UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

~~ACT~~For OFthe ~~1934~~fiscal year ended March 31, 2012

For the fiscal year ended March 31, 2011

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

ACT OF 1934

For the transition period from ___________ to _____________

Commission file number: 0-21494

WNC HOUSING TAX CREDIT FUND III, L.P.

(Exact name of registrant as specified in its charter)

California	33-0433017
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
17782 Sky Park Circle	~~92614-6404~~
Irvine, CA	~~(Zip Code)~~92614-6404
(Address of principal executive offices)	(Zip Code)

(714) 662-5565

(Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to section 12(g) of the Act:

UNITS OF LIMITED PARTNERSHIP INTEREST

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

~~Yes_____~~ Yes [ ] No [X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

~~Yes_____~~ Yes [ ] No [X ]

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

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

~~Yes_____ No~~ Yes [X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x [X]

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

Large accelerated ~~filer____~~ filer [ ] Accelerated ~~filer____~~ filer [ ] Non-accelerated filer [X ] Smaller reporting company[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

~~Yes_____~~ Yes [ ] No [X ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

INAPPLICABLE

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

NONE

PART I.

Item 1. Business

Organization

WNC Housing Tax Credit Fund III, L.P. (the "Partnership") is a California limited partnership formed under the laws of the State of California on May 10, 1991. The Partnership was formed to acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”). The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership or operating agreement (the “Local Limited Partnership Agreement”).

The general partner of the Partnership is WNC Tax Credit Partners, L.P. (the “General Partner”). WNC & Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. are the general partners of WNC Tax Credit Partners, L.P. The chairman and president of Associates owns all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own.

Pursuant to a registration statement filed with the Securities and Exchange Commission (“SEC”), on April 27, 1990, the Partnership commenced a public offering of 15,000 units of limited partnership interest ("Partnership Units") at a price of $1,000 per Partnership Unit. As of the close of the public offering on September 30, 1993, a total of 15,000 Partnership Units representing $15,000,000 had been sold. Holders of Partnership Units are referred to herein as “Limited Partners.”

The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the Partnership Agreement (as defined below) or law.

Description of Business

The Partnership's principal business objective was to provide its Limited Partners with Low Income Housing Tax Credits. The Partnership's principal business therefore consisted of investing as a limited partner or non-managing member in Local Limited Partnerships each of which owned and operated a Housing Complex which will qualified for the Low Income Housing Tax Credits. In general, under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15 year compliance period (the “Compliance Period”), and under state law may have to be maintained as low income housing for 30 or more years.

As a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture of Low Income Housing Tax Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships (“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy” below) and (ii) to eliminate the possibility of posting a bond against potential recapture. The Partnership is seeking to sell its Local Limited Partnership Interests. Nonetheless, because of (i) the nature of the Housing Complexes and the Local Limited Partnership Interests, (ii) the difficulty of predicting the resale market for low-income housing, (iii) the current economy, and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership dated May 10, 1991 (the "Partnership Agreement"), will be accomplished in the near term. Furthermore, the recent codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests. If a Local Limited Partnership Interest or the related Housing Complex is not sold, it is anticipated that the Local General Partner would continue to operate such Housing Complex.

The Partnership originally invested in forty-eight Local Limited Partnerships, thirty-eight of which have been sold or otherwise disposed of as of March 31, ~~2011~~2012. Each of these Local Limited Partnerships owns or owned one Housing Complex that was eligible for the Low Income Housing Tax Credit, except for one Local Limited Partnership which ~~owns~~owned three such Housing Complexes. Certain Local Limited Partnerships may also benefit or have benefited from additional government programs promoting low- or moderate-income housing.

Exit Strategy

The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits. The initial programs have completed their Compliance Periods.

Upon the sale of a Local Limited Partnership ~~Interest~~interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. ~~All~~ A sale prior to the end of the ~~Local~~Compliance ~~Limited~~Period ~~Partnerships~~could ~~have~~result ~~completed~~in ~~their~~recapture ~~15-year~~if ~~Compliance~~certain ~~Period~~conditions are not met.

With that in mind, the General Partner is continuing its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.

Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership as Low Income Housing Tax Credits are no longer available. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, ~~2011~~2012. As of all periods presented, all of the Housing Complexes had completed their Compliance Period.

Upon management of the Partnership identifying a Local Limited Partnership for disposition, costs incurred by the Partnership in preparation for the disposition are deferred. Upon the sale of the Local Limited Partnership ~~Interest~~interest, the Partnership nets the costs that had been deferred against the proceeds from the sale in determining the gain or loss on sale of the Local Limited Partnership. Deferred disposition costs are included in other assets on the balance sheets.

AsThe Partnership has received the majority vote in favor of ~~March~~the ~~31,~~plan of ~~2010~~liquidation of the Partnership. Therefore, the Partnership ~~had~~is ~~sold~~engaging ~~its~~third party appraisers to appraise several or all of the Local Limited Partnerships in this Partnership. ~~Interest~~The appraisal is one of the preliminary steps that need to be completed in order ~~Carlinville~~to ~~Associate~~move I,forward Lwith the approved liquidation plan.P ~~and~~The ~~Lake~~expense ~~Ridge~~incurred ~~Apartments~~for the appraisals, ~~L.P.~~or ~~The~~any other disposition related expenses the Partnership incurs, are being capitalized and will remain on the balance sheet until the respective Local Limited Partnership ~~Partnerships~~is ~~had~~sold. ~~completed~~At ~~their~~the ~~Compliance~~time ~~Period~~of disposition the capitalized costs will be netted with any cash proceeds that are received in order to calculate the gain or loss on the disposition.

OnAs ~~April~~of 30March 31, ~~2010~~2011, the Partnership sold its Local Limited Partnership Interest in ~~Heritage~~Carlinville ~~Colonial~~Associates ~~Homes~~I, L.P~~. (“Heritage”). Heritage was appraised with a value of $320~~,~~000~~ ~~and~~Lake asRidge ~~of December 31~~Apartments, ~~2009~~L.P, ~~the~~Heritage ~~outstanding~~Colonial ~~mortgage debt was approximately $499~~Homes,~~000.~~ ~~The Local Limited Partnership Interest was sold on April 30, 2010 to the Local General Partner~~L. ~~The outstanding debt was greater than the appraised value but the Partnership received $10~~P,~~000~~ ~~for~~Meadow ~~its~~Run ~~Local~~Associates ~~Limited Partnership Interest~~L. ~~Additionally~~P, Windermere ~~the Partnership incurred $4~~Associates,~~594~~ ~~in expenses related to the disposition which were netted against the proceeds from the sale in calculating the gain on the sale~~L.P, ~~The~~Candleridge ~~net~~Apartments ~~proceeds will remain in the Partnership’s reserves and at a future date will be used to reimburse the General Partner or an affiliate for operating expenses it paid on behalf~~ of ~~the~~Bondurant, ~~Partnership~~L. ~~As the investment balance was zero at the time of sale~~P, ~~the~~Candleridge ~~Partnership~~Apartments ~~recorded a $5,406 gain on the sale~~ of ~~the Local Limited Partnership Interest during the year ended March 31~~Waukee, ~~2011~~L. NoP ~~cash~~and ~~distribution~~Logan ~~will~~Park ~~be made to the Limited Partners as a result of this sale~~Associates, L. ~~The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership~~P.

On August 26, 2010, the Partnership sold Local Limited Partnership Interest in Meadow Run Associates Limited Partnership (“Meadow Run”) to the Local General Partner. Meadow Run was appraised for $1,090,000 and had a mortgage note balance of $1,441,130 as of December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $30,000. The Partnership used the cash proceeds to pay $10,063 of accrued asset management fees and $19,937 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance in this Local Limited Partnership was zero at the time of the sale, therefore a gain of $30,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.3

4The following table reflects the 30 Local Limited Partnership interests that were sold during the year ended March 31, 2012:

On August 26, 2010, the Partnership sold its Local Limited Partnership Interest in Windermere Associates Limited Partnership (“Windermere”) to the Local General Partner. Windermere was appraised for $1,120,000 and had a mortgage note balance of $1,433,759 as of December 31, 2010. The Partnership’s Local Limited Partnership Interest was sold for $30,000. The Partnership used the cash proceeds to pay $10,063 of accrued asset management fees and $19,937 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $30,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

Local Limited Partnership	Debt at 12/31/10		Appraisal Value		Date of Sale		Sales Price		Sales Related Expenses		Gain (loss) on sale

Cherokee Housing	$	589,099	$	335,000		May 1, 2011	$	17,673	$	5,534	$	12,139
Coffeeville Housing		510,375		280,000		May 1, 2011		15,311		5,534		9,777
Coosa County Housing		515,037		350,000		May 1, 2011		15,451		5,534		9,917
Ft. Deposit Housing		669,824		380,000		May 1, 2011		20,095		5,534		14,561
Orange Beach		1,029,413		375,000		May 1, 2011		31,519		5,534		25,985
Wilcam Housing		591,672		450,000		May 1, 2011		17,750		5,534		12,216
Parks I		1,156,121		570,000		May 31, 2011		30,000		3,319		26,681
Cambridge Court		1,235,832		735,000		April 30, 2011		31,056		2,960		28,096
Fairview Village		542,986		260,000		June 30, 2011		30,000		4,301		25,699
Beaumont Elderly Housing		891,637		560,000		August 24, 2011		20,000		3,096		16,904
Chester Associates		653,547		380,000		August 24, 2011		20,000		3,196		16,804
Clinton Terrace, Ltd		716,935		230,000		November 15, 2011		20,000		3,773		16,227
Crockett Manor		784,131		730,000		August 24, 2011		20,000		2,996		17,004
Crockett Manor Senior		961,186		470,000		August 24, 2011		20,000		2,996		17,004
Delta Manor, L.P.		1,180,131		550,000		September 20, 2011		30,000		4,023		25,977
Eupora Apartments		1,148,192		750,000		August 24, 2011		20,000		3,496		16,504
Fox Lake Manor L.P.		345,617		290,000		August 30, 2011		20,000		4,096		15,904
Gulf Coast Apartments		1,265,783		740,000		August 30, 2011		20,000		2,946		17,054

On September 13, 2010, the Partnership sold its Local Limited Partnership Interest in Candleridge Apartments of Bondurant L.P. (“Candleridge-Bondurant”) to the Local General Partner. Candleridge-Bondurant was appraised for $413,000 and had a mortgage note balance of $550,140 at December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $25,000. The Partnership used the cash proceeds to pay $21,000 of accrued fees and expenses due to General Partner and affiliates and is retaining the remaining $4,000 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $25,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

On September 13, 2010, the Partnership sold its Local Limited Partnership Interest in Candleridge Apartments of Waukee L.P. (“Candleridge-Waukee”) to the Local General Partner. Candleridge-Waukee was appraised for $589,000 and had a mortgage note balance of $606,189 at December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $25,000. The Partnership used the cash proceeds to pay $21,000 of accrued fees and expenses due to General Partner and affiliates and is retaining the remaining $4,000 in reserves for future operating expenses. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $25,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

Local Limited Partnership	Debt at 12/31/10		Appraisal Value		Date of Sale		Sales Price		Sales Related Expenses		Gain (loss) on sale

Gulf Coast of Long Beach		1,296,021		860,000		August 30, 2011		20,000		2,946		17,054
Killbuck, L.P.		712,840		250,000		July 31, 2011		26,471		3,813		22,658
Levelland Manor, L.P.		862,108		420,000		October 1, 2011		25,863		4,893		20,970
Oakdale Senior Housing Ltd.		2,488,037		1,710,000		March 27, 2012		20,000		1,017		18,983
Post Manor, L.P.		603,294		250,000		October 1, 2011		18,099		4,251		13,848
Red Bud Associates		564,272		310,000		August 24, 2011		20,000		3,196		16,804
Steelville Associates		509,551		315,000		August 30, 2011		20,000		3,196		16,804
Tanglewood L.P.		1,015,558		740,000		July 31, 2011		39,706		3,815		35,891
Whitted Forest		828,985		605,000		September 19, 2011		-		7,084		(7,084	)
Wills Point Manor, L.P.		600,357		240,000		October 1, 2011		18,011		4,251		13,760
Woodland Apartments, L.P.		1,193,654		530,000		October 1, 2011		35,810		4,251		31,559
Woodview LP		1,138,704		675,000		August 30, 2011		40,000		8,887		31,113

OnAll ~~December 31, 2010, the Partnership sold its~~ Local Limited ~~Partnership~~Partnerships ~~Interest~~that inwere ~~Logan~~sold ~~Park~~for ~~Associates Limited Partnership (“Logan Park”) to~~ the ~~Local~~year ~~General~~ended ~~Partner. Logan~~March ~~Park was appraised for $810~~31,~~000~~ ~~and~~2012 had ~~a mortgage note balance of $2,182,348 at December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $30,000. The Partnership used~~ reached the ~~cash~~end ~~proceeds to pay $20,000~~ of ~~accrued fees and expenses due to General Partner and affiliates and is retaining~~ the ~~remaining~~Compliance ~~$10,000 in reserves for future operating expenses~~Period. ~~The~~ ~~Partnership’s investment balance was zero at the time of the sale. The purchase price of $30~~Therefore,~~000~~ ~~was~~no ~~partially~~risk ~~offset by a $3,500 appraisal that was performed prior to the sale and $700~~ of ~~legal~~credit ~~fees~~recapture ~~related to the sale resulting in a $25,800 gain being recorded during the year ended March 31, 2011~~exists. No ~~cash~~distributions ~~distribution~~ will be made to the Limited Partners as a result of ~~this~~these ~~sale~~sales. ~~The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.~~

On November 18, 2010, the Partnership filed preliminary consent solicitation materials with the SEC regarding the adoption of a plan of liquidation. Definitive materials were filed with the SEC on December 2, 2010. Materials were disseminated to the Limited Partners on December 2, 2010. The Partnership sought approval to have a formal plan of liquidation of selling its limited partnership interests or selling the underlying Housing Complexes of each of the Local Limited Partnerships. On December 20, 2010, the Partnership sent a letter to the Limited Partners reminding them that a proxy was mailed to them and a vote was requested. On January 19, 2011, the Partnership received the majority vote in favor of the plan for dissolution.5

The ~~Partnership~~following istable ~~engaging~~represents ~~third party appraisers to appraise several of~~ the ~~Local~~anticipated ~~Limited~~use ~~Partnerships in this Partnership. The appraisal is one~~ of the ~~preliminary~~cash ~~steps~~proceeds from ~~that need to be completed in order to move forward with~~ the ~~approved liquidation plan. Expenses incurred for the appraisals, or any other~~ disposition ~~related~~of ~~expenses~~ the ~~Partnership~~30 ~~incurs, are being capitalized and will remain on the balance sheet until the respective~~ Local Limited ~~Partnership~~Partnerships isthat ~~sold. At~~were ~~the~~disposed ~~time~~ of ~~disposition~~for the ~~capitalized~~year ~~costs~~ended ~~will~~March be31, ~~netted with any sale proceeds that are received in order to calculate the net gain or loss on the disposition~~2012.

Local Limited Partnership	Cash Proceeds		Reimburse GP or affiliates for expenses		Payment of accrued asset management fees		Remaining cash to remain in reserves for future expenses
Cherokee Housing	$	17,673	$	14,672	$	-	$	3,001
Coffeeville Housing		15,311		12,711		-		2,600
Coosa County Housing		15,451		12,828		-		2,623
Ft. Deposit Housing		20,095		16,683		-		3,412
Orange Beach		31,519		26,168		-		5,351
Wilcam Housing		17,750		14,736		-		3,014
Parks I		30,000		15,000		-		15,000
Cambridge Count		31,056		7,500		7,500		16,056
Fairview Village		30,000		20,000		10,000		-
Beaumont Elderly Housing		20,000		7,703		7,726		4,571
Chester Associates		20,000		7,703		7,726		4,571
Clinton Terrace, Ltd		20,000		-		19,000		1,000
Crockett Manor		20,000		7,703		7,726		4,571
Crockett Manor Senior		20,000		7,703		7,726		4,571
Delta Manor, L.P.		30,000		7,340		20,000		2,660
Eupora Apartments		20,000		7,703		7,726		4,571
Fox Lake Manor L.P.		20,000		12,447		-		7,553
Gulf Coast Apartments		20,000		9,917		-		10,083
Gulf Coast of Long Beach		20,000		9,917		-		10,083
Killbuck, L.P.		26,471		10,736		-		15,735
Levelland Manor, L.P.		25,863		3,146		17,717		5,000
Oakdale Senior Housing Ltd.		20,000		-		15,000		5,000
Post Manor, L.P.		18,099		3,146		9,953		5,000
Red Bud Associates		20,000		7,703		7,726		4,571
Steelville Associates		20,000		7,703		7,726		4,571
Tanglewood L.P.		39,706		17,353		-		22,353
Whitted Forest		-		-		-		-
Wills Point Manor, L.P.		18,011		3,146		9,865		5,000
Woodland Apartments, L.P.		35,810		3,147		27,663		5,000
Woodview LP		40,000		21,660		-		18,340

~~As of March 31, 2011, the seven following Local Limited Partnerships were identified for disposition and all six Local Limited Partnership Interests were sold on May 1, 2011.~~6

~~The~~Subsequent ~~Partnership sold its Local Limited Partnership Interest in Cherokee Housing, Ltd. (“Cherokee”)~~ to ~~the~~March ~~Local General Partner for $17,673. Cherokee was appraised for $335,000 and had a mortgage note balance of $589,099 at December~~ 31, ~~2010. The Partnership will use the cash proceeds to pay $14~~2012,~~672~~ ~~of accrued fees and expenses due to General Partner and affiliates and is going to retain~~ the ~~remaining $3,001 in reserves for future operating expenses of the~~ Partnership~~. The~~ ~~Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and~~ has ~~agreed~~identified toseven ~~pay the cost of the~~ Local Limited ~~Partnership’s~~Partnerships ~~final~~for ~~tax~~disposition ~~return~~as ~~which~~listed ~~will~~in ~~cost $2,000. Therefore, a gain of $12,322 will be recorded during~~ the ~~three~~table ~~months ending June 30, 2011~~below. NoThe ~~cash~~Compliance ~~distribution~~Period for ~~will~~all beof ~~made~~these toLocal ~~the~~ Limited ~~Partners~~Partnerships ashave ~~a result of this sale. The Compliance Period has~~ expired so there is no risk of ~~tax credit~~ recapture to the investors in the Partnership. All dispositions are expected to close on July 31, 2012.

The Partnership also sold its Local Limited Partnership Interest in Coffeeville Housing, Ltd. (“Coffeeville”) to the Local General Partner for $15,311. Coffeeville was appraised for $280,000 and had a mortgage note balance of $510,375 at December 31, 2010. The Partnership will use the cash proceeds to pay $12,711 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $2,600 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $9,960 will be recorded during the three months ending June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

Local Limited Partnership	Debt at 12/31/11		Appraisal value		Value of Local Limited Partnership			Estimated sales price		Actual appraisal expense		Estimated legal expense		Estimated gain on sale
HOI Limited Partnership of Benson	$	888,000	$	825,000	$	(63,000	)	$	36,650	$	1,000	$	385	$	35,265
HOI Limited Partnership of Dallas		1,529,000		1,120,000		(409,000	)		36,650		1,000		385		35,265
Hoi Limited Partnership of Dunn		724,000		445,000		(279,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Kings Mountain		1,091,000		745,000		(346,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Lee		1,739,000		1,340,000		(399,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Sanford		1,610,000		965,000		(645,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Selma		838,000		805,000		(33,000	)		36,650		1,000		385		35,265

~~The~~Item ~~Partnership also sold its Local Limited Partnership Interest in Coosa County Housing, Ltd~~1A. ~~(“Coosa~~Risk County”) to the Local General Partner for $15,451. Coosa County was appraised for $350,000 and had a mortgage note balance of $515,037 at December 31, 2010. The Partnership will use the cash proceeds to pay $12,828 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $2,623 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $10,100 will be recorded during the three months ending June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Factors

~~The~~Set ~~Partnership~~forth ~~also~~below ~~sold~~are ~~its~~the ~~Local~~risks ~~Limited Partnership Interest in Ft. Deposit Housing Ltd. (“Ft. Deposit”) to~~ the ~~Local General Partner for $20,095. Ft. Deposit was appraised for $380,000 and had a mortgage note balance of $669,824 at December 31, 2010. The~~ Partnership ~~will~~believes ~~use~~are the ~~cash~~most significant ~~proceeds~~ to ~~pay $16,683 of accrued fees and expenses due to General Partner and affiliates and is going to retain~~ the ~~remaining~~Limited ~~$3,412 in reserves for future operating expenses of the Partnership~~Partners. The Partnership’s ~~investment balance was zero at the time of the sale~~ and the ~~Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the~~ Local Limited ~~Partnership’s~~Partnerships ~~final~~operate ~~tax~~in ~~return~~a ~~which~~continually ~~will~~changing ~~cost~~business environment $2and,~~000. Therefore,~~ ~~a gain of $14~~therefore,~~744~~ ~~will~~new berisks ~~recorded~~emerge ~~during~~from ~~the~~time ~~three~~to ~~months ending June 30, 2011~~time. No ~~cash~~This ~~distribution~~section ~~will~~contains besome ~~made~~forward-looking ~~to the Limited Partners as a result of this sale~~statements. ~~The~~ ~~Compliance~~For ~~Period~~an ~~has expired so there is no risk~~ explanation of ~~tax~~the ~~credit~~qualifications ~~recapture~~and tolimitations ~~the~~on ~~investors~~forward-looking instatements, ~~the~~see ~~Partnership~~Item 7.

The Partnership also sold its Local Limited Partnership Interest in Orange Beach Housing, Ltd. (“Orange Beach”) to the Local General Partner for $31,519. Orange Beach was appraised for $375,000 and had a ~~mortgage note balance of $1,029,413 at December 31, 2010~~. ~~The~~ ~~Partnership~~Risks ~~will~~arising ~~use~~from the ~~cash~~Internal ~~proceeds~~Revenue toCode ~~pay~~rules ~~$26,168~~governing ofLow ~~accrued~~Income ~~fees~~Housing ~~and~~Tax expenses due to General Partner and affiliates and is going to retain the remaining $5,351 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $26,168 will be recorded during the three months ending June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Credits

~~The~~Sales of Housing Complexes are subject to limitations which may impact a Local Limited Partnership’s ~~also~~ability ~~sold~~to sell its Housing Complex. Each Local Limited Partnership ~~Interest~~executes an extended low income housing commitment with the state in ~~Wilcam~~which the Housing, ~~Ltd~~Complex is located. ~~(“Wilcam”)~~The toextended low income housing commitment states the number of years that the Local ~~General~~Limited ~~Partner~~Partnership ~~for~~and ~~$17,750. Wilcam~~any ~~was~~subsequent ~~appraised~~owners ~~for~~must ~~$450,000~~rent ~~and~~the ~~had~~Housing aComplex as ~~mortgage~~low ~~note~~income ~~balance~~housing. ofUnder ~~$591~~Federal law,~~672~~ the commitment must be for at ~~December~~least ~~31,~~30 ~~2010~~years. The ~~Partnership~~commitment, ~~will~~actually ~~use~~agreed ~~the~~to, ~~cash~~may be ~~proceeds~~significantly tolonger ~~pay~~than ~~$14~~30 years. In prioritizing applicants for Low Income Housing Tax Credits,~~736~~ ofmost ~~accrued~~states ~~fees~~give ~~and~~additional points ~~expenses~~for ~~due~~commitment toperiods ~~General~~in ~~Partner~~excess ~~and~~of ~~affiliates~~30 ~~and~~years. isOn ~~going~~any tosale ~~retain~~of the ~~remaining~~Housing $3Complex during the commitment period,~~014~~ inthe ~~reserves~~purchaser would ~~for~~have ~~future~~to ~~operating~~agree ~~expenses~~to ofcontinue to rent the ~~Partnership. The~~Housing ~~Partnership’s~~Complex ~~investment~~as ~~balance~~low ~~was~~income ~~zero~~housing atfor the ~~time~~duration of the ~~sale~~commitment ~~and~~period. This requirement reduces the ~~Partnership~~potential ~~incurred~~market, ~~appraisal~~and ~~expenses~~possibly ofthe $3sales price,~~063,~~ ~~legal~~for ~~expenses~~the Housing Complexes. The sale of ~~$288~~a ~~and~~Housing ~~has~~Complex may ~~agreed~~be subject to ~~pay~~other ~~the~~restrictions. ~~cost~~For ofexample, Federal lenders or subsidizers may have the ~~Local~~right ~~Limited~~to ~~Partnership’s~~approve ~~final~~or ~~tax~~disapprove ~~return~~a purchase ~~which~~of ~~will~~a ~~cost~~Housing ~~$2,000~~Complex. ~~Therefore~~ Accordingly, there can be no assurance that a ~~gain~~Local ofLimited ~~$12,399~~Partnership will be ~~recorded~~able ~~during~~to ~~the~~sell ~~three~~its Housing ~~months~~Complex. ~~ending~~Even ~~June~~if 30it does so, ~~2011. No~~there ~~cash~~can ~~distribution~~be no assurance that any amount of cash will be ~~made~~distributed to the Limited Partners. The asPartnership awould ~~result~~first use sale proceeds to pay obligations of ~~this~~the ~~sale~~Partnership. ~~The~~ ~~Compliance~~As ~~Period~~a ~~has~~result, ~~expired~~a somaterial ~~there~~portion isof nothe ~~risk~~Low Income ofHousing ~~tax~~Tax ~~credit~~Credits ~~recapture~~may torepresent a return of the ~~investors~~money originally invested in the Partnership.

6As part of the recently enacted health care legislation, Congress has codified the economic substance doctrine. Because of its recent enactment, the full reach of this provision is unclear. Inasmuch as Housing Complexes might offer no benefit to a purchaser other than tax benefits, it is possible that the economic substance doctrine could be interpreted to limit deduction of tax losses from Housing Complexes, which would be expected to have a significant adverse effect on the sale value of the Housing Complexes and the Local Limited Partnership Interests.

Onb. ~~May~~Risks ~~31,~~related ~~2011,~~to ~~the~~investment ~~Partnership sold its Local Limited Partnership Interest~~ in ~~Parks I Limited Partnership (“Parks”) to an affiliate of the~~ Local ~~General Partner. Parks was appraised for $570,000 and had a mortgage note balance of $1,156,126 at December 31, 2010. The Local~~ Limited ~~Partnership~~Partnerships Interest was sold for $30,000, the Partnership will use the cash proceeds to pay $15,000 of accrued asset management fees with the balance of $15,000 to be retained in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and ~~the~~Housing Partnership incurred appraisal expenses of $2,400 and the legal expense is not yet known. Therefore the estimated gain on this sale will be $27,600, but will be adjusted during the three months ending June 30, 2011 for the legal expense and any other expense that is incurred by the Partnership related to this disposition. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture.Complexes

~~While~~Because ~~appraisals have been performed on substantially all of~~ the ~~Local Limited Partnerships, Fairview Village V, Limited~~ Partnership ~~and~~has ~~Village~~few ~~Lane Properties~~investments, ~~Limited~~each investment ~~Partnership~~will have ~~both~~a ~~been~~great ~~identified~~impact ~~for~~on ~~disposition~~the asPartnership’s results of ~~March 31, 2011~~operations. ~~Contracts~~ ~~are~~Any ~~under~~single ~~review~~Housing byComplex ~~each~~experiencing poor ofoperating ~~the~~performance, ~~potential~~impairment ~~purchasers~~ of ~~the~~value ~~Local~~will ~~Limited~~have ~~Partnership Interests for both of these Local Limited Partnerships. The Partnership estimates~~ a ~~closing~~significant ~~date~~impact ofupon ~~August 2011 for~~ the ~~Local Limited~~ Partnership ~~Interest~~as ~~sales. The~~a ~~purchase price is still under negotiations~~whole.

~~Item~~The 1Afailure to pay mortgage debt could result in a forced sale of a Housing Complex. ~~Risk~~ ~~Factors~~Each Local Limited Partnership leverages the Partnership’s investment therein by incurring mortgage debt. A Local Limited Partnership’s revenues could be less than its debt payments and taxes and other operating costs. If so, the Local Limited Partnership would have to use working capital reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure. The same results could occur if government subsidies ceased. Foreclosure would result in a loss of the Partnership’s capital invested in the Housing Complex. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the Local Limited Partnership’s ability to pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment. Balloon payments maturing prior to the end of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or at all.

~~Set~~The ~~forth~~Partnership ~~below~~does ~~are~~not control the ~~risks~~Local ~~the~~Limited Partnerships ~~Partnership~~and ~~believes~~must ~~are~~rely on the ~~most~~Local ~~significant~~General toPartners. The Local General Partners will make all management decisions for the Local Limited ~~Partners~~Partnerships and the Housing Complexes. The Partnership ~~and~~has very limited rights with respect to management of the Local Limited Partnerships. ~~operate~~The inPartnership awill ~~continually~~not ~~changing~~be ~~business~~able ~~environment~~to ~~and,~~exercise ~~therefore,~~any ~~new~~control ~~risks~~with ~~emerge~~respect ~~from time~~ to ~~time. This~~Local ~~section~~Limited ~~contains~~Partnership business ~~some~~decisions ~~forward-looking~~and ~~statements~~operations. ~~For~~Consequently, anthe ~~explanation~~success of the ~~qualifications~~Partnership ~~and~~will ~~limitations~~depend on ~~forward-looking~~the ~~statements,~~abilities ~~see~~of ~~Item~~the 7Local General Partners.

~~a. Risks arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits~~7

~~Sales of~~ Housing Complexes ~~are~~subsidized ~~subject~~by toother ~~limitations~~government programs ~~which~~are ~~may~~subject ~~impact a Local Limited Partnership’s ability~~ to ~~sell~~additional ~~its~~rules ~~Housing Complex. Each Local Limited Partnership executes an extended low income housing commitment with the state in~~ which ~~the~~may ~~Housing~~make ~~Complex~~it isdifficult ~~located. The~~to ~~extended~~operate ~~low income housing commitment states the number of years that the Local Limited Partnership~~ and ~~any~~sell ~~subsequent owners must rent the~~ Housing ~~Complex as low income housing~~Complexes. ~~Under~~ ~~Federal~~Some ~~law,~~or ~~the~~all commitment must be for at least 30 years. The commitment, actually agreed to, may be significantly longer than 30 years. In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of ~~30 years. On any sale of~~ the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period. This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes~~. The~~ ~~sale~~receive ~~of a Housing Complex may be subject to other restrictions. For example, Federal lenders~~ or ~~subsidizers~~ may ~~have~~receive ~~the~~government ~~right~~financing ~~to approve~~ or ~~disapprove~~operating asubsidies ~~purchase~~in ofaddition ~~a Housing Complex. Accordingly, there can be no assurance that a Local Limited Partnership will be able~~ to sell its Housing Complex. Even if it does so, there can be no assurance that any amount of cash will be distributed to the Limited Partners. The Partnership would first use sale proceeds to pay obligations of the Partnership. As a result, a material portion of the Low Income Housing Tax Credits. ~~may~~The ~~represent~~following aare ~~return~~risks ofassociated ~~the~~with ~~money~~some ~~originally~~such ~~invested~~subsidy ~~in the Partnership.~~programs:

As· ~~part~~Obtaining oftenants ~~the~~for ~~recently enacted health care legislation, Congress has codified~~ the ~~economic~~Housing ~~substance doctrine~~Complexes. ~~Because~~Government ofregulations ~~its~~limit ~~recent enactment,~~ the ~~full~~types ~~reach~~ of ~~this~~people ~~provision~~who iscan ~~unclear. Inasmuch~~rent assubsidized ~~Housing~~housing. ~~Complexes~~These ~~might~~regulations ~~offer~~may nomake ~~benefit to a purchaser other than tax benefits,~~ it ismore ~~possible~~difficult ~~that the economic substance doctrine could be interpreted~~ to ~~limit~~rent ~~deduction of tax losses from Housing Complexes, which would be expected to have a significant adverse effect on~~ the ~~sale~~residential ~~value~~units ofin the Housing Complexes ~~and the Local Limited Partnership Interests~~.

7· Obtaining rent increases. In many cases rents can only be increased with the prior approval of the subsidizing agency.

b· Limitations on cash distributions. ~~Risks~~The ~~related~~amount of cash that may be distributed to ~~investment~~owners inof ~~Local~~subsidized ~~Limited~~Housing ~~Partnerships~~Complexes ~~and~~is less than the amount that could be earned by the owners of non-subsidized Housing Complexes.

~~Because~~· Limitations on sale or refinancing of the Housing Complexes. A Local Limited Partnership ~~has~~may ~~few~~be ~~investments,~~unable ~~each~~to ~~investment~~sell ~~will~~its ~~have~~Housing aComplex ~~great~~or ~~impact~~to onrefinance its mortgage loan without the ~~Partnership’s~~prior ~~results~~approval of ~~operations~~the lender. ~~Any~~ ~~single~~The ~~Housing~~lender ~~Complex~~may ~~experiencing~~withhold ~~poor~~such ~~operating~~approval ~~performance,~~in ~~impairment~~the discretion of ~~value~~the ~~will~~lender. ~~have~~Approval amay ~~significant~~be ~~impact~~subject ~~upon~~to conditions, including the ~~Partnership~~condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a ~~whole~~mortgage may result in the assessment of a prepayment penalty.

~~The~~· ~~failure~~Limitations toon ~~pay~~transfers ~~mortgage~~of ~~debt~~interests ~~could result~~ in ~~a forced sale of a Housing Complex. Each~~ Local Limited ~~Partnership leverages the Partnership’s investment therein by incurring mortgage debt~~Partnerships. A ~~Local~~The ~~Limited~~ Partnership’s ~~revenues~~may ~~could~~ be ~~less~~unable ~~than its debt payments and taxes and other operating costs. If so, the Local Limited Partnership would have~~ to ~~use~~sell ~~working capital reserves, seek additional funds, or suffer a forced sale of~~ its ~~Housing~~interest ~~Complex, which could include a foreclosure. The same results could occur if government subsidies ceased. Foreclosure would result~~ in a ~~loss of the Partnership’s capital invested in the Housing Complex. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the~~ Local Limited Partnership’s ~~ability~~without tothe ~~pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment. Balloon payments maturing~~ prior toapproval ~~the end~~ of the ~~anticipated~~lender. ~~holding~~The ~~period~~lender ~~for~~may ~~the~~withhold ~~Housing~~such ~~Complex~~approval ~~create~~in the ~~risk~~discretion of ~~a forced sale if~~ the ~~debt cannot be refinanced~~lender. ~~There~~Approval ~~can~~may be nosubject ~~assurance that additional funds will be available~~ to ~~any Local Limited Partnership if needed on acceptable terms or at all~~conditions.

~~The~~· ~~Partnership~~Limitations ~~does~~on ~~not~~removal ~~control~~and ~~the~~admission of Local ~~Limited~~General ~~Partnerships~~Partners. ~~and~~The ~~must~~Partnership ~~rely~~may onbe ~~the~~unable ~~Local~~to ~~General~~remove ~~Partners.~~a ~~The~~ Local General ~~Partners~~Partner ~~will~~from ~~make~~a ~~all~~Local ~~management~~Limited ~~decisions~~Partnership except for ~~the~~cause, ~~Local~~such ~~Limited~~as ~~Partnerships~~the ~~and~~violation of the ~~Housing~~rules ~~Complexes. The~~of ~~Partnership~~the ~~has~~lender ~~very~~or ~~limited~~state ~~rights~~allocating ~~with~~authority. ~~respect~~Regulations tomay ~~management~~prohibit of the ~~Local~~removal ~~Limited~~of ~~Partnerships.~~a ~~The~~Local ~~Partnership~~General ~~will~~Partner ~~not~~or bepermit ~~able~~removal toonly ~~exercise~~with ~~any~~the ~~control~~prior ~~with~~approval ~~respect~~of tothe ~~Local~~lender. ~~Limited~~Regulations ~~Partnership~~may ~~business~~also ~~decisions~~require ~~and~~approval ~~operations.~~of ~~Consequently,~~ the ~~success~~admission of ~~the~~a ~~Partnership~~successor ~~will~~Local ~~depend~~General onPartner even upon the ~~abilities~~death or other disability of ~~the~~a Local General ~~Partners~~Partner.

~~Housing~~· ~~Complexes~~Limitations ~~subsidized~~on bysubsidy ~~other~~payments. ~~government~~Subsidy ~~programs~~payments ~~are~~may be fixed in amount and subject to ~~additional~~annual ~~rules~~legislative ~~which~~appropriations. ~~may~~The ~~make~~rental itrevenues ~~difficult~~of toa ~~operate~~Housing ~~and~~Complex, ~~sell~~when ~~Housing~~combined ~~Complexes~~with the maximum committed subsidy, may be insufficient to meet obligations. ~~Some~~ Congress or ~~all~~the ofstate ~~the~~legislature, ~~Housing~~as ~~Complexes~~the ~~receive~~case ormay be, may ~~receive~~fail ~~government~~to ~~financing~~appropriate or ~~operating~~increase ~~subsidies~~the innecessary ~~addition~~subsidy. toIn ~~Low~~those ~~Income~~events, ~~Housing~~the ~~Tax~~mortgage ~~Credits. The~~lender ~~following~~could ~~are~~foreclose ~~risks~~on ~~associated~~the ~~with~~Housing ~~some~~Complex ~~such~~unless ~~subsidy~~a ~~programs:~~workout arrangement could be negotiated.

· ~~Obtaining~~Possible ~~tenants~~changes ~~for~~in ~~the~~applicable ~~Housing Complexes~~regulations. ~~Government~~Legislation ~~regulations~~may ~~limit~~be ~~the~~enacted ~~types~~which ofadversely ~~people~~revises ~~who~~provisions ~~can~~of ~~rent~~outstanding ~~subsidized~~mortgage ~~housing~~loans. ~~These~~Such ~~regulations~~legislation ~~may~~has ~~make~~been itenacted ~~more difficult to rent the residential units~~ in the ~~Housing Complexes~~past.

· ~~Obtaining~~Limited ~~rent~~Partners ~~increases~~may not receive distributions if Housing Complexes are sold. InThere ~~many~~is ~~cases~~no ~~rents~~assurance ~~can~~that ~~only~~Limited bePartners ~~increased~~will ~~with~~receive any cash distributions from the ~~prior~~sale ~~approval~~or refinancing of a Housing Complex. The price at which a Housing Complex is sold may not be high enough to pay the ~~subsidizing~~mortgage ~~agency~~and other expenses at the Local Limited Partnership and Partnership levels which must be paid at such time. If that happens, a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses.

·Uninsured ~~Limitations~~casualties oncould ~~cash~~result ~~distributions~~in losses and recapture. ~~The~~There ~~amount~~are ofcasualties ~~cash~~which ~~that~~are ~~may~~either uninsurable or not economically insurable. These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters. If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property. Even if the casualty were an insured loss, the Local Limited Partnership might be ~~distributed~~unable to ~~owners~~rebuild the destroyed property. A portion of ~~subsidized~~prior tax credits could be recaptured and future tax credits could be lost if the Housing ~~Complexes~~Complex iswere ~~less~~not ~~than~~restored within a reasonable period of time. Any liability judgments against the ~~amount~~Local ~~that~~Limited Partnership could beexceed ~~earned~~available byinsurance proceeds or otherwise materially and adversely affect the ~~owners~~Local Limited Partnership. The cost of ~~non-subsidized~~liability ~~Housing~~and ~~Complexes~~casualty insurance has increased in recent years. Casualty insurance has become more difficult to obtain and may require large deductible amounts.

·Housing ~~Limitations~~Complexes onwithout ~~sale~~financing or ~~refinancing~~operating subsidies ofmay ~~the~~be ~~Housing~~unable ~~Complexes~~to pay operating expenses. AIf a Local Limited Partnership ~~may~~were be unable to ~~sell~~pay ~~its~~operating ~~Housing~~expenses, ~~Complex~~one result orcould tobe ~~refinance~~a forced sale of its ~~mortgage~~Housing ~~loan~~Complex. ~~without~~In ~~the~~this ~~prior~~regard, ~~approval~~some of the ~~lender.~~Local ~~The~~Limited ~~lender~~Partnerships may ~~withhold~~own ~~such~~Housing ~~approval~~Complexes which inhave no subsidies other than Low Income Housing Tax Credits. Those Housing Complexes do not have the ~~discretion~~benefit of below-market-interest-rate financing or operating subsidies which often are important to the ~~lender~~feasibility of low income housing. ~~Approval~~Those ~~may~~Housing beComplexes ~~subject~~rely solely on rents to ~~conditions,~~pay ~~including~~expenses. ~~the~~However, ~~condition~~in ~~that~~order ~~the~~for ~~purchaser~~any ~~continues~~Housing Complex to ~~operate~~be ~~the~~eligible ~~property~~for asLow ~~affordable~~Income ~~housing~~Housing ~~for~~Tax ~~terms~~Credits, ~~which~~it must ~~could~~restrict bethe asrent ~~long~~which asmay 30be ~~years~~charged orto ~~more~~tenants. InOver ~~addition~~time, ~~any~~the ~~prepayment~~expenses of a ~~mortgage~~Housing ~~may~~Complex ~~result~~will inincrease. ~~the~~If ~~assessment~~a ofLocal Limited aPartnership ~~prepayment~~cannot ~~penalty~~increase its rents, it may be unable to pay increased operating expenses.

· Limitations on transfers of interests in Local Limited Partnerships. The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the lender. The lender may withhold such approval in the discretion of the lender. Approval may be subject to conditions.8

·The ~~Limitations~~Partnership’s oninvestment ~~removal~~protection policies ~~and~~will ~~admission~~be worthless if the net worth of the Local General Partners is not sufficient to satisfy their obligations. ~~The~~There is ~~Partnership~~a ~~may~~risk that the Local General Partners will be unable to ~~remove~~perform atheir ~~Local~~financial ~~General~~obligations to the Partnership. The General Partner ~~from~~has not established a ~~Local~~minimum ~~Limited~~net ~~Partnership~~worth ~~except~~requirement for ~~cause~~the Local General Partners. Rather, ~~such~~each asLocal General Partner demonstrates a net worth which the ~~violation~~General ofPartner believes is appropriate under the ~~rules~~circumstances. The assets of the ~~lender~~Local orGeneral Partners ~~state~~are ~~allocating~~likely ~~authority~~to consist primarily of real estate holdings and similar assets. ~~Regulations~~The ~~may~~fair ~~prohibit~~market ~~the~~value ~~removal~~of these types of aassets is ~~Local~~difficult ~~General~~to ~~Partner~~estimate. orThese ~~permit~~types ~~removal~~of ~~only~~assets ~~with~~cannot be readily liquidated to satisfy the ~~prior~~financial ~~approval~~guarantees ofand commitments which the ~~lender~~Local General Partners make to the Partnership. ~~Regulations~~Moreover, other creditors may ~~also~~have ~~require~~claims ~~approval~~on ofthese ~~the~~assets. ~~admission~~No escrow accounts or other security arrangements will be established to ensure performance of a ~~successor~~Local General Partner’s obligations. The cost to enforce a Local General Partner’s ~~even~~obligations ~~upon~~may be high. If a Local General Partner does not satisfy its obligations the ~~death~~Partnership may have no remedy, or ~~other~~the ~~disability~~remedy ofmay abe limited to removing the Local General Partner as general partner of the Local Limited Partnership.

·Fluctuating ~~Limitations~~economic onconditions ~~subsidy~~can ~~payments~~reduce the value of real estate. ~~Subsidy~~The ~~payments~~Partnership’s ~~may~~principal bebusiness ~~fixed~~objective inis ~~amount~~providing ~~and~~its ~~subject~~Limited toPartners ~~annual~~with ~~legislative~~Low ~~appropriations.~~Income Housing ~~The~~Tax ~~rental~~Credits, ~~revenues~~not the generation of agains ~~Housing~~from ~~Complex,~~the ~~when~~appreciation ~~combined~~of ~~with~~real estate held by the ~~maximum~~Local ~~committed~~Limited ~~subsidy~~Partnerships. In its financial statements, ~~may~~the bePartnership ~~insufficient~~has tocarried ~~meet~~its ~~obligations.~~investments ~~Congress~~in orLocal Limited Partnerships at values reflecting the ~~state~~sum of ~~legislature,~~the astotal amount of the ~~case~~remaining ~~may~~future Low Income Housing Tax Credits estimated to be, ~~may~~allocated ~~fail~~to the Partnership and the estimated residual value to ~~appropriate~~the orPartnership ~~increase~~of its interests in the ~~necessary~~Local ~~subsidy~~Limited Partnerships. InAs ~~those~~of ~~events~~all periods presented, the Partnership ~~mortgage~~had ~~lender~~reduced ~~could~~the ~~foreclose~~carrying onamount ~~the~~to ~~Housing~~$0 ~~Complex~~with ~~unless~~respect ato ~~workout~~all ~~arrangement~~of ~~could~~its ~~be negotiated~~investments.

8Any investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the ability to realize a profit or even to recover invested capital. Among these conditions are:

· ~~Possible~~the ~~changes~~general inand ~~applicable~~local ~~regulations.~~job ~~Legislation may be enacted which adversely revises provisions of outstanding mortgage loans. Such legislation has been enacted in the past.~~market,

· ~~Limited Partners may not receive distributions if Housing Complexes are sold. There is no assurance that Limited Partners will receive any cash distributions from~~ the ~~sale~~availability orand ~~refinancing~~cost of ~~a Housing Complex. The price at which a Housing Complex is sold may not be high enough to pay the~~ mortgage ~~and other expenses at the Local Limited Partnership and Partnership levels which must be paid at such time. If that happens~~financing, ~~a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses.~~

~~Uninsured~~· ~~casualties~~monetary ~~could result in losses and recapture. There are casualties which are either uninsurable or not economically insurable. These include earthquakes~~inflation, floods, wars and losses relating to hazardous materials or environmental matters. If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property. Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property. A portion of prior tax credits could be recaptured and future tax credits could be lost if the Housing Complex were not restored within a reasonable period of time. Any liability judgments against the Local Limited Partnership could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost of liability and casualty insurance has increased in recent years. Casualty insurance has become more difficult to obtain and may require large deductible amounts.

~~Housing~~· ~~Complexes without financing or operating subsidies may be unable to pay operating expenses. If a Local Limited Partnership were unable to pay operating expenses~~tax, ~~one result could be a forced sale of its Housing Complex. In this regard~~environmental, ~~some~~land ofuse ~~the~~and ~~Local~~zoning Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits. Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are important to the feasibility of low income housing. Those Housing Complexes rely solely on rents to pay expenses. Howeverpolicies, in order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged to tenants. Over time, the expenses of a Housing Complex will increase. If a Local Limited Partnership cannot increase its rents, it may be unable to pay increased operating expenses.

~~The~~· ~~Partnership’s investment protection policies will be worthless if~~ the ~~net~~supply ~~worth~~ of ~~the~~and ~~Local~~demand General Partners is not sufficient to satisfy their obligations. There is a risk that the Local General Partners will be unable to perform their financial obligations to the Partnership. The General Partner has not established a minimum net worth requirement for the Local General Partners. Rather, each Local General Partner demonstrates a net worth which the General Partner believes is appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make to the Partnership. Moreoverproperties, other creditors may have claims on these assets. No escrow accounts or other security arrangements will be established to ensure performance of a Local General Partner’s obligations. The cost to enforce a Local General Partner’s obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership.

~~Fluctuating~~· ~~economic~~neighborhood conditions ~~can reduce the value of real estate. The Partnership’s principal business objective is providing its Limited Partners with Low Income Housing Tax Credits~~, not the generation of gains from the appreciation of real estate held by the Local Limited Partnerships. In its financial statements, the Partnership has carried its investments in Local Limited Partnerships at values reflecting the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership of its interests in the Local Limited Partnerships. As of all periods presented, the Partnership had reduced the carrying amount to $0 with respect to all of its investments.

~~Any~~· ~~investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect~~ the ~~ability~~availability toand ~~realize~~cost aof ~~profit~~utilities orand ~~even to recover invested capital~~water. ~~Among these conditions are:~~

·c. ~~the~~Tax ~~general~~risks ~~and~~other ~~local~~than ~~job~~those ~~market,~~relating to tax credits

·In addition to the ~~availability~~risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks. Additional Federal income tax risks associated with the ownership of Partnership Units and ~~cost~~the operations of ~~mortgage~~the ~~financing~~Partnership and the Local Limited Partnerships include, but are not limited to, the following:

·No ~~monetary~~opinion ~~inflation,~~of counsel as to certain matters. No legal opinion is obtained regarding matters:

9· the determination of which depends on future factual circumstances,

· ~~tax,~~which ~~environmental,~~are ~~land~~peculiar ~~use~~to ~~and~~individual ~~zoning~~Limited ~~policies~~Partners, or

· ~~the~~which ~~supply~~are ofnot ~~and~~customarily ~~demand~~the ~~for~~subject ~~similar~~of ~~properties,~~an opinion.

·The ~~neighborhood~~more ~~conditions,~~significant of these matters include:

· ~~the~~allocating ~~availability~~purchase price among components of a property, particularly as between buildings and fixtures, the cost of ~~utilities~~which is depreciable, and ~~water.~~the underlying land, the cost of which is not depreciable,

A· ~~loss~~characterizing inexpenses ~~value~~and ofpayments anmade ~~investment~~to inor ~~a Local Limited Partnership other than a temporary decline is recorded~~ by the Partnership inor ~~its~~a financial statements as an impairment loss. Impairment is measured by comparing the investment's carrying amount to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. For the years ended March 31, 2011, 2010 and 2009, impairment loss related to investments in Local Limited ~~Partnerships was $0~~Partnership, ~~$0, and $4,789, respectively.~~

c.· ~~Tax~~identifying ~~risks~~the ~~other~~portion ~~than~~of ~~those~~the ~~relating~~costs toof any Housing Complex which qualify for historic and other tax credits, and

In· ~~addition~~applying to ~~the~~any ~~risks~~specific ~~pertaining~~Limited ~~specifically~~Partner tothe ~~Low~~limitation ~~Income~~on ~~Housing~~the ~~Tax~~use ~~Credits,~~of ~~there~~tax ~~are~~credits ~~other~~and ~~Federal income~~ tax ~~risks~~losses. ~~Additional~~ ~~Federal~~Limited ~~income~~Partners ~~tax~~must ~~risks~~determine ~~associated~~for ~~with~~themselves the ~~ownership~~extent ofto ~~Partnership~~which ~~Units~~they ~~and~~can ~~the~~use ~~operations~~tax ofcredits ~~the Partnership~~ and ~~the~~tax ~~Local Limited Partnerships include, but are not limited to, the following:~~losses.

NoThere ~~opinion~~can be no assurance, therefore, that the IRS will not challenge some of ~~counsel~~the astax topositions ~~certain~~adopted ~~matters~~by the Partnership. No ~~legal~~The ~~opinion~~courts iscould ~~obtained~~sustain ~~regarding~~an ~~matters:~~IRS challenge. An IRS challenge, if successful, could have a detrimental effect on the Partnership’s ability to realize its investment objectives

~~· the determination of which depends on future factual circumstances,~~9

·Passive ~~which~~activity ~~are~~rules ~~peculiar~~will limit deduction of the Partnership’s losses and impose tax on interest income. The Internal Revenue Code imposes limits on the ability of most investors to claim losses from investments in real estate. An individual may claim these so-called passive losses only as an offset to income from investments in real estate or rental activities. An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest. These passive activity rules will restrict the ability of most Limited Partners, orto use losses from the Partnership as an offset of non-passive income.

·The ~~which~~Partnership ~~are~~may earn interest income on its reserves and loans. The passive activity rules generally will categorize interest as portfolio income, and not ~~customarily~~passive ~~the~~income. Passive ~~subject~~losses ofcannot be used as an ~~opinion~~offset to portfolio income. Consequently, a Limited Partner could pay tax liability on portfolio income from the Partnership.

~~The~~At ~~more~~risk rules might limit deduction of the Partnership’s losses. If a significant portion of ~~these~~the ~~matters~~financing ~~include~~used to purchase Housing Complexes does not consist of qualified nonrecourse financing, the “at risk” rules will limit a Limited Partner’s ability to claim Partnership losses to the amount the Limited Partner invests in the Partnership. The “at risk” rules of the Internal Revenue Code generally limit a Limited Partner’s ability to deduct Partnership losses to the sum of:

· ~~allocating~~the ~~purchase~~amount ~~price among components~~ of acash ~~property,~~the ~~particularly~~Limited asPartner ~~between~~invests ~~buildings~~in ~~and fixtures,~~ the ~~cost of which is depreciable~~Partnership, and · the ~~underlying~~Limited ~~land,~~Partner’s ~~the~~share ~~cost~~ of ~~which~~Partnership isqualified ~~not~~nonrecourse ~~depreciable,~~financing.

·Qualified ~~characterizing~~nonrecourse ~~expenses~~financing ~~and~~is ~~payments~~non-convertible, ~~made~~nonrecourse todebt which oris byborrowed ~~the~~from ~~Partnership~~a government, or awith ~~Local~~exceptions, ~~Limited~~any ~~Partnership,~~person actively and regularly engaged in the business of lending money.

·Tax ~~identifying~~liability ~~the~~on ~~portion~~sale of Housing Complex or Local Limited Partnership Interest may exceed the ~~costs~~cash ofavailable ~~any~~from ~~Housing~~the sale. When a Local Limited Partnership sells a Housing Complex ~~which~~it ~~qualify~~will ~~for~~recognize ~~historic~~gain. ~~and~~Such ~~other~~gain ~~tax~~is ~~credits,~~equal ~~and~~to the difference between:

· ~~applying~~the tosales ~~any~~proceeds ~~specific~~plus ~~Limited Partner~~ the ~~limitation~~amount ~~on the use~~ of ~~tax~~indebtedness ~~credits~~secured ~~and~~by ~~tax losses. Limited Partners must determine for themselves~~ the ~~extent~~Housing toComplex, ~~which they can use tax credits~~ and ~~tax losses.~~

~~There~~· ~~can be no assurance, therefore, that~~ the ~~IRS~~adjusted ~~will~~basis ~~not~~for ~~challenge some of~~ the ~~tax~~Housing ~~positions adopted by the Partnership~~Complex. The ~~courts~~adjusted ~~could~~basis ~~sustain~~for ana ~~IRS~~Housing ~~challenge. An~~Complex ~~IRS~~is ~~challenge,~~its iforiginal ~~successful~~cost, ~~could~~plus ~~have~~capital aexpenditures, ~~detrimental~~minus ~~effect on the Partnership’s ability to realize its investment objectives~~depreciation.

~~Passive~~Similarly, ~~activity~~when ~~rules will limit deduction of~~ the Partnership’s ~~losses~~sells ~~and~~an ~~impose tax on~~ interest ~~income. The~~in ~~Internal~~a ~~Revenue~~Local ~~Code~~Limited Partnership ~~imposes limits on~~ the ~~ability~~Partnership ofwill ~~most~~recognize ~~investors to claim losses from investments in real estate~~gain. An ~~individual~~Such ~~may~~gain ~~claim~~is ~~these~~equal ~~so-called passive losses only as an offset~~ to income from investments in real estate or rental activities. An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest. These passive activity rules will restrict the ~~ability~~difference ~~of most Limited Partners to use losses from the Partnership as an offset of non-passive income.~~between:

~~The~~· ~~Partnership~~the ~~may~~sales ~~earn~~proceeds ~~interest~~plus ~~income~~the onPartnership’s ~~its~~share ~~reserves~~of ~~and~~the ~~loans. The~~amount ~~passive~~of ~~activity~~indebtedness ~~rules~~secured ~~generally~~by ~~will~~the ~~categorize~~Housing ~~interest as portfolio income~~Complex, and ~~not~~· ~~passive~~the ~~income.~~adjusted ~~Passive~~basis ~~losses~~for ~~cannot~~the beinterest. ~~used~~The asadjusted anbasis ~~offset~~for toan ~~portfolio~~interest ~~income. Consequently,~~in a Local Limited ~~Partner~~Partnership ~~could~~is ~~pay~~the ~~tax~~amount ~~liability~~paid onfor ~~portfolio~~the interest, plus income ~~from~~allocations ~~the~~and ~~Partnership~~cash distributions, less loss allocations.

AtAccordingly, ~~risk~~gain ~~rules~~will ~~might~~be ~~limit~~increased ~~deduction~~by of the ~~Partnership’s~~depreciation ~~losses. If~~deductions ataken during ~~significant portion of~~ the ~~financing~~holding ~~used~~period tofor ~~purchase~~the Housing ~~Complexes~~Complex. ~~does~~In ~~not~~some ~~consist of qualified nonrecourse financing~~cases, ~~the “at risk” rules will limit~~ a Limited Partner’s ~~ability~~could tohave ~~claim~~a ~~Partnership~~tax ~~losses~~liability tofrom ~~the~~a ~~amount~~sale ~~the~~greater than ~~Limited Partner invests in~~ the ~~Partnership. The~~cash ~~“at~~distributed ~~risk”~~to ~~rules of~~ the ~~Internal Revenue Code generally limit a~~ Limited Partner’s ~~ability~~from ~~to deduct Partnership losses to~~ the ~~sum of:~~sale.

·IRS could audit the ~~amount~~returns of ~~cash~~the Partnership, the Local Limited ~~Partner~~Partnerships ~~invests~~or the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity. The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership. Similarly, ~~and~~only one judicial proceeding can be filed to contest an IRS determination. A contest by the Partnership of any IRS determination might result in high legal fees.

10An audit of the Partnership or a Local Limited Partnership also could result in an audit of a Limited Partner. An audit of a Limited Partner’s tax returns could result in adjustments both to items that are related to the Partnership and to unrelated items. The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.

·A successful IRS challenge to tax allocations of the Partnership or a Local Limited ~~Partner~~Partnership would reduce the tax benefits of an investment in the Partnership. Under the Internal Revenue Code, a partnership’s ~~share~~allocation of ~~Partnership~~income, ~~qualified~~gains, ~~nonrecourse~~deductions, ~~financing~~losses and tax credits must have substantial economic effect. Substantial economic effect is a highly-technical concept. The fundamental principle is two-fold. If a partner will benefit economically from an item of partnership income or gain, that item must be allocated to him so that he bears the correlative tax burden. Conversely, if a partner will suffer economically from an item of partnership deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit. If a partnership’s allocations do not have substantial economic effect, then the partnership’s tax items are allocated in accordance with each partner’s interest in the partnership. The IRS might challenge the allocations made by the Partnership:

Qualified nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person actively and regularly engaged in the business of lending money.10

~~Tax~~· ~~liability~~between ~~on sale of Housing Complex or Local Limited Partnership Interest may exceed~~ the ~~cash available from the sale. When a Local~~ Limited ~~Partnership~~Partners ~~sells~~and ~~a Housing Complex it will recognize gain. Such gain is equal to~~ the ~~difference~~General ~~between:~~Partner,

· ~~the~~among ~~sales proceeds plus~~ the ~~amount~~Limited ~~of indebtedness secured by the Housing Complex~~Partners, ~~and~~or

· ~~the~~between ~~adjusted basis for~~ the ~~Housing~~Partnership ~~Complex.~~and ~~The adjusted basis for~~ a ~~Housing~~Local ~~Complex~~General ~~is its original cost, plus capital expenditures, minus depreciation~~Partner.

~~Similarly~~If any allocations were successfully challenged, ~~when~~a ~~the~~greater ~~Partnership~~share ~~sells~~of the anincome ~~interest~~or ingain or a ~~Local~~lesser ~~Limited~~share ~~Partnership~~of the ~~Partnership~~losses ~~will~~or ~~recognize~~tax ~~gain~~credits might be allocated to the Limited Partners. ~~Such~~This ~~gain~~would isincrease the ~~equal~~tax liability or reduce the tax benefits to the ~~difference~~Limited ~~between:~~Partners.

·Tax ~~the~~liabilities ~~sales~~could ~~proceeds~~arise ~~plus~~in later years of the Partnership’s. ~~share~~After a period of ~~the~~years ~~amount~~following commencement of ~~indebtedness~~operations ~~secured~~ by ~~the~~a ~~Housing~~Local ~~Complex~~Limited Partnership, ~~and~~the Local Limited Partnership may generate profits rather than losses. A Limited Partner would have tax liability on his share of such profits unless he could offset the income with:

· ~~the~~unused ~~adjusted~~passive ~~basis~~losses ~~for~~from the ~~interest. The adjusted basis for an interest in a Local Limited~~ Partnership isor ~~the~~other ~~amount paid for the interest~~investments, ~~plus income allocations and cash distributions, less loss allocations.~~or

~~Accordingly,~~· ~~gain~~current ~~will~~passive belosses ~~increased by the depreciation deductions taken during the holding period for the Housing Complex. In some cases, a Limited Partner could have a tax liability~~ from aother ~~sale greater than the cash distributed to the Limited Partner from the sale~~investments.

~~IRS~~In ~~could~~such ~~audit the returns of the Partnership~~circumstances, the ~~Local~~ Limited ~~Partnerships~~Partner orwould ~~the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity. The IRS does~~ not ~~have~~receive ~~to audit each Limited Partner in order to challenge~~ a ~~position~~cash distribution ~~taken~~from by the Partnership orwith awhich ~~Local Limited Partnership. Similarly, only one judicial proceeding can be filed~~ to ~~contest~~pay ~~an IRS determination. A contest by the Partnership of~~ any ~~IRS~~tax ~~determination might result in high legal fees~~liability.

AnIRS ~~audit~~challenge ofto ~~the~~tax ~~Partnership~~treatment orof ~~a Local Limited Partnership also~~ expenditures could ~~result~~reduce ~~in an audit of a Limited Partner~~losses. An ~~audit~~The ofIRS amay ~~Limited~~contend ~~Partner’s tax returns could result in adjustments both to items~~ that ~~are~~fees ~~related~~and topayments of the Partnership ~~and~~or toa ~~unrelated~~Local ~~items. The~~ Limited ~~Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.~~Partnership:

A· ~~successful~~should ~~IRS~~be ~~challenge~~deductible toover ~~tax allocations of the Partnership or~~ a ~~Local~~longer ~~Limited~~period ~~Partnership would reduce the tax benefits~~ of antime ~~investment~~or in ~~the Partnership. Under the Internal Revenue Code,~~ a ~~partnership’s~~later ~~allocation of income~~year, ~~gains,~~· ~~deductions,~~are ~~losses~~excessive and ~~tax~~may ~~credits~~not ~~must~~be ~~have~~capitalized ~~substantial~~or ~~economic~~deducted ~~effect. Substantial~~in ~~economic effect is a highly-technical concept. The fundamental principle is two-fold. If a partner will benefit economically from an item of partnership income or gain~~full, ~~that~~· ~~item~~should ~~must~~ be ~~allocated~~capitalized toand ~~him~~not ~~so that he bears the correlative tax burden. Conversely~~deducted, ~~if a partner will suffer economically from an item of partnership deduction~~ or ~~loss,~~· ~~that~~may ~~item~~not ~~must~~ be ~~allocated~~included toas ~~him~~part soof ~~that he bears~~ the ~~correlative~~basis ~~tax~~for ~~benefit. If~~computing ~~a partnership’s allocations do not have substantial economic effect, then the partnership’s~~ tax ~~items are allocated in accordance with each partner’s interest in the partnership~~credits. ~~The IRS might challenge the allocations made by the Partnership:~~

·Any ~~between~~such ~~the~~contention ~~Limited~~by ~~Partners~~the ~~and~~IRS ~~the~~could ~~General~~adversely ~~Partner~~impact, among other things:

· ~~among~~the eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits, · the ~~Limited~~adjusted ~~Partners~~basis of a Housing Complex used to compute depreciation, or· the correct deduction of fees, · the amortization of organization and offering expenses and start-up expenditures.

·If ~~between~~the IRS were successful in any such contention, the ~~Partnership~~anticipated Low Income Housing Tax Credits and alosses ~~Local~~of ~~General~~the ~~Partner~~Partnership would be reduced, perhaps substantially.

IfChanges ~~any~~in ~~allocations~~tax ~~were~~law ~~successfully~~might ~~challenged,~~reduce the value of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits are allocated to a ~~greater~~Housing ~~share~~Complex at commencement of the ~~income~~10-year orcredit ~~gain~~period, there can be no assurance that future legislation may not adversely affect an investment in the Partnership. For example, legislation could reduce or aeliminate ~~lesser~~the ~~share~~value of Low Income Housing Tax Credits. In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses. orThese tax ~~credits~~losses ~~might~~generally bewere ~~allocated~~used to ~~the~~reduce ~~Limited~~an investor’s ~~Partners~~income from all sources on a dollar-for-dollar basis. ~~This~~ ~~would~~Investments ~~increase~~in ~~the~~low ~~tax~~income ~~liability~~housing orwere ~~reduce~~made in reliance on the availability of such tax benefits. toHowever, ~~the~~tax ~~Limited~~legislation ~~Partners~~enacted in 1986 severely curtailed deduction of such losses.

11New administrative or judicial interpretations of the law might reduce the value of Low Income Housing Tax Credits. Many of the provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by the IRS in regulations, rulings or public announcements, or by the courts. In the future, these provisions may be interpreted or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships. The IRS constantly reviews the Federal tax rules, and can revise its interpretations of established concepts. Any such revisions could reduce or eliminate tax benefits associated with an investment in the Partnership.

~~Tax~~State ~~liabilities~~income ~~could~~tax ~~arise~~laws inmay ~~later~~adversely ~~years~~affect of the Limited ~~Partnership~~Partners. ~~After~~ aA ~~period~~Limited ofPartner ~~years~~may ~~following~~be ~~commencement~~required ofto ~~operations~~file byincome tax returns and be subject to tax and withholding in each state or local taxing jurisdiction in which: a ~~Local~~Housing ~~Limited~~Complex ~~Partnership~~is located, the Partnership or a Local Limited Partnership ~~may~~engages in ~~generate~~business ~~profits~~activities, ~~rather~~or ~~than~~the ~~losses. A~~ Limited Partner ~~would~~is ~~have~~a ~~tax~~resident. ~~liability~~Corporate onLimited ~~his~~Partners ~~share~~may ofbe ~~such~~required ~~profits~~to ~~unless~~pay hestate ~~could offset the income with:~~franchise taxes.

~~· unused passive losses from the Partnership or other investments, or~~11

·The ~~current~~tax ~~passive~~treatment ~~losses~~of particular items under state or local income tax laws may vary materially from ~~other~~the ~~investments~~Federal income tax treatment of such items. Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law. The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances.

Ind. ~~such~~Risks ~~circumstances,~~related to the ~~Limited~~Partnership ~~Partner~~and ~~would not receive a cash distribution from~~ the Partnership ~~with which to pay any tax liability.~~Agreement

~~IRS~~The ~~challenge~~Partnership may be unable to ~~tax~~timely ~~treatment~~provide financial ofreports ~~expenditures~~to ~~could~~the ~~reduce~~Limited ~~losses~~Partners which would adversely affect their ability to monitor Partnership operations. ~~The~~Historically, the ~~IRS~~Partnership ~~may~~has ~~contend~~been ~~that~~unable ~~fees~~to timely file and ~~payments~~provide investors with all of its required periodic reports. In some instances, the delay has been substantial. Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership orin a timely manner. There cannot be any assurance that the Local General Partners will satisfy these obligations. If not, the Partnership would be unable to provide to the Limited Partners in a timely manner its financial statements and other reports. That would impact the Limited Partners’ ability to monitor Partnership: operations. The Partnership’s failure to meet its filing requirements under the Securities Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning the Partnership. The failure to file could also result in sanctions imposed by the SEC. Any defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.

·Lack ~~should~~of beliquidity ~~deductible~~of ~~over~~investment. aThere ~~longer~~is no ~~period~~public market for the purchase and sale of ~~time~~Partnership Units, and it is unlikely that one will develop. Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or inat a ~~later~~reasonable ~~year~~price. Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years. Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market. The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer. The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.

·The ~~are~~Limited ~~excessive~~Partners will not control the Partnership and ~~may~~must ~~not~~rely betotally ~~capitalized~~on the General Partner. The General Partner will make all management decisions for the Partnership. Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership. Limited Partners have no right or power ~~deducted~~to take part in ~~full,~~Partnership management.

·Individual ~~should~~Limited bePartners ~~capitalized~~will ~~and~~have ~~not~~no ~~deducted,~~recourse orif they disagree with actions authorized by a vote of the majority. The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to:

· ~~may~~remove ~~not~~the beGeneral ~~included~~Partner asand ~~part~~elect ofa replacement general partner, · amend the ~~basis~~Partnership ~~for~~Agreement, ~~computing~~· ~~tax~~terminate ~~credits~~the Partnership.

~~Any~~Accordingly, ~~such~~a ~~contention~~majority-in-interest byof the ~~IRS~~Limited Partners could ~~adversely~~cause any ~~impact~~such events to occur, ~~among~~even ~~other~~if ~~things:~~Limited Partners owning 49% of the Partnership Units opposed such action.

·Limitations on liability of the ~~eligible~~General ~~basis~~Partner to the Partnership. The ability of Limited Partners to sue the General Partner and it affiliates is subject to limitations. The Partnership Agreement limits the liability of the General Partner and it affiliates to the Limited Partners. The General Partner and it affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a ~~Housing~~manner ~~Complex~~which ~~used~~the General Partner reasonably believed to ~~compute~~be ~~Low~~within ~~Income~~the ~~Housing~~scope ~~Tax~~of ~~Credits~~its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct.

·Therefore, Limited Partners may be less able to sue the ~~adjusted~~General ~~basis~~Partner and ofit aaffiliates ~~Housing~~than ~~Complex~~would ~~used~~be tothe ~~compute~~case ~~depreciation,~~if such provisions were not included in the Partnership Agreement.

·Associates and its affiliates are serving as the general ~~correct~~partners ~~deduction~~of many other partnerships. Depending on their corporate area of ~~fees~~responsibility, the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership. These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership’s capital in Local Limited Partnerships.

~~· the amortization of organization and offering expenses and start-up expenditures.~~12

IfThe interests of Limited Partners may conflict with the ~~IRS~~interests ~~were~~of ~~successful~~the General Partner and its affiliates. The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership. The General Partner and its affiliates receive substantial compensation from the Partnership. The General Partner decides how the Partnership’s investments in ~~any~~Housing ~~such~~Complexes ~~contention~~are managed, and when the ~~anticipated~~investments ~~Low~~will ~~Income~~be ~~Housing~~sold. ~~Tax~~The ~~Credits~~General Partner may face a conflict in these circumstances because the General Partner’s share of fees and ~~losses~~cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The result of these conflicts could be that the Partnership ~~would~~may make investments which are less desirable, or on terms which are less favorable, to the Partnership than might otherwise be ~~reduced~~the case. The Partnership has not developed any formal process for resolving conflicts of interest. However, ~~perhaps~~the ~~substantially~~General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.

~~Changes~~Anticipated infuture ~~tax~~and ~~law~~existing ~~might~~cash ~~reduce~~resources of the ~~value~~Partnership ~~of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits~~ are ~~allocated~~not sufficient to apay ~~Housing~~existing ~~Complex~~liabilities ~~at commencement~~ of the ~~10-year credit period, there can be no assurance that future legislation may not adversely affect an investment in the~~ Partnership. ~~For example~~However, ~~legislation~~substantially ~~could~~all ~~reduce~~of ~~or eliminate~~ the ~~value~~existing liabilities of ~~Low Income Housing Tax Credits. In this regard, before 1986,~~ the ~~principal~~Partnership ~~tax~~are ~~benefit~~payable ~~of an investment in low income housing was tax losses. These tax losses generally were used~~ to ~~reduce an investor’s income from all sources on a dollar-for-dollar basis. Investments in low income housing were made in reliance on~~ the ~~availability~~General ofPartner ~~such~~and/or ~~tax~~its ~~benefits~~affiliates. ~~However, tax legislation enacted in 1986 severely curtailed deduction of such losses.~~

~~New~~The ~~administrative~~Partnership’s oraccrued ~~judicial~~payables ~~interpretations~~consist primarily of the ~~law~~asset ~~might~~management ~~reduce~~fees payable to the ~~value~~General ofPartner. ~~Low~~These ~~Income~~asset ~~Housing~~management ~~Tax~~fees ~~Credits. Many~~payable ofincreased ~~the~~(decreased) by ~~provisions~~approximately of$(200,000), ~~the~~$183,000 ~~Internal~~and ~~Revenue~~$291,000 ~~Code~~for ~~related~~the toyears ~~low~~ended ~~income~~March ~~housing~~31, 2012, 2011 and ~~real~~2010, ~~estate~~respectively. ~~investments~~The ~~have~~Partnership’s future ~~not~~contractual ~~been~~cash ~~interpreted~~obligations byconsist ~~the~~solely ~~IRS~~of inits ~~regulations,~~obligations ~~rulings~~to orpay ~~public~~future ~~announcements~~annual asset management fees. These will equal approximately $71,864 orper byyear through the ~~courts. In~~termination of the ~~future~~Partnership, ~~these~~which ~~provisions~~must ~~may~~occur beno ~~interpreted~~later orthan ~~clarified~~December by31, 2050. Though the ~~IRS~~amounts orpayable to the ~~courts~~General inPartner aand/or ~~manner~~its ~~adverse~~affiliates toare contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the ~~Local~~payment ~~Limited~~of ~~Partnerships. The~~these ~~IRS~~contractual ~~constantly~~obligations ~~reviews~~until capital reserves are in excess of the ~~Federal~~aggregate ~~tax~~of ~~rules,~~the existing contractual obligations and ~~can~~anticipated ~~revise~~future ~~its~~foreseeable ~~interpretations~~obligations of ~~established~~the ~~concepts~~Partnership. ~~Any~~ The ~~such~~Partnership ~~revisions~~would ~~could~~be ~~reduce~~adversely oraffected ~~eliminate~~should ~~tax~~the ~~benefits~~General ~~associated~~Partner ~~with~~and/or anits ~~investment~~affiliates indemand current payment of the ~~Partnership~~existing contractual obligations and or suspend services for this or any other reason.

~~State~~Associates ~~income~~agreed ~~tax~~to ~~laws~~continue ~~may~~providing ~~adversely~~advances ~~affect~~sufficient ~~the~~enough ~~Limited Partners. A Limited Partner may be required~~ to fund ~~file~~the ~~income~~operations ~~tax returns~~ and beworking ~~subject~~capital torequirements ~~tax~~of ~~and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located,~~ the Partnership orthrough aJune ~~Local Limited Partnership engages in business activities~~30, ~~or the Limited Partner is a resident~~2013. ~~Corporate Limited Partners may be required to pay state franchise taxes.~~

~~The~~Item ~~tax treatment of particular items under state or local income tax laws may vary materially from the Federal income tax treatment of such items~~1B. ~~Nonetheless,~~ ~~many~~Unresolved ofStaff the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law. The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances.Comments

12Not Applicable

dItem 2. ~~Risks related to the Partnership and the Partnership Agreement~~Properties

~~The~~Through Partnership may be unable to timely provide financial reports to the Limited Partners which would adversely affect their ability to monitor Partnership operations. Historically, the Partnership has been unable to timely file and provide investors with all of its ~~required~~investments periodic reports. In some instances, the delay has been substantial. Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership in ~~a timely manner. There cannot be any assurance that the~~ Local ~~General~~Limited ~~Partners will satisfy these obligations. If not~~Partnerships, the Partnership holds ~~would~~indirect beownership ~~unable~~interests ~~to provide to the Limited Partners~~ in ~~a timely manner its financial statements and other reports. That would impact~~ the ~~Limited~~Housing ~~Partners’ ability to monitor Partnership operations~~Complexes. The ~~Partnership’s~~following ~~failure~~table toreflects ~~meet its filing requirements under~~ the ~~Securities~~status ~~Exchange Act~~ of ~~1934 could reduce~~ the ~~liquidity~~eleven Housing Complexes for which the Partnership ~~Units~~had ~~due~~ownership toduring the ~~unavailability~~year, as of ~~public information concerning~~ the ~~Partnership. The~~dates ~~failure~~or tofor ~~file could also result in sanctions imposed by~~ the ~~SEC. Any~~periods ~~defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.~~indicated:

Lack of liquidity of investment. There is no public market for the purchase and sale of Partnership Units, and it is unlikely that one will develop. Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price. Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years. Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market. The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer. The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.13

The Limited Partners will not control the Partnership and must rely totally on the General Partner. The General Partner will make all management decisions for the Partnership. Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership. Limited Partners have no right or power to take part in Partnership management.

			As of March 31, 2012				As of December 31, 2011
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships		Amount of Investment Paid to Date		Number of Units		Estimated Aggregate Low Income Housing Tax Credits		Mortgage Balances of Local Limited Partnership

Brownfield Seniors Community, Ltd.	Brownfield, Texas	Winston Sullivan	$	147,000	$	147,000		24	$	292,000	$	652,000

Buffalo Apartments, Ltd.	Buffalo, Texas	Donald W. Sowell		91,000		91,000		24		177,000		362,000

HOI Limited Partnership of Benson (2)	Benson, North Carolina	Housing Opportunities, Inc.		269,000		269,000		50		577,000		843,000

HOI Limited Partnership of Dallas (2)	Dallas, North Carolina	Housing Opportunities, Inc.		366,000		366,000		60		787,000		1,503,000

HOI Limited Partnership of Dunn (2)	Dunn, North Carolina	Housing Opportunities, Inc.		170,000		170,000		34		366,000		711,000

HOI Limited Partnership of Kings Mt. (2)	Kings Mountain, North Carolina	Housing Opportunities, Inc.		262,000		262,000		46		563,000		1,071,000

HOI Limited Partnership of Lee (2)	Sanford, North Carolina	Housing Opportunities, Inc.		419,000		419,000		78		901,000		1,705,000

HOI Limited Partnership of Sanford (2)	Sanford, North Carolina	Housing Opportunities, Inc.		277,000		277,000		50		594,000		1,610,000

HOI Limited Partnership of Selma (2)	Selma, North Carolina	Housing Opportunities, Inc.		271,000		271,000		58		582,000		838,000

Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority. The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to:14

· remove the General Partner and elect a replacement general partner,

			As of March 31, 2012				As of December 31, 2011
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships		Amount of Investment Paid to Date		Number of Units		Estimated Aggregate Low Income Housing Tax Credits		Mortgage Balances of Local Limited Partnership

Oakdale Senior Housing Limited Partnership (1)	Oakdale, California	Oakdale Senior Housing Corporation		N/A		N/A		80		2,110,000		2,378,000

Village Lane Properties, a Limited Partnership	Farmington, Arkansas	ERC Properties, Inc.		168,000		168,000		36		370,000		814,000

			$	2,440,000	$	2,440,000		540	$	7,319,000	$	12,487,000

·(1) ~~amend~~The Partnership sold its interest in the Local Limited Partnership ~~Agreement~~subsequent to December 31, 2011 but prior to March 31, 2012.

·(2) ~~terminate~~The ~~the~~ Partnership has been identified for disposition subsequent to March 31, 2012.

~~Accordingly, a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the Partnership Units opposed such action.~~15

Limitations on liability of the General Partner to the Partnership. The ability of Limited Partners to sue the General Partner and it affiliates is subject to limitations. The Partnership Agreement limits the liability of the General Partner and it affiliates to the Limited Partners. The General Partner and it affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct.

	For the year ended December 31, 2011
Local Limited Partnership Name		Rental Income		Net Income (Loss)		Low Income Housing Tax Credits Allocated to Partnership

Brownfield Seniors Community, Ltd.	$	116,000	$	(8,000	)	N/A

Buffalo Apartments, Ltd.		124,000		2,000		N/A

HOI Limited Partnership of Benson (2)		292,000		10,000		N/A

HOI Limited Partnership of Dallas (2)		313,000		90,000		N/A

HOI Limited Partnership of Dunn (2)		196,000		21,000		N/A

HOI Limited Partnership of Kings Mt. (2)		215,000		(6,000	)	N/A

HOI Limited Partnership of Lee (2)		440,000		22,000		N/A

HOI Limited Partnership of Sanford (2)		350,000		9,000		N/A

HOI Limited Partnership of Selma (2)		334,000		44,000		N/A

Oakdale Senior Housing Limited Partnership(1)		542,000		(235,000	)	N/A

Village Lane Properties, a Limited Partnership		218,000		(51,000	)	N/A

	$	3,140,000	$	(102,000	)

~~Therefore,~~N/A ~~Limited~~– ~~Partners~~All ~~may~~of bethe ~~less~~Low ~~able~~Income toHousing ~~sue~~Tax ~~the~~Credits ~~General~~have ~~Partner~~been ~~and~~allocated to itthe ~~affiliates~~Partnership ~~than~~and ~~would~~there beare ~~the~~no ~~case~~future ifLow ~~such~~Income ~~provisions~~Housing ~~were~~Tax ~~not~~Credits ~~included~~expected into ~~the~~be ~~Partnership Agreement~~received.

~~Associates~~(1) ~~and~~The ~~its~~Partnership ~~affiliates~~sold ~~are~~its ~~serving~~interest asin the ~~general~~Local ~~partners~~Limited ofPartnership ~~many~~subsequent ~~other~~to ~~partnerships. Depending~~December ~~on their corporate area of responsibility~~31, ~~the~~2011 ~~officers~~but ofprior ~~Associates initially devote approximately 5%~~ to ~~50%~~March of31, ~~their time to the Partnership~~2012. ~~These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership’s capital in Local Limited Partnerships.~~

13(2) The Partnership has been identified for disposition subsequent to March 31, 2012.

The interests of Limited Partners may conflict with the interests of the General Partner and its affiliates. The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership. The General Partner and its affiliates receive substantial compensation from the Partnership. The General Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold. The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The result of these conflicts could be that the Partnership may make investments which are less desirable, or on terms which are less favorable, to the Partnership than might otherwise be the case. The Partnership has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.16

~~Anticipated~~WNC ~~future~~Housing ~~and~~Tax ~~existing~~Credit ~~cash~~Fund ~~resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. However~~III, ~~substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates.~~LP

The Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner. These accrued payables increased by approximately $183,000, $291,000 and $279,000 for the years ended March 31, 2011, 2010 and 2009, respectively. The Partnership’s future contractual cash obligations consist solely of its obligations to pay future annual asset management fees. These will equal approximately $219,000 per year through the termination of the Partnership, which must occur no later than December 31, 2050. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of the existing contractual obligations and anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.2012

Associates agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through June 30, 2012.

			Occupancy Rates
Local Limited		General Partner	As of December 31,
Partnership Name	Location	Name	2011			2010			2009			2008			2007

Beaumont Elderly Housing, L.P.	Beaumont, Mississippi	Donald W. Sowell		N/A			100	%		100	%		97	%		97	%

Brownfield Seniors Community, Ltd.	Brownfield, Texas	Winston Sullivan		100	%		92	%		96	%		92	%		100	%

Buffalo Apartments, Ltd.	Buffalo, Texas	Donald W. Sowell		96	%		96	%		92	%		100	%		96	%

Cambridge Court Associates Limited Partnership	Grottoes, Virginia	The Humphrey Companies		N/A			100	%		100	%		100	%		100	%

Candleridge Apartments of Bondurant L.P.	Bondurant, Iowa	Eric A. Sheldahl		N/A			N/A			100	%		100	%		100	%

Candleridge Apartments of Waukee L.P.	Waukee, Iowa	Eric A. Sheldahl		N/A			N/A			100	%		91	%		100	%

Carlinville Associates I, L.P.	Carlinville, Illinois	Kenneth M. Vitor		N/A			N/A			N/A			N/A			85	%

Cherokee Housing, Ltd.	Cedar Bluff, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A			95	%		89	%		95	%		95	%

Chester Associates I, a Limited Partnership	Chester, Illinois	Kenneth M. Vitor		N/A			96	%		96	%		100	%		92	%

~~Item 1B. Unresolved Staff Comments~~17

~~Not~~WNC ~~Applicable~~Housing Tax Credit Fund III, LP

~~Item~~March 2.31, ~~Properties~~2012

Through its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes. The following table reflects the status of the forty Housing Complexes for which the Partnership had ownership during the year, as of the dates or for the periods indicated:

			Occupancy Rates
Local Limited		General Partner	As of December 31,
Partnership Name	Location	Name	2011		2010			2009			2008			2007

Clinton Terrace Apartments, Ltd.	Albany, Kentucky	Eddie C. Dalton		N/A		100	%		92	%		100	%		100	%

Coffeeville Housing, Ltd.	Coffeeville, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A		84	%		84	%		84	%		84	%

Coosa County Housing, Ltd.	Rockford, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A		100	%		84	%		89	%		100	%

Crockett Manor, Ltd.	Crockett, Texas	Jean Johnson		N/A		98	%		100	%		100	%		100	%

Crockett Manor Senior Citizens Complex, Ltd.	Crockett, Texas	Jean Johnson		N/A		100	%		94	%		97	%		100	%

Delta Manor, L.P.	Techula, Mississippi	Glenn D. Miller		N/A		100	%		92	%		97	%		94	%

Eupora Apartments, L.P.	Eupora, Mississippi	Richard Tenhet and Geraldine Tenhet		N/A		100	%		100	%		97	%		100	%

Fairview Village V, Limited Partnership	Carroll, Iowa	Kevin A. Bierl		N/A		100	%		95	%		100	%		100	%

Fox Lake Manor Limited Partnership	Fox Lake, Wisconsin	William E. Paschke, Jr. and Robert E. Campbell		N/A		75	%		100	%		92	%		67	%

1418

			As of March 31, 2011				As of December 31, 2010
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships		Amount of Investment Paid to Date		Number of Units		Estimated Aggregate Low Income Housing Tax Credits		Mortgage Balances of Local Limited Partnership
Beaumont Elderly Housing, L.P.	Beaumont, Mississippi	Donald W. Sowell	$	229,000	$	229,000		30	$	462,000	$	892,000
Brownfield Seniors Community, Ltd.	Brownfield, Texas	Winston Sullivan		147,000		147,000		24		292,000		653,000
Buffalo Apartments, Ltd.	Buffalo, Texas	Donald W. Sowell		91,000		91,000		24		177,000		368,000
Cambridge Court Associates Limited Partnership	Grottoes, Virginia	The Humphrey Companies		254,000		254,000		39		557,000		1,236,000
Cherokee Housing, Ltd. (1)	Cedar Bluff, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		110,000		110,000		19		272,000		589,000
Chester Associates I, a Limited Partnership	Chester, Illinois	Kenneth M. Vitor		159,000		159,000		24		358,000		654,000
Clinton Terrace Apartments, Ltd.	Albany, Kentucky	Eddie C. Dalton		138,000		138,000		24		290,000		717,000
Coffeeville Housing, Ltd. (1)	Coffeeville, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		103,000		103,000		19		239,000		510,000
Coosa County Housing, Ltd. (1)	Rockford, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		103,000		103,000		19		265,000		515,000

WNC Housing Tax Credit Fund III, LP

15March 31, 2012

			As of March 31, 2011						As of December 31, 2010
			Occupancy Rates
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships			Amount of Investment Paid to Date			Number of Units			Estimated Aggregate Low Income Housing Tax Credits			Mortgage Balances of Local Limited Partnership
Local Limited		General Partner	As of December 31,
Crockett Manor, Ltd.	Crockett, Texas	Jean Johnson		184,000			184,000			40			383,000			784,000
Partnership Name	Location	Name	2011			2010			2009			2008			2007
Crockett Manor Senior Citizens Complex, Ltd.	Crockett, Texas	Jean Johnson		203,000			203,000			36			446,000			961,000
Ft. Deposit Housing, Ltd.	Fort Deposit, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A			96	%		96	%		91	%		83	%
Delta Manor, L.P.	Techula, Mississippi	Glenn D. Miller		227,000			227,000			36			499,000			1,180,000
Gulf Coast Apartments, L.P.	Gulfport, Mississippi	Philip Napier		N/A			88	%		92	%		95	%		92	%
Eupora Apartments, L.P.	Eupora, Mississippi	Richard Tenhet and Geraldine Tenhet		138,000			138,000			36			310,000			1,148,000
Gulf Coast Apartments of Long Beach, L.P.	Long Beach, Mississippi	Philip Napier		N/A			95	%		93	%		98	%		95	%
Fairview Village V, Limited Partnership (2)	Carroll, Iowa	Kevin A. Bierl		119,000			119,000			20			273,000			543,000
Heritage Colonial Homes, L.P.	Blackshear, Georgia	Robert J. Deharder and Jacqueline F. McPhillips		N/A			N/A			80	%		85	%		90	%
Fox Lake Manor Limited Partnership	Fox Lake, Wisconsin	William E. Paschke, Jr. and Robert E. Campbell		84,000			84,000			12			161,000			346,000
HOI Limited Partnership of Benson	Benson, North Carolina	Housing Opportunities, Inc.		94	%		98	%		96	%		92	%		92	%
Ft. Deposit Housing Ltd. (1)	Fort Deposit, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		127,000			127,000			23			330,000			670,000
HOI Limited Partnership of Dallas	Dallas, North Carolina	Housing Opportunities, Inc.		97	%		95	%		95	%		95	%		95	%
Gulf Coast Apartments, L.P.	Gulfport, Mississippi	Philip Napier		320,000			320,000			60			698,000			1,266,000
HOI Limited Partnership of Dunn	Dunn, North Carolina	Housing Opportunities, Inc.		100	%		100	%		100	%		97	%		100	%
Gulf Coast Apartments of Long Beach, L.P.	Long Beach, Mississippi	Philip Napier		315,000			315,000			60			685,000			1,296,000
HOI Limited Partnership of Kings Mt.	Kings Mountain, North Carolina	Housing Opportunities, Inc.		98	%		93	%		98	%		93	%		98	%
HOI Limited Partnership of Benson	Benson, North Carolina	Housing Opportunities, Inc.		269,000			269,000			50			577,000			888,000
HOI Limited Partnership of Lee	Sanford, North Carolina	Housing Opportunities, Inc.		99	%		92	%		94	%		92	%		96	%
HOI Limited Partnership of Dallas	Dallas, North Carolina	Housing Opportunities, Inc.		366,000			366,000			60			787,000			1,552,000

1619

			As of March 31, 2011				As of December 31, 2010
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships		Amount of Investment Paid to Date		Number of Units		Estimated Aggregate Low Income Housing Tax Credits		Mortgage Balances of Local Limited Partnership
HOI Limited Partnership of Dunn	Dunn, North Carolina	Housing Opportunities, Inc.		170,000		170,000		34		366,000		724,000
HOI Limited Partnership of Kings Mt.	Kings Mountain, North Carolina	Housing Opportunities, Inc.		262,000		262,000		46		563,000		1,109,000
HOI Limited Partnership of Lee	Sanford, North Carolina	Housing Opportunities, Inc.		419,000		419,000		78		901,000		1,771,000
HOI Limited Partnership of Sanford	Sanford, North Carolina	Housing Opportunities, Inc.		277,000		277,000		50		594,000		1,618,000
HOI Limited Partnership of Selma	Selma, North Carolina	Housing Opportunities, Inc.		271,000		271,000		58		582,000		889,000
Killbuck Limited Partnership	Killbuck, Ohio	Georg E. Maharg		151,000		151,000		24		338,000		713,000
Levelland Manor, L.P.	Levelland, Texas	1600 Capital Company		175,000		175,000		36		393,000		862,000
Oakdale Senior Housing Limited Partnership	Oakdale, California	Oakdale Senior Housing Corporation		919,000		919,000		80		2,110,000		2,488,000
Orange Beach Housing, Ltd. (1)	Orange Beach, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		208,000		208,000		31		472,000		1,029,000
Parks I Limited Partnership (1)	Chatham, Virginia	Sallie B. Garst and Lillien S. Brown		253,000		253,000		39		568,000		1,156,000

WNC Housing Tax Credit Fund III, LP

17March 31, 2012

			As of March 31, 2011						As of December 31, 2010
			Occupancy Rates
Local Limited Partnership Name	Location	General Partner Name	Partnership’s Total Investment in Local Limited Partnerships			Amount of Investment Paid to Date			Number of Units			Estimated Aggregate Low Income Housing Tax Credits			Mortgage Balances of Local Limited Partnership
Local Limited		General Partner	As of December 31,
Post Manor, L.P.	Post, Texas	1600 Capital Company		122,000			122,000			24			263,000			603,000
Partnership Name	Location	Name	2011			2010			2009			2008			2007
Red Bud Associates I, a Limited Partnership	Red Bud, Illinois	Kenneth M. Vitor		135,000			135,000			20			303,000			564,000
HOI Limited Partnership of Sanford	Sanford, North Carolina	Housing Opportunities, Inc.		96	%		96	%		96	%		94	%		94	%
Steeleville Associates I, a Limited Partnership	Steeleville, Illinois	Kenneth M. Vitor		110,000			110,000			16			247,000			510,000
HOI Limited Partnership of Selma	Selma, North Carolina	Housing Opportunities, Inc.		98	%		98	%		98	%		100	%		97	%
Tanglewood Limited Partnership	Frankfurt, Ohio	Georg E. Maharg and Maharg Realty, Inc.		212,000			212,000			36			475,000			1,016,000
Killbuck Limited Partnership	Killbuck, Ohio	Georg E. Maharg		N/A			92	%		83	%		92	%		100	%
Village Lane Properties, a Limited Partnership (2)	Farmington, Arkansas	ERC Properties, Inc.		168,000			168,000			36			370,000			823,000
Lake Ridge Apartments, L.P.	Tiptonville, Tennessee	Lewis Beasley, Jr. and Carol Beasley		N/A			N/A			91	%		91	%		95	%
Whitted Forest Limited Partnership	Hillsborough, North Carolina	Hillsborough Affordable Housing Corporation		685,000			685,000			35			1,572,000			885,000
Levelland Manor, L.P.	Levelland, Texas	1600 Capital Company		N/A			100	%		97	%		100	%		97	%
Wilcam Housing, Ltd. (1)	Camden, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		106,000			106,000			19			299,000			592,000
Logan Park Associates Limited Partnership	Caldwell, Idaho	Riley J. Hill		N/A			N/A			80	%		90	%		92	%
Wills Point Manor, L.P.	Wills Point, Texas	1600 Capital Company		124,000			124,000			24			277,000			600,000
Meadow Run Associates Limited Partnership	Gordonsville, Virginia	The Humphrey Companies		N/A			N/A			95	%		98	%		100	%
Woodlands Apartments, L.P.	Mount Pleasant, Texas	1600 Capital Company		239,000			239,000			48			537,000			1,194,000
Oakdale Senior Housing Limited Partnership	Oakdale, California	Oakdale Senior Housing Corporation		89	%		96	%		96	%		99	%		94	%
Woodview Limited Partnership	Chillicothe, Illinois and Glassford, Illinois	Michael K. Moore		269,000			269,000			36			362,000			1,139,000
Orange Beach Housing, Ltd.	Orange Beach, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A			97	%		81	%		94	%		94	%
			$	8,961,000		$	8,961,000			1,425		$	19,653,000		$	37,053,000

~~(1) The Local Limited Partnership was identified for disposition and the Local Limited Partnership Interest was sold subsequent to March 31, 2011.~~20

~~(2)~~WNC ~~The~~Housing ~~Local~~Tax ~~Limited~~Credit ~~Partnership~~Fund ~~was identified for disposition as of March 31~~III, ~~2011.~~LP

18March 31, 2012

	For the year ended December 31, 2010
				Occupancy Rates
Local Limited Partnership Name	Rental Income			Net Income (Loss)			Low Income Housing Tax Credits Allocated to Partnership
Local Limited			General Partner	As of December 31,
Beaumont Elderly Housing, L.P.	$	144,000		$	(23,000	)		N/A
Partnership Name	Location		Name	2011			2010			2009			2008			2007
Brownfield Seniors Community, Ltd.		108,000			(15,000	)		N/A
Post Manor, L.P.	Post, Texas		1600 Capital Company		N/A			79	%		79	%		63	%		83	%
Buffalo Apartments, Ltd.		119,000			(6,000	)		N/A
Red Bud Associates I, a Limited Partnership	Red Bud, Illinois		Kenneth M. Vitor		N/A			95	%		90	%		95	%		100	%
Cambridge Court Associates Limited Partnership		211,000			(2,000	)		N/A
Steeleville Associates I, a Limited Partnership	Steeleville, Illinois		Kenneth M. Vitor		N/A			88	%		88	%		88	%		100	%
Cherokee Housing, Ltd. (1)		99,000			(6,000	)		N/A
Tanglewood Limited Partnership	Frankfurt, Ohio		Georg E. Maharg and Maharg Realty, Inc.		N/A			94	%		100	%		94	%		97	%
Chester Associates I, a Limited Partnership		102,000			(20,000	)		N/A
Village Lane Properties, a Limited Partnership	Farmington, Arkansas		ERC Properties, Inc.		100	%		97	%		97	%		100	%		100	%
Clinton Terrace Apartments, Ltd.		96,000			(8,000	)		N/A
Whitted Forest Limited Partnership	Hillsborough, North Carolina		Hillsborough Affordable Housing Corporation		N/A			64	%		54	%		46	%		77	%
Coffeeville Housing, Ltd. (1)		81,000			(14,000	)		N/A
Coosa County Housing, Ltd. (1)		96,000			2,000			N/A
Crockett Manor, Ltd.		207,000			10,000			N/A
Crockett Manor Senior Citizens Complex, Ltd.		166,000			(16,000	)		N/A
Delta Manor, L.P.		204,000			(47,000	)		N/A
Eupora Apartments, L.P.		175,000			(1,000	)		N/A
Fairview Village V, Limited Partnership (2)		102,000			6,000			N/A
Fox Lake Manor Limited Partnership		53,000			(6,000	)		N/A
Ft. Deposit Housing, Ltd. (1)		119,000			(7,000	)		N/A
Gulf Coast Apartments, L.P.		272,000			(28,000	)		N/A
Gulf Coast Apartments of Long Beach, L.P.		291,000			(40,000	)		N/A
HOI Limited Partnership of Benson		284,000			6,000			N/A
HOI Limited Partnership of Dallas		304,000			(12,000	)		N/A
HOI Limited Partnership of Dunn		185,000			(11,000	)		N/A
HOI Limited Partnership of Kings Mt.		204,000			(30,000	)		N/A

1921

	For the year ended December 31, 2010
Local Limited Partnership Name	Rental Income		Net Income (Loss)			Low Income Housing Tax Credits Allocated to Partnership
HOI Limited Partnership of Lee		432,000		(5,000	)		N/A
HOI Limited Partnership of Sanford		336,000		(24,000	)		N/A
HOI Limited Partnership of Selma		321,000		23,000			N/A
Killbuck Limited Partnership		89,000		(34,000	)		N/A
Levelland Manor, L.P.		156,000		(27,000	)		N/A
Oakdale Senior Housing Limited Partnership		544,000		(110,000	)		N/A
Orange Beach Housing, Ltd. (1)		133,000		(29,000	)		N/A
Parks I Limited Partnership (1)		254,000		(29,000	)		N/A
Post Manor, L.P.		91,000		(17,000	)		N/A
Red Bud Associates I, a Limited Partnership		85,000		(21,000	)		N/A
Steeleville Associates I, a Limited Partnership		68,000		(15,000	)		N/A
Tanglewood Limited Partnership		124,000		(49,000	)		N/A
Village Lane Properties, a Limited Partnership (2)		219,000		(16,000	)		N/A
Whitted Forest Limited Partnership		43,000		(215,000	)		N/A
Wilcam Housing, Ltd. (1)		101,000		(8,000	)		N/A
Wills Point Manor, L.P.		101,000		(11,000	)		N/A
Woodlands Apartments, L.P.		210,000		(24,000	)		N/A
Woodview Limited Partnership		194,000		(23,000	)		N/A
	$	7,123,000	$	(902,000	)

WNC Housing Tax Credit Fund III, LP

~~N/A~~March –31, ~~All of the Low Income Housing Tax Credits have been allocated to the Partnership and there are no future Low Income Housing Tax Credits expected to be received.~~2012

(1) The Local Limited Partnership was identified for disposition and the Local Limited Partnership Interest was sold subsequent to March 31, 2011.

			Occupancy Rates
Local Limited		General Partner	As of December 31,
Partnership Name	Location	Name	2011			2010			2009			2008			2007

Wilcam Housing, Ltd.	Camden, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		N/A			89	%		89	%		95	%		89	%

Wills Point Manor, L.P.	Wills Point, Texas	1600 Capital Company		N/A			96	%		100	%		100	%		100	%

Windmere Associates Limited Partnership	Lexington, Virginia	The Humphrey Companies		N/A			N/A			100	%		100	%		100	%

Woodlands Apartments, L.P.	Mount Pleasant, Texas	1600 Capital Company		N/A			90	%		94	%		92	%		94	%

Woodview Limited Partnership	Chillicothe, Illinois and Glassford, Illinois	Michael K. Moore		N/A			95	%		94	%		100	%		100	%

	Weighted Average			96	%		94	%		93	%		94	%		95	%

~~(2)~~N/A- The Partnership sold its Local Limited Partnership ~~was~~Interest ~~identified~~prior ~~for~~to ~~disposition~~the asrespective year ~~of March 31, 2011~~end.

2022

~~WNC~~Item ~~Housing~~3. ~~Tax~~Legal ~~Credit Fund III, LP~~Proceedings

~~March 31, 2011~~NONE

			Occupancy Rates As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
Beaumont Elderly Housing, L.P.	Beaumont, Mississippi	Donald W. Sowell		100	%		100	%		97	%		97	%		97	%
Brownfield Seniors Community, Ltd.	Brownfield, Texas	Winston Sullivan		92	%		96	%		92	%		100	%		92	%
Buffalo Apartments, Ltd.	Buffalo, Texas	Donald W. Sowell		96	%		92	%		100	%		96	%		96	%
Cambridge Court Associates Limited Partnership	Grottoes, Virginia	The Humphrey Companies		100	%		100	%		100	%		100	%		100	%
Candleridge Apartments of Bondurant L.P.	Bondurant, Iowa	Eric A. Sheldahl		N/A			100	%		100	%		100	%		96	%
Candleridge Apartments of Waukee L.P.	Waukee, Iowa	Eric A. Sheldahl		N/A			100	%		91	%		100	%		96	%
Carlinville Associates I, L.P.	Carlinville, Illinois	Kenneth M. Vitor		N/A			N/A			N/A			85	%		75	%
Cherokee Housing, Ltd.	Cedar Bluff, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		95	%		89	%		95	%		95	%		100	%
Chester Associates I, a Limited Partnership	Chester, Illinois	Kenneth M. Vitor		96	%		96	%		100	%		92	%		88	%

Item 4. Mine Safety Disclosures

21NOT APPLICABLE

~~WNC~~PART ~~Housing Tax Credit Fund III, LP~~II.

			Occupancy Rates
			As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
Clinton Terrace Apartments, Ltd.	Albany, Kentucky	Eddie C. Dalton		100	%		92	%		100	%		100	%		100	%
Coffeeville Housing, Ltd.	Coffeeville, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		84	%		84	%		84	%		84	%		79	%
Coosa County Housing, Ltd.	Rockford, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		100	%		84	%		89	%		100	%		100	%
Crockett Manor, Ltd.	Crockett, Texas	Jean Johnson		98	%		100	%		100	%		100	%		100	%
Crockett Manor Senior Citizens Complex, Ltd.	Crockett, Texas	Jean Johnson		100	%		94	%		97	%		100	%		100	%
Delta Manor, L.P.	Techula, Mississippi	Glenn D. Miller		100	%		92	%		97	%		94	%		94	%
Eupora Apartments, L.P.	Eupora, Mississippi	Richard Tenhet and Geraldine Tenhet		100	%		100	%		97	%		100	%		100	%
Fairview Village V, Limited Partnership	Carroll, Iowa	Kevin A. Bierl		100	%		95	%		100	%		100	%		100	%
Fox Lake Manor Limited Partnership	Fox Lake, Wisconsin	William E. Paschke, Jr. and Robert E. Campbell		75	%		100	%		92	%		67	%		67	%

Item 5a.

22(a) The Partnership Units are not traded on a public exchange but were sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists. Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied.

~~WNC~~(b) ~~Housing~~At ~~Tax~~March ~~Credit~~31, ~~Fund III~~2012, LPthere were 987 Limited Partners and 0 assignees of Partnership Units who were not admitted as Limited Partners.

(c) The Partnership was not designed to provide operating cash distributions to Limited Partners. It is possible that the Partnership could make distributions from sale proceeds, if the Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and any then accrued obligations of the Partnership. There can be no assurance in this regard. Any distributions would be made in accordance with the terms of the Partnership Agreement. During the years ended March 31, 2012, 2011 and 2010, the Partnership made no cash distributions to the Limited Partners.

			Occupancy Rates
			As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
Ft. Deposit Housing, Ltd.	Fort Deposit, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		96	%		96	%		91	%		83	%		96	%
Gulf Coast Apartments, L.P.	Gulfport, Mississippi	Philip Napier		88	%		92	%		95	%		92	%		100	%
Gulf Coast Apartments of Long Beach, L.P.	Long Beach, Mississippi	Philip Napier		95	%		93	%		98	%		95	%		98	%
Heritage Colonial Homes, L.P.	Blackshear, Georgia	Robert J. Deharder and Jacqueline F. McPhillips		N/A			80	%		85	%		90	%		95	%
HOI Limited Partnership of Benson	Benson, North Carolina	Housing Opportunities, Inc.		98	%		96	%		92	%		92	%		94	%
HOI Limited Partnership of Dallas	Dallas, North Carolina	Housing Opportunities, Inc.		95	%		95	%		95	%		95	%		100	%
HOI Limited Partnership of Dunn	Dunn, North Carolina	Housing Opportunities, Inc.		100	%		100	%		97	%		100	%		100	%
HOI Limited Partnership of Kings Mt.	Kings Mountain, North Carolina	Housing Opportunities, Inc.		93	%		98	%		93	%		98	%		100	%
HOI Limited Partnership of Lee	Sanford, North Carolina	Housing Opportunities, Inc.		92	%		94	%		92	%		96	%		97	%

(d)

No securities are authorized for issuance by the Partnership under equity compensation plans.

23(e) The Partnership does not issue common stock.

~~WNC~~(f) ~~Housing~~No ~~Tax~~unregistered ~~Credit~~securities ~~Fund~~were ~~III~~sold by the Partnership during the year ended March 31, LP2012.

~~March~~Item ~~31,~~5b. ~~2011~~Use of Proceeds

			Occupancy Rates
			As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
HOI Limited Partnership of Sanford	Sanford, North Carolina	Housing Opportunities, Inc.		96	%		96	%		94	%		94	%		96	%
HOI Limited Partnership of Selma	Selma, North Carolina	Housing Opportunities, Inc.		98	%		98	%		100	%		97	%		98	%
Killbuck Limited Partnership	Killbuck, Ohio	Georg E. Maharg		92	%		83	%		92	%		100	%		100	%
Lake Ridge Apartments, L.P.	Tiptonville, Tennessee	Lewis Beasley, Jr. and Carol Beasley		N/A			91	%		91	%		95	%		91	%
Levelland Manor, L.P.	Levelland, Texas	1600 Capital Company		100	%		97	%		100	%		97	%		97	%
Logan Park Associates Limited Partnership	Caldwell, Idaho	Riley J. Hill		N/A			80	%		90	%		92	%		98	%
Meadow Run Associates Limited Partnership	Gordonsville, Virginia	The Humphrey Companies		N/A			95	%		98	%		100	%		100	%
Oakdale Senior Housing Limited Partnership	Oakdale, California	Oakdale Senior Housing Corporation		96	%		96	%		99	%		94	%		100	%
Orange Beach Housing, Ltd.	Orange Beach, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		97	%		81	%		94	%		94	%		97	%

NOT APPLICABLE

24Item 5c. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

~~WNC Housing Tax Credit Fund III, LP~~NONE

~~March 31, 2011~~23

			Occupancy Rates
			As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
Parks I Limited Partnership	Chatham, Virginia	Sallie B. Garst and Lillien S. Brown		100	%		97	%		100	%		97	%		95	%
Post Manor, L.P.	Post, Texas	1600 Capital Company		79	%		79	%		63	%		83	%		96	%
Red Bud Associates I, a Limited Partnership	Red Bud, Illinois	Kenneth M. Vitor		95	%		90	%		95	%		100	%		100	%
Steeleville Associates I, a Limited Partnership	Steeleville, Illinois	Kenneth M. Vitor		88	%		88	%		88	%		100	%		100	%
Tanglewood Limited Partnership	Frankfurt, Ohio	Georg E. Maharg and Maharg Realty, Inc.		94	%		100	%		94	%		97	%		97	%
Village Lane Properties, a Limited Partnership	Farmington, Arkansas	ERC Properties, Inc.		97	%		97	%		100	%		100	%		100	%
Whitted Forest Limited Partnership	Hillsborough, North Carolina	Hillsborough Affordable Housing Corporation		64	%		54	%		46	%		77	%		86	%

Item 6. Selected Financial Data

25Selected balance sheet information for the Partnership is as follows:

WNC Housing Tax Credit Fund III, LP

	March 31,
	2012			2011			2010			2009			2008

ASSETS
Cash	$	122,452		$	57,638		$	110,204		$	16,761		$	101,033
Other assets		510			118,262			-			-			-
Investments in Local Limited Partnerships, net		-			-			-			-			25,029

Total Assets	$	122,962		$	175,900		$	110,204		$	16,761		$	126,062

LIABILITIES
Accounts payable	$	5,746		$	-		$	-		$	-		$	-
Accrued fees and expenses due to General Partner and affiliates		4,322,533			4,699,059			4,405,978			4,082,099			3,772,893
Due to Local Limited Partnership		-			-			1,028			-			-
Total Liabilities		4,328,279			4,699,059			4,407,006			4,082,099			3,772,893
PARTNERS' DEFICIT		(4,205,317	)		(4,523,159	)		(4,296,802	)		(4,065,338	)		(3,646,831	)

Total Liabilities and Partners’ Deficit	$	122,962		$	175,900		$	110,204		$	16,761		$	126,062

~~March 31, 2011~~24

			Occupancy Rates
			As of December 31,
Local Limited Partnership Name	Location	General Partner Name	2010			2009			2008			2007			2006
Wilcam Housing, Ltd.	Camden, Alabama	Thomas H. Cooksey and Apartment Developers, Inc.		89	%		89	%		95	%		89	%		89	%
Wills Point Manor, L.P.	Wills Point, Texas	1600 Capital Company		96	%		100	%		100	%		100	%		96	%
Windmere Associates Limited Partnership	Lexington, Virginia	The Humphrey Companies		N/A			100	%		100	%		100	%		100	%
Woodlands Apartments, L.P.	Mount Pleasant, Texas	1600 Capital Company		90	%		94	%		92	%		94	%		92	%
Woodview Limited Partnership	Chillicothe, Illinois and Glassford, Illinois	Michael K. Moore		95	%		94	%		100	%		100	%		100	%
	Weighted Average			94	%		93	%		94	%		95	%		97	%

Selected results of operations, cash flows and other information for the Partnership are as follows:

N/A- The Partnership sold its Local Limited Partnership Interest prior to the respective year end.

	For the Years Ended March 31,
	2012			2011			2010			2009			2008

Loss from operations	$	(284,854	)	$	(367,581	)	$	(358,233	)	$	(428,663	)	$	(345,925	)
Equity in income (losses) of Local Limited Partnerships		-			-			-			(19,900	)		4,985
Gain on sale of Local Limited Partnerships		556,813			141,206			54,250			30,023			-
Interest income		55			18			8			33			235
Net income (loss)	$	272,014		$	(226,357	)	$	(303,975	)	$	(418,507	)	$	(340,705	)

Net loss allocated to:
General Partner	$	2,720		$	(2,264	)	$	(3,040	)	$	(4,185	)	$	(3,407	)
Limited Partners	$	269,294		$	(224,093	)	$	(300,935	)	$	(414,322	)	$	(337,298	)
Net loss per Partnership Unit	$	17.95		$	(14.94	)	$	(20.06	)	$	(27.62	)	$	(22.49	)
Outstanding weighted Partnership Units		15,000			15,000			15,000			15,000			15,000

	For the Years Ended March 31,
	2012			2011			2010		2009			2008

Net cash provided by (used in):
Operating activities	$	(618,001	)	$	(202,566	)	$	39,193	$	(114,295	)	$	(48,044	)
Investing activities		682,815			150,000			54,250		30,023			-

Net change in cash		64,814			(52,566	)		93,443		(84,272	)		(48,044	)

Cash, beginning of period		57,638			110,204			16,761		101,033			149,077

Cash, end of period	$	122,452		$	57,638		$	110,204	$	16,761		$	101,033

Low Income Housing Tax Credits per Partnership Unit were as follows ~~Item~~for ~~3. Legal~~the ~~Proceedings~~years ended December 31:

NONE

		2011		2010		2009		2008		2007

Federal	$	-	$	-	$	-	$	-	$	-

State		-		-		-		-		-

Total	$	-	$	-	$	-	$	-	$	-

~~Item 4. (Removed and Reserved)~~25

~~PART~~Item II7. Management's Discussion and Analysis of Financial Condition and Results of Operations

~~Item~~Forward ~~5. Market~~Looking ~~for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~Statements

~~Item~~With 5athe exception of the discussion regarding historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.

~~(a)~~Risks ~~The~~and ~~Partnership~~uncertainties ~~Units~~inherent ~~are~~in ~~not~~forward ~~traded~~looking onstatements ainclude, but ~~public~~are ~~exchange~~not ~~but~~limited ~~were~~to, ~~sold~~the ~~through~~Partnership’s afuture ~~public~~cash ~~offering.~~flows Itand isability ~~not~~to ~~anticipated~~obtain ~~that~~sufficient ~~any~~financing, ~~public~~level ~~market~~of ~~will~~operating expenses, ~~develop~~conditions ~~for~~in the ~~purchase~~Low ~~and~~Income ~~sale~~Housing ofTax ~~any~~Credits ~~Partnership~~property ~~Units~~market and ~~none~~the ~~exists.~~economy ~~Partnership~~in ~~Units~~general, ~~can~~changes bein ~~assigned~~law orrules ~~otherwise~~and regulations, ~~transferred~~and ~~only~~legal ifproceedings. ~~certain~~Historical ~~requirements~~results inare not necessarily indicative of the ~~Partnership~~operating ~~Agreement~~results ~~are~~for ~~satisfied~~any future period.

~~(b)~~Subsequent Atwritten ~~March~~and ~~31,~~oral ~~2011,~~forward ~~there~~looking ~~were~~statements ~~989~~attributable to ~~Limited~~the ~~Partners~~Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and 0in ~~assignees~~other ofreports ~~Partnership~~filed ~~Units~~with ~~who~~the ~~were~~SEC. ~~not~~The ~~admitted~~following asdiscussion ~~Limited~~should ~~Partners~~be read in conjunction with the financial statements and the notes thereto included elsewhere in this filing.

~~(c)~~Critical ~~The~~Accounting ~~Partnership~~Policies was not designed to provide operating cash distributions to Limited Partners. It is possible that the Partnership could make distributions from sale proceeds, if the Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and ~~any~~Certain ~~then~~Risks accrued obligations of the Partnership. There can be no assurance in this regard. Any distributions would be made in accordance with the terms of the Partnership Agreement. During the years ended March 31, 2011, 2010 and ~~2009, the Partnership made no cash distributions to the Limited Partners.~~Uncertainties

~~(d)~~The NoPartnership ~~securities~~believes that the following discussion addresses the Partnership’s most significant accounting policies, which are ~~authorized~~the ~~for~~most ~~issuance~~critical byto aid in fully understanding and evaluating the Partnership’s ~~under~~reported ~~equity~~financial ~~compensation~~results, ~~plans~~and certain of the Partnership’s risks and uncertainties.

~~(e)~~Use ~~The~~of ~~Partnership does not issue common stock.~~Estimates

~~(f)~~The Nopreparation ~~unregistered~~of ~~securities~~financial ~~were~~statements ~~sold~~in byconformity with accounting principles generally accepted in the ~~Partnership~~United ~~during~~States of America requires management to make estimates and assumptions that affect the ~~year~~reported ~~ended~~amounts ~~March~~of 31assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, ~~2011~~and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

~~Item~~Method ~~5b.~~of ~~Use~~Accounting offor ~~Proceeds~~Investments in Local Limited Partnerships

~~NOT~~The ~~APPLICABLE~~Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and were being amortized over 30 years (See Notes 2 and 3 to the financial statements).

~~Item~~"Equity ~~5c.~~in ~~Purchases~~losses of ~~Equity~~Local ~~Securities~~Limited Partnerships" for each year ended March 31 has been recorded by the ~~Issuer~~Partnership ~~and~~based ~~Affiliated~~on ~~Purchasers~~the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.

~~NONE~~26

27Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income.

In accordance with the accounting guidance for the consolidation of ~~Item~~variable 6interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. ~~Selected~~ ~~Financial~~The analysis ~~Data~~that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

~~Selected~~Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership's interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance ~~sheet~~sheets, ~~information~~recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership's balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as ~~follows:~~well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.

	March 31,
	2011			2010			2009			2008			2007
ASSETS
Cash	$	57,638		$	110,204		$	16,761		$	101,033		$	149,077
Other assets		118,262			-			-			-			-
Investments in Local Limited Partnerships, net		-			-			-			25,029			20,384
Total Assets	$	175,900		$	110,204		$	16,761		$	126,062		$	169,461
LIABILITIES
Accrued fees and expenses due to General Partner and affiliates	$	4,699,059		$	4,405,978		$	4,082,099		$	3,772,893		$	3,475,587
Due to Local Limited Partnership		-			1,028			-			-			-
Total Liabilities		4,699,059			4,407,006			4,082,099			3,772,893			3,475,587
PARTNERS' DEFICIT		(4,523,159	)		(4,296,802	)		(4,065,338	)		(3,646,831	)		(3,306,126	)
Total Liabilities and Partners’ Deficit	$	175,900		$	110,204		$	16,761		$	126,062		$	169,461

Income Taxes

28The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure.

~~Selected~~Impact ~~results~~ of ~~operations,~~Recent ~~cash~~Accounting ~~flows and other information for the Partnership are as follows:~~Pronouncements

	For the Years Ended March 31,
	2011			2010			2009			2008			2007
Loss from operations	$	(367,581	)	$	(358,233	)	$	(428,663	)	$	(345,925	)	$	(285,083	)
Equity in income (losses) of Local Limited Partnerships		-			-			(19,900	)		4,985			(2,993	)
Gain on sale of Local Limited Partnerships		141,206			54,250			30,023			-			-
Interest income		18			8			33			235			683
Net loss	$	(226,357	)	$	(303,975	)	$	(418,507	)	$	(340,705	)	$	(287,393	)
Net loss allocated to:
General Partner	$	(2,264	)	$	(3,040	)	$	(4,185	)	$	(3,407	)	$	(2,874	)
Limited Partners	$	(224,093	)	$	(300,935	)	$	(414,322	)	$	(337,298	)	$	(284,519	)
Net loss per Partnership Unit	$	(14.94	)	$	(20.06	)	$	(27.62	)	$	(22.49	)	$	(18.97	)
Outstanding weighted Partnership Units		15,000			15,000			15,000			15,000			15,000

In September 2006, the Financial Accounting Standards Board (“FASB”) issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions. In February 2008, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted U.S. generally accepted accounting principles (“GAAP”) for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.

	For the Years Ended March 31,
	2011			2010		2009			2008			2007
Net cash provided by (used in):
Operating activities	$	(202,566	)	$	39,193	$	(114,295	)	$	(48,044	)	$	(7,081	)
Investing activities		150,000			54,250		30,023			-			-
Net change in cash		(52,566	)		93,443		(84,272	)		(48,044	)		(7,081	)
Cash, beginning of period		110,204			16,761		101,033			149,077			156,158
Cash, end of period	$	57,638		$	110,204	$	16,761		$	101,033		$	149,077

In November 2008, the FASB issued accounting guidance on Equity Method Investment Accounting Considerations that addresses how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee’s issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. This guidance is effective in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Partnership adopted the guidance for the interim quarterly period beginning April 1, 2009. The impact of adopting it did not have a material impact on the Partnership’s financial condition or results of operations.

~~Low~~In ~~Income~~April ~~Housing~~2009, ~~Tax~~the ~~Credits~~FASB ~~per~~issued ~~Partnership~~accounting ~~Unit~~guidance ~~were~~for Interim Disclosures about Fair Value of Financial Instruments. This requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as ~~follows~~well as annual statements. It became effective for as of and for the ~~years~~interim period ended ~~December~~June ~~31:~~30, 2009 and had no impact on the Partnership’s financial condition or results of operations.

	2010		2009		2008		2007		2006
Federal	$	-	$	-	$	-	$	-	$	0
State		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	0

29In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 30, 2009. The adoption did not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Company did not include the disclosure in this Form 10-K.

In June 2009, the FASB issued an amendment to the accounting and disclosure ~~Item~~requirements 7for the consolidation of variable interest entities (VIEs). ~~Management'~~ The amended guidance modifies the consolidation model to one based on control and economics, and replaced quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s ~~Discussion~~economic performance and ~~Analysis~~(2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of ~~Financial~~the ~~Condition~~primary beneficiary of a VIE and ~~Results~~adds an additional reconsideration event for determination of ~~Operations~~whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment was effective for fiscal years beginning after November 15, 2009. The adoption of this guidance on April 1, 2010 did not have a material effect on the Partnership’s financial statements.

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

~~With~~Certain ~~the~~Risks ~~exception of the discussion regarding historical information, this “Management’s Discussion~~ and Analysis of Financial Condition and Results of Operations” and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.Uncertainties

~~Risks~~See ~~and~~Item ~~uncertainties~~1A ~~inherent~~for ina ~~forward~~discussion ~~looking statements include, but are not limited to, the Partnership’s future cash flows and ability to obtain sufficient financing, level~~ of ~~operating~~risks ~~expenses,~~regarding ~~conditions in~~ the ~~Low Income Housing Tax Credits property market and the economy in general, changes in law rules and regulations, and legal proceedings~~Partnership. ~~Historical results are not necessarily indicative of the operating results for any future period.~~

~~Subsequent~~All ~~written~~of ~~and~~the ~~oral~~Low ~~forward~~Income ~~looking~~Housing ~~statements~~Tax ~~attributable~~Credits anticipated to ~~the~~be ~~Partnership~~realized from orthe ~~persons~~Local ~~acting~~Limited onPartnerships ~~its~~have ~~behalf~~been ~~are~~realized. ~~expressly~~The ~~qualified~~Partnership indoes ~~their~~not ~~entirety~~anticipate bybeing ~~cautionary~~allocated ~~statements~~a insignificant ~~this~~amount of ~~Form~~Low ~~10-K~~Income ~~and~~Housing inTax ~~other~~Credits ~~reports~~from ~~filed with~~ the ~~SEC. The~~Local ~~following~~Limited ~~discussion~~Partnerships ~~should be read~~ in ~~conjunction with~~ the ~~financial~~future. ~~statements~~All ~~and~~Local ~~the~~Limited ~~notes~~Partnerships ~~thereto~~have ~~included~~completed the ~~elsewhere~~Compliance ~~in this filing~~Period.

~~Critical~~To ~~Accounting~~date, ~~Policies~~certain Local Limited Partnerships have incurred significant operating losses and ~~Certain~~have ~~Risks~~working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or ~~Uncertainties~~the Local General Partners may be required to sustain the operations of such Local Limited Partnerships.

~~The~~Anticipated ~~Partnership~~future ~~believes~~and ~~that~~existing cash resources of the ~~following~~Partnership ~~discussion~~are not ~~addresses~~sufficient to pay existing liabilities of the Partnership’s. ~~most~~However, ~~significant~~substantially ~~accounting~~all ~~policies,~~of ~~which~~the existing liabilities of the Partnership are payable to the ~~most~~General ~~critical~~Partner and/or its affiliates. Though the amounts payable to ~~aid~~the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in ~~fully~~excess ~~understanding~~of the aggregate of then existing contractual obligations and ~~evaluating~~then anticipated future foreseeable obligations of the Partnership’s. ~~reported~~The ~~financial~~Partnership ~~results,~~would be adversely affected should the General Partner and/or ~~certain~~its affiliates demand current payment of the ~~Partnership’s~~existing ~~risks~~contractual obligations and ~~uncertainties~~or suspend services for this or any other reason.

~~Use~~Financial ~~of Estimates~~Condition

The ~~preparation~~Partnership’s ofassets ~~financial~~at ~~statements~~March in31, ~~conformity~~2012 ~~with~~consisted ~~accounting~~of ~~principles generally accepted~~ $122,000 in ~~the~~cash ~~United~~and ~~States~~$1,000 ofin ~~America~~other ~~requires~~assets. ~~management~~Liabilities toat ~~make~~March ~~estimates~~31, ~~and~~2012 ~~assumptions~~primarily ~~that~~consisted ~~affect the reported amounts~~ of ~~assets~~$6,000 ~~and liabilities and disclosure~~ of ~~contingent~~accounts ~~assets~~payable and ~~liabilities at the date~~ $4,323,000, of ~~the~~accrued ~~financial~~fees ~~statements,~~ and ~~the~~expenses ~~reported~~due ~~amounts~~to ofGeneral ~~revenues~~Partner and ~~expenses~~affiliates ~~during~~(See ~~the~~“Future ~~reporting~~Contractual ~~period.~~Cash ~~Actual~~Obligations” ~~results could materially differ from those estimates~~below).

~~Method of Accounting for Investments in Local Limited Partnerships~~28

~~The~~Results ~~Partnership accounts for its investments in Local Limited Partnerships using the equity method~~ of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and were being amortized over 30 years (See Notes 2 and 3 to the financial statements).Operations

~~"Equity~~Year Ended March 31, 2012 Compared to Year Ended March 31, 2011 The Partnership’s net income for the year ended March 31, 2012 was $272,000, reflecting an increase of $498,000 from the net loss of $(226,000) experienced for the year ended March 31, 2011. There was an increase in ~~losses~~gain on sale of Local Limited Partnerships" of $416,000 for ~~each~~the year ended March 31, ~~has~~2012 compared to the year ended March 31, 2011. The Partnership sold its Local Limited Partnership Interest in thirty Local Limited Partnerships during the year ended March 31, 2012 compared to six Local Limited Partnerships during the year ended March 31, 2011. The gain on sale of Local Limited Partnerships will vary from period to period, depending on the number of Housing Complexes that have been ~~recorded~~sold, bythe values of such Housing Complexes and the ~~Partnership~~closing dates of such transactions. There was also a $132,000 decrease of asset management fees for the year ended March 31, 2012. These fees are calculated based on the ~~twelve~~invested ~~months~~assets. ofAs ~~reported~~Local ~~results~~Limited ~~provided~~Partnerships are bysold, the invested assets decrease, thereby decreasing the asset management fees. There was a decrease of $47,000 in write off of advances to Local Limited Partnerships for ~~each~~the year ended ~~December~~March 31, 2012 compared to the year ended March 31, 2011. ~~Equity~~Advances of in$14,000 ~~losses~~were ~~from~~made and reserved for during the year ended March 31, 2012 compared to advances of $60,000 made and reserved for during the year ended March 31, 2011. A Local Limited ~~Partnerships~~Partnership ~~allocated~~was toexperiencing some operational issues and the Partnership advanced isthe ~~not~~necessary ~~recognized~~funds. The legal and accounting fees decreased by $9,000 the year ended March 31, 2012 due to the ~~extent~~timing of ~~that~~the accounting work performed for the ~~investment~~Partnership. ~~balance~~The ~~would~~reporting befees ~~adjusted~~increased ~~below~~by ~~zero~~$2,000 and the distribution income decreased by $(35,000) for the year ended March 31, 2012. IfReporting fees and distribution income can fluctuate from year to year due to the fact that Local Limited Partnerships ~~report~~pay ~~net~~those ~~income~~fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. There was a $(15,000) increase in ~~future~~outsourcing ~~years~~expenses for the year ended March 31, 2012 due to the fact that the Partnership ~~will~~outsourced ~~resume~~a ~~applying~~portion of the ~~equity~~data ~~method~~entry ~~only~~management ~~after~~to ~~its~~increase ~~share~~efficiency. The write off of ~~such~~other ~~net~~assets ~~income~~increased by ~~equals~~$(30,000) for the ~~share~~year ofended ~~net~~March ~~losses~~31, ~~not~~2012. ~~recognized~~Appraisal ~~during~~and other sales related expenses are capitalized and remain on the ~~period(s)~~balance sheet until the ~~equity~~respective ~~method~~Local ~~was~~Limited ~~suspended~~Partnership is sold. If the respective Local Limited Partnership is not sold within one year, they are expensed.

30Year Ended March 31, 2011 Compared to Year Ended March 31, 2010 The Partnership’s net loss for the year ended March 31, 2011 was $(226,000), reflecting an decrease of $78,000 from the net loss of $(304,000) experienced for the year ended March 31, 2010. There was an increase of $10,000 in write off of advances to Local Limited Partnerships for the year ended March 31, 2011 compared to the year ended March 31, 2010. Advances of $50,000 were made and reserved for during the year ended March 31, 2010 compared to advances of $60,000 made and reserved for during the year ended March 31, 2011. A Local Limited Partnership was experiencing some operational issues and the Partnership advanced the necessary funds. The amount advanced can vary from year to year depending on the operations of the Local Limited Partnerships. Total income decreased by $15,000 for the year ended March 31, 2011 compared to the year ended March 31, 2010. Reporting fees and distribution income can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. There was an increase in gain on sale of Local Limited Partnerships of $87,000 for the year ended March 31, 2011 compared to the year ended March 31, 2010. The Partnership sold its Local Limited Partnership Interest in six Local Limited Partnerships during the year ended March 31, 2011 compared to one Local Limited Partnership during the year ended March 31, 2010. The gains recorded by the Partnerships can vary depending on the sales prices of the Housing Complexes or Local Limited Partnerships that are being sold.

~~Distributions~~Liquidity ~~received~~and Capital ~~from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income.~~Resources

InYear ~~accordance~~Ended ~~with~~March ~~the~~31, ~~accounting~~2012 ~~guidance~~Compared ~~for~~to Year Ended March 31, 2011 The net increase in cash during the ~~consolidation~~year ofended ~~variable~~March ~~interest~~31, ~~entities~~2012 was $65,000 ~~the~~compared ~~Partnership~~to ~~determines~~a ~~when~~net itdecrease ~~should~~in ~~include~~cash for the ~~assets~~year ended March 31, ~~liabilities~~2011 of $(53,000). ~~and~~The ~~activities~~variance ofwas partially due $(14,000) advanced to a ~~variable~~Local ~~interest~~Limited ~~entity~~Partnership during the year ended March 31, 2012 compared to $(~~VIE~~60,000) inadvanced ~~its~~during ~~financial~~the ~~statements~~year ended March 31, ~~and~~2011. ~~when~~As itdiscussed ~~should~~above, ~~disclose~~advances ~~information~~are ~~about~~made ~~its~~based ~~relationship~~on ~~with~~the operational aneeds ~~VIE~~of the Local Limited Partnerships. The ~~analysis~~Partnership ~~that~~sold ~~must~~thirty beof ~~performed~~its toLocal ~~determine~~Limited ~~which~~Partnerships ~~entity~~during ~~should~~the ~~consolidate~~year ended aMarch ~~VIE~~31, ~~focuses~~2012 oncompared ~~control~~to ~~and~~six ~~economic~~sold ~~factors.~~during Athe ~~VIE~~year isended aMarch ~~legal~~31, ~~structure~~2011 ~~used~~resulting toin ~~conduct~~an ~~activities~~increase orin ~~hold~~gain ~~assets~~on sales of $416,000 for ~~which~~the ~~must~~year beended ~~consolidated~~March by31, a2012. ~~company~~The ifreporting itfees isincreased ~~the~~by ~~primary~~$2,000 ~~beneficiary~~and ~~because~~the itdistribution ~~has~~income decreased by $(135,000) for the ~~power~~year ended March 31, 2012. As stated above, the reporting fees and distribution income can vary from year to ~~direct~~year depending on the ~~activities~~available cash flows of the ~~VIE~~Local ~~that~~Limited ~~most~~Partnerships. ~~significantly~~The ~~impact~~Partnership reimbursed the ~~VIE's~~General ~~economic~~Partner ~~performance~~or ~~and~~an affiliate $(2274,000) for ~~the~~expenses ~~obligation~~paid toon ~~absorb~~behalf ~~losses~~of orthe ~~receive~~Partnership ~~benefits~~during ~~that~~the ~~could~~year ~~potentially~~ended beMarch ~~significant~~31, to2012 ~~the~~compared ~~VIE.~~to If$(164,000) ~~multiple~~reimbursed ~~unrelated~~during ~~parties~~the year ~~share~~ended ~~such~~March ~~power~~31, as2011. ~~defined~~Lastly, nothe ~~party~~Partnership ~~will~~paid be$(336,000) ~~required~~of toaccrued ~~consolidate~~asset ~~the~~management ~~VIE.~~fees ~~Further,~~during the ~~guidance~~year ~~requires~~ended ~~continual~~March 31, ~~reconsideration~~2012 ofcompared to $(84,000) during the ~~primary~~year ~~beneficiary~~ended ofMarch a31, ~~VIE~~2011.

Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership's interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership's balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.29

~~Income~~Year ~~Taxes~~Ended March 31, 2011 Compared to Year Ended March 31, 2010 Net decrease in cash during the year ended March 31, 2011 was $(53,000) compared to net increase in cash for the year ended March 31, 2010 of $93,000. The variance was partially due the $(50,000) of advances made to a Local Limited Partnership during the year ended March 31, 2010 compared to $(60,000) advanced during the year ended March 31, 2011. As discussed above, advances are made based on the operational needs of the Local Limited Partnerships. The Partnership also received $15,000 less in total income during the year ended March 31, 2011 compared to the year ended March 31, 2010. As stated above, the reporting fees and distribution income can vary from year to year depending on the available cash flows of the Local Limited Partnerships. The Partnership reimbursed the General Partner or an affiliate $(5,000) for expenses incurred on behalf of the Partnership during the year ended March 31, 2010 compared to $(164,000) reimbursed during the year ended March 31, 2011. Lastly, the Partnership paid $(5,000) of accrued asset management fees during the year ended March 31, 2010 compared to $(84,000) during the year ended March 31, 2011.

~~The~~Accrued ~~Partnership~~payables, ~~has~~which ~~elected~~consist toprimarily beof ~~treated~~related asparty aasset ~~pass-through~~management fees ~~entity~~due ~~for~~to ~~income~~the ~~tax~~General ~~purposes and~~Partner, asincreased ~~such,~~(decreased) isby ~~not~~approximately ~~subject~~$(377,000), to$293,000 ~~income~~and ~~taxes. Rather~~$396,000 ~~all~~for ~~items~~the ofyears ~~taxable~~ended ~~income~~March 31, ~~deductions~~2012, ~~and~~2011 ~~tax credits are passed through to~~ and ~~are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly~~2010, ~~the Partnership is not required to take any tax positions in order to qualify as a pass-through entity~~respectively. The ~~Partnership~~General isPartner ~~required to file and~~ does ~~file~~not ~~tax~~anticipate ~~returns~~that ~~with~~these ~~the~~accrued ~~Internal~~fees ~~Revenue~~will ~~Service~~be ~~and~~paid ~~other~~until ~~taxing~~such time ~~authorities.~~as ~~Accordingly,~~capital ~~these~~reserves ~~financial~~are ~~statements~~in doexcess ~~not~~of ~~reflect~~future aforeseeable ~~provision~~working ~~for~~capital ~~income~~requirements ~~taxes~~of ~~and~~ the Partnership ~~has no other tax positions which must be considered for disclosure~~.

~~Impact~~The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of ~~Recent~~the ~~Accounting~~Partnership ~~Pronouncements~~through June 30, 2013.

InFuture ~~September~~Contractual ~~2006,~~Cash the Financial Accounting Standards Board (“FASB”) issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions. In February 2008, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted U.S. generally accepted accounting principles (“GAAP”) for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.Obligations

~~In February 2007, the FASB issued accounting guidance for~~ The ~~Fair~~following ~~Value~~table ~~Option~~summarizes for Financial Assets and Financial Liabilities. This guidance permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. It is effective for fiscal years beginning after November 15, 2007. On April 1, 2008, the Partnership’s ~~adopted~~future ~~GAAP~~contractual cash ~~for~~obligations ~~The~~as ~~Fair Value Option for Financial Assets and Financial Liabilities and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date~~ of ~~adoption.~~March ~~Accordingly~~31, ~~the initial application of the guidance had no effect on the Partnership.~~2012:

	2013		2014		2015		2016		2017		Thereafter		Total

Asset management fees (1)	$	4,394,397	$	71,864	$	71,864	$	71,864	$	71,864	$	2,371,512	$	7,053,365
Total contractual cash obligations	$	4,394,397	$	71,864	$	71,864	$	71,864	$	71,864	$	2,371,512	$	7,053,365

In(1) ~~November~~Asset ~~2008,~~management ~~the~~fees ~~FASB~~are ~~issued~~payable ~~accounting~~annually ~~guidance~~until ontermination ~~Equity~~of ~~Method Investment Accounting Considerations that addresses how~~ the ~~initial carrying value of an equity method investment should be determined~~Partnership, ~~how~~which anis ~~impairment~~to ~~assessment~~occur ofno anlater ~~underlying~~than ~~indefinite-lived~~2050. ~~intangible~~The ~~asset~~estimate of anthe ~~equity~~fees ~~method~~payable ~~investment~~included ~~should~~herein beassumes ~~performed,~~the ~~how~~retention anof ~~equity~~the ~~method investee~~Partnership’s ~~issuance~~interest ofin ~~shares~~all ~~should~~Housing beComplexes ~~accounted~~until ~~for,~~2050. ~~and~~Amounts ~~how~~due to ~~account~~the ~~for~~General aPartner ~~change~~as inof anMarch ~~investment~~31, ~~from~~2012 ~~the~~have ~~equity~~been ~~method~~included toin the ~~cost~~2013 ~~method~~column. ~~This~~The ~~guidance~~General isPartner ~~effective~~does innot ~~fiscal~~anticipate ~~years~~that ~~beginning~~these onfees orwill ~~after~~be ~~December 15, 2008,~~paid ~~and~~until ~~interim~~such ~~periods~~time ~~within~~as ~~those~~capital ~~fiscal~~reserves ~~years.~~are ~~The~~in ~~Partnership~~excess ~~adopted~~of the ~~guidance~~aggregate ~~for~~of the ~~interim~~existing ~~quarterly~~contractual ~~period~~obligations ~~beginning~~and ~~April~~the 1,anticipated ~~2009.~~future ~~The~~foreseeable ~~impact~~obligations of ~~adopting it did not have a material impact on~~ the Partnership~~’s financial condition or results of operations~~.

InFor ~~April~~additional ~~2009,~~information ~~the~~regarding ~~FASB~~asset ~~issued~~management ~~accounting~~fees, ~~guidance~~see ~~for~~Note 3 ~~Interim Disclosures about Fair Value of Financial Instruments. This requires disclosure about the method and significant assumptions used~~ to ~~establish~~ the ~~fair value of~~ financial ~~instruments for interim reporting periods as well as annual~~ statements~~. It~~ ~~became~~included ~~effective~~elsewhere ~~for as of and for the interim period ended June 30, 2009 and had no impact on the Partnership’s financial condition or results of operations~~herein.

InOff-Balance ~~May~~Sheet 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 30, 2009. The adoption did not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Company did not include the disclosure in this Form 10-K.Arrangements

~~In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs).~~ The ~~amended~~Partnerships guidance modifies the consolidation model to one based on control and economics, and replaced quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no ~~party~~off-balance ~~will~~sheet ~~be required to consolidate the VIE~~arrangements. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment was effective for fiscal years beginning after November 15, 2009. The adoption of this guidance on April 1, 2010 did not have a material effect on the Partnership’s financial statements.

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

~~Certain~~See ~~Risks~~Item ~~and~~1 ~~Uncertainties~~for information in this regard.

~~See~~Impact ~~Item 1A for a discussion~~ of ~~risks~~Recent ~~regarding~~Accounting ~~the Partnership.~~Pronouncements

~~All~~See offootnote ~~the~~1 ~~Low Income Housing Tax Credits anticipated~~ to ~~be realized from~~ the ~~Local~~financial ~~Limited Partnerships have been realized~~statements. The Partnership does not anticipate being allocated a significant amount of Low Income Housing Tax Credits from the Local Limited Partnerships in the future. All Local Limited Partnerships have completed the Compliance Period.

32Item 7A. Quantitative and Qualitative Disclosures about Market Risk

ToNOT date, certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership’s investment in certain of such Local Limited Partnerships could be lost, and the loss and recapture of the related Low Income Housing Tax Credits could occur.APPLICABLE

~~Anticipated~~Item ~~future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership~~8. ~~However,~~ ~~substantially~~Financial ~~all~~Statements ~~of the existing liabilities of the Partnership are payable to the General Partner~~ and~~/or~~ ~~its~~Supplementary affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.Data

~~Financial Condition~~30

~~The~~REPORT OF ~~Partnership’s~~INDEPENDENT assets at March 31, 2011 consisted of $58,000 in cash and $118,000 in other assets. Liabilities at March 31, 2011 primarily consisted of $4,699,000 of accrued fees and expenses due to General Partner and affiliates (See “Future Contractual Cash Obligations” below).REGISTERED

~~Results~~PUBLIC ACCOUNTING ~~of Operations~~FIRM

~~Year Ended March 31, 2011 Compared to Year Ended March 31, 2010 The Partnership’s net loss for~~ To the year ended March 31, 2011 was $(226,000), reflecting an decrease of $78,000 from the net loss of $(304,000) experienced for the year ended March 31, 2010. There was an increase of $10,000 in write off of advances to Local Limited Partnerships for the year ended March 31, 2011 compared to the year ended March 31, 2010. Advances of $50,000 were made and reserved for during the year ended March 31, 2010 compared to advances of $60,000 made and reserved for during the year ended March 31, 2011. A Local Limited Partnership was experiencing some operational issues and the Partnership advanced the necessary funds. The amount advanced can vary from year to year depending on the operations of the Local Limited Partnerships. Total income decreased by $15,000 for the year ended March 31, 2011 compared to the year ended March 31, 2010. Reporting fees and distribution income can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. There was an increase in gain on sale of Local Limited Partnerships of $87,000 for the year ended March 31, 2011 compared to the year ended March 31, 2010. The Partnership sold its Local Limited Partnership Interest in six Local Limited Partnerships during the year ended March 31, 2011 compared to one Local Limited Partnership during the year ended March 31, 2010. The gains recorded by the Partnerships can vary depending on the sales prices of the Housing Complexes or Local Limited Partnerships that are being sold.Partners

~~Year~~WNC Housing ~~Ended~~Tax ~~March~~Credit ~~31,~~Fund ~~2010 Compared to Year Ended March 31~~III, ~~2009 The Partnership’s net loss for the year ended March 31, 2010 was $(304,000), reflecting an decrease of $115,000 from the net loss of $(419,000) experienced for the year ended March 31, 2009~~L. The decrease in net loss was partially due to a decrease of $20,000 in equity in losses from Local Limited Partnerships, which was due to the fact that all the net investment balances reached zero as of March 31, 2009P. Therefore no further losses from the Local Limited Partnerships could be recorded. In addition, there was a decrease of $70,000 in loss from operations. The decrease in loss from operations is partially due to a decrease of $64,000 in write off of advances to Local Limited Partnerships for the year ended March 31, 2010 compared to the year ended March 31, 2009. Advances of $114,000 were made during the year ended March 31, 2009 and reserved for fully in the same year compared to advances of $50,000 made and reserved for during the year ended March 31, 2010. A Local Limited Partnership was experiencing some operational issues and the Partnership advanced the necessary funds. The amount advanced can vary from year to year depending on the operations of the Local Limited Partnerships. There was also a decrease in impairment loss of $(5,000). As all net investment balances had been reduced to zero as of March 31, 2009 there were no investment balances to impair. Appraisal expenses decreased by $23,000 due to the Partnership obtaining appraisals for five Local Limited Partnerships during the year ended March 31, 2009. The five properties were not disposed of and are not considered to be identified for disposition. The Partnership is not pursuing selling those interests at this time. These decreases were offset by an increase of $(67,000) in accounting and legal expenses. The variance is related to the timing of the accounting work being performed. Total income increased by $46,000 for the year ended March 31, 2010 compared to the year ended March 31, 2009. Reporting fees and distribution income can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnership’s cash flow will allow for the payment. Lastly, there was an increase in gain on sale of Local Limited Partnerships of $24,000 for the year ended March 31, 2010 compared to the year ended March 31, 2009. The Partnership sold its Local Limited Partnership Interest in one Local Limited Partnership during both the years ended March 31, 2010 and 2009. The sales prices for the Local Limited Partnership Interest will vary for each Local Limited Partnership depending on the carrying value and what the market will pay.

33We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund III, L.P. (a California Limited Partnership) (the Partnership) as of March 31, 2012 and 2011, and the related statements of operations, partners’ equity (deficit) and cash flows for each of the years in the three-year period ended March 31, 2012. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

~~Year~~In our ~~Ended~~opinion, ~~March~~the ~~31,~~financial ~~2011~~statements ~~Compared~~referred to ~~Year~~above ~~Ended~~present ~~March 31~~fairly, ~~2010 Net decrease~~ in ~~cash~~all ~~during~~material ~~the year ended March 31~~respects, ~~2011 was $(53,000) compared to net increase in cash for~~ the ~~year~~financial ~~ended~~position ~~March 31, 2010~~ of ~~$93,000. The~~WNC Housing ~~variance~~Tax ~~was~~Credit ~~partially~~Fund ~~due the $(50~~III,~~000)~~ ofL.P. ~~advances made to~~ (a ~~Local~~California Limited Partnership ~~during the year ended March 31, 2010 compared to $(60,000~~) ~~advanced~~as ~~during~~of ~~the year ended~~ March 31, ~~2011. As~~2012 ~~discussed~~and ~~above~~2011, ~~advances~~and ~~are made based on~~ the ~~operational~~results ~~needs~~ of ~~the~~its Local Limited Partnerships. The Partnership also received $15,000 less in total income during the year ended March 31, 2011 compared to the year ended March 31, 2010. As stated above, the reporting fees operations and ~~distribution~~its ~~income can vary from year to year depending on the available~~ cash flows ~~of the Local Limited Partnerships. The Partnership reimbursed the General Partner or an affiliate $(5,000)~~ for ~~expenses~~each ~~incurred on behalf~~ of the ~~Partnership~~years ~~during~~in the three-year period ended March 31, ~~2010 compared to $(164~~2012,~~000)~~ ~~reimbursed~~in ~~during~~conformity ~~the~~with ~~year~~accounting ~~ended~~principles generally ~~March~~accepted ~~31,~~in ~~2011. Lastly,~~ the ~~Partnership~~United ~~paid~~States ~~$(5,000)~~ of ~~accrued asset management fees during the year ended March 31, 2010 compared to $(84,000) during the year ended March 31, 2011~~America.

~~Year~~Our audits ~~Ended~~were ~~March~~conducted ~~31,~~for ~~2010~~the ~~Compared~~purpose toof ~~Year~~forming ~~Ended~~an ~~March~~opinion ~~31,~~on ~~2009 Net increase in cash during~~ the ~~year~~basic ~~ended~~financial ~~March~~statements ~~31,~~taken ~~2010~~as ~~was~~a ~~$93,000~~whole. ~~compared~~The toschedules listed ~~net~~under ~~decrease~~Item ~~in cash for the year ended March 31, 2009 of $~~15(~~84,000~~a)~~. The~~(2) ~~increase~~ in ~~net change in cash of $177,000 was largely comprised of~~ the ~~$(114,000)~~index ofrelated ~~advances made~~ to ayears ~~Local~~above ~~Limited~~are ~~Partnership~~presented for the ~~year~~purpose ~~ended~~of ~~March~~complying ~~31,~~with ~~2009 compared to $(50,000) advanced during~~ the ~~year~~Securities and ~~ended~~Exchange ~~March~~Commission’s ~~31,~~rules ~~2010. The~~and ~~Partnership~~are ~~also~~not ~~received~~part ~~$46,000~~of ~~more in total income in~~ the ~~yera~~basic ~~ended~~financial ~~March 31, 2010 compared to the year ended March 31, 2009~~statements. As ~~stated~~These ~~above~~schedules ~~the~~have ~~reporting~~been ~~fees and distribution income can vary from year~~ subjected to ~~year depending on~~ the ~~available~~auditing ~~cash~~procedures ~~flows~~applied ofto the ~~Local~~audits ~~Limited Partnerships. The Partnership reimbursed the General Partner or an affiliate $(5,000) for expenses incurred on behalf~~ of the ~~Partnership~~basic ~~during~~financial ~~the~~statements ~~year ended March 31~~and, ~~2010~~in ~~compared~~our ~~to $(63~~opinion,~~000)~~ ~~paid~~fairly ~~during~~state ~~the~~in ~~year~~all ~~ended~~material respects ~~March 31, 2009. Lastly,~~ the ~~Partnership~~financial ~~paid~~statement ~~$(5,000)~~data ofrequired ~~accrued~~to ~~asset~~be ~~management~~set ~~fees~~forth ~~during~~therein ~~the~~in ~~year~~relation ~~ended March 31, 2010 compared~~ to ~~$(20,000) during~~ the ~~year~~basic ~~ended~~financial ~~March~~statements ~~31,~~taken ~~2009~~as a whole.

~~Accrued~~/s/ ~~payables,~~Reznick ~~which consist primarily of related party asset management fees due to the General Partner~~Group, ~~increased by approximately $293,000, $396,000 and $309,000 for the years ended March 31, 2011, 2010 and 2009, respectively~~P. ~~The General Partner does not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future foreseeable working capital requirements of the Partnership~~C.

The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through June 30Bethesda, ~~2012.~~ Maryland

~~Other~~June 20, ~~Matters~~2012

One Local Limited Partnership, Whitted Forest Limited Partnership (“Whitted Forest”), has been experiencing operational issues. Whitted Forest has consistently had occupancy below acceptable levels, negative cash flow and a low debt coverage ratio. In 2005, the Partnership received its final allocation of Low Income Housing Tax Credits from this Housing Complex. The Compliance Period expired on December 31, 2009, therefore there is no risk of recapture.F-1

~~The~~WNC ~~lender,~~HOUSING ~~Sun~~TAX ~~Trust,~~CREDIT ~~reached~~FUND ~~an understanding with Whitted Forest and was willing to accept an offer to retire the debt. However~~III, ~~the bank modified their proposal which was not acceptable to Whitted Forest~~L. ~~In March 2011, Whitted Forest filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code~~P. Since then the parties have worked out an arrangement to sell the asset and provide the funds to Sun Trust. The Court has confirmed. Marketing activities have begun to sell the apartment community.

34(A California Limited Partnership)

~~Future~~BALANCE ~~Contractual~~SHEETS ~~Cash Obligations~~(Audited)

The following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2011:

	March 31,
	2012			2011

ASSETS

Cash	$	122,452		$	57,638
Other assets		510			118,262
Investments in Local Limited Partnerships, net (Notes 2 and 3)		0			0

Total Assets	$	122,962		$	175,900

LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)

Liabilities:
Accounts payable	$	5,746		$	0
Accrued fees and expenses due to General Partner and affiliates (Note 3)		4,322,533			4,699,059

Total Liabilities		4,328,279			4,699,059

Partners’ Equity (Deficit):
General Partner		34,580			(13,968	)
Limited Partners (15,000 Partnership Units authorized; 15,000 Partnership Units issued and outstanding)		(4,239,897	)		(4,509,191	)

Total Partners’ Equity (Deficit)		(4,205,317	)		(4,523,159	)

Total Liabilities and Partners’ Equity (Deficit)	$	122,962		$	175,900

	2012		2013		2014		2015		2016		Thereafter		Total
Asset management fees (1)	$	4,718,012	$	219,428	$	219,428	$	219,428	$	219,428	$	7,460,552	$	13,056,276
Total contractual cash obligations	$	4,718,012	$	219,428	$	219,428	$	219,428	$	219,428	$	7,460,552	$	13,056,276

See accompanying notes to financial statements

(1) Asset management fees are payable annually until termination of the Partnership, which is to occur no later than 2050. The estimate of the fees payable included herein assumes the retention of the Partnership’s interest in all Housing Complexes until 2050. Amounts due to the General Partner as of March 31, 2011 have been included in the 2012 column. The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership.F-2

~~For~~WNC ~~additional~~HOUSING ~~information~~TAX ~~regarding~~CREDIT ~~asset~~FUND ~~management fees~~III, ~~see Note 3 to the financial statements included elsewhere herein~~L.P.

~~Off-Balance~~(A ~~Sheet~~California ~~Arrangements~~Limited Partnership)

~~The~~STATEMENTS ~~Partnerships~~OF ~~has~~OPERATIONS ~~no off-balance sheet arrangements.~~(Audited)

~~Exit~~For ~~Strategy~~the Years Ended March 31, 2012, 2011 and 2010

See Item 1 for information in this regard.

	For the Years Ended March 31,
	2012			2011			2010

Distribution income	$	5,965		$	40,894		$	39,342
Reporting fees		22,014			20,034			36,282

Total income		27,979			60,928			75,624

Operating expenses:
Outsourcing expenses		15,420			0			0
Asset management fees (Note 3)		135,875			267,577			296,396
Legal and accounting		81,469			90,744			79,097
Write off of advances to Local Limited Partnerships (Note 5)		13,504			60,161			49,732
Asset management expenses		19,766			2,978			333
Appraisal expenses		30,385			0			0
Other		16,414			7,049			8,299

Total operating expenses		312,833			428,509			433,857

Loss from operations		(284,854	)		(367,581	)		(358,233	)

Gain on sale of Local Limited Partnerships		556,813			141,206			54,250

Interest income		55			18			8

Net income (loss)	$	272,014		$	(226,357	)	$	(303,975	)

Net income (loss) allocated to:
General Partner	$	2,720		$	(2,264	)	$	(3,040	)

Limited Partners	$	269,294		$	(224,093	)	$	(300,935	)

Net income (loss) per Partnership Unit	$	17.95		$	(14.94	)	$	(20.06	)

Outstanding weighted Partnership Units		15,000			15,000			15,000

~~Impact~~See ofaccompanying ~~Recent~~notes ~~Accounting~~to ~~Pronouncements~~financial statements

~~See footnote 1 to the financial statements.~~F-3

~~Item~~WNC ~~7A. Quantitative~~HOUSING ~~and~~TAX ~~Qualitative~~CREDIT ~~Disclosures~~FUND ~~about~~III, ~~Market Risk~~L.P.

~~NOT~~(A ~~APPLICABLE~~California Limited Partnership)

~~Item~~STATEMENTS ~~8. Financial~~OF ~~Statements~~PARTNERS’ ~~and~~EQUITY (DEFICIT) ~~Supplementary Data~~(Audited)

35For the Years Ended March 31, 2012, 2011 and 2010

REPORT OF INDEPENDENT REGISTERED

	General Partner			Limited Partners			Total

Partners’ deficit at March 31, 2009	$	(81,175	)	$	(3,984,163	)	$	(4,065,338	)

Contributions (Note 6)		72,511			0			72,511

Net income (loss)		(3,040	)		(300,935	)		(303,975	)

Partners’ deficit at March 31, 2010		(11,704	)		(4,285,098	)		(4,296,802	)

Net income (loss)		(2,264	)		(224,093	)		(226,357	)

Partners’ deficit at March 31, 2011		(13,968	)		(4,509,191	)		(4,523,159	)

Contributions (Note 6)		45,828			0			45,828

Net income (loss)		2,720			269,294			272,014

Partners’ equity (deficit) at March 31, 2012	$	34,580		$	(4,239,897	)	$	(4,205,317	)

~~PUBLIC~~See ~~ACCOUNTING~~accompanying ~~FIRM~~notes to financial statements

~~To the Partners~~F-4

WNC ~~Housing~~HOUSING ~~Tax~~TAX ~~Credit~~CREDIT ~~Fund~~FUND III, L.P.

~~We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund III, L.P.~~ (aA California Limited Partnership) (the Partnership) as of March 31, 2011 and 2010, and the related statements of operations, partners’ deficit and cash flows for each of the years in the three-year period ended March 31, 2011. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

InFor ~~our opinion,~~ the ~~financial~~Years ~~statements~~Ended ~~referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund III, L.P. (a California Limited Partnership) as of~~ March 31, ~~2011 and 2010~~2012, ~~and~~2011 ~~the results of its operations~~ and ~~its cash flows for each of the years in the three-year period ended March 31, 2011, in conformity with accounting principles generally accepted in the United States of America.~~2010

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15(a)(2) in the index related to years above are presented for the purpose of complying with the Securities and Exchange Commission’s rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole.

	For the Years Ended March 31,
	2012			2011			2010

Cash flows from operating activities:
Net income (loss)	$	272,014		$	(226,357	)	$	(303,975	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain on sale of Local Limited Partnerships		(556,813	)		(141,206	)		(54,250	)
Increase in other assets		(38,635	)		(127,056	)		0
Write off other assets		30,385			0			0
Increase (decrease) in accrued fees and expenses due to General Partner and affiliates		(330,698	)		293,081			396,390
Increase (decrease) in due to Local Limited Partnership		0			(1,028	)		1,028
Increase in accounts payable		5,746			0			0

Net cash provided by (used in) operating activities		(618,001	)		(202,566	)		39,193

Cash flows from investing activities:
Advances made to Local Limited Partnerships		(13,504	)		(60,161	)		(49,732	)
Write off of advances made to Local Limited Partnerships		13,504			60,161			49,732
Net proceeds from sale of Local Limited Partnerships		682,815			150,000			54,250

Net cash provided by investing activities		682,815			150,000			54,250

Net increase (decrease) in cash		64,814			(52,566	)		93,443

Cash, beginning of period		57,638			110,204			16,761

Cash, end of period	$	122,452		$	57,638		$	110,204

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid	$	800		$	800		$	800

NON-CASH FINANCING ACTIVITIES:
Advances made to the Partnership by the General Partner in prior years were converted to General Partner equity	$	45,828		$	0			72,511

~~/s/Reznick~~See ~~Group,~~accompanying ~~P.C~~notes to financial statements

~~Bethesda, Maryland~~F-5

~~June~~WNC 28HOUSING TAX CREDIT FUND III, ~~2011~~L.P.

36(A California Limited Partnership)

~~WNC~~NOTES ~~HOUSING~~TO ~~TAX~~FINANCIAL ~~CREDIT FUND III, L.P.~~STATEMENTS

(AFor ~~California~~the ~~Limited~~Years ~~Partnership)~~Ended March 31, 2012, 2011 and 2010

~~BALANCE~~NOTE ~~SHEETS~~1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	March 31,
	2011			2010
ASSETS
Cash	$	57,638		$	110,204
Other assets		118,262			-
Investments in Local Limited Partnerships, net (Notes 2 and 3)		-			-
Total Assets	$	175,900		$	110,204
LIABILITIES AND PARTNERS’ DEFICIT
Liabilities:
Accrued fees and expenses due to General Partner and affiliates (Note 3)	$	4,699,059		$	4,405,978
Due to Local Limited Partnership		-			1,028
Total Liabilities		4,699,059			4,407,006
Partners’ Deficit:
General Partner		(13,968	)		(11,704	)
Limited Partners (15,000 Partnership Units authorized; 15,000 Partnership Units issued and outstanding)		(4,509,191	)		(4,285,098	)
Total Partners’ Deficit		(4,523,159	)		(4,296,802	)
Total Liabilities and Partners’ Deficit	$	175,900		$	110,204

Organization

~~See~~WNC ~~accompanying~~Housing ~~notes~~Tax Credit Fund III, L.P., a California limited partnership (the "Partnership"), was formed on May 10, 1991 under the laws of the State of California. The Partnership was formed to ~~financial~~acquire ~~statements~~limited partnership interests in other limited partnerships ("Local Limited Partnerships") which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”). The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership or operating agreement (the “Local Limited Partnership Agreement”).

37WNC Tax Credit Partners, L.P. is the general partner of the Partnership (the “General Partner”). WNC & Associates, Inc., a California corporation (“Associates”), and Wilfred N. Cooper, Sr., are general partners of the General Partner. The chairman and president owns all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own.

~~WNC~~The ~~HOUSING~~Partnership ~~TAX~~shall ~~CREDIT~~continue ~~FUND~~to ~~III~~be in full force and effect until December 31, L2050 unless terminated prior to that date pursuant to the partnership agreement or law.P.

(AThe ~~California~~financial ~~Limited~~statements include only activity relating to the business of the Partnership), and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners.

~~STATEMENTS~~The OFPartnership ~~OPERATIONS~~Agreement authorized the sale of up to 15,000 units of Limited Partnership interest (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units concluded in September 1993 at which time 15,000 Partnership Units representing subscriptions in the amount of $15,000,000, had been accepted. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors in the Partnership (“Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments.

~~For~~The proceeds from the ~~Years~~disposition ~~Ended~~of ~~March~~any 31of the Local Limited Partnership properties will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the Partnership. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, ~~2011~~there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, ~~2010~~there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions equal to their capital contributions and ~~2009~~their return on investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to its capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.

	For the Years Ended March 31,
	2011			2010			2009
Distribution income	$	40,894		$	39,342		$	15,252
Reporting fees		20,034			36,282			14,288
Total income		60,928			75,624			29,540
Operating expenses and loss:
Amortization		-			-			340
Asset management fees (Note 3)		267,577			296,396			298,697
Legal and accounting		90,744			79,097			12,342
Write off of advances to Local Limited Partnerships (Note 5)		60,161			49,732			114,087
Impairment loss		-			-			4,789
Appraisal expenses		-			-			22,600
Other		10,027			8,632			5,348
Total operating expenses and loss		428,509			433,857			458,203
Loss from operations		(367,581	)		(358,233	)		(428,663	)
Equity in losses of Local Limited Partnerships (Note 2)		-			-			(19,900	)
Gain on sale of Local Limited Partnerships		141,206			54,250			30,023
Interest income		18			8			33
Net loss	$	(226,357	)	$	(303,975	)	$	(418,507	)
Net loss allocated to:
General Partner	$	(2,264	)	$	(3,040	)	$	(4,185	)
Limited Partners	$	(224,093	)	$	(300,935	)	$	(414,322	)
Net loss per Partnership Unit	$	(14.94	)	$	(20.06	)	$	(27.62	)
Outstanding weighted Partnership Units		15,000			15,000			15,000

Risks and Uncertainties

~~See~~An ~~accompanying~~investment ~~notes~~in the Partnership and the Partnership’s investments in Local Limited Partnerships and their Housing Complexes are subject to ~~financial~~risks. ~~statements~~These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership’s investments. Some of those risks include the following:

38F-6

WNC HOUSING TAX CREDIT FUND III, L.P.

(A California Limited Partnership)

~~STATEMENTS~~NOTES OFTO ~~PARTNERS’~~FINANCIAL ~~DEFICIT~~STATEMENTS - CONTINUED

For the Years Ended March 31, ~~2011~~2012, ~~2010~~2011 and ~~2009~~2010

	General Partner			Limited Partners			Total
Partners’ deficit at March 31, 2008	$	(76,990	)	$	(3,569,841	)	$	(3,646,831	)
Net loss		(4,185	)		(414,322	)		(418,507	)
Partners’ deficit at March 31, 2009		(81,175	)		(3,984,163	)		(4,065,338	)
Contribution (Note 6)		72,511			-			72,511
Net loss		(3,040	)		(300,935	)		(303,975	)
Partners’ deficit at March 31, 2010		(11,704	)		(4,285,098	)		(4,296,802	)
Net loss		(2,264	)		(224,093	)		(226,357	)
Partners’ deficit at March 31, 2011	$	(13,968	)	$	(4,509,191	)	$	(4,523,159	)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~See~~The ~~accompanying~~Low ~~notes~~Income Housing Tax Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to ~~financial~~the ~~statements~~tax liability due on the person’s last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction. Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership.

39The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.

~~WNC~~The ~~HOUSING~~ability ~~TAX~~of ~~CREDIT~~Limited ~~FUND~~Partners ~~III,~~to Lclaim tax losses from the Partnership is limited.P The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the Limited Partners could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.

(AAll ~~California~~of the Low Income Housing Tax Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership) does not anticipate being allocated a significant amount of Low Income Housing Tax Credits from the Local Limited Partnerships in the future. All Local Limited Partnerships have completed the Compliance Period.

~~STATEMENTS~~Anticipated OFfuture ~~CASH~~and ~~FLOWS~~existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or their affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

~~For the Years Ended March 31, 2011, 2010 and 2009~~F-7

	For the Years Ended March 31,
	2011			2010			2009
Cash flows from operating activities:
Net loss	$	(226,357	)	$	(303,975	)	$	(418,507	)
Adjustments to reconcile net loss to net cash provided by (used in) in operating activities:
Amortization		-			-			340
Equity in losses of Local Limited Partnerships		-			-			19,900
Impairment loss		-			-			4,789
Increase in other assets		(127,056	)		-			-
Increase in accrued fees and expenses due to General Partner and affiliates		293,081			396,390			309,206
Increase (decrease) in due to Local Limited Partnership		(1,028	)		1,028			-
Gain on sale of Local Limited Partnerships		(141,206	)		(54,250	)		(30,023	)
Net cash provided by (used in) operating activities		(202,566	)		39,193			(114,295	)
Cash flows from investing activities:
Advances made to Local Limited Partnerships		(60,161	)		(49,732	)		(114,087	)
Write off of advances made to Local Limited Partnerships		60,161			49,732			114,087
Proceeds from sale of Local Limited Partnerships		150,000			54,250			30,023
Net cash provided by investing activities		150,000			54,250			30,023
Net increase (decrease) in cash		(52,566	)		93,443			(84,272	)
Cash, beginning of period		110,204			16,761			101,033
Cash, end of period	$	57,638		$	110,204		$	16,761
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid	$	800		$	800		$	800
NON-CASH FINANCING ACTIVITIES:
Advances made to the Partnership by the General Partner in prior years were converted to General Partner equity	$	-		$	72,511		$	-

WNC HOUSING TAX CREDIT FUND III, L.P.

~~See~~(A ~~accompanying~~California ~~notes~~Limited ~~to financial statements~~Partnership)

40NOTES TO FINANCIAL STATEMENTS - CONTINUED

~~WNC~~For ~~HOUSING~~the ~~TAX~~Years ~~CREDIT~~Ended ~~FUND~~March ~~III~~31, ~~L.P.~~2012, 2011 and 2010

(ANOTE ~~California~~1 ~~Limited~~- ~~Partnership)~~ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTES~~The TOPartnership ~~FINANCIAL~~currently ~~STATEMENTS~~has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through June 30, 2013.

~~For~~No trading market for the ~~Years~~Partnership ~~Ended~~Units ~~March~~exists ~~31,~~or ~~2011,~~is ~~2010~~expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and ~~2009~~should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners.

~~NOTE~~Exit ~~1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Strategy

~~Organization~~The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits. The initial programs have completed their Compliance Periods.

~~WNC~~Upon ~~Housing~~the ~~Tax~~sale ~~Credit~~of ~~Fund III, L.P.,~~ a ~~California~~Local ~~limited~~Limited ~~partnership (the "~~Partnership~~"),~~ ~~was~~interest ~~formed~~or onHousing ~~May~~Complex after ~~10, 1991 under~~ the ~~laws~~end of the ~~State~~Compliance ofPeriod, ~~California.~~there ~~The~~would ~~Partnership~~be ~~was~~no ~~formed~~recapture toof acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”). ~~The~~ ~~local~~A ~~general~~sale ~~partners~~prior (to the ~~“Local General Partners”)~~ end of ~~each Local Limited Partnership retain responsibility for maintaining, operating and managing~~ the ~~Housing~~Compliance ~~Complex.~~Period ~~Each~~could ~~Local~~result ~~Limited~~in ~~Partnership~~recapture isif ~~governed~~certain byconditions ~~its~~are ~~agreement~~not ~~of limited partnership or operating agreement (the “Local Limited Partnership Agreement”)~~met.

~~WNC~~With ~~Tax~~that ~~Credit~~in ~~Partners~~mind, ~~L.P.~~the General Partner is ~~the~~continuing ~~general~~its ~~partner~~review of the Housing ~~Partnership~~Complexes. ~~(the~~The ~~“General~~review ~~Partner”). WNC~~considers &many ~~Associates~~factors, ~~Inc.,~~including aextended ~~California~~use ~~corporation~~requirements (~~“Associates”),~~such ~~and~~as ~~Wilfred~~those N.due ~~Cooper,~~to ~~Sr.,~~mortgage ~~are~~restrictions or ~~general~~state ~~partners~~compliance ofagreements), the ~~General~~condition ~~Partner. The chairman and president owns all~~ of the ~~outstanding~~Housing ~~stock~~Complexes, ofand ~~Associates. The business of~~ the ~~Partnership~~tax isconsequences ~~conducted~~to ~~primarily~~the ~~through~~Limited ~~Associates,~~Partners as from the ~~Partnership~~sale ~~has no employees~~ of ~~its~~the ~~own~~Housing Complexes.

~~The~~Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership ~~shall~~expects ~~continue~~to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership as Low Income Housing Tax Credits are no longer available. Local Limited Partnership interests may be disposed of any time by the General Partner in ~~full~~its ~~force~~discretion. ~~and~~While ~~effect~~liquidation ~~until~~of ~~December~~the 31Housing Complexes continues to be evaluated, ~~2050~~the ~~unless~~dissolution ~~terminated~~of ~~prior~~the toPartnership ~~that~~was not ~~date~~imminent ~~pursuant~~as toof March 31, 2012. As of all periods presented, all of the ~~partnership~~Housing ~~agreement~~Complexes orhad ~~law~~completed their Compliance Period.

~~The~~Upon ~~financial~~management ~~statements~~of ~~include~~the ~~only~~Partnership ~~activity~~identifying ~~relating~~a toLocal Limited Partnership for disposition, costs incurred by the ~~business~~Partnership in preparation for the disposition are deferred. Upon the sale of the Local Limited Partnership interest, ~~and~~the doPartnership ~~not~~nets ~~give~~the ~~effect~~costs tothat ~~any~~had ~~assets~~been ~~that~~deferred against the ~~partners~~proceeds ~~may~~from ~~have~~the ~~outside~~sale ofin ~~their~~determining the ~~interests~~gain inor loss on sale of the Local Limited Partnership,. orDeferred todisposition ~~any~~costs ~~obligations,~~are ~~including~~included ~~income~~in ~~taxes,~~other ofassets on the ~~partners~~balance sheets.

The Partnership ~~Agreement~~has ~~authorized~~received the ~~sale~~majority ofvote upin tofavor ~~15,000~~of ~~units~~the plan of ~~Limited~~liquidation ~~Partnership~~of ~~interest~~the (“Partnership. ~~Units”) at $1~~Therefore,~~000~~ ~~per~~the Partnership ~~Unit.~~is ~~The~~engaging ~~offering~~third ofparty ~~Partnership~~appraisers ~~Units~~to ~~concluded~~appraise inseveral ~~September~~or ~~1993~~all atof the ~~which~~Local ~~time~~Limited ~~15,000~~Partnerships in this Partnership. ~~Units~~The ~~representing~~appraisal ~~subscriptions~~is inone of the ~~amount~~preliminary ofsteps ~~$15,000,000,~~that ~~had~~need ~~been~~to ~~accepted. The~~be ~~General~~completed ~~Partner~~in order ~~has~~to amove 1%forward ~~interest~~with inthe ~~operating~~approved ~~profits~~liquidation ~~and~~plan. ~~losses,~~The ~~taxable~~expense ~~income~~incurred ~~and~~for ~~losses~~the appraisals, inor ~~cash~~any ~~available~~other ~~for~~disposition ~~distribution~~related expenses ~~from~~ the Partnership incurs, are being capitalized and ~~Low~~will ~~Income~~remain ~~Housing~~on ~~Tax~~the ~~Credits~~balance ofsheet until the respective Local Limited Partnership~~. The~~ ~~investors~~is insold. At the ~~Partnership~~time ~~(“Limited~~of ~~Partners”)~~disposition the capitalized costs will be ~~allocated~~netted ~~the~~with ~~remaining~~any ~~99%~~cash ofproceeds ~~these~~that ~~items~~are received in order ~~proportion~~ to ~~their~~calculate ~~respective~~the ~~investments~~gain or loss on the disposition.

~~The~~As ~~proceeds from the disposition~~ of ~~any~~March of31, 2011, the ~~Local Limited~~ Partnership ~~properties~~sold ~~will~~its ~~be used first to pay debts and other obligations per the respective~~ Local Limited Partnership Interest ~~Agreement. Any~~in ~~remaining~~Carlinville ~~proceeds~~Associates ~~will~~I, ~~then~~L.P, beLake ~~paid~~Ridge toApartments, ~~the Partnership~~L. ~~The~~P, ~~sale~~Heritage ofColonial aHomes, ~~Housing Complex may be subject to other restrictions and obligations~~L. ~~Accordingly~~P, ~~there~~Meadow ~~can~~Run beAssociates ~~no assurance that a Local Limited Partnership will be able to sell its Housing Complex~~L. ~~Even~~P, Windermere ifAssociates, ~~it does so~~L.P, ~~there~~Candleridge ~~can~~Apartments ~~be no assurance that any significant amounts~~ of ~~cash~~Bondurant, ~~will be distributed to the Partnership~~L. ~~Should such distributions occur~~P, ~~the~~Candleridge ~~Limited~~Apartments ~~Partners~~of ~~will~~Waukee, be entitled to receive distributions equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to its capital contributions from the remainderL. ~~Any~~P ~~additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments)~~ and ~~10%~~Logan toPark ~~the General Partner~~Associates, L.P.

~~Risks and Uncertainties~~F-8

AnWNC ~~investment~~HOUSING inTAX ~~the~~CREDIT ~~Partnership~~FUND ~~and the Partnership’s investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership~~III, ~~and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership’s investments~~L. ~~Some of those risks include the following:~~P.

41(A California Limited Partnership)

~~WNC~~NOTES ~~HOUSING~~TO ~~TAX~~FINANCIAL ~~CREDIT~~STATEMENTS ~~FUND~~- ~~III, L.P.~~CONTINUED

(AFor ~~California~~the ~~Limited~~Years ~~Partnership)~~Ended March 31, 2012, 2011 and 2010

~~NOTES~~NOTE TO1 ~~FINANCIAL~~- ~~STATEMENTS~~ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~For~~The following table reflects the ~~Years~~30 ~~Ended~~Local ~~March~~Limited ~~31,~~Partnership ~~2011,~~interests that ~~2010~~were ~~and~~sold ~~2009~~during the year ended March 31, 2012:

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Local Limited Partnership	Debt at 12/31/10		Appraisal Value		Date of Sale		Sales Price		Sales Related Expenses		Gain (loss) on sale
Cherokee Housing	$	589,099	$	335,000		May 1, 2011	$	17,673	$	5,534	$	12,139
Coffeeville Housing		510,375		280,000		May 1, 2011		15,311		5,534		9,777
Coosa County Housing		515,037		350,000		May 1, 2011		15,451		5,534		9,917
Ft. Deposit Housing		669,824		380,000		May 1, 2011		20,095		5,534		14,561
Orange Beach		1,029,413		375,000		May 1, 2011		31,519		5,534		25,985
Wilcam Housing		591,672		450,000		May 1, 2011		17,750		5,534		12,216
Parks I		1,156,121		570,000		May 31, 2011		30,000		3,319		26,681
Cambridge Court		1,235,832		735,000		April 30, 2011		31,056		2,960		28,096
Fairview Village		542,986		260,000		June 30, 2011		30,000		4,301		25,699
Beaumont Elderly Housing		891,637		560,000		August 24, 2011		20,000		3,096		16,904
Chester Associates		653,547		380,000		August 24, 2011		20,000		3,196		16,804
Clinton Terrace, Ltd		716,935		230,000		November 15, 2011		20,000		3,773		16,227
Crockett Manor		784,131		730,000		August 24, 2011		20,000		2,996		17,004
Crockett Manor Senior		961,186		470,000		August 24, 2011		20,000		2,996		17,004
Delta Manor, L.P.		1,180,131		550,000		September 20, 2011		30,000		4,023		25,977
Eupora Apartments		1,148,192		750,000		August 24, 2011		20,000		3,496		16,504
Fox Lake Manor L.P.		345,617		290,000		August 30, 2011		20,000		4,096		15,904
Gulf Coast Apartments		1,265,783		740,000		August 30, 2011		20,000		2,946		17,054

The Low Income Housing Tax Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction. Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership.F-9

~~The~~WNC ~~Partnership~~HOUSING ~~has~~TAX ~~invested~~CREDIT inFUND a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversityIII, ~~poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives~~L. ~~Each Housing Complex is subject to mortgage indebtedness~~P. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.

~~The~~(A ~~ability~~California of Limited ~~Partners to claim tax losses from the~~ Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the Limited Partners could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.)

~~All~~NOTES ofTO ~~the~~FINANCIAL ~~Low~~STATEMENTS ~~Income~~- Housing Tax Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership does not anticipate being allocated a significant amount of Low Income Housing Tax Credits from the Local Limited Partnerships in the future. All Local Limited Partnerships have completed the Compliance Period.CONTINUED

~~Anticipated~~For ~~future and existing cash resources of~~ the ~~Partnership~~Years ~~are~~Ended ~~not~~March ~~sufficient to pay existing liabilities of the Partnership. However~~31, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or their affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable2012, ~~the~~2011 ~~Partnership anticipates that the General Partner~~ and~~/or~~ its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.2010

42NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

WNC HOUSING TAX CREDIT FUND III, L.P.

Local Limited Partnership	Debt at 12/31/10		Appraisal Value		Date of Sale		Sales Price		Sales Related Expenses		Gain (loss) on sale

Gulf Coast of Long Beach		1,296,021		860,000		August 30, 2011		20,000		2,946		17,054
Killbuck, L.P.		712,840		250,000		July 31, 2011		26,471		3,813		22,658
Levelland Manor, L.P.		862,108		420,000		October 1, 2011		25,863		4,893		20,970
Oakdale Senior Housing Ltd.		2,488,037		1,710,000		March 27, 2012		20,000		1,017		18,983
Post Manor, L.P.		603,294		250,000		October 1, 2011		18,099		4,251		13,848
Red Bud Associates		564,272		310,000		August 24, 2011		20,000		3,196		16,804
Steelville Associates		509,551		315,000		August 30, 2011		20,000		3,196		16,804
Tanglewood L.P.		1,015,558		740,000		July 31, 2011		39,706		3,815		35,891
Whitted Forest		828,985		605,000		September 19, 2011		-		7,084		(7,084	)
Wills Point Manor, L.P.		600,357		240,000		October 1, 2011		18,011		4,251		13,760
Woodland Apartments, L.P.		1,193,654		530,000		October 1, 2011		35,810		4,251		31,559
Woodview LP		1,138,704		675,000		August 30, 2011		40,000		8,887		31,113

(AAll ~~California~~Local Limited ~~Partnership)~~Partnerships that were sold for the year ended March 31, 2012 had reached the end of the Compliance Period. Therefore, no risk of credit recapture exists. No distributions will be made to the Limited Partners as a result of these sales.

~~NOTES TO FINANCIAL STATEMENTS~~F-10

~~For~~WNC ~~the~~HOUSING ~~Years~~TAX ~~Ended~~CREDIT ~~March~~FUND 31III, ~~2011, 2010 and 2009~~L.P.

~~NOTE~~(A 1California -Limited ~~ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued~~Partnership)

~~The~~NOTES ~~Partnership~~TO ~~currently~~FINANCIAL ~~has~~STATEMENTS ~~insufficient~~- working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through June 30, 2012.CONTINUED

NoFor ~~trading market for~~ the ~~Partnership~~Years ~~Units~~Ended ~~exists~~March or31, is2012, ~~expected~~2011 ~~to develop. Limited Partners may be unable to sell their Partnership Units except at a discount~~ and should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners.2010

~~Exit~~NOTE ~~Strategy~~1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The ~~Compliance Period for a Housing Complex is generally 15 years~~ following ~~construction~~table orrepresents ~~rehabilitation~~the ~~completion.~~anticipated ~~Associates~~use ~~was one~~ of the ~~first~~cash inproceeds from the ~~industry~~disposition toof ~~offer~~the ~~syndicated~~30 ~~investments~~Local inLimited ~~Low~~Partnerships ~~Income~~that ~~Housing~~were ~~Tax~~disposed ~~Credits. The~~of ~~initial~~for ~~programs~~the ~~have~~year ~~completed~~ended ~~their~~March ~~Compliance~~31, ~~Periods~~2012.

Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. All of the Local Limited Partnerships have completed their 15-year Compliance Period.

Local Limited Partnership	Cash Proceeds		Reimburse GP or affiliates for expenses		Payment of accrued asset management fees		Remaining cash to remain in reserves for future expenses
Cherokee Housing	$	17,673	$	14,672	$	-	$	3,001
Coffeeville Housing		15,311		12,711		-		2,600
Coosa County Housing		15,451		12,828		-		2,623
Ft. Deposit Housing		20,095		16,683		-		3,412
Orange Beach		31,519		26,168		-		5,351
Wilcam Housing		17,750		14,736		-		3,014
Parks I		30,000		15,000		-		15,000
Cambridge Count		31,056		7,500		7,500		16,056
Fairview Village		30,000		20,000		10,000		-
Beaumont Elderly Housing		20,000		7,703		7,726		4,571
Chester Associates		20,000		7,703		7,726		4,571
Clinton Terrace, Ltd		20,000		-		19,000		1,000
Crockett Manor		20,000		7,703		7,726		4,571
Crockett Manor Senior		20,000		7,703		7,726		4,571
Delta Manor, L.P.		30,000		7,340		20,000		2,660
Eupora Apartments		20,000		7,703		7,726		4,571
Fox Lake Manor L.P.		20,000		12,447		-		7,553
Gulf Coast Apartments		20,000		9,917		-		10,083
Gulf Coast of Long Beach		20,000		9,917		-		10,083
Killbuck, L.P.		26,471		10,736		-		15,735
Levelland Manor, L.P.		25,863		3,146		17,717		5,000
Oakdale Senior Housing Ltd.		20,000		-		15,000		5,000
Post Manor, L.P.		18,099		3,146		9,953		5,000
Red Bud Associates		20,000		7,703		7,726		4,571
Steelville Associates		20,000		7,703		7,726		4,571
Tanglewood L.P.		39,706		17,353		-		22,353
Whitted Forest		-		-		-		-
Wills Point Manor, L.P.		18,011		3,146		9,865		5,000
Woodland Apartments, L.P.		35,810		3,147		27,663		5,000
Woodview LP		40,000		21,660		-		18,340

~~Upon~~WNC ~~identifying~~HOUSING ~~those~~TAX ~~Housing~~CREDIT ~~Complexes~~FUND ~~with the highest potential for a successful sale~~III, ~~refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them~~L. ~~The objective is to wind down the Partnership as Low Income Housing Tax Credits are no longer available~~P. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, 2011.

~~Upon~~(A ~~management~~California ~~of the Partnership identifying a Local~~ Limited Partnership for disposition, costs incurred by the Partnership in preparation for the disposition are deferred. Upon the sale of the Local Limited Partnership Interest, the Partnership nets the costs that had been deferred against the proceeds from the sale in determining the gain or loss on sale of the Local Limited Partnership. Deferred disposition costs are included in other assets on the balance sheets.)

AsNOTES ofTO ~~March~~FINANCIAL ~~31,~~STATEMENTS ~~2010,~~- ~~the Partnership had sold its Limited Partnership Interest in Carlinville Associate I, L.P. and Lake Ridge Apartments. The Local Limited Partnerships had completed their Compliance Period.~~CONTINUED

OnFor ~~April 30, 2010,~~ the ~~Partnership~~Years ~~sold~~Ended ~~its~~March ~~limited partner interest in Heritage Colonial Homes, L.P. (“Heritage”). Heritage was appraised with a value of $320,000 and as of December~~ 31, ~~2009~~2012, the outstanding mortgage debt was approximately $499,000. The Local Limited Partnership interest was sold on April 30, 2010 to the Local General Partner. The Compliance Period has been completed, therefore there will be no recapture of Low Income Housing Tax Credits. The outstanding debt was greater than the appraised value but the Partnership did receive $10,000 for its Local Limited Partnership interest. Additionally, the Partnership had incurred $4,594 in expenses related to the disposition which are netted against the proceeds from the sale in calculating the gain on sale of the Local Limited Partnership interest. The net proceeds will remain in the Partnership’s reserves 2011 and at a future date will be used to reimburse the General Partner or an affiliate for operating expenses it paid on behalf of the Partnership. As the investment balance was zero at the time of sale, the Partnership recorded a $5,406 gain on the sale of the Local Limited Partnership interest related to Heritage during the nine months ended December 31, 2010~~. The Compliance period has expired so there is no risk of tax credit recapture.~~

43NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~WNC~~Subsequent ~~HOUSING~~to ~~TAX~~March ~~CREDIT~~31, ~~FUND III~~2012, Lthe Partnership has identified seven Local Limited Partnerships for disposition as listed in the table below.P The Compliance Period for all of these Local Limited Partnerships have expired so there is no risk of recapture to the investors in the Partnership. All dispositions are expected to close on July 31, 2012.

(A California Limited Partnership)

Local Limited Partnership	Debt at 12/31/11		Appraisal value		Value of Local Limited Partnership			Estimated sales price		Actual appraisal expense		Estimated legal expense		Estimated gain on sale
HOI Limited Partnership of Benson	$	888,000	$	825,000	$	(63,000	)	$	36,650	$	1,000	$	385	$	35,265
HOI Limited Partnership of Dallas		1,529,000		1,120,000		(409,000	)		36,650		1,000		385		35,265
Hoi Limited Partnership of Dunn		724,000		445,000		(279,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Kings Mountain		1,091,000		745,000		(346,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Lee		1,739,000		1,340,000		(399,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Sanford		1,610,000		965,000		(645,000	)		36,650		1,000		385		35,265
HOI Limited Partnership of Selma		838,000		805,000		(33,000	)		36,650		1,000		385		35,265

~~NOTES TO FINANCIAL STATEMENTS~~F-12

~~For~~WNC ~~the~~HOUSING ~~Years~~TAX ~~Ended~~CREDIT ~~March~~FUND 31III, ~~2011, 2010 and 2009~~L.P.

~~NOTE~~(A 1California -Limited ~~ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued~~Partnership)

OnNOTES ~~August~~TO ~~26,~~FINANCIAL ~~2010,~~STATEMENTS ~~the~~- Partnership sold Local Limited Partnership Interest in Meadow Run Associates Limited Partnership (“Meadow Run”) to the Local General Partner. Meadow Run was appraised for $1,090,000 and had a mortgage note balance of $1,441,130 as of December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $30,000. The Partnership used the cash proceeds to pay $10,063 of accrued asset management fees and $19,937 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance in this Local Limited Partnership was zero at the time of the sale, therefore a gain of $30,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.CONTINUED

OnFor ~~August 26, 2010,~~ the ~~Partnership~~Years ~~sold~~Ended ~~its~~March Local Limited Partnership Interest in Windermere Associates Limited Partnership (“Windermere”) to the Local General Partner. Windermere was appraised for $1,120,000 and had a mortgage note balance of $1,433,759 as of December 31, ~~2010. The Partnership’s Local Limited Partnership Interest was sold for $30~~2012,~~000. The~~ ~~Partnership~~2011 ~~used the cash proceeds to pay $10,063 of accrued asset management fees~~ and $19,937 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $30,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.2010

OnNOTE ~~September~~1 ~~13, 2010, the Partnership sold its Local Limited Partnership Interest in Candleridge Apartments of Bondurant L.P. (“Candleridge~~-~~Bondurant”)~~ toORGANIZATION ~~the~~AND ~~Local~~SUMMARY ~~General~~OF ~~Partner. Candleridge-Bondurant~~SIGNIFICANT ~~was~~ACCOUNTING ~~appraised for $413~~POLICIES,~~000~~ and had a mortgage note balance of $550,140 at December 31, 2009. The Partnership’s Local Limited Partnership Interest was sold for $25,000. The Partnership used the cash proceeds to pay $21,000 of accrued fees and expenses due to General Partner and affiliates and is retaining the remaining $4,000 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $25,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.continued

OnMethod ~~September~~of ~~13,~~Accounting ~~2010,~~For ~~the~~Investments ~~Partnership sold its Local Limited Partnership Interest~~ in ~~Candleridge Apartments of Waukee L.P. (“Candleridge-Waukee”) to the~~ Local ~~General Partner. Candleridge-Waukee was appraised for $589,000 and had a mortgage note balance of $606,189 at December 31, 2009. The Partnership’s Local~~ Limited Partnership Interest was sold for $25,000. The Partnership used the cash proceeds to pay $21,000 of accrued fees and expenses due to General Partner and affiliates and is retaining the remaining $4,000 in reserves for future operating expenses. The Partnership’s investment balance was zero at the time of the sale, therefore a gain of $25,000 was recorded for the year ended March 31, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Partnerships

OnThe ~~December~~Partnership ~~31,~~accounts ~~2010,~~for ~~the~~its ~~Partnership~~investments ~~sold~~in ~~its~~ Local Limited ~~Partnership~~Partnerships using ~~Interest~~the inequity ~~Logan~~method ~~Park~~of ~~Associates~~accounting, ~~Limited~~whereby the Partnership ~~(“Logan~~adjusts ~~Park”)~~its toinvestment balance for its share of the Local ~~General~~Limited Partnerships’ ~~Partner. Logan~~results ~~Park~~of ~~was~~operations ~~appraised~~and for ~~$810,000~~any contributions made and ~~had~~distributions areceived. ~~mortgage~~The ~~note~~Partnership ~~balance~~reviews ofthe carrying ~~$2,182,348~~amount atof ~~December~~an ~~31,~~individual ~~2009. The~~investment ~~Partnership’s~~in a Local Limited Partnership ~~Interest was sold~~ for ~~$30,000. The~~possible ~~Partnership~~impairment ~~used~~at ~~the~~least ~~cash~~annually ~~proceeds~~or towhenever events ~~pay~~or ~~$20,000~~changes ofin ~~accrued~~circumstances ~~fees~~indicate ~~and~~that ~~expenses~~the ~~due~~carrying toamount ~~General~~of ~~Partner~~such ~~and~~investment ~~affiliates~~may ~~and~~not isbe ~~retaining~~recoverable. ~~the~~Recoverability of ~~remaining~~such ~~$10,000~~investment inis ~~reserves~~measured ~~for~~by ~~future~~the ~~operating~~estimated ~~expenses. The~~value ~~Partnership’s~~derived ~~investment~~by ~~balance~~management, ~~was~~generally ~~zero~~consisting atof the ~~time~~sum of the ~~sale.~~remaining ~~The~~future Low ~~purchase~~Income ~~price~~Housing ofTax ~~$30,000~~Credits ~~was~~estimated ~~partially~~to ~~offset~~be byallocated ato ~~$3,500~~the ~~appraisal~~Partnership ~~that~~and ~~was~~the ~~performed~~estimated ~~prior~~residual value to the ~~sale~~Partnership. If ~~and~~an ~~$700~~investment ofis ~~legal~~considered ~~fees~~to ~~related~~be toimpaired, the ~~sale~~Partnership ~~resulting~~reduces the carrying value of its investment in aany ~~$25,800~~such ~~gain~~Local ~~being~~Limited Partnership. ~~recorded~~The ~~during~~accounting policies of the ~~year~~Local ~~ended~~Limited ~~March~~Partnerships, 31generally, ~~2011.~~are Noexpected ~~cash~~to ~~distribution will~~ be ~~made~~consistent towith those of the ~~Limited~~Partnership. ~~Partners~~Costs asincurred aby ~~result~~the ofPartnership ~~this~~in ~~sale. The~~acquiring ~~Compliance~~the ~~Period~~investments ~~has~~are ~~expired~~capitalized soas ~~there~~part isof nothe ~~risk~~investment ofand ~~tax~~were being ~~credit~~amortized ~~recapture~~over to30 ~~the~~years ~~investors~~(See inNotes ~~the~~2 ~~Partnership~~and 3).

44"Equity in losses of Local Limited Partnerships" for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.

~~WNC~~Distributions ~~HOUSING~~received ~~TAX~~from ~~CREDIT~~the ~~FUND~~Local ~~III,~~Limited LPartnerships are accounted for as a reduction of the investment balance.P Distributions received after the investment has reached zero are recognized as distribution income.

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A ~~California~~VIE is ~~Limited~~a ~~Partnership~~legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

~~NOTES~~Based TOon ~~FINANCIAL~~this ~~STATEMENTS~~guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership's interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership's balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.

~~For the Years Ended March 31, 2011, 2010 and 2009~~F-13

~~NOTE~~WNC 1HOUSING -TAX ~~ORGANIZATION~~CREDIT ~~AND~~FUND ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~III, ~~continued~~L.P.

On(A ~~November~~California 18, 2010, the Partnership filed preliminary consent solicitation materials with the SEC regarding the adoption of a plan of liquidation. Definitive materials were filed with the SEC on December 2, 2010. Materials were disseminated to the Limited ~~Partners on December 2, 2010. The~~ Partnership sought approval to have a formal plan of liquidation of selling its limited partnership interests or selling the underlying Housing Complexes of each of the Local Limited Partnerships. On December 20, 2010, the Partnership sent a letter to the Limited Partners reminding them that a proxy was mailed to them and a vote was requested. On January 19, 2011, the Partnership received the majority vote in favor of the plan for dissolution.)

~~The~~NOTES ~~Partnership~~TO isFINANCIAL ~~engaging~~STATEMENTS ~~third~~- party appraisers to appraise several of the Local Limited Partnerships in this Partnership. The appraisal is one of the preliminary steps that need to be completed in order to move forward with the approved liquidation plan. Expenses incurred for the appraisals, or any other disposition related expenses the Partnership incurs, are being capitalized and will remain on the balance sheet until the respective Local Limited Partnership is sold. At the time of disposition the capitalized costs will be netted with any sale proceeds that are received in order to calculate the net gain or loss on the disposition.CONTINUED

AsFor ofthe Years Ended March 31, ~~2011~~2012, ~~the~~2011 ~~seven following Local Limited Partnerships were identified for disposition~~ and ~~all six Local Limited Partnership Interests were sold on May 1, 2011.~~2010

~~The~~NOTE ~~Partnership~~1 ~~sold~~- ~~its~~ORGANIZATION ~~Local~~AND ~~Limited~~SUMMARY ~~Partnership~~OF ~~Interest~~SIGNIFICANT inACCOUNTING ~~Cherokee Housing~~POLICIES, Ltd. (“Cherokee”) to the Local General Partner for $17,673. Cherokee was appraised for $335,000 and had a mortgage note balance of $589,099 at December 31, 2010. The Partnership will use the cash proceeds to pay $14,672 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $3,001 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $12,322 will be recorded during the three months ended June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.continued

~~The~~Use Partnership also sold its Local Limited Partnership Interest in Coffeeville Housing, Ltd. (“Coffeeville”) to the Local General Partner for $15,311. Coffeeville was appraised for $280,000 and had a mortgage note balance of $510,375 at December 31, 2010. The Partnership will use the cash proceeds to pay $12,711 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $2,600 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $9,960 will be recorded during the three months ended June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Estimates

The ~~Partnership~~preparation ~~also~~of ~~sold~~financial ~~its~~statements ~~Local Limited Partnership Interest~~ in ~~Coosa~~conformity ~~County~~with ~~Housing,~~accounting principles ~~Ltd.~~generally ~~(“Coosa~~accepted ~~County”)~~in to the ~~Local~~United ~~General~~States ~~Partner~~of ~~for~~America ~~$15,451. Coosa~~requires ~~County~~management ~~was~~to ~~appraised~~make ~~for~~estimates ~~$350,000~~ and ~~had~~assumptions athat ~~mortgage note balance of $515,037 at December 31, 2010. The Partnership will use~~ affect the ~~cash~~reported ~~proceeds~~amounts ~~to pay $12,828~~ of ~~accrued~~assets ~~fees~~ and ~~expenses~~liabilities ~~due to General Partner~~ and ~~affiliates~~disclosure ~~and is going to retain the remaining $2,623 in reserves for future operating expenses~~ of ~~the~~contingent ~~Partnership. The~~assets ~~Partnership’s~~and ~~investment~~liabilities ~~balance was zero~~ at the ~~time~~date of the ~~sale~~financial statements, and the ~~Partnership~~reported ~~incurred~~amounts ~~appraisal expenses~~ of ~~$3,063,~~revenues ~~legal~~and expenses ~~of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $10,100 will be recorded~~ during the ~~three~~reporting ~~months ended June 30, 2011~~period. No ~~cash~~Actual ~~distribution~~results ~~will~~could bematerially ~~made~~differ from tothose ~~the Limited Partners as a result of this sale~~estimates. ~~The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.~~

45Cash and Cash Equivalents

~~WNC~~The ~~HOUSING~~Partnership ~~TAX~~considers ~~CREDIT~~all ~~FUND~~highly ~~III~~liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of March 31, L2012 and 2011, the Partnership had no cash equivalents.P.

(AReporting ~~California~~Comprehensive ~~Limited Partnership)~~Income

~~NOTES~~The TOPartnership ~~FINANCIAL~~had ~~STATEMENTS~~no items of other comprehensive income for the periods presented.

~~For~~Net ~~the~~Loss ~~Years~~Per ~~Ended~~Partnership ~~March 31, 2011, 2010 and 2009~~Unit

~~NOTE~~Net 1loss -per ~~ORGANIZATION~~Partnership ~~AND~~Unit ~~SUMMARY~~includes OFno ~~SIGNIFICANT~~dilution ~~ACCOUNTING~~and ~~POLICIES,~~is ~~continued~~computed by dividing loss available to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.

~~The~~Income Partnership also sold its Local Limited Partnership Interest in Ft. Deposit Housing Ltd. (“Ft. Deposit”) to the Local General Partner for $20,095. Ft. Deposit was appraised for $380,000 and had a mortgage note balance of $669,824 at December 31, 2010. The Partnership will use the cash proceeds to pay $16,683 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $3,412 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $14,744 will be recorded during the three months ended June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Taxes

The Partnership ~~also~~has ~~sold~~elected ~~its Local Limited Partnership Interest in Orange Beach Housing, Ltd. (“Orange Beach”)~~ to ~~the~~be ~~Local~~treated ~~General~~as ~~Partner~~a ~~for~~pass-through ~~$31,519. Orange~~entity ~~Beach was appraised~~ for income ~~$375,000~~tax ~~and~~purposes ~~had a mortgage note balance of $1~~and,~~029,413~~ atas ~~December 31~~such, ~~2010. The~~is ~~Partnership~~not ~~will~~subject ~~use~~to ~~the~~income ~~cash~~taxes. ~~proceeds~~Rather, toall ~~pay~~items ~~$26,168~~ of ~~accrued~~taxable ~~fees~~income, ~~and~~deductions ~~expenses due to General Partner~~ and ~~affiliates~~tax ~~and~~credits are ispassed ~~going~~through to ~~retain~~and ~~the~~are ~~remaining~~reported ~~$5,351~~by inits ~~reserves~~owners ~~for~~on ~~future~~their ~~operating~~respective ~~expenses~~income oftax ~~the Partnership~~returns. The Partnership’s ~~investment~~federal ~~balance~~tax status ~~was~~as ~~zero~~a atpass-through ~~the~~entity ~~time~~is ofbased ~~the~~on ~~sale~~its ~~and~~legal ~~the~~status ~~Partnership~~as ~~incurred~~a ~~appraisal~~partnership. ~~expenses of $3~~Accordingly,~~063,~~ ~~legal~~the ~~expenses~~Partnership ofis ~~$288~~not ~~and~~required ~~has agreed~~ to take ~~pay~~any ~~the~~tax ~~cost~~positions ofin ~~the~~order ~~Local~~to ~~Limited~~qualify ~~Partnership’s~~as ~~final~~a ~~tax~~pass-through ~~return~~entity. ~~which~~The ~~will~~Partnership ~~cost~~is ~~$2,000. Therefore,~~required ato ~~gain~~file ofand ~~$26,168~~does ~~will~~file betax ~~recorded~~returns with ~~during~~ the ~~three~~Internal ~~months~~Revenue ~~ended~~Service ~~June~~and ~~30,~~other ~~2011~~taxing authorities. No ~~cash~~Accordingly, ~~distribution~~these ~~will~~financial bestatements ~~made~~do tonot ~~the~~reflect ~~Limited Partners as~~ a ~~result~~provision for ofincome ~~this~~taxes ~~sale. The~~and ~~Compliance~~the ~~Period~~Partnership has ~~expired so there is~~ no ~~risk~~other of tax ~~credit~~positions ~~recapture~~which tomust ~~the~~be ~~investors~~considered infor ~~the Partnership~~disclosure.

~~The~~Revenue Partnership also sold its Local Limited Partnership Interest in Wilcam Housing, Ltd. (“Wilcam”) to the Local General Partner for $17,750. Wilcam was appraised for $450,000 and had a mortgage note balance of $591,672 at December 31, 2010. The Partnership will use the cash proceeds to pay $14,736 of accrued fees and expenses due to General Partner and affiliates and is going to retain the remaining $3,014 in reserves for future operating expenses of the Partnership. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $3,063, legal expenses of $288 and has agreed to pay the cost of the Local Limited Partnership’s final tax return which will cost $2,000. Therefore, a gain of $12,399 will be recorded during the three months ended June 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.Recognition

OnThe ~~May 31, 2011, the~~ Partnership ~~sold~~is ~~its~~entitled ~~Local Limited Partnership Interest in Parks I Limited Partnership (“Parks”)~~ to anreceive ~~affiliate~~reporting offees from the Local Limited ~~General Partner~~Partnerships. ~~Parks~~ ~~was~~The ~~appraised~~intent ~~for $570,000 and had a mortgage note balance~~ of ~~$1,156,126 at December 31, 2010. The Local Limited Partnership Interest was sold for $30,000,~~ the ~~Partnership~~reporting ~~will use the cash proceeds to pay $15,000 of accrued asset management~~ fees ~~with~~is ~~the balance of $15,000~~ to beoffset ~~retained~~ (in ~~reserves~~part) ~~for~~administrative ~~future~~costs ~~operating~~incurred ~~expenses~~by of the Partnership~~. The~~ in ~~Partnership’s~~corresponding ~~investment~~with ~~balance was zero at~~ the ~~time~~Local ofLimited ~~the~~Partnerships. ~~sale~~Due ~~and~~to the ~~Partnership~~uncertainty ~~incurred appraisal expenses~~ of ~~$2,400 and~~ the ~~legal~~collection ~~expense~~of isthese ~~not yet known. Therefore the estimated gain on this sale will be $27~~fees,~~600,~~ ~~but will be adjusted during~~ the ~~three months ended June 30, 2011 for the legal expense and any other expense that is incurred by the~~ Partnership ~~related~~recognizes reporting tofees ~~this disposition. No cash distribution will be made to the Limited Partners~~ as acollections ~~result~~are ~~of this sale~~made. ~~The Compliance Period has expired so there is no risk of tax credit recapture.~~

46Reclassifications

~~WNC~~Certain ~~HOUSING~~reclassifications ~~TAX~~have ~~CREDIT~~been ~~FUND~~made ~~III,~~to Lthe 2011 and 2010 financial statements to be consistent with the 2012 presentation.P.

~~(A California Limited Partnership)~~F-14

~~NOTES~~WNC TOHOUSING ~~FINANCIAL~~TAX ~~STATEMENTS~~CREDIT FUND III, L.P.

~~For~~(A ~~the~~California ~~Years~~Limited ~~Ended March 31, 2011, 2010 and 2009~~Partnership)

~~NOTE~~NOTES 1TO -FINANCIAL ~~ORGANIZATION~~STATEMENTS ~~AND~~- ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued~~CONTINUED

~~While~~For ~~appraisals have been performed on substantially all of~~ the ~~Local~~Years ~~Limited~~Ended ~~Partnerships, Fairview Village V, Limited Partnership and Village Lane Properties, Limited Partnership have both been identified for disposition as of~~ March 31, ~~2011. Contracts~~2012, ~~are under review by each of the potential purchasers of the Local Limited Partnership Interests for both of these Local Limited Partnerships. The Partnership estimates a closing date of August~~ 2011 ~~for~~and ~~the Local Limited Partnership Interest sales. The purchase price is still under negotiations.~~2010

~~The~~NOTE ~~Partnership~~1 ~~accounts~~- ~~for~~ORGANIZATION ~~its~~AND ~~investments~~SUMMARY inOF ~~Local~~SIGNIFICANT ~~Limited~~ACCOUNTING ~~Partnerships using the equity method of accounting~~POLICIES, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment and were being amortized over 30 years (See Notes 2 and 3).continued

~~"Equity~~Impact ~~in losses~~ of ~~Local~~Recent ~~Limited~~Accounting Partnerships" for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.Pronouncements

~~Distributions~~In ~~received~~September ~~from~~2006, the ~~Local~~FASB ~~Limited~~issued ~~Partnerships~~accounting ~~are~~guidance ~~accounted~~ for asFair Value Measurements, which defines fair value, establishes a ~~reduction~~framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions. In February 2008, the FASB delayed for one year implementation of the ~~investment~~guidance ~~balance~~as it pertains to certain non-financial assets and liabilities. ~~Distributions~~ ~~received~~The ~~after~~Partnership adopted GAAP for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the ~~investment~~effective date was April 1, 2009. The Partnership has ~~reached~~determined ~~zero~~that ~~are~~adoption ~~recognized~~of asthis ~~distribution~~guidance ~~income~~has no material impact on the Partnership’s financial statements.

In ~~accordance~~November ~~with~~2008, the FASB issued accounting guidance ~~for~~on ~~the~~Equity ~~consolidation~~Method Investment ofAccounting ~~variable~~Considerations ~~interest~~that ~~entities,~~addresses ~~the~~how ~~Partnership determines when it should include~~ the ~~assets,~~initial ~~liabilities,~~carrying ~~and~~

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