~~119)	$ (12,~~312~~162,~~966~~481)
Other partners' share of net (loss) income	$ (6,220)	$ (4,741)	$ 24,559	$ (9,771)
Other partners' share of net income (loss)	$ (7,156)	$ (4,732)	$ 31,064	$ (17,677)
Gateway's share of net loss	$ (~~179~~243,~~556~~276)	$ (~~135~~201,~~149~~050)	$ (12,~~257~~026,~~086~~183)	$ (12,~~303~~144,~~195~~804)
Suspended losses	69132,~~244~~964	76107,~~557~~331	1,~~128~~896,~~336~~117	12,~~223~~020,~~623~~249
Equity in Income (Loss) of Project Partnerships	$ (110,312)	$ (58,592)	$ (128,750)	$ (79,572)
Equity in Loss of Project Partnerships	$ (110,312)	$ (93,719)	$ (130,066)	$ (124,555)

NOTE 5 – SUMMARY OF DISPOSITION ACTIVITIES:

Gateway at one time held investments in 133 Project Partnerships (39 in Series 7, 43 in Series 8, 24 in Series 9, 15 in Series 10, and 12 in Series 11). As of ~~September~~December 3031, 2010, Gateway has sold its interest in 1621 Project Partnerships (1014 in Series 7, 3 in Series 8, 2 in Series 9, 1 in Series 10 and 1 in Series 1011). A summary of the sale transactions for the Project Partnerships disposed during the current fiscal year-to-date and the previous fiscal year are summarized below.

Fiscal Year 2011 Disposition Activity:

Series 7

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
August 2010	Pioneer Apartments, L.P.	$ 157,949	$ 15.19	$ 157,949	$ -
				$ 157,949
December 2010	Lake Village Apartments	65,124	6.27	65,124	-
December 2010	Savannah Park of Atoka	65,125	6.27	65,125	-
December 2010	Savannah Park of Coalgate	65,125	6.27	65,125	-
December 2010	Cardinal Apartments	187,362	18.02	-	187,362
				$ 353,323	$ 187,362

The net proceeds per LP unit from the sale of Pioneer Apartments, Lake Village Apartments, Savannah Park of Atoka, Savannah Park of Coalgate and Cardinal Apartments are a component of the Distribution Payable on the Balance Sheet as of ~~September~~December 3031, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent quarter.

In accordance with GAAP, although the sale of Cardinal Apartments was consummated on or prior to December 31, 2010, the gain on the sale is being deferred on the Balance Sheet and not recognized on the Statement of Operations until the period that the net sales proceeds are received. Gateway recorded a receivable for the gross proceeds from this sale totaling $272,333 which is included in Receivable – Other on the Balance Sheet. The net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Assignees in a subsequent quarter. The deferred gain of $187,362 is included in Deferred Gain on Sale of Project Partnerships on the Balance Sheet and will be recognized on the fiscal year 2011 fourth quarter Statement of Operations.

Series 9

Transaction			Net Proceeds	~~Deferred~~ Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	on Disposal	on Disposal
September 2010	Stilwell Properties III	$ 43,030	$ 6.88	$ 43,030	$ -
				$ 43,030	$ -

InThe ~~accordance~~net ~~with~~proceeds ~~GAAP,~~per ~~although~~LP unit from the sale of Stilwell Properties III, ~~L.P.~~is ~~was~~a ~~consummated~~component onof ~~or prior to September 30, 2010,~~ the ~~gain~~Distribution onPayable ~~the sale is being deferred~~ on the Balance Sheet ~~and~~as ~~not recognized on the Statement~~ of ~~Operations~~December ~~until the period that the net sales proceeds are received. Gateway recorded a receivable for the gross proceeds from this sale totaling $44~~31,~~256~~ ~~which is included in Receivable – Other on the Balance Sheet and has been subsequently received in October~~ 2010. ~~The~~These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 ~~Assignees~~Limited Partners in a subsequent quarter. ~~The deferred gain of $43,030 is included in Deferred Gain on Sale of Project Partnerships on the Balance Sheet and will be recognized on the fiscal year 2011 third quarter Statement of Operations.~~

NOTE 5 – SUMMARY OF DISPOSITION ACTIVITIES: (Continued)

Fiscal Year 2011 Disposition Activity (Continued):

Series 11

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
December 2010	Cardinal Apartments	$ 125,774	$ 24.53	$ -	$ 125,774
				$ -	$ 125,774

In accordance with GAAP, although the sale of Cardinal Apartments was consummated on or prior to December 31, 2010, the gain on the sale is being deferred on the Balance Sheet and not recognized on the Statement of Operations until the period that the net sales proceeds are received. Gateway recorded a receivable for the gross proceeds from this sale totaling $177,667 which is included in Receivable – Other on the Balance Sheet. The net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Assignees in a subsequent quarter. The deferred gain of $125,774 is included in Deferred Gain on Sale of Project Partnerships on the Balance Sheet and will be recognized on the fiscal year 2011 fourth quarter Statement of Operations.

Fiscal Year 2010 Disposition Activity:

Series 7

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
August 2009	Mountain City Manor	$ 36,860	$ 3.54	$ 38,190	$ -
August 2009	Tazewell Village	41,290	3.97	42,620	-
August 2009	Jamestown Village	36,450	3.51	37,864	-
August 2009	Clinch View Manor	134,400	12.93	135,814	-
May 2009	Spring Creek Apartments II LP	46,520	4.48	46,030	-
				$ 300,518	$ -

The net proceeds per LP unit from the sale of Mountain City Manor, Tazewell Village, Jamestown Village, Clinch View Manor, and Spring Creek Apartments II LP were distributed to the Series 7 Limited Partners in September 2009.

Series 8

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	South Brenchley	$ 13,000	$ 1.30	$ 13,000	$ -
January 2010	Cimmaron Station	10,000	1.00	10,000	-
				$ 23,000	$ -

25The net proceeds per LP unit from the sale of South Brenchely and Cimmaron Station are a component of the Distribution Payable on the Balance Sheets as of March 31 and December 31, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent quarter.

NOTE 5 – SUMMARY OF DISPOSITION ACTIVITIES (Continued):

The net proceeds per LP unit from the sale of South Brenchely and Cimmaron Station are a component of the Distribution Payable on the Balance Sheets as of March 31 and September 30, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent quarter.

Series 9

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	Mountain Glen	$ 10,000	$ 1.59	$ 10,000	$ -
				$ 10,000	$ -

The net proceeds per LP unit from the sale of Mountain Glen are a component of the Distribution Payable on the Balance Sheets as of March 31 and ~~September~~December 3031, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent quarter.

Series 10

Transaction			Net Proceeds	Gain on
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal
January 2010	Redstone	$ 10,000	$ 1.98	$ 10,000
				$ 10,000

The net proceeds per LP unit from the sale of Redstone are a component of the Distribution Payable on the Balance Sheets as of March 31 and September 30, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent quarter.

NOTE 5 – SUMMARY OF DISPOSITION ACTIVITIES: (Continued)

Fiscal Year 2010 Disposition Activity (Continued):

Series 10

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	Redstone	$ 10,000	$ 1.98	$ 10,000	$ -
				$ 10,000	$ -

The net proceeds per LP unit from the sale of Redstone are a component of the Distribution Payable on the Balance Sheets as of March 31 and December 31, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent quarter.

NOTE 6 – SIGNIFICANT EQUITY INVESTEES:

Certain Project Partnerships constitute 20% or more of assets, equity or income (loss) from continuing operations of the respective Series in which they are held (“Significant Project Partnerships”). In accordance with Gateway’s policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized results of operations as of ~~June~~September 30, 2010 for each Significant Project Partnership:

Series 7
	Cardinal Apartments
Rental and other income	$ 45,581
Gross profit	12,631
Net loss	$ (291)
Series 10
	Stigler Properties	Applegate Apartments
Rental and other income	$ 4872,~~284~~874	$ 6699,~~061~~777
Gross profit	1417,~~513~~815	810,~~442~~555
Net income (loss)	$ 72	$ (14,350)
Net loss	$ (3,846)	$ (23,634)
	Heatherwood Apartments
Rental and other income	$ 105,990
Gross profit	19,883
Net loss	$ (11,689)
Series 11
	Creekstone Apartments, L.P.	Magnolia Place Apartments, L.P.
Rental and other income	$ ~~117~~175,~~868~~650	$ 76115,~~184~~019
Gross profit	1115,~~709~~661	1216,~~462~~918
Net loss	$ (2235,~~435~~200)	$ (814,~~646~~597)
	Eloy Apartments, L.P.
Rental and other income	$ 92140,~~036~~828
Gross loss	(3218,~~253~~016)
Net loss	$ (7379,~~757~~470)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Gateway. The MD&A is provided as a supplement to, and should be read in conjunction with the financial statements and accompanying footnotes to the financial statements contained elsewhere in this report.

The Managing General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 (the “Act”) mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas, and the provisions of the Act have been implemented by Gateway.

Gateway – All Series - The following discusses the overall results of operations, liquidity and capital resources for Gateway as a whole. A summary of the activity within each specific Series of Gateway then follows.

Results of Operations

As more fully detailed in the Exit Strategy discussion included within this MD&A, all of the Project Partnerships have delivered their Tax Credits to Gateway, ~~and~~ the Tax Credit compliance period has expired, ~~for~~and ~~125 of the Project Partnerships initially held.~~ Gateway is in the process of selling or disposing of ~~its~~all ~~interests in Project Partnerships that have reached the end~~ of ~~their~~its ~~Tax~~remaining ~~Credit~~Project ~~compliance~~Partnership ~~period~~interests. Net proceeds received from the sales are in turn distributed to the Limited Partners. Once all Project Partnership interests have been sold or otherwise disposed of, Gateway will be liquidated. The target date for liquidation of Gateway is on or before December 31, 2012, although there is no certainty, and it may not even be considered likely at this time, that all the activities necessary to occur as of such date will have transpired.

27Distribution income arises from any cash distributions received from Project Partnerships which have a zero investment balance for financial reporting purposes. Distribution income decreased $16,273 from $65,920 for the nine months ended December 31, 2009 to $49,647 for the nine months ended December 31, 2010. The decrease in distribution income is a result of decreases in available cash at Project Partnerships to pay distributions in accordance with the partnership agreements as well as the timing of such payments. The gross distributions received from Project Partnerships decreased from $85,891 for the nine month period ended December 31, 2009 to $60,548 for the same period ended in 2010.

Total expenses of Gateway were $313,049 for the nine months ended December 31, 2010, a decrease of $189,356 as compared to the nine months ended December 31, 2009 total expenses of $502,405. The decrease results primarily from decreases in 1) asset management fees and general and administrative expenses – General Partner due to sales of Project Partnerships (Gateway ceases accruing Asset Management Fees and General and Administrative expenses – General Partner for sold Project Partnerships) along with the cessation of allocations for General and Administrative expenses from the General Partner in Series 8 beginning in fiscal year 2010, and Series 7, 9, 10 and 11 beginning in fiscal year 2011, and 2) amortization expense (resulting from the suspension of amortization due to Project Partnership investment balances reaching zero or the acquisition fees and expense being fully amortized).

Equity in Loss of Project Partnerships increased from $124,555 for the nine months ended December 31, 2009 to $130,066 for the nine months ended December 31, 2010 because of an increase in the losses from Project Partnerships with positive investment balances. Because Gateway utilizes the equity method of accounting to account for its investment in Project Partnerships, income or losses from Project Partnerships with a zero investment balance are not recognized in the Statement of Operations. For the nine months ended September 30, 2010 (Project Partnership financial information is on a three-month lag), Gateway’s share of the net loss was $2,026,183, of which $1,896,117 was suspended. For the nine months ended September 30, 2009, Gateway’s share of the net loss was $2,144,804, of which $2,020,249 was suspended.

Gain on Sale of Project Partnerships increased from $301,008 for the nine months ended December 31, 2009 to $396,353 for the nine months ended December 31, 2010. As more fully discussed within this MD&A, five Project Partnership investments were sold during the third quarter of fiscal year 2011 as compared to the third quarter of fiscal year 2010 when no Project Partnership investments were sold. The amount of the gain or loss from the sale of a Project Partnership and the period in which it is recognized on the Statement of Operations is dependent upon the specifics related to each sale or disposition transaction. Refer to the discussion of each Project Partnership sold in the Exit Strategy section within this MD&A.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

~~Distribution~~Interest income ~~arises from any cash distributions received from Project Partnerships which have a zero investment balance for financial reporting purposes. Distribution income~~ decreased $244,~~663~~499 from $514,~~671~~589 for the ~~six~~nine months ended ~~September~~December 3031, 2009 to $~~27,008~~90 for the ~~six~~nine months ended ~~September~~December 3031, 2010. The ~~decrease~~change in ~~distribution~~interest income isresults aprimarily ~~result~~from ofthe ~~decreases~~fluctuation inof ~~available~~interest ~~cash~~rates aton ~~Project~~short-term ~~Partnerships~~investments toover ~~pay~~this ~~distributions~~period inalong ~~accordance~~ with the ~~partnership~~maturation ~~agreements~~of asinvestments ~~well~~in assecurities over the ~~timing~~same ~~of such payments~~period. ~~The~~Cash ~~gross~~and ~~distributions~~Cash ~~received~~Equivalents increased $389,234 from ~~Project~~$808,101 ~~Partnerships~~as ~~decreased~~of ~~from~~December 31, 2009 to $681,~~360~~197,335 ~~for~~as ~~the~~of ~~six~~December ~~month~~31, ~~period~~2010. ~~ended~~Investments ~~September~~in 30Securities decreased from $83,857 as of December 31, 2009 to $370 as of December 31,~~159~~ ~~for~~2010. Interest ~~the~~income ~~same~~is ~~period~~generally ~~ended~~one insource ~~2010~~of funds available to pay administrative costs of Gateway.

Total expenses of Gateway were $243,531 for the six months ended September 30, 2010, a decrease of $111,116 as compared to the six months ended September 30, 2009 total expenses of $354,647. The decrease results primarily from decreases in 1) asset management fees and general and administrative expenses – General Partner due to sales of Project Partnerships (Gateway ceases accruing Asset Management Fees and General and Administrative expenses – General Partner for sold Project Partnerships) along with the cessation of accruals for general and administrative expenses – General Partner in Series 8 beginning in fiscal year 2010, and Series 7, Series 9 and Series 10 beginning in fiscal year 2011, and 2) amortization expense (resulting from the suspension of amortization due to Project Partnership investment balances reaching zero or the acquisition fees and expense being fully amortized).

Equity in Loss of Project Partnerships increased from $79,572 for the six months ended September 30, 2009 to $128,750 for the six months ended September 30, 2010 because of a increase in the losses from Project Partnerships with positive investment balances. Because Gateway utilizes the equity method of accounting to account for its investment in Project Partnerships, income or losses from Project Partnerships with a zero investment balance are not recognized in the Statement of Operations. For the six months ended June 30, 2010 (Project Partnership financial information is on a three-month lag), Gateway’s share of the net loss was $1,257,086, of which $1,128,336 was suspended. For the six months ended June 30, 2009, Gateway’s share of the net loss was $1,303,195, of which $1,223,623 was suspended. Equity in Loss of Project Partnerships did not change from the three months ended June 30, 2010 to the six months ended September 30, 2010 as all losses from Project Partnerships during this three month period totaling $512,946 were suspended.

Gain on Sale of Project Partnerships decreased from $301,008 for the six months ended September 30, 2009 to $157,948 for the six months ended September 30, 2010. As more fully discussed within this MD&A, two Project Partnership investments were sold during the second quarter of fiscal year 2011 as compared to the second quarter of fiscal year 2010 when four Project Partnership investments were sold. The amount of the gain or loss from the sale of a Project Partnership and the period in which it is recognized on the Statement of Operations is dependent upon the specifics related to each sale or disposition transaction. Refer to the discussion of each Project Partnership sold in the Exit Strategy section within this MD&A.

Interest income decreased $2,980 from $3,033 for the six months ended September 30, 2009 to $53 for the six months ended September 30, 2010. The change in interest income results primarily from the fluctuation of interest rates on short-term investments over this period along with the maturation of investments in securities over the same period. Cash and Cash Equivalents increased $193,929 from $749,426 as of September 30, 2009 to $943,355 as of September 30, 2010. Investments in Securities decreased from $82,320 as of September 30, 2009 to zero as of September 30, 2010. Interest income is generally one source of funds available to pay administrative costs of Gateway.

Liquidity and Capital Resources

The capital resources of each Series are used to pay General and Administrative operating costs including personnel, supplies, data processing, travel, legal, and accounting and audit fees associated with the administration and monitoring of Gateway and the Project Partnerships. The capital resources are also used to pay the Asset Management Fee due the Managing General Partner, but only to the extent that Gateway's remaining resources are sufficient to fund Gateway's ongoing needs. Payment of any Asset Management Fee unpaid at the time Gateway sells its interests in the Project Partnerships is subordinated to the investors' return of their original capital contribution.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

The sources of funds to pay the expenses of Gateway are cash and cash equivalents and cash distributed to the Series from the operations of the Project Partnerships. Due to the rent limitations applicable to the Project Partnerships as a result of their qualifying for Tax Credits, Gateway does not expect there to be a significant increases in future rental income of the Project Partnerships. Therefore, cash distributions from the operations of the Project Partnerships are not expected to increase. However, operational factors of the Project Partnerships and the timing of distributions contribute to fluctuations of distributions from period to period and year to year. Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

In total, Gateway reported a net ~~loss~~gain of $~~187~~2,~~272~~975 from operations for the ~~six~~nine months ended ~~September~~December 3031, 2010. Cash and Cash Equivalents increased by $34288,~~147~~127 during the ~~six~~nine months ended ~~September~~December 3031, 2010. Of the Cash and Cash Equivalents on hand as of ~~September~~December 3031, 2010 and March 31, 2010, $~~206~~444,~~400~~804 and $48,451, respectively, is payable to certain Series’ Limited Partners arising from the sale of Project Partnerships. Distributions will occur to those certain Limited Partners in a subsequent quarter, less the applicable state tax withholding. After consideration of these sales proceeds, Cash and Cash Equivalents decreased $69,396 as compared to the prior year-end balances.

The financial performance of each respective Series is summarized as follows:

Series 7 - Gateway closed this series on October 16, 1992 after receiving $10,395,000 from 635 Limited Partner investors. Equity in Loss of Project Partnerships was $~~288~~0 for the ~~six~~nine months ended ~~September~~December 3031, 2010 and $0 for the ~~six~~nine months ended ~~September~~December 3031, 2009. For the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, the Project Partnerships generated a loss of $~~333~~450,~~188~~478 and $~~360~~573,~~252~~586 on Rental and other income of $12,~~905~~603,~~739~~372 and $12,~~980~~977,~~593~~595, respectively. Gateway’s share of the Project Partnerships’ net loss for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009 was $~~350~~476,~~147~~187 and $~~357~~572,~~378~~362, of which $~~349~~476,~~859~~187 and $~~357~~572,~~378~~362 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $~~482~~650,~~563~~979 and $~~500~~751,~~779~~169 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At ~~September~~December 3031, 2010, the Series had $~~292~~493,~~495~~629 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

As disclosed on the statement of cash flows, the Series had net ~~loss~~income of $~~107~~296,~~009~~786 for the ~~six~~nine months ended ~~September~~December 3031, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $8083,~~805~~116. Cash provided by investing activities totaled $~~163~~367,~~598~~043 consisting of cash distributions from the Project Partnerships of $513,~~650~~720 and Net Proceeds from Sale of Project Partnerships of $~~157~~353,~~948~~323.

Series 8 - Gateway closed this Series on June 28, 1993 after receiving $9,980,000 from 664 Limited Partner investors. Equity in Loss of Project Partnerships decreased from $11,312 for the six months ended September 30, 2009 to $0 for the six months ended September 30, 2010. For the six months ended June 30, 2010 and 2009, the Project Partnerships generated a loss of $370,813 and $484,198 on Rental and other income of $2,683,210 and $2,750,725, respectively. Gateway’s share of the Project Partnerships’ net loss for the six months ended June 30, 2010 and 2009 was $369,830 and $477,209, of which $369,830 and $465,897 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $698,643 and $749,326 for the six months ended June 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At September 30, 2010, the Series had $228,370 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

As disclosed on the statement of cash flows, the Series had a net loss of $60,368 for the six months ended September 30, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $18,064. Cash provided by investing activities totaled $7,446 consisting of cash distributions from the Project Partnerships.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Series 98 - Gateway closed this Series on ~~September~~June 3028, 1993 after receiving $69,~~254~~980,000 from ~~406~~664 Limited Partner investors. Equity in Loss of Project Partnerships decreased from $~~301~~11,312 for the ~~six~~nine months ended ~~September~~December 3031, 2009 to $0 for the ~~six~~nine months ended ~~September~~December 3031, 2010. For the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, the Project Partnerships generated a loss of $~~276~~756,~~902~~987 and $~~222~~731,~~194~~198 on Rental and other income of $14,~~382~~019,~~726~~935 and $14,~~460~~149,~~983~~000, respectively. Gateway’s share of the Project Partnerships’ net loss for ~~six~~the nine months ended ~~June~~September 30, 2010 and 2009 was $~~274~~753,~~134~~015 and $~~224~~721,~~636~~175, of which $~~274~~753,~~134~~015 and $~~224~~709,~~335~~863 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $~~362~~1,~~545~~047,965 and $~~395~~1,~~320~~123,804 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At ~~September~~December 3031, 2010, the Series had $95235,~~304~~792 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

As disclosed on the statement of cash flows, the Series had a net loss of $3576,~~247~~615 for the ~~six~~nine months ended ~~September~~December 3031, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $718,~~259~~057. Cash provided by investing activities totaled $514,~~651~~861 consisting of cash distributions from the Project Partnerships.

Series 109 - Gateway closed this Series on ~~January~~September 2130, ~~1994~~1993 after receiving $56,~~043~~254,000 from ~~325~~406 Limited Partner investors. Equity in Loss of Project Partnerships ~~increased~~decreased from $~~9,367~~301 for the ~~six~~nine months ended ~~September~~December 3031, 2009 to $~~18,150~~0 for the ~~six~~nine months ended ~~September~~December 3031, 2010. For the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, the Project Partnerships generated a loss of $65399,~~848~~170 and $~~106~~446,~~432~~889 on Rental and other income of $~~941~~2,~~457~~097,626 and $~~972~~2,~~682~~192,329, respectively. Gateway’s share of the Project Partnerships’ net loss for ~~the~~nine ~~six~~ months ended ~~June~~September 30, 2010 and 2009 was $83395,~~419~~179 and $~~108~~442,~~823~~967, of which $65395,~~269~~179 and $99442,~~456~~666 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $~~219~~543,~~823~~817 and $~~243~~592,~~306~~980 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At ~~September~~December 3031, 2010, the Series had $144,~~397~~612 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

As disclosed on the statement of cash flows, the Series had a net loss of $~~42,961~~870 for the ~~six~~nine months ended ~~September~~December 3031, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $195,~~831~~989. Cash provided by investing activities totaled $1053,~~590~~689 consisting of cash distributions from the Project Partnerships of $10,659 and Net Proceeds from Sale of Project Partnerships of $43,030.

Series 1110 - Gateway closed this Series on ~~April~~January 2921, 1994 after receiving $5,~~127~~043,000 from ~~330~~325 Limited Partner investors. ~~The~~ Equity in Loss of Project Partnerships increased from $5819,~~592~~223 for the ~~six~~nine months ended ~~September~~December 3031, 2009 to $~~110~~19,~~312~~754 for the ~~six~~nine months ended ~~September~~December 3031, 2010. For the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, the Project Partnerships generated a loss of $~~185~~138,~~776~~052 and $~~139~~205,~~890~~026 on Rental and other income of $~~950~~1,~~673~~413,025 and $~~896~~1,~~437~~462,951, respectively. Gateway’s share of the Project Partnerships’ net loss for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009 was $~~179~~158,~~556~~526 and $~~135~~207,~~149~~250, of which $69138,~~244~~772 and $76188,~~557~~027 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $~~261~~329,~~979~~736 and $~~261~~364,~~740~~958 for the ~~six~~nine months ended ~~June~~September 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At ~~September~~December 3031, 2010, the Series had $~~182~~147,~~789~~298 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

As disclosed on the statement of cash flows, the Series had a net loss of $~~155~~51,~~705~~947 for the ~~six~~nine months ended ~~September~~December 3031, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $3519,~~001~~826. Cash provided by investing activities ~~consists~~totaled $13,486 consisting of cash distributions from the Project Partnerships ~~totaling $7,822~~.

Series 11 - Gateway closed this Series on April 29, 1994 after receiving $5,127,000 from 330 Limited Partner investors. The Equity in Loss of Project Partnerships increased from $93,719 for the nine months ended December 31, 2009 to $110,312 for the nine months ended December 31, 2010. For the nine months ended September 30, 2010 and 2009, the Project Partnerships generated a loss of $250,432 and $205,782 on Rental and other income of $1,430,471 and $1,368,621, respectively. Gateway’s share of the Project Partnerships’ net loss for the nine months ended September 30, 2010 and 2009 was $243,276 and $201,050, of which $132,964 and $107,331 were suspended, respectively. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. These Project Partnerships reported depreciation and amortization of $392,969 and $392,611 for the nine months ended September 30, 2010 and 2009, respectively. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2010, the Series had $176,004 of Cash and Cash Equivalents. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future and to pay part of the Asset Management Fee.

As disclosed on the statement of cash flows, the Series had a net loss of $164,379 for the nine months ended December 31, 2010. However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $41,786. Cash provided by investing activities consists of cash distributions from the Project Partnerships totaling $7,822.

Critical Accounting Estimates

Exit Strategy upon Expiration of the Project Partnership Tax Credit Compliance Period

The IRS compliance period for low-income housing Tax Credit properties is generally 15 years from occupancy following construction or rehabilitation completion. When Project Partnerships reach the end of their Tax Credit compliance period, Gateway initiates the process of disposing of its investment in the Project Partnership; the objective of the process is to sell Gateway’s interest in the properties for fair market value and ultimately, when Gateway’s last Project Partnership investment is sold, liquidate Gateway. Generally, the market for Project Partnerships is limited. Some of the factors which negatively impact the marketability of these projects include (1) requirements by government agencies or the project’s debt holder to continue to maintain the property in the low-income housing program, and (2) the mortgage balance of the property is very near the initial balance as a result of the heavily subsidized debt of the Project Partnerships and lengthy (usually 50 year) amortization periods.

As of ~~September~~December 3031, 2010, Gateway holds a limited partner interest in ~~117~~112 Project Partnerships which own and operate government assisted multi-family housing complexes. Gateway at one time held investments in 133 Project Partnerships. As of December 31, ~~2009, only 8 of the Project Partnerships have yet to reach the end of their Tax Credit compliance period but will do so in the year ending December 31,~~ 2010~~. As of September 30~~, ~~2010,~~21 16 of the Project Partnerships have been sold (1014 in Series 7, 3 in Series 8, 2 in Series 9, 1 in Series 10, and 1 in Series 1011) and, in accordance with the Gateway partnership agreement, the entire net proceeds received from these sales either have been or will be distributed to the Limited Partners of the respective Series. A summary of the sale transactions for the Project Partnerships disposed during the current fiscal year-to-date and the previous fiscal year are summarized below:

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Fiscal Year 2011 Disposition Activity:

Series 7

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
August 2010	Pioneer Apartments, L.P.	$ 157,949	$ 15.19	$ 157,949	$ -
				$ 157,949
December 2010	Lake Village Apartments	65,124	6.27	65,124	-
December 2010	Savannah Park of Atoka	65,125	6.27	65,125	-
December 2010	Savannah Park of Coalgate	65,125	6.27	65,125	-
December 2010	Cardinal Apartments	187,362	18.02	-	187,362
				$ 353,323	$ 187,362

Fiscal Year 2011 Disposition Activity (Continued):

Series 9

Transaction			Net Proceeds	~~Deferred~~ Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	on Disposal	on Disposal
September 2010	Stilwell Properties III	$ 43,030	$ 6.88	$ 43,030	$ -
				$ 43,030	$ -

Series 11

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
December 2010	Cardinal Apartments	$ 125,774	$ 24.53	$ -	$ 125,774
				$ -	$ 125,774

In accordance with GAAP, although the sale of Cardinal Apartments was consummated on or prior to December 31, 2010, the gain on the sale is being deferred on the Balance Sheet and not recognized on the Statement of Operations until the period that the net sales proceeds are received. Gateway recorded a receivable for the gross proceeds from this sale totaling $177,667 which is included in Receivable – Other on the Balance Sheet. The net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Assignees in a subsequent quarter. The deferred gain of $125,774 is included in Deferred Gain on Sale of Project Partnerships on the Balance Sheet and will be recognized on the fiscal year 2011 fourth quarter Statement of Operations.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Fiscal Year 2010 Disposition Activity:

Series 7

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
August 2009	Mountain City Manor	$ 36,860	$ 3.54	$ 38,190	$ -
August 2009	Tazewell Village	41,290	3.97	42,620	-
August 2009	Jamestown Village	36,450	3.51	37,864	-
August 2009	Clinch View Manor	134,400	12.93	135,814	-
May 2009	Spring Creek Apartments II LP	46,520	4.48	46,030	-
				$ 300,518	$ -

Series 8

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	South Brenchley	$ 13,000	$ 1.30	$ 13,000	$ -
January 2010	Cimmaron Station	10,000	1.00	10,000	-
				$ 23,000	$ -

The net proceeds per LP unit from the sale of South Brenchely and Cimmaron Station are a component of the Distribution Payable on the Balance Sheets as of March 31 and ~~September~~December 3031, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent quarter.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Fiscal Year 2010 Disposition Activity (Continued):

Series 9

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	Mountain Glen	$ 10,000	$ 1.59	$ 10,000	$ -
				$ 10,000	$ -

Series 10

Transaction			Net Proceeds	Gain on	Deferred Gain
Month / Year	Project Partnership	Net Proceeds	Per LP Unit	Disposal	on Disposal
January 2010	Redstone	$ 10,000	$ 1.98	$ 10,000	$ -
				$ 10,000	$ -

The net proceeds per LP unit from the sale of Redstone are a component of the Distribution Payable on the Balance Sheets as of March 31 and ~~September~~December 3031, 2010. These net proceeds, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent quarter.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Status Update on Unsold Project Partnerships:

The following summarizes the most recent status of the sale/disposal process for the Project Partnership investments held as of ~~September~~December 3031, 2010:

Gateway has approved the sale to the general partner of the Project Partnership or a third party:

Series 7

Mt. Vernon Rental Housing, L.P. Meadow Run Apartments, LP Lakeland II, LP Blue Ridge Elderly Housing, Ltd., L.P. ~~Horton Housing, L.P. Atoka Properties Coalgate Properties~~

These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $~~298~~102,000, or $289.6781 per limited partnership unit. Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 7 Limited Partners subsequent to the closing of these sales transactions which would most likely occur within the next two years.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Series 8

Antlers Properties ~~Antlers~~Logan ~~Properties~~Heights, IILtd. AAA Properties of Bentonville Meadowview Properties Limited Partnership Concordia Senior Housing, L.P. ~~Holdenville~~Mountainburg Properties Kirksville Senior Apartments, Limited Partnership ~~Mountainburg Properties Wetumka Properties~~ Cottondale Rental Housing, L.P. Wetumka Properties

These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $~~650~~589,000, or $6559.1302 per limited partnership unit. Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 8 Limited Partners subsequent to the closing of these sales transactions which would most likely occur within the next two years.

Series 9

Arbor Trace Apartments Phase I LP	Arbor Trace Apartments Phase II LP
Abernathy Properties	Boxwood Place Properties
Lamar Properties, L.P.	Jay Properties II

These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $307,000, or $49.09 per limited partnership unit. Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 9 Limited Partners subsequent to the closing of these sales transactions which would most likely occur within the next two years.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Status Update on Unsold Project Partnerships (Continued):

Series 10

Stigler Properties

This approval is subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sale amount as approved by Gateway, should the transaction close without modification, the estimated net proceeds to Gateway from the sale of this Project Partnership is estimated to be $54,000, or $10.71 per limited partnership unit. Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 10 Limited Partners subsequent to the closing of this sales transaction which would most likely occur within the next two years.

Gateway is exploring options regarding the sale or other disposition of the remaining Project Partnership investments that have exited their Tax Credit compliance period and are not specifically listed above. Any net proceeds arising from these particular Project Partnerships are anticipated to be minimal.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

As a smaller reporting company, no information is required.

Item 4. Controls and Procedures.

Not applicable to this report.

Item 4T. Controls and Procedures.

Disclosure controls are procedures designed to ensure that information required to be disclosed in Gateway's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as Gateway's are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of the Managing General Partner’s management, including the Chief Executive Officer and Chief Financial Officer, Gateway has evaluated the effectiveness of its disclosure controls and procedures applicable to each of the Series as well as to the total partnership pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures applicable to each of the Series as well as to the total partnership are effective. There were no changes in Gateway’s internal control over financial reporting during the ~~six~~nine months ended ~~September~~December 3031, 2010 that have materially affected, or are reasonably likely to materially affect, Gateway’s internal control over financial reporting.

With respect to the Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Financial Officer, respectively, of the Managing General Partner of Gateway (see Exhibits 31.1 and 31.2 included herein), such certifications are applicable to each of the Series as well as to the total partnership.

PART II – Other Information

Item 1. Legal Proceedings.

Not applicable to this report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable to this report.

Item 3. Defaults upon Senior Securities.

Not applicable to this report.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable to this report.

Item 5. Other Information.

Not applicable to this report.

Item 6. Exhibits.

31.1 Principal Executive Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

31.2 Principal Financial Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

32. Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

SIGNATURES

Pursuant to the requirements 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.

GATEWAY TAX CREDIT FUND III, LTD.

(A Florida Limited Partnership)

By: Raymond James Tax Credit Funds, Inc.

(the Managing General Partner)

Date: November 12, 2010		By:/s/ Ronald M. Diner
Date: February 11, 2011		By:/s/ Ronald M. Diner
		Ronald M. Diner
		President

Date: November 12, 2010		By:/s/ Toni S. Matthews
Date: February 11, 2011		By:/s/ Toni S. Matthews
		Toni S. Matthews
		Vice President and Chief Financial Officer

Filing Compare · GATEWAY TAX CREDIT FUND III LTD