10-Q 1 f10q_dec2005-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, 2005 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) 317-5700 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] 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 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Balance Sheets

~~June~~December 15, March 15, 2005 2005 ------------- ------------- (Unaudited) (Audited) ASSETS Operating Assets Property and equipment, at cost, net of accumulated depreciation of $8669,~~949~~952,~~436~~154 and $96,840,139, respectively $ 7558,~~576~~645,~~636~~752 $ 86,316,389 Cash and cash equivalents 6,~~261~~617,~~990~~003 4,335,171 Cash held in escrow 98,~~657~~437,~~050~~834 10,529,679 Accounts receivable - tenants ~~515~~295,~~598~~948 761,215 Deferred costs, net of accumulated amortization of $1811,~~342,007~~017 and $1,662,029, respectively 1,~~594~~198,~~533~~361 1,922,580 Other assets 2,~~135~~214,~~082~~949 1,230,423 ------------- ------------- Total operating assets 9577,~~740~~409,~~889~~847 105,095,457 ------------- ------------- Assets from discontinued operations (Note 4) Property and equipment held for sale, net of accumulated depreciation of $1418,~~216~~032,~~205~~393 and $13,195,220, respectively 911,~~246~~872,~~734~~222 11,193,351 Net assets held for sale 42,~~270~~749,~~825~~047 4,452,896 ------------- ------------- Total assets from discontinued operations 1314,~~517~~621,~~559~~269 15,646,247 ------------- ------------- Total assets $ ~~109~~92,~~258~~031,~~448~~116 $ 120,741,704 ============= ============= LIABILITIES AND PARTNERS' DEFICIT Operating Liabilities Mortgage notes payable $ 8163,~~868~~984,~~757~~220 $ 97,203,309 Accounts payable 43,~~328~~848,~~993~~099 2,436,882 Accrued interest payable 8,~~108~~525,~~046~~754 7,885,329 Security deposits payable ~~549~~391,~~060~~747 624,852 Due to local general partners and affiliates 19,~~782~~647,~~414~~288 21,080,176 Due to general partners and affiliates 8,~~539~~056,~~451~~364 8,261,783 Due to selling partners ~~1,412,272~~0 1,412,272 ------------- ------------- Total operating liabilities ~~124~~104,~~588~~453,~~933~~472 138,904,603 ------------- ------------- Liabilities from discontinued operations (Note 4) Mortgage notes payable of assets held for sale 1618,~~573~~806,~~070~~852 12,032,637 Net liabilities held for sale (including minority interest) 751,~~974~~399,496 2,076,114 ------------- ------------- Total liabilities from discontinued operations 1620,~~649~~206,~~044~~348 14,108,751 ------------- ------------- Minority interests 1(682,~~554,370~~229) (321,605) ------------- ------------- Commitments and contingencies (Note 5) Partners' deficit: Limited partners (15,987.5 BACs issued and outstanding) (3230,~~476~~904,~~200~~591) (30,908,125) General partners (1,~~057~~041,~~759~~884) (1,041,920) ------------- ------------- Total partners' deficit (3331,~~533~~946,~~959~~475) (31,950,045) ------------- ------------- Total liabilities and partners' deficit $ ~~109~~92,~~258~~031,~~448~~116 $ 120,741,704 ============= =============

See accompanying notes to consolidated financial statements. 2 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

Three Months Ended ~~June~~Nine Months Ended December 15, December 15, ----------------------------- ----------------------------- 2005 2004* 2005 2004* ------------ ------------ ------------ ------------ Operations: Revenues Rental income $ 54,~~602~~860,~~400~~185 $ 54,~~373~~815,~~929~~859 ~~Other~~$ 8814,~~881~~383,691 ~~172~~$ 14,148,307 Other 100,912 96,128 285,534 476,795 ------------ ------------ 5------------ ------------ 4,~~691~~961,~~281~~097 54,~~546~~911,~~236~~987 14,669,225 14,625,102 ------------ ------------ ------------ ------------ Expenses General and administrative 1831,~~044~~779 795,~~416~~180 12,~~013~~296,~~817~~053 2,458,476 General and administrative-related parties (Note 2) ~~476~~539,~~186~~628 ~~466~~471,~~949~~016 1,531,116 1,404,255 Repairs and maintenance 1,~~587~~330,~~566~~546 1,~~398~~233,~~339~~304 4,148,989 3,790,303 Operating and other 1702,~~090~~749 479,~~406~~963 ~~966~~2,~~137~~055,141 1,877,193 Taxes ~~239~~249,~~585~~232 ~~193~~262,~~835~~675 711,027 624,030 Insurance ~~351~~305,~~282~~215 ~~317~~281,~~848~~055 857,419 807,085 Financial 1,~~555~~330,~~363~~994 1,~~713~~629,~~144~~584 3,932,737 4,539,190 Depreciation and amortization 1,~~419~~106,~~453~~577 1,~~255~~139,~~366~~961 3,319,475 3,341,254 ------------ ------------ ------------ ------------ Total expenses from operations 76,~~764~~396,~~257~~720 76,~~325~~292,~~435~~738 18,851,957 18,841,786 ------------ ------------ ------------ ------------ Loss from operations before minority interest (21,~~072~~435,~~976~~623) (1,~~779~~380,~~199~~751) (4,182,732) (4,216,684) Minority interest in loss of subsidiaries from operations 81,~~102~~386 34,~~677~~112 7,201 8,661 ------------ ------------ ------------ ------------ Loss from operations (21,~~064~~434,~~874~~237) (1,~~775~~376,~~522~~639) (4,175,531) (4,208,023) Discontinued Operations: Income from discontinued operations (including gain ~~(loss)~~ on sale of properties) (Note 4) 25,~~419~~990,~~081~~094 23,~~770~~682,~~408~~222 6,117,222 5,648,517 ------------ ------------ ------------ ------------ Net income $ ~~354~~4,~~207~~555,857 $ ~~994~~2,~~886~~305,583 $ 1,941,691 $ 1,440,494 ============ ============ ============ ============ Loss from operations - limited partners $ (21,~~044~~419,~~225~~895) $ (1,~~757~~362,~~767~~873) $ (4,133,776) $ (4,165,943) Income from discontinued operations (including gain ~~(loss)~~ on sale of properties) - limited partners 25,~~394~~930,~~890~~193 23,~~742~~645,~~704~~400 6,056,050 5,592,032 ------------ ------------ ------------ ------------ Net income - limited partners $ ~~350~~4,~~665~~510,298 $ ~~984~~2,~~937~~282,527 $ 1,922,274 $ 1,426,089 ============ ============ ============ ============ Number of BACs outstanding 15,987.5 15,987.5 15,987.5 15,987.5 ============ ============ ============ ============ Loss from operations per BAC $ (~~127~~88.8681) $ (~~109~~85.9525) $ (258.56) $ (260.58) Income from discontinued operations per BAC ~~149~~370.93 228.02 378.80 ~~171~~349.5678 ------------ ------------ ------------ ------------ Net income per BAC $ 21282.9412 $ 61142.6177 $ 120.24 $ 89.20 ============ ============ ============ ============

* Reclassified for comparative purposes See accompanying notes to consolidated financial statements. 3 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statement of Changes in Partners' Deficit (Unaudited)

Limited General Total Partners Partner ------------ ------------ ------------ Partners' deficit - March 16, 2005 $(31,950,045) $(30,908,125) $ (1,041,920) Net income ~~354~~1,~~207~~941,691 ~~350~~1,~~665~~922,274 319,~~542~~417 Distributions (1,938,121) (1,918,740) (19,381) ------------ ------------ ------------ Partners' deficit - ~~June~~December 15, 2005 $(3331,~~533~~946,~~959~~475) $(3230,~~476~~904,~~200~~591) $ (1,~~057~~041,~~759~~884) ============ ============ ============

See accompanying notes to consolidated financial statements 4 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited)

~~Three~~Nine Months Ended ~~June~~December 15, ----------------------------- 2005 2004* ------------ ------------ Net income $ ~~354~~1,~~207~~941,691 $ ~~994~~1,~~886~~440,494 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Gain on sale of properties (10,550,777) (4,427,642) Depreciation and amortization 14,~~419~~936,~~453~~374 16,~~255~~202,~~366~~008 ~~Income~~Loss ~~from~~on ~~discontinued~~impairment ~~operations~~of ~~(2,419,081)~~fixed (assets 2,~~770~~710,~~408)~~000 0 Minority interest in ~~loss~~income of subsidiaries (8272,~~102~~357) (3,~~677~~526,100) Decrease in accounts receivable - tenants ~~255~~147,~~269~~056 ~~463~~243,~~008~~674 ~~Decrease~~Increase ~~(increase)~~ in other assets (~~997~~1,~~168~~275,872) (~~362~~571,~~878~~546) Increase (~~Decrease~~decrease) ~~increase~~ in accounts payable ~~and~~2,627,491 ~~other~~(489,993) ~~liabilities~~Increase 2in accrued interest payable 763,~~414~~916 1,~~029~~645,959 ~~152~~Decrease in security deposits payable (50,~~931~~038) (1,516) Increase in due to general partners and affiliates ~~277~~55,~~668~~727 ~~299~~1,~~729~~001,714 ~~Decrease~~Increase ~~(increase)~~in cash held in escrow 91(1,~~944~~431,645) (~~189~~698,~~350~~962) ------------ ------------ Net cash ~~provided by~~ (used in) provided by operating activities ~~1,388,219~~ (~~160~~398,~~393~~434) 818,090 ------------ ------------ Cash flows from investing activities: Decrease ~~(increase)~~ in cash held in escrow ~~830~~1,~~944~~179,131 ~~(249~~288,~~111)~~138 Proceeds from sale of investments ~~530~~7,~~650~~684,400 1,224,789 Costs paid relating to sale of properties (222,016) 0 Improvements to property and equipment (98563,~~958~~131) (771,~~971~~099,721) ------------ ------------ Net cash provided by ~~(used in)~~ investing activities 18,~~262~~078,~~636~~384 ~~(327~~413,~~082)~~206 ------------ ------------ Cash flows from financing activities: Repayments of mortgage notes (~~237~~4,~~023~~482,822) (~~705~~1,~~758~~828,243) Increase in due to local general partners and affiliates 831,~~988~~027,345 ~~309~~1,~~850~~061,896 Decrease in due to local general partners and affiliates ~~(195,352)~~0 (82329,~~937~~044) ~~Increase~~ (~~decrease~~Decrease) increase in capitalization of consolidated subsidiaries attributable to minority interest ~~1,562,472~~ (15235,~~639~~594) 287,560 Distributions (1,938,121) 0 ------------ ------------ Net cash used in financing activities (~~724~~5,~~036~~629,192) (~~494~~807,~~484~~831) ------------ ------------ Net increase ~~(decrease)~~ in cash and cash equivalents 12,~~926~~050,~~819~~758 ~~(981~~423,~~959)~~465 Cash and cash equivalents at beginning of period 4,~~335~~779,~~171~~438 5,224,728 ------------ ------------ Cash and cash equivalents at end of period $ 6,~~261~~830,~~990~~196 $ 45,~~242~~648,~~769~~193 ============ ============ Summarized below are the components of the gain on sale of properties: Decrease in property and equipment, net of accumulated depreciation $ 19,996,475 $ 17,207,232 Decrease in mortgage notes payable (21,962,052) (21,261,879) Decrease in due to general partners and affiliates (252,500) (474,583) Decrease in due to local general partner and affiliates (2,256,995) (257,744) Decrease in due to selling partners (1,412,272) 0 Decrease in cash held in escrow 4,554,061 752,892 Decrease in rents receivable 220,458 46,776 Decrease in other assets 99,161 305,553 Decrease in accounts payable (1,117,566) (138,525) Decrease in accrued interest payable (763,557) (2,236,444) Decrease in security deposits payable (112,271) (157,193) Decrease in deferred costs 189,278 461,952 (Decrease) increase in capitalization of consolidated subsidiaries attributable to minority interest (270,613) 2,549,110

See Note 4 for cash flows from discontinued operations. * Reclassified for comparative purposes. See accompanying notes to consolidated financial statements 5 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) Note 1 - General The consolidated financial statements for the nine months ended December 15, 2005 and 2004, include the accounts of Liberty Tax Credit Plus L.P. (the "Partnership") and 23 and 27 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 accounting principles generally accepted in the United States of America ("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, 2005 and March 15, 2005, the results of operations for the three and nine months ended December 15, 2005 and 2004 and cash flows for the nine months ended December 15, 2005 and 2004. However, the operating results and cash flows for the nine months ended December 15, 2005 may not be indicative of the results for the year. 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, 2005. 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 $738,000 for the three and nine month periods ended December 15, 2005, respectively, and $0 for both the three and nine month periods ended December 15, 2004. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. 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 from operations for the three and nine months ended December 15, 2005 and 2004 were as follows:

Three Months Ended ~~June~~Nine Months Ended December 15, December 15, ------------------------ ------------------------ 2005 2004* 2005 2004* ---------- ---------- ---------- ---------- Partnership management fees (a) $~~225~~ 222,750 $ 269,250 $~~261~~ 670,750 $ 800,250 Expense reimbursement (b) 69138,~~293~~473 3047,~~314~~431 347,542 131,675 Local administrative fee (d) 104,~~000~~750 83,~~000~~875 13,250 11,625 ---------- ---------- ---------- ---------- Total general and administrative -General Partners ~~304~~365,~~543~~973 ~~300~~320,~~064~~556 1,031,542 943,550 ---------- ---------- ---------- ---------- Property management fees incurred to affiliates of the local general partners (c) ~~171~~173,~~643~~655 ~~166~~150,~~885~~460 499,574 460,705 ---------- ---------- ---------- ---------- Total general and administrative-related parties $~~476~~ 539,~~186~~628 $~~466~~ 471,~~949~~016 $1,531,116 $1,404,255 ========== ========== ========== ==========

* Reclassified for comparative purpose. 6 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) The costs incurred to related parties from discontinued operations for the three and nine months ended December 15, 2005 and 2004 were as follows:

Three Months Ended ~~June~~Nine Months Ended December 15, December 15, -------------------- -------------------- 2005 2004 2005 2004 -------- -------- -------- -------- Property management fees incurred to affiliates of the General Partners (c) $ 0 $ 2315,~~653~~769 $ 0 $ 63,075 Local administrative fee (d) 27,~~000~~250 59,~~000~~125 21,750 27,375 -------- -------- -------- -------- Total general and administrative-General Partners 27,~~000~~250 2824,~~653~~894 21,750 90,450 -------- -------- -------- -------- Property management fees incurred to affiliates of the ~~Local~~local ~~General~~general ~~Partners~~partners (c) 7642,~~309~~334 8868,~~780~~676 186,665 229,829 -------- -------- -------- -------- Total general and administrative-related parties $ 7849,~~309~~584 $~~117~~ 93,~~433~~570 $208,415 $320,279 ======== ======== ======== ========

(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 General Partners amounting to approximately $7,932,000 and $7,811,000 were accrued and unpaid as of December 15, 2005 and March 15, 2005, 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 $58,000 and $35,000 were accrued and unpaid as of December 15, 2005 and March 15, 2005, 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 in operations amounted to $355,836 and $419,437 and $1,105,978 and $1,313,094 for the three and nine months ended December 15, 2005 and 2004, respectively. Of these fees, $215,989 and $219,136 and $686,239 and $690,534 were incurred to affiliates of the local general partners, which include $42,334 and $68,676 and $186,665 and $229,829 of fees relating to discontinued operations. In addition, $15,769 and $63,075 was incurred to affiliates of the General Partners for the three and nine months ended December 15, 2004, which is also included in discontinued operations. (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 The Partnership is currently in the process of disposing of its investments. As of December 15, 2005, the Partnership has disposed of 14 of its 31 original investments. On November 28, 2005, the Partnership entered into a purchase and sale agreement to sell the property and the related assets and liabilities of Willoughby/Wycoff Housing Associates, L.P. ("Willoughby") to an unaffiliated third party purchaser for a purchase price of $4,800,000. The sales documents have been executed and the initial deposit funds are being held in escrow. An expected closing could occur in February 2006. No assurance can be given that the sale will actually occur. Willoughby is being held as an asset held for sale as of December 15, 2005. As of September 30, 2005, Willoughby had property and equipment, at cost, of approximately $6,191,000, accumulated depreciation of approximately $3,762,000 and mortgage debt of approximately $4,017,000. On September 22, 2005, the Partnership entered into a purchase and sale agreement to sell the property and the related assets and liabilities of 2051 Grand Concourse Housing Associates, L.P. ("Grand Concourse") to an unaffiliated third party purchaser for a purchase price of $4,937,500. The sales documents have been executed and the initial deposit funds are being held in escrow. An expected closing could occur in March 2006. No assurance can be given that the sale will actually occur. Grand Concourse is being held as an asset held for sale as of December 15, 2005. As of September 30, 2005, Grand Concourse had property and equipment, at cost, of approximately $5,271,000, accumulated depreciation of approximately $3,208,000 and mortgage debt of approximately $3,281,000. 7 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) On September 22, 2005, the Partnership entered into a purchase and sale agreement to sell the property and the related assets and liabilities of Concourse Artist's Housing Associates, L.P. ("Concourse Artist's") to an unaffiliated third party purchaser for a purchase price of $1,797,500. The sales documents have been executed and the initial deposit funds are being held in escrow. An expected closing could occur in March 2006. No assurance can be given that the sale will actually occur. Concourse Artist's is being held as an asset held for sale as of December 15, 2005. As of September 30, 2005, Concourse Artist's had property and equipment, at cost, of approximately $2,285,000, accumulated depreciation of approximately $1,386,000 and mortgage debt of approximately $1,412,000. On September 22, 2005, the Partnership entered into a purchase and sale agreement to sell the property and the related assets and liabilities of Robin Housing Associates, L.P. ("Robin Housing") to an unaffiliated third party purchaser for a purchase price of $7,265,000. The sales documents have been executed and the initial deposit funds are being held in escrow. An expected closing could occur in March 2006. No assurance can be given that the sale will actually occur. Robin Housing is being held as an asset held for sale as of December 15, 2005. As of September 30, 2005, Robin Housing had property and equipment, at cost, of approximately $8,238,000, accumulated depreciation of approximately $5,022,000 and mortgage debt of approximately $4,903,000. On September 15, 2005, the Partnership's limited partnership interest in Bayridge Associates, L.P. ("Bayridge") was sold to an unaffiliated third party purchaser for $1,125,000. The sale resulted in a gain of approximately $5,920,000. The sale resulted in the liquidation of Bayridge. As of the sale date, Bayridge had property and equipment, at cost, of approximately $13,231,000, accumulated depreciation of approximately $7,270,000 and mortgage debt of approximately $9,598,000. On July 27, 2005, the property and the related assets and liabilities of Penn Alto Associates, L.P. ("Penn Alto") were sold to an unaffiliated third party purchaser for $1,575,000. During the quarter ended September 15, 2005, in accordance with Statement of Financial Accounting Standards ("SFAS No. 144"), the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $850,000. The sale resulted in a gain of approximately $127,000. The sale resulted in the liquidation of Penn Alto. As of the sale date, Penn Alto had property and equipment, at cost, of approximately $11,106,000, accumulated depreciation of approximately $6,236,000 and mortgage debt of approximately $3,383,000. On June 2, 2005, the Partnership sold its limited partnership interest in Lancaster Towers Associates, LTD ("Lancaster") to an affiliate of the Local General Partner for a purchase price of $449,750. During the quarter ended June 15, 2005, in accordance with SFAS No. 144, the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $1,860,000. The sale resulted in a distribution to the Local General Partner of approximately $271,000. As of the sale date, Lancaster had property and equipment, at cost, of approximately $4,594,000, accumulated depreciation of approximately $2,757,000 and mortgage debt of approximately $1,605,000. On April 25, 2005, the Partnership entered into a redemption agreement for the sale of its limited partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn") to the Local General Partner. The sales documents have been executed and the Partnership received $200,000 and a note receivable for $1,200,000 due February 9, 2006 that is recorded in other assets. As of September 15, 2005, the Partnership has recorded the $1,400,000 in accrued expenses as a deferred gain. Fox Glenn is awaiting approval of the sale from the Department of Housing and Urban Development ("HUD"). No assurances can be given that the HUD will approve the sale. Fox Glenn is being held as an asset held for sale as of December 15, 2005. As of September 30, 2005, Fox Glenn had property and equipment, at cost, of approximately $7,682,000, accumulated depreciation of approximately $4,554,000 and mortgage debt of approximately $5,195,000. On March 29, 2005, the property and the related assets and liabilities of Regent Street Associates, L.P. ("Regent Street") were sold to an unaffiliated third party purchaser for the assumption of the outstanding debt, resulting in a gain of $1,436,000. The sale resulted in the liquidation of Regent Street. As of the sale date, Regent Street had property and equipment, at cost, of approximately $7,655,000, accumulated depreciation of approximately $4,610,000 and mortgage debt of approximately $3,629,000. On February 17, 2005, the Partnership's limited partnership interest in Redwood Villa Associates ("Redwood") was sold to an unaffiliated third party purchaser for $60,000, resulting in a gain of approximately $1,749,000. The sale resulted in the liquidation of Redwood. As of the sale date, Redwood had property and equipment, at cost, of approximately $5,999,000, accumulated depreciation of approximately $3,525,000 and mortgage debt of approximately $3,746,000. 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 thirty party purchaser for $6,500,000, resulting in a gain of approximately $1,356,000. The sale resulted in the liquidation of Lund Hill. As of the sale date, Lund Hill had property and equipment, at cost, of approximately $6,046,000, accumulated depreciation of approximately $2,423,000 and mortgage debt of approximately $2,971,000. On March 31, 2004, the Partnership's limited partnership interest in Walnut Park Plaza ("Walnut") was sold to the Local General Partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,700,000 resulting in a general partner contribution of approximately $2,549,000. The sale resulted in the liquidation of Walnut. As of the sale date, Walnut had property and equipment, at cost, of approximately $10,957,000, accumulated depreciation of approximately $4,448,000 and mortgage debt of approximately $7,330,000. 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 $4,800,000. The proceeds were used to settle the associated mortgage which had an outstanding balance of approximately $3,600,000, and the balance was distributed to the partners of Autumn Park. 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 was due on October 30, 2005. A demand letter is being sent to commence collection proceedings. The sale 8 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) resulted in a gain of approximately $1,992,000. The sale resulted in the liquidation of Autumn Park. As of the sale date, Autumn Park had property and equipment, at cost, of approximately $6,138,000, accumulated depreciation of approximately $3,488,000, and mortgage debt of approximately $3,754,000. 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 party for $8,891,000, resulting in a gain of approximately $1,259,000. An additional gain of approximately $363,000 was recognized during the fourth quarter ended March 15, 2005. The sale resulted in the liquidation of Bolton. As of the sale date, Bolton had property and equipment, at cost, of approximately $13,601,000 accumulated depreciation of approximately $7,852,000 and mortgage debt of approximately $7,266,000. 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. The sale resulted in the liquidation of Tanglewood. As of the sale date, Tanglewood had property and equipment, at cost, of approximately $5,902,000, accumulated depreciation of approximately $3,148,000 and mortgage debt of approximately $2,852,000. Note 4 - Discontinued Operations The following table summarizes the financial position of the Local Partnerships that are classified as discontinued operations because the respective Local Partnerships were classified as assets held for sale. As of December 15, 2005, Concourse Artist's, Bayridge, Bolton, Grand Concourse, Fox Glenn, Lancaster, Lund Hill, Penn Alto, Redwood, Regent Street, Robin Housing and Willoughby were classified as discontinued operations in the Consolidated Financial Statements. As of March 15, 2005, Bolton, Lancaster, Lund Hill, Redwood and Regent Street were classified as discontinued operations on the Consolidated Balance Sheets. Consolidated Balance Sheets of Discontinued Operations:

~~June~~December 15, March 15, 2005 2005 ------------ ------------ Assets Property and equipment, net of accumulated depreciation of $1418,~~216~~032,~~205~~393 and $13,195,220, respectively $ 911,~~246~~872,~~734~~222 $ 11,193,351 Cash and cash equivalents ~~309~~213,~~051~~193 444,267 Cash held in escrow 31,~~205~~641,~~874~~876 3,851,578 Deferred costs, net of accumulated amortization of $~~453~~907,~~245~~182 and $182,368, respectively ~~301~~515,~~337~~178 68,189 Other assets ~~454~~378,~~563~~800 88,862 ------------ ------------ Total assets $ 1314,~~517~~621,~~559~~269 $ 15,646,247 ============ ============ Liabilities Mortgage notes payable $ 1618,~~573~~806,~~070~~852 $ 12,032,637 Accounts payable and other liabilities ~~564~~701,~~195~~705 1,172,267 Due to local general partners and affiliates 1935,~~517,122~~955 732,717 Due to general partners and affiliates 1758,~~500~~146 49,500 Minority interest (2296,~~022,843~~310) 121,630 ------------ ------------ Total liabilities $ 1620,~~649~~206,~~044~~348 $ 14,108,751 ============ ============

The following table summarizes the results of operations of the Local Partnerships that are classified as discontinued operations. For the three and nine months ended December 15, 2005, Concourse Artist's, Fox Glenn, Grand Concourse, Robin Housing and Willoughby which were classified as assets held for sale, and Bayridge, Lancaster, Lund Hill, Penn Alto, Redwood and Regent Street, which were sold during the year, were all classified as discontinued operations on the Consolidated Financial Statements. For the three and nine months ended December 15, 2004 and in order to present comparable results for the three and nine months ended December 15, 2005, Concourse Artist's, Bayridge, Grand Concourse, Fox Glenn, Lancaster, Lund Hill, Penn Alto, Redwood, Regent Street, Robin Housing and Willoughby were all classified as discontinued operations. In addition, Autumn Park, Bolton, Tanglewood and Walnut, which were sold during the year ended March 15, 2005, were all classified as discontinued operations on the Consolidated Financial Statements. 9 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) Consolidated Statements of Discontinued Operations:

Three Months Ended ~~June~~Nine Months Ended December 15, December 15, -------------------------- -------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Revenues: Rental income $ 1,~~127~~476,~~143~~797 $2 3,~~576~~056,~~433~~397 $ 5,178,098 $ 9,574,953 Other 1636,~~473~~595 90189,~~460~~905 139,846 361,993 Gain on sale of properties 6,037,429 4,~~544~~417,~~188~~512 210,~~504~~550,~~461~~777 4,427,642 ----------- ----------- ----------- ----------- Total revenue 57,~~687~~550,~~804~~821 57,~~171~~663,~~354~~814 15,868,721 14,364,588 ----------- ----------- ----------- ----------- Expenses: General and administrative ~~245~~334,~~314~~564 ~~436~~610,~~424~~188 1,081,953 1,805,017 General and administrative-related parties (Note 2) 7849,~~309~~584 ~~117~~93,~~433~~570 208,415 320,279 Repairs and maintenance ~~271~~485,~~532~~739 ~~654~~592,~~057~~902 1,348,764 1,984,069 Operating ~~181~~205,~~458~~339 ~~440~~432,~~246~~013 987,396 1,523,863 Taxes 8159,~~958~~939 ~~180~~112,~~396~~753 246,277 469,699 Insurance 62121,~~174~~979 ~~135~~169,~~702~~005 333,692 574,532 Interest ~~316~~412,~~218~~333 ~~812~~845,~~831~~007 1,483,259 2,695,297 Depreciation and amortization ~~342~~433,~~780~~302 ~~619~~1,~~268~~126,846 1,616,899 2,860,754 Loss on impairment of fixed assets 10 0 2,~~860~~710,000 0 ----------- ----------- ----------- ----------- Total expenses 32,~~439~~102,~~743~~779 3,~~396~~982,~~357~~284 10,016,655 12,233,510 ----------- ----------- ----------- ----------- Income before minority interest 25,~~248~~448,~~061~~042 13,~~774~~681,~~997~~530 5,852,066 2,131,078 Minority interest in ~~loss~~income of subsidiaries from discontinued operations ~~171~~542,~~020~~052 ~~995~~692 265,~~411~~156 3,517,439 ----------- ----------- ~~Total~~----------- ----------- Net income from discontinued operations (including gain on sale of properties) $2 5,~~419~~990,~~081~~094 $2 3,~~770~~682,~~408~~222 $ 6,117,222 $ 5,648,517 =========== =========== =========== =========== Income - limited partners from discontinued operations (including gain on sale of properties) $2 5,~~394~~930,~~890~~193 $2 3,~~742~~645,~~704~~400 $ 6,056,050 $ 5,592,032 =========== =========== =========== =========== Number of BACs outstanding 15,987.5 15,987.5 15,987.5 15,987.5 =========== =========== =========== =========== Income from discontinued operations (including gain on sale of properties) per BAC $ ~~149~~370.93 $ 228.02 $ 378.80 $ ~~171~~349.5678 =========== =========== =========== =========== Nine Months Ended December 15, -------------------------- 2005 2004 ----------- ----------- Cash flows from Discontinued Operations: Net cash provided by operating activities $ 1,989,516 $ 25,929 ----------- ----------- Net cash provided by investing activities $ 7,247,719 $ 3,823,625 ----------- ----------- Net cash used in financing activities $(1,837,967) $ (814,413) ----------- -----------

10 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 15, 2005 (Unaudited) Note 5 - Commitments and Contingencies a) Uninsured Cash and Cash Equivalents The Partnership maintains its cash and cash equivalents in various banks. Accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. b) Cash Distributions Cash distributions from the Local Partnerships to the Partnership are restricted by the provisions of the respective Local Partnership agreements and/or the Department of Housing and Urban Development ("HUD"). Such cash distributions are typically made from surplus cash flow. c) Tax Credits A portion of the low income housing tax credits ("Tax Credits") could be subject to recapture in future years if (i) a Local Partnership ceases to meet qualification requirements, (ii) if there is a decrease in the qualified basis of the Local Partnership property or (iii) if there is a reduction in the Local Partnership interest in the property at any time during the 15-year period commencing at the beginning of the period that entitles qualified BACholders to Tax Credits, generally ten years from the date of investment or, if later, the date the property is leased to qualified tenants ("Tax Credit Period"). As of December 31, 2003, the Tax Credit Period for each Local Partnership had expired. d) Other The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally, however no more than 24% of the properties are located in any single state. There are also substantial risks associated with owning properties receiving government assistance, for example the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence, without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. Note 6 - New Accounting Pronouncements In June 2005, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections ("FAS 154"). FAS 154 replaces Accounting Principles Board ("APB") Opinion No. 20, Accounting Changes and Statement of Financial Accounting Standards No. 3, Reporting Accounting Changes in Interim Financial Statements. FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. FAS 154 also requires that a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a restatement. FAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Partnership does not expect the adoption of FAS 154 to have a material impact on the Partnership's consolidated financial statements. In June 2005, the FASB issued Emerging Issues Task Force No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights ("EITF No. 04-5"). EITF No. 04-5 replaces counterpart requirements in Statement of Position ("SOP") 78-9, which provides guidance on accounting for investments in real-estate ventures and limited partners. Under EITF No. 04-5, the general partner's control would be overcome if the limited partners have either "kick-out rights" - the right to dissolve or liquidate the partnership or otherwise remove the general partner "without cause" or "participating rights" - the right to effectively participate in significant decisions made in the ordinary course of the partnership's business. The kick-out rights and the participating rights must be substantive in order to overcome the general partner's control. EITF 04-5 is now effective. The Partnership does not expect the adoption of EITF 05-4 to have a material effect on the consolidated financial statements. 11 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, 2005, the properties and the related assets and liabilities of nine Local Partnerships and the limited partnership interest in five Local Partnerships were sold. For a discussion of these sales of the Local Partnerships, see Note 3 to the financial statements. Short-Term ---------- The Partnership's primary sources of funds included: (i) working capital reserves; (ii) interest earned on the working capital reserves; (iii) cash distributions from operations of the Local Partnerships; and (iv) sales proceeds and distributions. Such funds, although minimal, are available to meet the obligations of the Partnership. During the nine months ended December 15, 2005 and 2004, distributions from operations of the Local Partnerships amounted to approximately $101,000 and $113,000, respectively. Additionally, during the nine months ended December 15, 2005 and 2004, the Partnership received approximately $557,000 and $1,225,000 distributions of proceeds from sales. For the nine months ended December 15, 2005, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately $2,051,000. This increase is attributable to a decrease in cash held in escrow relating to investing activities ($1,179,000), proceeds from sale of investments ($7,684,000) and a net increase in due to local general partners and affiliates ($1,027,000) which exceeded net cash used in operating activities ($398,000), improvements to property and equipment ($563,000), costs paid relating to sale of properties ($222,000), repayments of mortgage notes ($4,483,000), distributions ($1,938,000) and a decrease in capitalization of consolidated subsidiaries attributable to minority interest ($236,000). Included in the adjustments to reconcile net income to net cash used in operating activities is depreciation and amortization of approximately ($4,936,000), gain on sale of properties ($10,551,000) and loss on impairment of fixed assets ($2,710,000). Total expenses for the three and nine months ended December 15, 2005 and 2004, excluding depreciation and amortization, interest and general and administrative-related parties, totaled $3,419,521 and $3,052,177 and $10,068,629 and $9,557,087, respectively. Accounts payable as of December 15, 2005 and March 15, 2005, were $3,848,099 and $2,436,882, respectively. Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and in certain circumstances advances from the Partnership. Because the provisions of the secondary loans defer the payment of accrued interest of the respective Local Partnerships, the Partnership believes it (and the applicable Local Partnerships) has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term. Included in accounts payable as of December 15, 2005 and March 15, 2005 are $1,400,059 and $7,730 of deferred revenue from sales, respectively. Accrued interest payable as of December 15, 2005 and March 15, 2005 was $8,525,754 and $7,885,329, respectively. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. In addition, each Local Partnership's mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. Partnership management fees and expense reimbursements owed to the General Partners amounting to approximately $7,990,000 and $7,846,000 were accrued and unpaid as of December 15, 2005 and March 15, 2005, 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. A working capital reserve of approximately $4,821,000 remained unused at December 15, 2005. On April 15, 2005, a distribution from sales proceeds was made to the Limited Partners of approximately $1,919,000 and to the General Partner of approximately $19,000. Approximately $3,500,000 has been declared for distributions and is expected to be made during the fourth quarter ended March 15, 2006. The Partnership is not expected to have access to additional sources of financing. Long-Term --------- For a discussion of contingencies affecting certain Local Partnerships, see Note 5 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. 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 12 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. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", 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 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. 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). During the nine months ended December 15, 2005, the Partnership recorded $2,710,000 as a loss on impairment of assets or reduction to estimated fair value for two Local Partnerships. 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 depreciated. As of December 15, 2005 and March 15, 2005, the Partnership has recorded property and equipment net of accumulated depreciation of $11,872,222 and $11,193,351, respectively, as held for sale. Revenue Recognition ------------------- Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and as rents become due and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income, and other rental related items. 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 for the three and nine months ended December 15, 2005 and 2004, consisted primarily of the results of the Partnership's investment in the consolidated Local Partnerships. Rental income increased approximately 1% and 2% for the three and nine months ended December 15, 2005 as compared to the corresponding periods in 2004, primarily due to rental rate increases at the Local Partnerships. Other income decreased approximately $191,000 for the nine months ended December 15, 2005 as compared to the corresponding period in 2004, primarily due to a decrease in subsidiary income being received at one Local Partnership in 2005 offset by an increase in interest income at the Partnership level, resulting from higher cash balances during the year from increased sales activity. General and administrative-related parties increased approximately $69,000 and $127,000 for the three and nine months ended December 15, 2005 as compared to the corresponding periods in 2004, primarily due to an increase in expense reimbursements offset by a decrease in Partnership management fees resulting from sold properties at the Partnership level. Operating and other increased approximately $223,000 and $178,000 for the three and nine months ended December 15, 2005 as compared to the corresponding periods in 2004, primarily due to increased gas prices at two Local Partnerships, increased water and sewer costs at a third Local Partnership and increased electricity costs at a fourth Local Partnership. Taxes increased approximately $87,000 for the nine months ended December 15, 2005 as compared to the corresponding period in 2004, primarily due to a reassessment of the property taxes at one Local Partnership in 2005. 13 Financial decreased approximately $299,000 and $606,000 for the three and nine months ended December 15, 2005 as compared to the corresponding periods in 2004, primarily due to the mortgage payoff in the prior year at one Local Partnership and an overaccrual in the prior year at a second Local Partnership. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership has mortgage notes that are payable in aggregate monthly installments including principal and interest at rates varying from 1% to 12% per annum. The Partnership does not believe there is a material risk associated with the various interest rates associated with the mortgage notes as the majority of the Local Partnership mortgage notes have fixed rates. The Partnership currently discloses in Item 8, Note 3 to the financial statements in the Partnership's Annual Report on Form 10-K for the year ended March 15, 2005, the fair value of the mortgage notes payable. The Partnership does not have any other 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 the 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. 14 PART II. OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Unregistered Sales of Equity 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 On November 8, 2005, CharterMac announced that Stuart J. Boesky would step down as Chief Executive Officer and trustee of CharterMac, the indirect parent of RCC Manager LLC, the managing member of Credit Properties GP LLC which is the general partner of Related Credit Properties L.P. (the "Related General Partner"). Upon his stepping down, which was effective on November 15, 2005, he also resigned from his position as Executive Vice President of the general partner of the Related General Partner. Mr. Boesky will stay on as a consultant to CharterMac for the next year in order to ensure a smooth transition. Item 6. Exhibits (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) 15 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 17, 2006 ---------------- By:/s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Chief Executive Officer (Principal Executive and Financial Officer) Date: January 17, 2006 ---------------- 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 17, 2006 ---------------- By:/s/ Alan P. Hirmes ------------------ Alan P. Hirmes, President and Chief Executive Officer (Principal Executive and Financial Officer) Date: January 17, 2006 ---------------- 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"), certify that: 1. I have reviewed this quarterly report on Form 10-Q for the period ending December 15, 2005 of the Partnership; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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 have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, 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 report is 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; c) evaluated the effectiveness of the Partnership's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the Partnership's internal control over financial reporting that occurred during the Partnership's most recent fiscal quarter 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 control 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 control over financial reporting. Date: January 17, 2006 ---------------- By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Principal Executive Officer and Principal Financial Officer 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, 2005 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 17, 2006

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