10-Q 1 f10q_dec2004-lib1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 For the quarterly period ended December 15, 2004 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ------- EXCHANGE ACT OF 1934 Commission File Number 0-17015 LIBERTY TAX CREDIT PLUS L.P. ---------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3446500 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 Madison Avenue, New York, New York 10022 -------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212)421-5333 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 is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No X ----- ----- PART I - Financial Information Item 1. Financial Statements LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)

============= ============= ~~September~~December 15, March 15, 2004 2004 ------------- ------------- ASSETS Property and equipment, at cost, net of accumulated depreciation of $~~112~~108,~~970~~236,~~558~~516 and $121,278,707 respectively $~~105~~ 98,~~437~~332,~~253~~554 $ 120,489,756 ~~Property and equipment - held for sale, net of accumulated depreciation of $7,572,358 and $0 6,076,671 0~~ Cash and cash equivalents 45,~~697~~648,~~677~~193 5,~~524~~224,728 Cash held in escrow 15,~~284~~091,~~831~~801 15,550,003 Accounts receivable - tenants ~~481~~648,~~697~~350 938,800 Deferred costs - net of accumulated amortization of $21,~~090~~924,~~589~~407 and $2,394,139, respectively 21,~~209~~994,~~034~~791 2,609,060 Other assets 1,~~887~~756,~~766~~085 1,373,958 ------------- ------------- Total assets $~~136~~ 123,~~074~~471,~~929~~774 $ 146,186,305 ============= =============

2 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (continued)

============= ============== ~~September~~December 15, March 15, 2004 2004 ------------- -------------- LIABILITIES AND PARTNERS' DEFICIT Liabilities: Mortgage notes payable $ ~~128~~113,~~168~~710,~~874~~039 $ 136,800,161 Accounts payable and other liabilities 13,~~608~~193,~~182~~788 14,571,500 Due to local general partners and affiliates 20,~~635~~454,~~659~~392 19,979,284 Due to general partners and affiliates 9,~~366~~095,~~810~~460 8,568,329 Due to selling partners 1,292,934 1,292,934 ------------- ------------- Total liabilities ~~173~~157,~~072~~746,~~459~~613 181,212,208 ------------- ------------- Minority interest ~~548~~965,~~151~~259 1,654,689 ------------- ------------- Commitments and contingencies (Note 4) Partners' deficit: Limited partners (15,987.5 BACs issued and outstanding) (3634,~~440~~157,~~380~~853) (35,583,942) General partners (1,~~105~~082,~~301~~245) (1,096,650) ------------- ------------- Total partners' deficit (3735,~~545~~240,~~681~~098) (36,680,592) ------------- ------------- Total liabilities and partners' deficit $ ~~136~~123,~~074~~471,~~929~~774 $ 146,186,305 ============= =============

See accompanying notes to consolidated financial statements. 3 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

============================ ============================ Three Months Ended ~~Six~~Nine Months Ended ~~September~~December 15, ~~September~~December 15, ---------------------------- ---------------------------- 2004 2003* 2004 2003* ---------------------------- ---------------------------- Operations: Revenues Rental income $ 7,~~900~~105,~~642~~917 $ 87,~~390~~041,~~022~~993 $ 1521,~~851~~086,~~004~~032 $ 1621,~~784~~321,~~165~~475 Other ~~289~~173,~~988~~933 ~~337~~311,~~544~~136 ~~552~~663,~~755~~785 ~~655~~832,~~992~~995 ~~Gain on sale of properties (Note 3) 20,446 522,560 2,524,907 1,808,199~~ ------------ ------------ ------------ ------------ 87,~~211~~279,~~076~~850 97,~~250~~353,~~126~~129 1821,~~928~~749,~~666~~817 1922,~~248~~154,~~356~~470 ------------ ------------ ------------ ------------ Expenses General and administrative 1,~~330~~158,~~400~~880 1,~~676~~197,~~753~~930 23,~~780~~554,~~641~~688 3,~~125~~727,~~545~~967 General and administrative- related parties (Note 2) ~~653~~581,~~050~~188 ~~658~~600,~~731~~003 1,~~237~~726,~~432~~471 1,~~299~~774,~~436~~756 Repairs and maintenance 1,~~895~~685,~~770~~556 1,~~848~~758,~~639~~194 35,~~948~~157,~~166~~909 34,~~519~~752,~~097~~257 Operating and other 1762,~~082,697~~143 1744,~~301,745~~679 2,~~489~~957,~~080~~968 23,~~771~~056,~~832~~379 Taxes ~~344~~371,~~070~~762 ~~379~~445,~~577~~620 ~~718~~975,~~301~~744 ~~740~~1,~~693~~025,543 Insurance ~~478~~431,~~007~~684 ~~447~~394,~~290~~036 ~~931~~1,~~557~~213,997 ~~910~~1,~~883~~109,934 Financial 2,~~233~~246,~~921~~168 2,~~610~~294,~~281~~096 46,~~759~~349,~~896~~543 56,~~252~~609,~~023~~660 Depreciation and amortization 21,~~060~~891,~~567~~488 21,~~138~~632,~~802~~923 35,~~935~~509,~~201~~936 4,~~232~~898,~~689~~761 ------------ ------------ ------------ ------------ Total expenses 109,~~078~~128,~~482~~869 119,~~061~~067,~~818~~481 2027,~~800~~446,~~274~~256 2126,~~852~~955,~~198~~257 ------------ ------------ ------------ ------------ Loss from operations before minority interest (1,~~867~~849,~~406~~019) (1,~~811~~714,~~692~~352) (15,~~871~~696,~~608~~439) (24,~~603~~800,~~842~~787) Minority interest in loss of subsidiaries 7from operations 5,~~431~~493 ~~233~~4,~~316~~272 114,~~006,519~~848 ~~464~~7,~~022~~324 ------------ ------------ ------------ ------------ ~~Net~~Loss ~~loss~~from $operations (1,~~859~~843,~~975~~526) $ (1,~~578~~710,~~376~~080) $ (~~865~~5,~~089~~681,591) $ (24,~~139~~793,~~820~~463) ~~============~~------------ ~~============~~------------ ~~============~~------------ ~~============ Net loss~~ ------------ ~~limited~~Discontinued ~~partners~~operations: $Income (~~1,841,375~~loss) $from ~~(1,562,592)~~discontinued $operations (~~856,438)~~including $gain ~~(2,118,422)~~on ~~============~~sale ~~============ ============ ============ Number~~ of ~~BACs~~properties) ~~outstanding~~(Note 156) 4,~~987.5~~149,109 15(490,~~987.5~~496) 157,~~987.5~~122,085 15453,~~987.5~~067 ~~============~~------------ ~~============~~------------ ~~============~~------------ ~~============~~------------ Net income (loss) ~~per BAC~~ $ ~~(115.18)~~2,305,583 $ (~~97.73~~2,200,576) $ ~~(53.57)~~1,440,494 $ (~~132.50~~4,340,396) ============ ============ ============ ============

4 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (continued)

============ ================ ============================ ~~Limited~~Three ~~General~~Months ~~Total~~Ended ~~Partners~~Nine ~~Partners~~Months Ended December 15, December 15, ---------------------------- ---------------------------- 2004 2003* 2004 2003* ---------------------------- ~~Partners'~~---------------------------- ~~deficit~~Loss from operations - ~~March~~limited 16partners (1,825,090) ~~2004 $~~(361,~~680~~692,~~592~~979) $(355,~~583~~624,~~942~~775) $ (14,~~096~~745,~~650~~528) ~~Net~~Income (loss) from discontinued oper- ations (~~865,089~~including gain on sale of properties) ~~(856~~- limited partners 4,~~438)~~107,617 (8485,~~651~~591) 7,050,864 448,536 ------------ ------------ ------------ ~~Partners'~~------------ ~~deficit~~Net income (loss) - ~~September~~limited ~~15,~~partners ~~2004~~$ 2,282,527 $ (372,~~545~~178,~~681~~570) $~~(36~~ 1,~~440~~426,~~380)~~089 $ (14,~~105~~296,~~301~~992) ============ ============ ============ ============ Number of BACs outstanding 15,987.5 15,987.5 15,987.5 15,987.5 ============ ============ ============ ============ Loss from operations per BAC (114.16) (105.90) (351.82) (296.83) Income (loss) from discontinued operations (including gain on sale of prop- erties) per BAC 256.93 (30.37) 441.02 28.06 ------------ ------------ ------------ ------------ Net income (loss) per BAC $ 142.77 $ (136.27) $ 89.20 $ (268.77) ============ ============ ============ ============

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 5 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statement of Changes in Partners' Deficit (Unaudited)

============================================ ~~Six~~Limited ~~Months~~General ~~Ended~~Total ~~September~~Partners ~~15,~~Partners ---------------------------- ~~2004 2003~~ ----------------~~------------~~ ~~Cash~~Partners' ~~flows~~deficit ~~from~~- ~~operating~~March ~~activities:~~16, ~~Net~~2004 ~~loss~~ $ (~~865~~36,~~089~~680,592) $(235,~~139~~583,~~820~~942) ~~Adjustments~~$ ~~to reconcile net loss to net cash provided by operating activities: Gain on sale of properties~~ (~~Note 3) (2,524,907) (~~1,~~808~~096,~~199~~650) ~~Depreciation~~Net ~~and~~income ~~amortization 3,935,201 4,232,689 Minority interest in loss of subsidiaries (~~1,~~006~~440,~~519)~~494 ~~(464,022) Decrease in accounts receivable-tenants 438,698 107,842 Increase in other assets (513,808) (196,319) Increase in accounts payable and other liabilities 928,232~~ 1,~~114~~426,~~998~~089 ~~Increase in due to general partners and affiliates 826~~14,~~814~~405 ~~373,547 (Increase) decrease in cash held in escrow (436,956) 5,068~~ ----------- -~~----------~~ ~~Net cash provided by operating activities 781,666 1,225,784~~ ------------ ------------ ~~Cash~~Partners' ~~flows~~deficit ~~from~~- ~~investing~~December ~~activities: Proceeds from sale of properties 0 504~~15,~~984~~ ~~Decrease~~2004 $(~~increase) in cash held in escrow 334~~35,~~169 (32~~240,~~125~~098) ~~Improvements to property and equipment~~ $(~~897~~34,~~955) (638~~157,~~555~~853) ~~-----------~~$ ~~----------- Net cash used in investing activities~~ (~~563~~1,~~786) (165~~082,~~696~~245) ~~-----------~~============ ~~-----------~~============ ============

See accompanying notes to consolidated financial statements. 6 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited)

============================ ~~Six~~Nine Months Ended ~~September~~December 15, ---------------------------- 2004 2003* ---------------------------- Cash flows from ~~financing~~operating activities: ~~Repayments~~Net ofincome ~~mortgage~~(loss) ~~notes~~$ (1,~~301~~440,~~287)~~494 $ (14,~~794~~340,~~327~~396) ~~Increase~~Adjustments into ~~due~~reconcile net income (loss) to ~~local~~net ~~general~~cash ~~partners~~provided by operating activities: Income from discontinued operations (including gain on sale of properties - Notes 3 and ~~affiliates~~6) ~~791~~(7,~~391~~122,085) ~~505~~(453,~~636~~067) ~~Decrease~~Depreciation inand ~~due~~amortization to5,509,936 ~~local~~4,898,761 ~~general~~Minority ~~partners~~interest ~~and~~in ~~affiliates~~loss of subsidiaries (~~135~~14,~~016~~848) (~~795~~7,~~163~~324) (Decrease in accounts receivable-tenants 297,376 131,715 Increase in other assets (1,036,804) ~~increase~~(3,918) Increase in ~~capitalization~~accounts ofpayable ~~consolidated~~and ~~subsidiaries~~other ~~attributable~~liabilities 1,581,844 1,282,146 Increase in due to ~~minority~~general ~~interest~~partners and affiliates 839,476 534,170 Increase in cash held in escrow (~~100~~677,~~019~~299) ~~167~~(412,~~491~~777) ------------ ------------ Net cash ~~used~~provided inby ~~financing~~operating activities ~~(744~~818,~~931)~~090 (1,~~916~~629,~~363)~~310 ------------ ------------ ~~Net~~Cash ~~decrease~~flows infrom ~~cash~~investing ~~and~~activities: ~~cash~~Proceeds ~~equivalents~~from ~~(527~~sale of properties 1,~~051)~~224,789 ~~(856~~504,~~275)~~984 ~~Cash~~Decrease ~~and~~(increase) in cash ~~equivalents~~held atin ~~beginning~~escrow of288,138 ~~period~~(218,057) 5Improvements to property and equipment (1,~~224~~099,~~728~~721) 6(776,~~067,262~~519) ------------ ------------ ~~Cash~~Net ~~and~~ cash ~~equivalents~~provided atby ~~end~~(used ofin) ~~period~~investing $activities 4413,~~697,677~~206 ~~$ 5~~(489,~~210,987~~592) ~~=========== =========== Supplemental disclosures of noncash activities: Increase in property and equipment~~ ------------ ~~held for sale reclassified from property and equipment $ 6,076,671 $ 8,952,525~~------------

7 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited) (continued)

============================ ~~Six~~Nine Months Ended ~~September~~December 15, ---------------------------- 2004 2003* ---------------------------- ~~Summarized~~Cash ~~below~~flows ~~are~~from ~~the~~financing ~~components~~activities: Repayments of ~~the~~mortgage ~~gain~~notes on(1,828,243) ~~sale~~(2,407,336) ofIncrease ~~properties: Decrease~~ in ~~property~~due ~~and~~to ~~equipment,~~local ~~net~~general ofpartners ~~accumulated~~and ~~depreciation~~affiliates ~~$ 6~~1,~~024~~061,~~442~~896 ~~$ 6~~739,~~565,853~~428 Decrease in ~~mortgage~~due ~~notes~~to ~~payable~~local general partners and affiliates (7329,~~330,000~~044) (6589,~~377,743~~691) ~~Decrease~~Increase in ~~due~~capitalization of consolidated subsidiaries attributable to ~~general~~minority ~~partners~~interest ~~and~~287,560 ~~affiliates~~55,178 ------------ ------------ Net cash used in financing activities (28807,~~333~~831) (452,~~000~~202,421) ~~Decrease~~------------ in------------ ~~due~~Net toincrease ~~local~~(decrease) ~~general~~in ~~partner~~cash and ~~affiliates~~cash 0equivalents 423,465 (~~892~~1,~~675~~062,703) ~~Decrease~~Cash inand cash ~~held~~equivalents inat ~~escrow~~beginning ~~367,959~~of 0period ~~Decrease~~5,224,728 in6,067,262 ~~rents~~------------ ~~receivable~~------------ ~~18,405~~Cash 0and ~~Decrease~~cash inequivalents ~~accounts~~at ~~payable,~~end ~~accrued~~of ~~expenses~~period ~~and~~$ ~~other~~5,648,193 ~~liabilities~~$ (15,~~891~~004,~~550)~~559 ~~(553,650)~~============ ~~Decrease~~============ Supplemental disclosures of noncash activities: Increase in ~~deferred~~property ~~costs~~and ~~314,170~~equipment- held for sale reclassified from property and equipment $ 0 $ 8,952,525

8 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited) (continued)

~~Three~~============================ ~~Months~~Nine ~~Ended Six~~ Months Ended ~~September~~December 15, ~~September 15,~~ ----------------------- -----~~------------------~~ 2004 2003* ~~2004 2003~~ ----------------------- -----~~------------------~~ ~~Partnership~~Summarized ~~manage-~~below ~~ment~~are ~~fees~~the components of the discontinued operations (aincluding gain on sale of properties): $Decrease ~~269,250~~in $property ~~269~~and equipment,~~250~~ net of accumulated depreciation $ ~~531~~17,~~000~~874,259 $ ~~538~~7,~~500~~524,476 ~~Expense~~Decrease ~~reimburse-~~in ~~ment~~mortgage ~~(b)~~notes ~~53,930~~payable 58(21,~~382 84~~261,~~244~~879) 82(6,~~149~~442,728) ~~Property~~Decrease ~~management~~in ~~fees~~mortgage ~~incurred~~escrow todeposits ~~af-~~297,852 ~~filiates~~476,531 ofDecrease ~~the~~in ~~Gen~~cash-restricted ~~eral~~for ~~Partners~~tenants ~~(c)~~security ~~23,653~~deposits 27116,~~441~~134 ~~47,306~~0 ~~54,882~~Decrease ~~Local~~in ~~administrative~~reserve ~~fee~~for ~~(d)~~replacement 13433,~~000~~377 ~~14,000~~0 ~~26,000~~Decrease ~~28,000~~(increase) ~~----------~~in ~~----------~~prepaid ~~----------~~expenses ~~----------~~and ~~Total~~other ~~general~~assets ~~and~~654,677 ~~administrative-~~(15,831) ~~General~~Increase ~~Partners~~in ~~359~~accounts receivable (6,~~833~~926) ~~369~~(70,~~073~~746) ~~688~~Decrease in deferred costs 486,~~550~~997 ~~703~~310,~~531~~908 ~~----------~~(Decrease) ~~----------~~increase ~~----------~~in ~~----------~~accounts ~~Property~~payable, ~~manage-~~accrued ~~ment~~expenses ~~fees~~and ~~incurred~~other toliabilities ~~affili-~~(2,959,556) ~~ates~~221,259 ofDecrease ~~the~~in ~~local~~due to general partners ~~(c)~~and ~~293,217~~affiliates ~~289~~(312,~~658~~345) ~~548~~(43,~~882~~009) ~~595,905~~Decrease ~~----------~~in ~~----------~~due ~~----------~~to ~~----------~~local ~~Total~~ general partner and ~~administrative-~~affiliates ~~related~~(257,744) ~~parties~~(1,444,227) $Decrease ~~653,050~~in $capitalization ~~658,731~~of ~~$1,237,432~~consolidated ~~$1,299,436~~subsidiaries ~~==========~~attributable ~~==========~~to ~~==========~~minority ~~==========~~interest (962,142) (464,716)

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 9 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) Note 1 - General The consolidated financial statements for the nine months ended December 15, 2004 and 2003, include the accounts of Liberty Tax Credit Plus L.P. (the "Partnership") and 27 and 30 subsidiary partnerships (each a "subsidiary partnership" or "Local Partnership"), respectively, in which the Partnership is a limited partner. Through the rights of the Partnership and/or a general partner of the Partnership (a "General Partner"), which General Partner has a contractual obligation to act on behalf of the Partnership, to remove the general partners of each subsidiary partnership (the "local general partners") and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation. For financial reporting purposes, the Partnership's fiscal quarter ends on December 15. All subsidiary partnerships have fiscal quarters ending September 30. Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from October 1 through December 15. The Partnership's quarter ends on December 15 in order to allow adequate time for the subsidiary partnerships financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with generally accepted accounting principles ("GAAP"). In the opinion of the General Partners, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Partnership as of December 15, 2004, the results of operations for the three and nine months ended December 15, 2004 and 2003 and cash flows for the nine months ended December 15, 2004 and 2003. However, the operating results and cash flows for the nine months ended December 15, 2004 may not be indicative of the results for the year. In accordance with FASB 144, the results of discontinued operations are reported as a separate component of income before extraordinary items on the Consolidated Statements of Operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the consolidated financial statements. Adjustments to amounts previously reported in operations that are directly related to the 10 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the Consolidated Balance Sheets. Certain information and note disclosures which are normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the period ended March 15, 2004. Increases (decreases) in the capitalization of consolidated subsidiaries attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners. The Partnership's investment in each subsidiary partnership is equal to the respective subsidiary partnership's partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interests' investments in the subsidiary partnerships have been charged to the Partnership. Such losses aggregate approximately $0 and $10,000 for both the three and nine months ended December 15, 2004 and 2003, respectively. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. 11 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) Note 2 - Related Party Transactions An affiliate of the General Partners has a 1% interest, as a special limited partner, in each of the subsidiary partnerships. An affiliate of the General Partners also has a minority interest in certain subsidiary partnerships. The costs incurred to related parties for the three and nine months ended December 15, 2004 and 2003 classified as operations on the Consolidated Statements of Operations were as follows:

(a) The General Partners are entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the local annual administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership's Amended and Restated Agreement of Limited Partnership), for administering the affairs of the Partnership. The partnership management fee, subject to the foregoing limitation, will be determined by the General Partners in their sole discretion based upon their review of the Partnership's investments. Partnership management fees owed to the 12 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) General Partners amounting to approximately $8,587,000 and $7,911,000 were accrued and unpaid as of December 15, 2004 and March 15, 2004, respectively. (b) The Partnership reimburses the General Partners and their affiliates for actual Partnership operating expenses incurred by the General Partners and their affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance. Expense reimbursements and asset monitoring fees owed to Related Credit Properties L.P., a General Partner, amounting to approximately $82,000 and $90,000 were accrued and unpaid as of December 15, 2004 and March 15, 2004, respectively. The General Partners have allowed for the accrual without payment of the amounts set forth in (a) and (b) but are under no obligation to continue to do so. (c) Property management fees incurred by the subsidiary partnerships amounted to $419,437 and $435,229 and $1,313,094 and $1,354,736 for the three and nine months ended December 15, 2004 and 2003, respectively. Of these fees, $254,007 and $259,388 and $763,046 and $790,492 were incurred to affiliates of the local general partners. (d) Liberty Associates III L.P., a General Partner and the special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. Note 3 - Sale of Properties On September 24, 2004, the property and the related assets and liabilities of Autumn Park Associates, L.P. ("Autumn Park") were sold to an unaffiliated third party for $1,050,000. This amount consisted of $900,000 paid in cash at the closing and $150,000 pursuant to one promissory note. The note compounds interest at 10% and is due on October 30, 2005. The sale resulted in a gain of approximately $1,992,000. On August 27, 2004, the property and the related assets and liabilities of 2108 Bolton Drive Associated, L.P. ("Bolton") were sold to an unaffiliated third 13 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) party for $8,891,000, resulting in a gain of approximately $1,259,000. On July 30, 2004, the property and the related assets and liabilities of Tanglewood Apartments, L.P. ("Tanglewood") were sold to an unaffiliated third party for $3,425,000, resulting in a gain of approximately $1,167,000. On March 31, 2004, the property and the related assets and liabilities of Walnut Park Plaza ("Walnut") were sold to the local general partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,732,000 resulting in a gain of approximately $2,559,000. The sale resulted in the liquidation of Walnut. On March 2, 2004, the Partnership signed a "Letter of Intent" with an unaffiliated third party to purchase the Partnership's limited partnership interest in Bayridge Associates, L.P. ("Bayridge") for a purchase price of $1,100,000 plus the assumption of the existing debt. The closing is expected to occur in 2006. No assurances can be given that the sale will actually occur. On May 19, 2003, the property and the related assets and liabilities of Silver Blue Lake Apts. LTD ("Silver Blue") were sold to an unaffiliated third party for a purchase price of $3,500,000, resulting in a gain of approximately $408,000, which was recognized in the quarter ended September 15, 2003. Accrued interest on a note related to the Local Partnership was forgiven resulting in forgiveness of indebtedness income of approximately $114,000 which was recognized during the quarter ended September 15, 2003. The sale resulted in the liquidation of Silver Blue. On March 16, 2003, the deed in lieu of foreclosure to Bryden Road, one of the properties owned by Shiloh Grove, L.P. ("Shiloh"), was transferred to an unaffiliated third party. The outstanding mortgage balance paid by the third party on the day of transfer was $189,871 resulting in a gain of approximately $104,000, which was recognized during the fourth quarter ended March 15, 2004. On January 23, 2003, the property and the related assets and liabilities of Ludlam Gardens Apartments, LTD. ("Ludlam") were sold to an unaffiliated third 14 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) party for a purchase price of $3,900,000, resulting a gain of approximately $959,000. The sale resulted in the liquidation of Ludlam. On January 16, 2003, the property and the related assets and liabilities of Dixie Apartment Associates, LTD. ("Dixie") were sold to an unaffiliated third party for a purchase price of $1,300,000, resulting a gain of approximately $327,000. The sale resulted in the liquidation of Dixie. Note 4 - Commitments and Contingencies Redwood Villa Associates, L.P. ------------------------------ Redwood Villa Associates, L.P. ("Redwood") has sustained operating losses since its inception, and at December 15, 2004 had a partners' deficit of approximately $1,592,000. Redwood has been able to defer ground lease payments that are due to a related party. The local general partner, whenever possible, plans to reduce operating costs to achieve profitable operations or provide future capital contributions. Bayridge Associates, L.P. ------------------------- Bayridge Associates, L.P. ("Bayridge") has experienced increased vacancy loss and recurring concessions over the past year due to the continuing soft rental market in the Portland, OR area. Management of the property changed during the year. They are working to make all vacant units market ready and hope to improve occupancy during the next year. Note 5 - Subsequent Events On January 5, 2005, the property and the related assets and liabilities of Lund Hill Associates, L.P. ("Lund Hill"), were sold to an unaffiliated third party for a purchase price of $6,500,000, resulting in a gain of approximately $1,097,000, which will be recognized in the financial statements of the Partnership's Form 10-K during the quarter ended March 15, 2005. On December 29, 2004, the Partnership entered into an agreement for the sale of its Limited Partnership Interest in Lancaster Towers Associates, Ltd. ("Lancaster") to an affiliate of the local general partner for a purchase price of $450,000. The sales documents have been executed and the funds are being held 15 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited) in escrow waiting for approval of the sale from the Department of Housing and Urban Development ("HUD"). No assurances can be given that HUD will approve the sale. Note 6 - Discontinued Operations: The following table summarizes the financial results of the Local Partnerships that are classified as discontinued operations. For the three and nine month period ended December 15, 2004, Autumn Park, Bolton, Tanglewood and Walnut were classified as discontinued operations on the Consolidated Statement of Operations. For the three and nine month period ended December 15, 2003, Autumn Park, Bolton, Tanglewood, Walnut, Silver Blue, Bryden Road (one of the properties owned by Shiloh), Ludlam and Dixie were classified as discontinued operations on the Consolidated Statement of Operations.

16 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2004 (Unaudited)

17 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The Partnership's capital has been invested in 31 Local Partnerships. As of December 15, 2004, the properties and the related assets and liabilities of seven Local Partnerships and the limited partnership interest in one Local Partnership were sold. For a discussion of the sale of the Local Partnerships, see Note 3 to the financial statements. The Partnership's primary source of funds is cash distributions from operations of the Local Partnerships in which the Partnership has invested. Such funds, although minimal, are available to meet obligations of the Partnership. During the nine months ended December 15, 2004 and 2003, such distributions amounted to approximately $1,338,000 and $115,000, respectively. In addition, partnership management fees and expense reimbursements owed to the General Partners amounting to approximately $8,669,000 and $8,001,000 were accrued and unpaid as of December 15, 2004 and March 15, 2004, respectively. Without the General Partners' continued accrual without payment of the partnership management fees, the Partnership will not be in a position to meet its obligations. The General Partners have allowed for the accrual without payment of a portion of the partnership management fees but are under no obligation to continue to do so. For the nine months ended December 15, 2004, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately $423,000. This increase is attributable to cash provided by operating activities ($818,000), proceeds from sales of properties ($1,225,000), a decrease in cash held in escrow relating to investing activities ($288,000), a net increase in due to local general partners and affiliates relating to financing activities ($733,000) and an increase in capitalization of consolidated subsidiaries attributable to minority interest ($288,000) which exceeded improvements to property and equipment ($1,100,000) and principal repayment of mortgage notes ($1,828,000). Included in adjustments to reconcile the net loss to net cash provided by operating activities are depreciation and amortization of approximately ($5,510,000) and income from discontinued operations (including gain on sale of properties) of approximately ($7,122,000). For a discussion of contingencies affecting certain Local Partnerships, see Note 4 to the financial statements. Since the maximum loss the Partnership would be liable for is its net investment in the respective Local Partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership may result in recapture of tax credits if the investment is lost before the expiration of the applicable compliance period. 18 Management is not aware of any trends or events, commitments or uncertainties which have not otherwise been disclosed that will, or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The portfolio is diversified by the location of the properties around the United States so that if one area of the country is experiencing downturns in the economy, the remaining properties in the Partnership's portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. Critical Accounting Policies ---------------------------- In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of the Partnership accounting policies included in Note 2 to the consolidated financial statements in the annual report on Form 10-K. Property and Equipment ---------------------- Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The Partnership complies with Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time property investments themselves are reduced to estimated fair value (generally using discounted cash flows). At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not 19 depreciated. For the nine months ended December 15, 2004, the Partnership has not recorded any property and equipment as held for sale. Discontinued Operations ----------------------- In accordance with FASB 144, the results of discontinued operations are reported as a separate component of income before extraordinary items on the Consolidated Statements of Operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the consolidated financial statements. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the Consolidated Balance Sheets. Income Taxes ------------ The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31. Results of Operations --------------------- The results of operations of the Partnership, as well as the Local Partnerships, remained fairly consistent during the three and nine months ended December 15, 2004 and 2003, excluding gain on sale of properties, other income, taxes, depreciation and amortization and capital events with respect to Ludlam, Dixie, Silver Blue, Bryden Road, Walnut, Tanglewood, Bolton and Autumn Park, which sold their respective properties and the related assets and liabilities (the "Sold Assets"). The results of operations for the three and nine months ended December 15, 2004 and 2003 consisted primarily of the results of the Partnership's investment in the consolidated Local Partnerships. Rental income decreased approximately 3% and 5% for the three and nine months ended December 15, 2004 as compared to the corresponding periods in 2003. Excluding the Sold Assets, rental income remained fairly consistent for the three months ended December 15, 2004 and 2003 and decreased approximately 1% for the nine months ended December 15, 2004 and 2003, primarily due to a grant received by one Local Partnership in 2003 and increased vacancy and recurring concessions at a second Local Partnership in 2004 (see Note 4). 20 Other income decreased approximately $101,000 and $205,000 for the three and nine months ended December 15, 2004 as compared to the corresponding periods in 2003. Excluding the Sold Assets, other income decreased approximately $100,000 and $45,000, primarily due to a decrease in subsidy income at one Local Partnership. Taxes decreased approximately $134,000 and $157,000 for the three and nine months ended December 15, 2004 as compared to the corresponding periods in 2003. Excluding the Sold Assets, taxes decreased approximately $74,000 and $50,000, primarily due to an overaccrual of taxes in the prior year at one Local Partnership. Depreciation and amortization increased approximately $331,000 and $34,000 for the three and nine months ended December 15, 2004, as compared to the corresponding periods in 2003. Excluding the Sold Assets, depreciation and amortization increased approximately $260,000 and $614,000, primarily due to the resumption of depreciation expense at one Local Partnership that was classified as an asset held for sale in 2004, and therefore not depreciated in 2003. Repairs and maintenance decreased approximately $236,000 for the three months ended December 15, 2004 as compared to the corresponding period in 2003, primarily due to decreases relating to the Sold Assets. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership does not have any market risk sensitive instruments. Item 4. Controls and Procedures (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in Partnership's internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. 21 PART II. OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Unregistered Sales of Equity in Securities and Use of Proceeds - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - None Item 6. Exhibits (3A) Limited Partnership Agreement of Liberty Tax Credit Plus L.P. dated October 9, 1987** (3B) Form of Amended and Restated Agreement of Partnership of Liberty Tax Credit Plus L.P. (attached to Prospectus as Exhibit A)** (3C) Certificate of Limited Partnership of Liberty Tax Credit Plus L.P., together with amendments filed September 14, 1987 and October 8, 1987** (10A) Form of Subscription Agreement (attached to Prospectus as Exhibit B)** (10B) Form of Purchase Agreement for purchase of Local Partnership Interests** (10C) Form of Local Partnership Agreement** (31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). (32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350). ** Incorporated herein as an exhibit by reference to exhibits filed with Amendment No. 1 to Liberty Tax Credit Plus L.P.'s Registration Statement on Form S-11, file No. 33-15479. 22 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. LIBERTY TAX CREDIT PLUS L.P. ---------------------------- (Registrant) By: RELATED CREDIT PROPERTIES L.P., a General Partner By: Related Credit Properties Inc., its General Partner Date: January 28, 2005 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Chief Executive Officer (Principal Executive and Financial Officer) Date: January 28, 2005 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (Principal Accounting Officer) By: LIBERTY ASSOCIATES III, L.P., a General Partner By: Related Credit Properties L.P., its General Partner By: Related Credit Properties Inc., its General Partner Date: January 28, 2005 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Chief Executive Officer (Principal Executive and Financial Officer) Date: January 28, 2005 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (Principal Accounting Officer) Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P. (the "General Partners"), each of which is a general partner of Liberty Tax Credit Plus L.P. (the "Partnership"), hereby certify that: 1. I have reviewed this quarterly report on Form 10-Q for the period ending December 15, 2004 of the Partnership; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and I have: a) designed such disclosure controls and procedures to ensure that material information relating to the Partnership, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report was being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and c) evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the Partnership's internal control over financial reporting that occurred during the period ending December 15, 2004 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Partnership's auditors and to the boards of directors of the General Partners: a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Partnership's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Partnership's internal controls over financial reporting. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer January 28, 2005 Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b) AND SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE ("18 U.S.C. 1350") In connection with the Quarterly Report of Liberty Tax Credit Plus L.P. (the "Partnership") on Form 10-Q for the period ending December 15, 2004 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Partnership. A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the SEC or its staff upon request. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer January 28, 2005

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