UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB
(Mark One)

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

                                   For the quarterly period ended March 31, 2007

                                       OR

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

                                               Commission File Number: 333-11625

       CAPITAL ALLIANCE INCOME TRUST LTD., A REAL ESTATE INVESTMENT TRUST
       ------------------------------------------------------------------
              (Exact name of small business issuer in its charter)

            Delaware                                  94-3240473
-------------------------------          --------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

 100 Pine Street
 Suite 2450
 San Francisco, California                                        94111
----------------------------------------                  --------------------
 (Address of principal executive office)                       (zip code)

                                 (415) 288-9575
                                 --------------
                           (Issuer's telephone number)

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

Title of each class Name of each exchange on which registered Common Stock $0.01
par value American Stock Exchange

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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 [_]

As of May 2, 2007, the issuer's common shares closed at $8.10 and the aggregate
market value of the issuer's shares of Common Stock, $.01 par value, held by
non-affiliates of the issuer was approximately $2,268,000. At that date
approximately 381,000 common shares were outstanding of which 280,000 common
shares were held by non-affiliates.

Transitional Small Business Disclosure Format.      Yes [_]   No [X]


<PAGE>



                                TABLE OF CONTENTS



PART I

     ITEM 1          CONSOLIDATED FINANCIAL STATEMENTS                     3-5

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS           6-10

     ITEM 2          MANAGEMENT'S DISCUSSION AND ANALYSIS                11-15

     ITEM 3          CONTROLS AND PROCEDURES                                16

PART II

     OTHER INFORMATION                                                   16-17

     SIGNATURES                                                             18

     CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT                       19

     CERTIFICATION OF FORM 10-QSB                                           20










<PAGE>
                                     PART I
                                     ITEM 1.

                              FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                          Consolidated Balance Sheets

                                                                        March 31,
                                                                          2007        December 31,
ASSETS                                                                (Unaudited)        2006
                                                                      ------------    ------------

<S>                                                                   <C>             <C>
    Cash and cash equivalents                                         $    557,831    $    599,943
    Restricted cash                                                         82,917         123,037
    Marketable securities                                                      770             899
    Accounts receivable                                                    841,341       1,000,937
    Allowance for doubtful accounts                                       (230,000)       (230,000)
    Notes receivable:
       Mortgage notes receivable                                        12,923,911      17,121,939
       Allowance for loan losses                                          (562,309)       (782,309)
                                                                      ------------    ------------
          Net notes receivable                                          12,361,602      16,339,630
    Real estate owned                                                    2,011,644         245,000
    Origination costs, net                                                  99,150         124,654
                                                                      ------------    ------------

    Total assets                                                      $ 15,725,255    $ 18,204,100
                                                                      ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

    Liabilities
         Mortgage note holdbacks                                      $     82,917    $    123,037
         Bank loans payable                                              4,418,114       6,767,821
         Other liabilities                                                 207,123         159,016
                                                                      ------------    ------------
    Total liabilities                                                    4,708,154       7,049,874

    Stockholders' equity
    Preferred stock, $.01 par value;1,600,000 shares authorized;             2,138           2,138
           213,820 shares issued and outstanding at March 31, 2007
           and December 31, 2006
    Additional paid in capital - preferred stock                         5,509,728       5,509,728
    Less treasury stock: 16,919 and 16,919 preferred shares at
           March 31, 2007 and December 31, 2006 at cost                   (229,179)       (229,179)

    Common stock, $.01 par value; 2,000,000 shares authorized;               5,001           5,001
           500,032 shares issued and outstanding at March 31, 2007
           and December 31, 2006
    Additional paid in capital - common stock                            9,394,576       9,394,576
    Less treasury stock: 119,500 and 119,500 common shares at
           March 31, 2007 and December 31, 2006 at cost                 (1,699,771)     (1,699,771)
    Accumulated other comprehensive income                                       7             137
    Accumulated deficit                                                 (1,965,399)     (1,828,404)
                                                                      ------------    ------------

    Total stockholders' equity                                          11,017,101      11,154,226
                                                                      ------------    ------------

    Total liabilities and stockholders' equity                        $ 15,725,255    $ 18,204,100
                                                                      ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>
                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                     Consolidated Statements of Operations

                                                                     Three Months Ended
                                                                           March 31
                                                                     2007          2006
                                                                     -----         ----
REVENUES                                                          (Unaudited)  (Unaudited)
                                                                   ---------    ---------
<S>                                                                <C>          <C>
       Interest income                                             $ 338,782    $ 636,274
       Loan origination income                                            --      131,678
       Service release premium                                            --       85,144
       Other income                                                    2,254        7,311
                                                                   ---------    ---------
           Total revenues                                            341,036      860,407

EXPENSES
       Loan servicing fees to related parties                          7,150      139,502
       Management fees to related parties                                 --       81,356
       Interest expense on loans                                     111,682      299,383
       Interest expense on loans from related parties                     --       30,402
       Loan origination costs                                         25,503       68,481
       Provision for loan losses                                     103,649       20,000
       Wages and salaries                                             99,646      152,643
       Taxes                                                           9,175        4,975
       General and administrative                                    118,045      156,693
                                                                   ---------    ---------
             Total expenses                                          474,850      953,435
                                                                   ---------    ---------

LOSS FROM CONTINUING OPERATIONS                                     (133,814)     (93,028)

       Operating expenses of real estate owned                        (3,182)     (44,614)
       Gain (loss) on real estate owned                                   --     (239,850)
                                                                   ---------    ---------
             Total loss and income from asset held for disposal
                   and real estate owned                              (3,182)    (284,464)
                                                                   ---------    ---------

NET LOSS                                                           $(136,996)   $(377,492)
                                                                   =========    =========

PREFERRED DIVIDENDS                                                       --           --
                                                                   ---------    ---------

NET LOSS AVAILABLE TO COMMON                                       $(136,996)   $(377,492)
                                                                   =========    =========

BASIC EARNINGS PER COMMON SHARE                                    $   (0.36)   $   (0.98)
                                                                   =========    =========

DILUTED EARNINGS PER COMMON SHARE                                  $   (0.36)   $   (0.98)
                                                                   =========    =========

DIVIDENDS PAID PER PREFERRED SHARE                                 $      --    $      --
                                                                   =========    =========

DIVIDENDS PAID PER COMMON SHARE                                    $      --    $      --
                                                                   =========    =========

BASIC COMMON SHARES                                                  380,532      384,215
                                                                   =========    =========

DILUTED COMMON SHARES                                                380,532      384,215
                                                                   =========    =========

</TABLE>

          See accompanying notes to consolidated financial statements

                                       4


<PAGE>
<TABLE>
<CAPTION>

                      CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
                     Consolidated Statements of Cash Flows


                                                                              Three Months Ended
                                                                                   March 31
                                                                              2007          2006
                                                                         -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                      <C>            <C>
      Net Loss                                                           $  (136,996)   $  (377,490)
      Adjustments to reconcile net income (loss) to net cash (used in)
        provided by operating activities:
        Provision for loan losses                                            103,649         15,000
        Loss on real estate owned                                                 --        239,850
        (Increase) decrease in accounts receivable                          (164,053)      (590,496)
        (Increase) in other assets                                                --         (3,954)
        Change in due to / due from related party                                 --         83,762
        Increase (decrease) in other liabilities                              48,108        121,071
                                                                         -----------    -----------
          Net cash (used in) operating activities                           (149,292)      (512,257)

CASH FLOWS FROM INVESTING ACTIVITIES
      Sale of (investment in) marketable securities                               --           (485)
      (Increase) decrease in origination costs                                25,503         38,413
      (Increase) decrease in warehousing facilities                               --       (191,100)
      (Increase) decrease in net real estate owned                            (4,144)            --
      (Increase) decrease in net mortgage notes receivable                 2,435,528      4,112,098
                                                                         -----------    -----------
        Net cash provided by investing activities                          2,456,887      3,958,926

CASH FLOWS FROM FINANCING ACTIVITIES
      Payments of bank loans                                              (2,349,707)    (2,769,161)
      Purchase of treasury stock                                                  --       (154,227)
      Preferred dividends paid                                                    --             --
      Common dividends paid                                                       --             --
                                                                         -----------    -----------
        Net cash (used in) by financing activities                        (2,349,707)    (2,923,388)
                                                                         -----------    -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                    (42,112)       523,281

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             599,943      1,626,247
                                                                         -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $   557,831    $ 2,149,528
                                                                         ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
      Cash paid for interest                                             $   115,389    $    25,072
                                                                         ===========    ===========
      Cash paid for taxes                                                $       159    $     5,624
                                                                         ===========    ===========

NON-CASH INVESTING ACTIVITIES
      Foreclosure                                                        $ 1,762,500    $        --
                                                                         ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements


                                       5
<PAGE>
                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


1.   Organization
     ------------

     References to the "Company" refer to Capital Alliance Income Trust Ltd., A
     Real Estate Investment Trust (the "Trust"), a Delaware corporation, and
     Capital Alliance Funding Corporation ("CAFC"), collectively. The Trust was
     formed December 12, 1995 as a mortgage investment trust, which invests
     primarily in loans secured by deeds of trust on one-to-four unit
     residential properties as the loan's primary collateral. On April 11, 1997,
     the Trust formed a non-qualified REIT subsidiary, CAFC, to conduct a
     mortgage banking business. The Trust owns all of CAFC's common and
     preferred shares. As of March 31, 2007 and December 31, 2006, the Trust and
     CAFC are consolidated in the Company's financial statements.

     Prior to December 29, 2006, the Company was externally advised by Capital
     Alliance Advisors, Inc. (the "Former Manager", "CAAI"). On December 29,
     2006, the Former Manager was terminated and the Company became self
     advised.

2.   Summary of significant accounting policies and nature of operations
     -------------------------------------------------------------------

     These financial statements should be read in conjunction with the financial
     statements and notes thereto for the year ended December 31, 2006 filed
     pursuant to 15d-2 on Form 10-KSB with the Securities and Exchange
     Commission.

     Basis of presentation.    The financial information herein is unaudited;
     however, such information reflects all adjustments (consisting of normal,
     recurring adjustments) which are, in the opinion of management, necessary
     for a fair statement of results for the interim period. The results of
     operations for the three months ended March 31, 2007, are not necessarily
     indicative of the results to be expected for the full year. These financial
     statements should be read in conjunction with the Company's audited
     financial statements and the notes thereto included in the Company's Form
     10-KSB filed for the year ending December 31, 2006.

     Income taxes.    The Trust intends at all times to qualify as a real estate
     investment trust ("REIT") for federal income tax purposes, under Sections
     856 through 860 of the Internal Revenue Code of 1986, as amended and
     applicable Treasury Regulations. Therefore, the Trust generally will not be
     subject to federal corporate income taxes if the Trust distributes at least
     90% of its taxable income to its stockholders. To qualify as a REIT, the
     Trust must elect to be so treated and must meet on a continuing basis
     certain requirements relating to the Trust's organization, sources of
     income, nature of assets, and distribution of income to stockholders. The
     Trust must maintain certain records and request certain information from
     its stockholders designed to disclose actual ownership of its stock.

     In addition the Trust must satisfy certain gross income requirements
     annually and certain asset tests at the close of each quarter of its
     taxable year. If the Trust fails to qualify for taxation as a REIT in any
     taxable year, and the relief provisions do not apply, the Trust will be
     subject to tax on its taxable income at regular corporate rates.
     Distributions to stockholders in any year in which the Trust fails to
     qualify will not be deductible by the Trust nor will they be required to be
     made. Unless entitled to relief under specific statutory provisions, the
     Trust will also be disqualified from taxation as a REIT for the four
     taxable years following the year during which qualification was lost. Based
     on the Trust's belief that it has operated in a manner so as to allow it to
     be taxed as a REIT since inception, no provision for federal income taxes
     has been made in the consolidated financial statements.

     Revenue recognition.    Interest income is recorded on the accrual basis of
     accounting in accordance with the terms of the loans. When the payment of
     principal or interest is 90 or more days past due, management reviews the
     likelihood that the loan will be repaid. For these delinquent loans,
     management continues to record interest income and establishes a loan loss
     reserve as necessary to protect against losses in the loan portfolio
     including accrued interest. However, if the mortgage's collateral is
     considered insufficient to satisfy the outstanding balance, after estimated
     foreclosure and selling costs, interest is not accrued. The Trust's loan
     origination income is deferred and recognized over the life of the loan. A
     portion of the Company's loan origination is recognized at origination and
     a portion of the Company's service release premium is recognized at the
     time of the mortgage's sale into the secondary market.

                                       6
<PAGE>
                          CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


2.   Summary of significant accounting policies and nature of operations
     -------------------------------------------------------------------
     (continued)

     Stock options.    During the three months ended March 31, 2006 and 2007 no
     option awards were issued. Therefore, there was no disclosure necessary
     pursuant to FASB Statement No. 123 (revised 2004) ("FAS 123(R)"),
     "Share-Based Payment," which is a revision of FASB Statement No. 123 ("FAS
     123"), "Accounting for Stock-Based Compensation."

     Reclassifications.    Certain 2006 amounts may have been reclassified to
     conform to the 2007 presentation. Such reclassifications had no effect on
     previously reported net income or earnings per share.

     Recent accounting pronouncements.    In December 2004, the FASB issued FASB
     Statement No.153 "Exchange of Non-monetary Assets" ("FAS 153"), an
     amendment of APB Opinion No.29 "Accounting for Non-monetary Transactions".
     The amendments made by FAS 153 are based on the principle that exchanges of
     non-monetary assets should be measured based on the fair value of the
     assets exchanged. Further, the amendments eliminate the narrow exception
     for non-monetary exchanges of similar productive assets and replace it with
     a broader exception for exchanges of non-monetary assets that do not have
     commercial substance. FAS 153 is effective for non-monetary asset exchanges
     occurring in fiscal periods beginning after June 15, 2005. Earlier
     application is permitted for non-monetary asset exchanges occurring in
     fiscal periods after the date of issuance. The provisions of FAS 153 shall
     be applied prospectively. The Company does not believe the adoption of FAS
     153 will have a significant impact on the Company's overall results of
     operations or financial position.

     In March 2005, the FASB issued FASB Interpretation No.47, "Accounting for
     Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 clarifies the
     term conditional asset retirement obligations as used in FASB Statement No.
     143, "Accounting for Asset Retirement Obligations". The Company's adoption
     of FIN 47 did not have a material impact on the consolidated financial
     statements.

     In May 2005, the FASB issued FASB No.154, "Accounting Changes and Error
     Corrections" ("FAS154"), which replaces APB Opinion No.20, "Accounting
     Changes" and FASB No.3 "Reporting Accounting Changes in Interim Financials
     Statements". This Standard retained accounting guidance related to changes
     in estimates, changes in reporting entity and error corrections. However,
     changes in accounting principles must be accounted for retrospectively by
     modifying the financial statements of prior periods unless it is
     impracticable to do so. FAS 154 is effective for accounting changes made in
     fiscal years beginning after December 15, 2005. The Company does not
     believe adoption of FAS 154 will have a material impact on its financial
     condition or results of operations.

3.   Mortgage notes receivable
     -------------------------

     Reconciliation of the mortgage notes receivable balances follows:

                                          Three months ended Twelve months ended
                                            March 31, 2007     December 31, 2006
                                            --------------     ----------------
     Balance, beginning of period           $   17,121,939     $     26,443,616
     Additions during period:
         Originations                                   --           21,542,427
     Deductions during period:
         Collections of principal               (2,422,654)            (120,010)
         Repayments                                (12,874)         (11,223,490)
         Sales                                          --          (19,220,604)
         Foreclosures, net of reserve           (1,762,500)            (300,000)
         Write off of uncollectible loans               --                   --
                                            --------------     ----------------
     Balance, end of period                 $   12,923,911     $     17,121,939
                                            ==============     ================

     Mortgage notes receivable are stated at the principal outstanding. Interest
     on the mortgages is due monthly and principal is usually due as a balloon
     payment at loan maturity.

                                       7
<PAGE>
                         CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


4.   Allowance for loan losses
     -------------------------

     The allowance for loan losses is based on the fair value of the related
     collateral, since all loans subject to this measurement are collateral
     dependent. Management believes a $562,309 and $782,309 allowance for loan
     losses are adequate to protect against potential losses inherent in all
     receivables as of March 31, 2007 and December 31, 2006, respectively.
     Actual losses may differ from the estimate.

     A reconciliation of the allowance for loan losses follows:
<TABLE>
<CAPTION>

                                                         Three months ended   Twelve months ended
                                                             March 31, 2007     December 31, 2006
                                                             --------------    ------------------
<S>                                                             <C>            <C>
     Provision for loan losses
         as reported on consolidated statements of operations   $   103,649    $         522,840
     CAFC consolidation adjustments                                      --             (102,398)
     Write-off of uncollectible loans (net)                        (323,649)             (28,133)
                                                                -----------    -----------------
     Total adjustments to allowance                                (220,000)             392,309
     Balance, beginning of year                                 $   782,309    $         390,000
                                                                -----------    -----------------
     Balance, end of year                                       $   562,309    $         782,309
                                                                ===========    =================
</TABLE>

5.   Real estate owned
     -----------------

     As of December 31, 2006, the Company owned one property. During the three
     months ended March 31, 2006, the Company foreclosed on one property. As of
     March 31, 2007, the Trust owned two properties.

     A reconciliation of the real estate owned account shows its cash and
     non-cash activities follows:
<TABLE>
<CAPTION>
                                                        Three months ended    Twelve months ended
                                                            March 31, 2007      December 31, 2006
                                                        -------------------   -------------------
<S>                                                         <C>                 <C>
     Balance, beginning of period                           $       245,000     $       1,978,350
     Additions
     Foreclosed mortgage notes, net of reserve (non-cash)         1,769,825               300,000
     Assumption of senior debt                                           --                    --
     Repayment of senior debt                                            --              (962,127)
     Writedown on REO                                                (3,181)
     Gain (loss) on sale (non-cash)                                     --               (165,031)
                                                            ---------------     -----------------
                                                                  2,011,644             1,151,192
     Less: Proceeds from sale of real estate owned
     (net of closing costs )                                             --              (906,192)
                                                            ---------------     -----------------
     Balance, end of period                                 $     2,011,644     $         245,000
                                                            ===============     =================
</TABLE>

6.   Related party transactions
     --------------------------

     The Former Manager, which is owned by two directors - Messrs. Swartz and
     Konczal - provided management and advisory services and received fees for
     these services from the Company. The Former Manager also received
     reimbursement from the Company for clerical, direct expenses and
     administrative services at cost based on relative utilization of facilities
     and personnel. On December 29, 2006, the Former Manager's management and
     advisory service contracts were terminated and the Company paid the Former
     Manager a one time termination fee of $500,000.

     During 2006, the Former Manager received a loan origination and servicing
     fee equal to one-twelfth (1/12) of 2% annually of the Gross Mortgage Assets
     of the Trust computed at the end of each month. As of March 31, 2006, the
     Trust capitalized 32.5% of this fee as origination costs and amortized them
     over the average life of the portfolio. The remaining 67.5% of the fee was
     expensed as the portion attributed for servicing. For the three month
     period ended March 31, 2006, the Trust expensed loan origination and
     servicing fees of $139,502.


                                       8
<PAGE>
                         CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)


6.   Related party transactions (continued)
     --------------------------------------

     During 2006, the Former Manager received a management fee equal to
     one-twelfth (1/12) of 1% annually of the book value of mortgages,
     mortgage-related investments and real property ("Gross Mortgage Assets") of
     the Trust plus one-twelfth (1/12) of one-half percent (1/2%) of the book
     value of the non-mortgage assets of the Trust computed at the end of each
     month. The management fee also includes reimbursement for the direct costs
     of overseeing the administration and disposition of real estate owned by
     the Company. The Trust paid the Former Manager $51,636 in management fees
     for the three month period ended March 31, 2006. Within the financial
     statements, the management fees are included in the Management fees to
     related parties.

     During 2006, the Former Manager received a REO management fee for managing
     and servicing the properties that the Company has obtained through
     foreclosure of mortgage notes held. The fee for these services is $500 per
     month for each property. The Trust paid the Former Manager $1,500 in REO
     management fees for the three month period ended March 31, 2006. Within the
     financial statements, 2006's REO management fees are included in the
     Management fees to related parties.

     Effective January 1, 2007, the Trust engaged the Former Manager to continue
     to servicing its mortgage loans and REO. CAAI is paid $50 per month per
     loan file for loan servicing and $500 per month per REO. The Trust paid
     $5,650 in loan servicing fees and $1,500 in REO coordination fees for the
     three months ended March 31, 2007. Within the 2007 financial statements
     loan servicing and REO coordination fees are included in loan servicing
     fees to related parties.

     During 2006, the Former Manager received an administrative fee up to 25
     basis points on mortgages funded for the benefit of the Trust. The Trust
     expensed $28,220 for this cost as of March 31, 2006. These fees are
     reported as part of the management fees.

     On occasion, the Company and its former affiliates had related receivables
     and payables arising from ordinary business transactions. As of March 31,
     2007 and December 31, 2006, the Company had a net payable of $0 and $0 from
     the Former Manager and a net payable of $0 and $0 from Calliance Realty
     Fund, LLC, respectively.

7.   Preferred, common and treasury stock
     ------------------------------------

     The Preferred Shareholders are entitled to a dividend preference in an
     amount equal to an annualized return on the adjusted net capital
     contribution of Preferred Shares at each dividend record date during such
     year (or, if the Directors do not set a record date, as of the first day of
     the month). The annualized return is the lesser of: (a) 10.25%, (b) 1.50 %
     over the Prime Rate (determined on a not less than quarterly basis) or (c)
     the rate set by the Board of Directors. The preferred dividend preference
     is non-cumulative. After declaring dividends for a given year to the
     Preferred Shareholders in the amount of the dividend preference, no further
     dividends may be declared on the Preferred Shares for the subject year,
     until the dividends declared on each Common Share for that year equals the
     dividend preference for each Preferred Share for such year. Any additional
     dividends generally will be allocated such that the amounts of dividends
     per share to the Preferred Shareholders and Common Shareholders for the
     subject year are equal. The Preferred Shareholder's additional dividends,
     if any, are non-cumulative.

     Preferred Shareholders are entitled to receive all liquidating
     distributions until they have received an amount equal to their aggregate
     adjusted net capital contribution. Thereafter, Common Shareholders are
     entitled to all liquidation distributions until the aggregate adjusted net
     capital contributions of all Common Shares has been reduced to zero. Any
     subsequent liquidating distributions will be allocated among Common
     Shareholders and Preferred Shareholders pro rata.

                                       9

<PAGE>
                         CAPITAL ALLIANCE INCOME TRUST
                         A REAL ESTATE INVESTMENT TRUST

                   Notes to Consolidated Financial Statements
                                   (Unaudited)




7.   Preferred, common and treasury stock (continued)
     ------------------------------------------------

     The Preferred Shares are redeemable by a shareholder, subject to the
     consent of the Board of Directors, annually on June 30 ("Redemption Date")
     for written redemption requests received by May 15 of such year. Preferred
     Shares requesting redemption shall cease to be entitled to distribution,
     voting rights and other benefits as of May 30 prior to the Redemption Date.
     However, if the Board of Directors postpones or delays action on Preferred
     Shares redemption request beyond June 30, the date for the suspension of
     such shareholders rights and benefits shall be delayed proportionately. The
     Board of Directors may in its sole discretion deny, delay, postpone or
     consent to any or all requests for redemption. The redemption amount to be
     paid for redemption of such Preferred Shares is the adjusted net capital
     contribution plus unpaid declared and accrued dividends, divided by the
     aggregate net capital contributions plus declared and accrued but unpaid
     dividends attributable to all Preferred Shares outstanding, multiplied by
     the net asset value of the Trust attributable to the Preferred Shares which
     shall be that percentage of the Trust's net asset value that the aggregate
     adjusted net capital contributions of all Preferred Shares bears to the
     adjusted net capital contributions of all Shares outstanding.

     The Trust has the power to redeem or prohibit the transfer of a sufficient
     number of Common and/or Preferred Shares or the exercise of warrants and/or
     options and to prohibit the transfer of shares to persons that would result
     in a violation of the Trust's shareholding requirements. Only with the
     explicit approval of the Trust's Board of Directors may a shareholder own
     more than 9.8% of the total outstanding shares.

8.   Earnings per share
     ------------------

     The following table represents a reconciliation of the numerators and
     denominators of the basic and diluted earnings per common share for the
     three months ended March 31, 2007 and 2006:
<TABLE>
<CAPTION>

                                                                          2007         2006
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
     Numerator:
     Net income (loss)                                                  $(136,996)   $(377,492)
     Preferred dividends                                                       --           --
                                                                        ---------    ---------
     Numerator for basic and diluted earnings per share income (loss)
     available to common stockholders                                   $(136,996)   $(377,492)
                                                                        =========    =========
     Denominator:
         Basic weighted average shares                                    380,532      384,215
         Dilutive effect of options                                            --           --
                                                                        ---------    ---------
         Diluted weighted average shares                                  380,532      384,215
                                                                        =========    =========

     Basic earnings per common share                                    $   (0.36)   $   (0.98)
                                                                        =========    =========
     Diluted earnings per common share                                  $   (0.36)   $   (0.98)
                                                                        =========    =========
</TABLE>






                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       10
<PAGE>

                                     PART I
                                     ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OR
                                PLAN OF OPERATION


Certain statements contained herein are not based on historical information and
certain statements contained in future filings by the Trust with the SEC, in the
Trust's press releases or in the Trust's public and stockholder communications
may not be based on historical facts and are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by reference to a future period or
periods, or by the use of forward-looking terms such as "may", "will", "expect",
"anticipate", or similar terms. Actual results could materially differ from
those in the forward-looking statements due to a variety of factors.

Preparation of the Company's consolidated financial statements is based upon the
operating results of the Trust and CAFC. Management's discussion and analysis of
the results of operations for the three months ended March 31, 2007 and 2006
follows:

OVERVIEW

In May of 1997, the Trust registered its common shares with the Securities and
Exchange Commission under the Securities Act of 1933. On September 30, 1998, the
initial public offering of Common Shares was completed. Since October 1, 1998,
the common shares have been listed on the American Stock Exchange with the
exchange symbol of "CAA".

The Company's financial statements are the Consolidation of the Trust and CAFC.
During the first quarter of 2006, the Trust announced its intent to cease
mortgage loan originations by CAFC and to monetize CAFC's loan inventory. By
year end 2006, any loans not sold into the secondary mortgage market were
transferred to the Trust. During the first quarter of 2007, CAFC was an inactive
taxable subsidiary.

During the fourth quarter of 2006, the Company's shareholders overwhelmingly
voted to terminate the outside management and initiate internal management. On
December 29, 2006, the Former Manager's management and advisory contracts were
terminated and the Company commenced self-management.

2007's first quarter brought tumultuous changes to the
alternative/non-conforming residential mortgage industry. Many companies, both
larger and better capitalized than the Trust suffered insolvency, announced
significant workforce reductions, delayed earnings reports and experienced
precipitous drops in their share price. The most unfortunate companies have
sought bankruptcy protection. Trends which precipitated these changes included
increasing residential mortgage delinquencies, loan foreclosures and the sudden
withdrawal of investor interest in alternative/non-conforming residential
mortgage securities and residential whole loans.

The Trust's residential loan portfolio continues to produce unacceptable levels
of delinquency and non-performing assets. The mortgage portfolio's delinquency
characteristics reduced revenues and adjusted collateral values required
additional loan loss expenses (reserves). In response to these problems and to
maximize shareholder value, Management will to focus on efficient asset
management as the strategic alternative to non-performing loan sales at
depressed valuations. As non-performing assets are monetized, the Company's
investment focus will expand to provide a source of future profitability and
increased shareholder value.


                                       11
<PAGE>
As of January 1, 2007, the Trust had foreclosed real estate owned ("REO") of
$245,000 and approximately 33% of the mortgage loan portfolio were
non-performing assets (as measured by mortgage payments delinquencies in excess
of 60 days). Due to the partial financing of the mortgage loan portfolio with
debt, REO and non-performing mortgage loans were approximately 55% of total
shareholder equity and approximately 104% of common shareholder equity. As of
March 31, 2007, the Trust has REO for sale of approximately $2,011,644 and
approximately 28% of the mortgage loan portfolio is non-performing assets. REO
and non-performing mortgage loans declined to approximately 53% of total
shareholder equity and approximately 101% of common shareholder equity.

The Trust is a real estate investment trust ("REIT") and REIT's are generally
required to distribute at least 90% of their annual taxable income as dividend
payments. During 2005 and 2006, the Trust incurred taxable losses. On account of
these losses, dividend payments were curtailed during 2005. These taxable
losses, also known as Net Operating Losses ("NOL"), allow the Trust to retain
future taxable income equal to the cumulative amount of its NOL balance. The
Internal Revenue Code waives mandatory dividend payments until prior years
taxable losses are recovered.

When the Trust produces pre-NOL taxable income, the Trust's Board of Directors
will need to reconcile the opportunity to strengthen the Company's balance sheet
and the priority of restoring dividend payments. This issue will require
additional review and analysis by the Board of Directors.

The current interest rate environment has also contributed to operating losses
for the Trust. The rise in short term rates increased the cost of carrying a
mortgage portfolio. Meanwhile, the non-conforming residential mortgage market
has attracted better financed competitors willing to offer higher LTV
(loan-to-value) loans or more competitive pricing. These developments have
exerted downward pressure on the Trust's investment yield and investment spread.

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with
accounting principles generally accepted in the United States of America. The
Company's significant accounting policies are described in the notes to the
consolidated financial statements. Certain accounting policies require
management to make significant estimates and assumptions, which have a material
impact on the carrying value of certain assets and liabilities, and the Company
considers these to be critical accounting policies. The estimates and
assumptions used are based on historical experience and other factors, which
management believes to be reasonable under the circumstances. Actual results
could differ significantly from these estimates and assumptions, which could
have a material impact on the carrying value of assets and liabilities at the
balance sheet dates and results of operations for the reporting periods.

The following are critical accounting policies that require the most significant
estimates and assumptions that are particularly susceptible to a significant
change in the preparation of the financial statements and are not presented in
their relative order of importance.

Revenue recognition.   Interest income is recorded on the accrual basis of
accounting in accordance with the terms of the loans. When the payment of
principal or interest is 90 or more days past due, management reviews the
likelihood that the loan will be repaid. For these delinquent loans, management
continues to record interest income and establishes a loan loss reserve as
necessary to protect against losses in the loan portfolio including accrued
interest. However, if the mortgage's collateral is considered insufficient to
satisfy the outstanding balance, after estimated foreclosure and selling costs,
interest is not accrued.

Allowance for loan losses.  A provision for loan losses in based on management's
evaluation of an amount that is adequate to absorb losses inherent in the
existing loan portfolio. The evaluation, which includes a review of all loans on
which full collection may not be reasonably assumed, considers among other
matters, general economic conditions, the fair market value or the estimated net
realizable value of the underlying collateral, past loan loss experience, trends
in loan delinquency and other factors that warrant recognition in providing for
an adequate loan loss allowance.

Allowance for Doubtful Accounts.  An allowance for accounts receivable claims is
based on management's evaluation of the likelihood of collection. The evaluation
is based on the payee's ability and willingness to pay the claim in full as well
as the costs associated with possible legal action.

Real estate owned. Real estate owned represents property acquired in foreclosure
of mortgage notes receivable. The real estate is carried at the lower of the
value of the mortgage note receivable less selling costs on the real estate or
fair market value. Certain estimates and assumptions are required in determining
the cost to sell or in estimating the fair market value of the real estate.

Stock option.   The Trust has issued stock options to certain employees of the
Manager and to its Directors. The stock options issued are accounted for using
the intrinsic-value method. Because the options were issued with exercise prices
no less than the market price of the Trust's common stock on the dates of grant
and because other key terms are fixed, use of the intrinsic-value method results
in the Trust not recognizing compensation expense for these options. If the
terms of these options were changed, variable accounting might need to be used,
and the Trust might then need to begin recognizing compensation expense for the
options.

                                       12
<PAGE>

Operating Strategy.
As a portfolio lender, the Company has invested in California non-conforming
mortgage loans on one-to-four unit residential properties secured by first and
second deeds of trust. Historically, the Trust has limited its mortgage
investment to a cumulative loan to value ratio ("CLTV") that does not exceed 75%
of the underlying collateral. Prospectively, the Company will consider expanding
its investment policy to other REIT permissible assets.

CAFC's loan originating operations were suspended in the first quarter of 2006.
Substantial disposal of CAFC's assets occurred throughout 2006.

Loan Origination.     Since the suspension of loans originations by CAFC, the
Former Manager provided whole loans for the Mortgage Investment Business. On
December 29, 2006, the Former Manager was terminated. Prospectively, portfolio
loans may be acquired from unaffiliated third parties or the Former Manager. The
Former Manager and CAFC accounted for 100% of the loans acquired by the Trust in
2006. The Trust did not acquire any additional mortgages assets in 2007's first
quarter.

Loan Servicing.     Mortgage loan servicing consists of collecting payments from
borrowers, making required advances, accounting for principal and interest
payments, holding borrowed proceeds in escrow until fulfillment of mortgage loan
requirements, contacting delinquent borrowers, supervising foreclosures and
property dispositions in the event of unremedied defaults and performing other
administrative duties. The Company does not acquire or maintain a loan's
servicing rights, unless the mortgage loan is owned by the Company. Although the
Former Manager was terminated from management responsibility, loan servicing is
outsourced to the Former Manager. All or a portion of the aforementioned
servicing responsibilities contracted to the Former Manager, may be
subcontracted by the Former Manager. The Former Manager is paid $50 per month
per loan file for Loan Servicing and $500 per month per REO. The Loan Servicing
Agreement is cancelable with 30 days notice prior to the end of a calendar
quarter.

Commitments and Contingencies.     As of March 31, 2007, the Company's loan
portfolio included 35 loans totaling $12,923,911 of which eight loans totaling
$3,714,684 representing 28% of the loan portfolio were delinquent over two
payments. In assessing the collectibility of these delinquent mortgage loans,
management has established a loan loss reserve of $562,309, if it is necessary
to foreclose upon the mortgage loans.

As of December 31, 2006, the Company's loan portfolio included 39 loans totaling
$17,121,939 of which 12 loans totaling $5,874,559 representing 34% of the loan
portfolio were delinquent over two payments. In assessing the collectibility of
these delinquent mortgage loans, management has established a loan loss reserve
of $782,309, if it is necessary to foreclose upon the mortgage loans.

In assessing the delinquent mortgage loans, management estimates a net gain will
be recognized, if it is necessary to foreclose on the delinquent mortgage loans.
Estimates are based on an anticipated sales price of the foreclosed property
that includes a discount from the latest appraised value of the property, less
the sum of pre-existing liens, costs of disposition, the face amount of the
mortgage loan and accrued interest receivable.

The Trust generally issues loan commitments only on a conditional basis and
generally funds such loans promptly upon removal of any conditions. Accordingly,
the Trust did not have any commitments to fund loans as of March 31, 2007 and
March 31, 2006.

On December 14, 2005 the Trust unconditionally guaranteed CAFC's sale of
mortgage loans to Lehman Brothers Bank. During the first quarter of 2006, two
loans for $2,500,000 were sold to Lehman Bothers Bank pursuant to this
guarantee. During 2005, no loans were sold to Lehman Brothers Bank pursuant to
this guarantee.


                                       13
<PAGE>



As of March 31, 2007, the following table summarizes the Company's outstanding
repayment obligations:
<TABLE>
<CAPTION>

------------------------------       --------------  ---------------------------------------------
         Maximum Other
  Commercial Commitments (a)         Total Amounts
     as of March 31, 2007              Committed       Amount of Commitment Expiration Per Period
-------------------------------      --------------  ---------------------------------------------
                                                     Less than      1 - 3        4 - 5   After 5
                                                      1 year        years        years    years
                                     --------------  ---------  -----------     -------  --------
<S>                                   <C>                <C>     <C>               <C>      <C>
Lines of Credit (b)                   $4,418,114         0       $4,418,114        0        0
Standby Repurchase Obligations            0              0            0            0        0
Total Commercial Commitments          $4,418,114         0       $4,418,114        0        0
</TABLE>

(a)  Commercial commitments are funding commitments that could potentially
     require registrant performance in the event of demands by third parties or
     contingent events, such as under lines of credit extended or under
     guarantees of debt.

(b)  The Mortgage Investment Business outstanding obligations as of March 31,
     2007 due in 1-3 years were $4,418,114.

RESULTS OF OPERATIONS

The historical information presented herein is not necessarily indicative of
future operations.

Three months ended March 31, 2007 and 2006. Revenues for the first quarter
decreased to $341,036 as compared to $860,407 for the same period in the prior
year. The decrease in revenue, during the first three months of 2007 was due to
decreases in interest income of $297,492, in loan origination income of $131,678
and in service release premium of $85,144.

Expenses for the three months ended March 31, 2007 decreased to $474,850 as
compared to $953,435 for the same period in the prior year. The decrease in
expenses during the first three months of 2007 was primarily due to the
transition to self management which resulted in a net decrease of $213,708 in
servicing and management fees and from a decrease in interest expenses of
$218,103.

LIQUIDITY AND CAPITAL RESOURCES

During 2006, the Company had access to a $25,000,000 repurchase facility that
was retired during the second quarter of 2006. During 2005, the Trust also
secured a $7,000,000 term facility, with a November 14, 2007 maturity and a one
year extension option. Management believes that cash flow from operations, the
mortgage loans that are paid off, additional credit facilities that may be
obtained during 2007 and, if necessary, the limited sale of investment mortgages
will be sufficient to meet the liquidity needs of the company's businesses for
the next twelve months.

Three months ended March 31, 2007 and 2006. As of January 1, 2007 and 2006, the
Trust had $599,943 and $1,626,247 of cash and cash equivalents, respectively.
During the three month period ended March 31, 2007, cash and cash equivalents
decreased by $42,112. During the three month period ended March 31, 2006, cash
and cash equivalents increased by $523,280. After taking into effect the various
transactions discussed below, cash and cash equivalents at March 31, 2007 and
2006 were $557,831 and $2,149,527.

The following summarizes the changes in net cash provided by operating
activities, net cash used for investing activities, and net cash provided by
financing activities.

Net cash used in operating activities during the three months ended March 31,
2007 and 2006 was $149,292 and $512,258, respectively. During the first three
months of 2007, net loss used $136,996, an increase in accounts receivable used
$164,053, and the provision for loan losses provided $103,649. During the first
three months of 2006, net loss used $377,492, an increase in accounts receivable
used $590,496 and an increase in other liabilities provided 121,072.

Net cash provided by investing activities for the three months ended March 31,
2007 and 2006 was $2,456,887 and $3,958,926, respectively. During the first
three months of 2007, a net decrease in mortgage notes receivable provided
$2,435,528. During the first three months of 2006, a net decrease in mortgage
notes receivable provided $4,112,098.

Net cash used in financing activities during the three months ended March 31,
2007 and 2006 was $2,349,707 and $2,923,388, respectively. During the first
three months of 2007, net payments of bank loans used cash of $2,349,707.

                                       14
<PAGE>
During the first three months of 2006, net payments of bank loans used cash of
$2,769,161 while treasury stock purchases reduced cash by $154,227.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk. Market risk is the exposure to loss resulting from changes in
interest rates, credit spreads, foreign exchange rates, commodity prices, and
equity prices. The primary market risks to which the Company is exposed are
interest rate risk and credit risk.

Interest risk. Interest rate risk is highly sensitive to many factors, including
governmental, monetary and tax policies, domestic and international economic and
political considerations and other factors beyond the control of the Company.
Changes in the general level of the U.S. Treasury yield curve can have
significant effects on the market value of the Company's portfolio. The majority
of the Company's assets are fixed-rate loans with a spread to U.S. Treasuries.
The Trust's loans are valued on the March 31, 2007 and December 31, 2006 balance
sheet at the lower of cost or market.

As U.S. Treasury securities are priced to a lower yield and/or the spread to
U.S. Treasuries used to price the Company's assets are decreased, the market
value of the Company's portfolio may increase. Conversely, as U.S. Treasury
securities are priced to a higher yield and/or the spread to U.S. Treasuries
used to price the Company's assets is increased, the market value of the
Company's portfolio may decline. Changes in the level of the U.S. Treasury yield
curve can also affect, among other things, the prepayment assumptions used to
value certain of the Trust's loans. In addition, changes in the general level of
the United States Prime Rate or one month LIBOR can affect the Trust's net
interest income. The Company's borrowings are floating rate based on a spread
over the daily Prime Rate or one month LIBOR. As these rates increases or
decreases, the Company's interest expense will move in the same direction.

On account of the relatively short adjusted weighted average maturity of the
Company's portfolio loans (26 months), a variety of financial instruments
available to limit the effects of interest rate fluctuations on its operations
have not been utilized. The use of these types of derivatives (such as interest
rate swaps, caps, floors and other interest rate exchange contracts) to hedge
interest-earnings assets and/or interest-bearing liabilities carry risks,
including the risk that the net losses on a hedge position may exceed the amount
invested in such instruments. As the level of variable rate mortgage financing
of the portfolio increases or the weighted average maturity of the portfolio
increases, the Trust may utilize a variety of financial instruments to limit the
effects of interest rate fluctuations.

Credit risk.   Credit risk is the exposure to loss from loan defaults and
foreclosures. Default and foreclosure rates are subject to a wide variety of
factors, including, but not limited to, property values, supply/demand factors,
construction trends, consumer behavior, regional economics, interest rates, the
strength of the American economy and other factors beyond the control of the
Company.

All loans are subject to a certain probability of default and foreclosure. An
increase in default rates will reduce the book value of the Company's assets and
the Company's earnings and cash flow available to fund operations and pay
dividends.

The Company manages credit risk through the underwriting process, limiting loans
at the time of funding to 75% of the collateral's appraised value, establishing
loss assumptions and carefully monitoring loan performance. Nevertheless, the
Company assumes that a certain portion of its loans will default and adjusts the
allowance for loan losses based on that assumption.

Asset and liability management.   Asset and liability management is concerned
with the timing and magnitude of the maturity of assets and liabilities. In
general, management's strategy is to approximately match the term of the Trust's
liabilities to the portfolio's adjusted weighted average maturity (26 months).

The majority of the Company's assets pay a fixed coupon and the income from such
assets are relatively unaffected by interest rate changes. The Company's
borrowings are currently under a variable rate line of credit that resets
monthly. Given this relationship between assets and liabilities, the Company's
interest rate sensitivity gap is highly negative. This implies that a period of
falling short term interest rates will tend to increase the Company's net
interest income, while a period of rising short term rates will tend to reduce
the Trust's net interest income.



                                       15
<PAGE>

                                     PART I
                                     ITEM 3.

                             CONTROLS AND PROCEDURES

(A) Evaluation of Disclosure Controls and Procedures.   The Chief Executive
Officer and the Principal Accounting Officer of the Trust have, based on their
evaluation of the Company's disclosure controls and procedures within 90 days of
the filing date of this report, evaluated the effectiveness of such controls and
procedures. Based on such evaluations, they have concluded that the Trust's
disclosure controls and procedures have effectively operated to ensure that all
material information relating to the Company and its operations and financial
condition has been made known to them by other officers and employees within the
Company and its Manager on a timely basis.

(B) Changes in Internal Controls.  There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
those controls subsequent to the date of their evaluation. Accordingly, no
corrective actions with regard to such controls or procedures have been
required.

                                     PART II

                                OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The Trust is involved in three legal proceedings as of March 31, 2007.

CAFC was named as defendant in a case filed in the Superior Court, Alameda
County, State of California on December 7, 2004. Plaintiff alleged that CAFC
made a fraudulent loan to him by cross collateralizing two separate properties.
The cross collateralization was necessary to grant the borrower the desired
loan, since there was insufficient equity in the primary property used as
collateral for the loan. Two amended complaints have been filed in addition to
the initial one. The Plaintiff has represented himself. After CAFC was allowed
by the court to foreclose on the primary collateral and the borrowing was paid
in full, Plaintiff, upon the Court's insistence, obtained counsel and has filed
an amended complaint, which is pending. The Plaintiff was deposed in May of 2006
and the discovery process is still ongoing.

On April 14, 2006, the Company was served a summons alleging that the Company
was involved with misleading a former mortgage holder. Upon the satisfaction of
their mortgage claim from the proceeds of a Company provided mortgage, the
former mortgage holder released their escrow settlement to the new purchaser
without re-recording their subordinate mortgage claim. On July 14, 2006, the
property was sold at a Trustee sale and the Company's loan was paid in full. The
former mortgage holder's unrecorded claim was not satisfied at the
aforementioned Trustee sale. The Company believes the former mortgage holder's
action is without merit.

On March 29, 2007, the Company was served a summons alleging that the Company
intentionally interfered with the sale of real property by failing to provide
timely payoff information to consulate the sale and thereby caused Plaintiff to
lose the economic benefits of a sale. The Company believes Plaintiff is acting
without merit and will vigorously defend itself.

ITEM 2.   CHANGES IN SECURITIES

     No common shares and preferred shares were purchased for treasury stock
     during the three month period ended March 31, 2007.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

       None

ITEM 4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

       None






                                       16
<PAGE>



ITEM 5.   OTHER INFORMATION

       None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits
          --------

 Exhibit No.
    3.1      Charter Certificate of Incorporation and Amendment No. 1(1)
    3.2      Bylaws of the Registrant(1)
    3.3      Certificate of Amendment of Certificate of Incorporation(4)
    4.1      Form of Stock Certificate of Common Shares of the Registrant(2)
    10.1     Form of Management Agreement between the Registrant and Capital
             Alliance Advisors, Inc.(1) (terminated December 29, 2006)
    10.2     Form of Indemnity Agreement between the Registrant and its
             Directors and Officers(1)
    10.3     Form of Loan Origination and Loan Servicing Agreement between the
             Registrant and
             Capital Alliance Advisors, Inc.(1) (terminated December 29, 2006)
    23.4     Consent of Landels Ripley & Diamond, LLP(4)
    24.1     Power of Attorney of Thomas B. Swartz(1)
    24.2     Power of Attorney of Dennis R. Konczal(1)
    24.4     Power of Attorney of Stanley C. Brooks(1)
    24.7     Power of Attorney of Richard J. Wrensen(5)


(1)  These exhibits were previously contained in Registrant's Registration
     Statement filed on Form S-11 with the Commission on September 9, 1996, and
     are incorporated by reference herein.

(2)  These exhibits were previously contained in Amendment No. 1 to the
     Registrant's Registration Statement filed on Form S-11 with the Commission
     on January 15, 1997, and are incorporated by reference herein.

(3)  These exhibits were previously contained in Post-Effective Amendment No. 3
     to the Registrant's Registration Statement filed on Form S-11 with the
     Commission on December 10, 1997, and are incorporated by reference herein.

(4)  These exhibits were previously contained in Form 10-Q for the period ending
     June 30, 1997 filed with the Commission on August 14, 1997, and are
     incorporated by reference herein.

(5)  This exhibit was previously contained in Form 10-K for the period ending
     December 31, 1998 filed with the Commission on April 10, 1999, and is
     incorporated by reference herein.


     (b)  Reports on Form 8-K.
          --------------------

          Form 8-K was filed on:

          o    February 2, 2007 due to the press release of February 2, 2007
               regarding the Shareholder letter.
          o    April 5, 2007 due to the press release of April 2, 2007
               announcing the fourth quarter and twelve months period ending
               2006 financial results.
          o    April 9, 2007 due to the press release of April 5, 2007
               announcing the appointment of a new director.
          o    May 7, 2007 due to the press release of May 3, 2007 regarding the
               Shareholder letter.

                                       17
<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                       CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A Real Estate Investment Trust


Dated:    May 10, 2007

                             /s/  Richard J. Wrensen
                             ------------------------
                             Richard J. Wrensen
                             President and Chief Executive Officer







                                       18



<PAGE>



                                  CERTIFICATION

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                              OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Capital Alliance Income Trust Ltd. (the
"Company") on Form 10-QSB for the period ending March 31, 2007 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Richard
J Wrensen, Chief Executive Officer and President of the Company, and I, Andrea
Barney, Principal Accounting Officer and Controller of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

          (1) The Report fully compiles with the requirements of section 13(a)
     or 15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in the Report fairly presents, in all
     material respects, the financial condition and result of operations of the
     Company.


Dated:        May 10, 2007

                                  /s/ Richard J. Wrensen
                                  ----------------------
                                  Richard J. Wrensen
                                  President and Chief Executive Officer


                                  /s/ Andrea Barney
                                  -----------------
                                  Andrea Barney
                                  Principal Accounting Officer and Controller








                                       19

<PAGE>



                                  CERTIFICATION
               OF FORM 10Q OF CAPITAL ALLIANCE INCOME TRUST LTD.,
                     A REAL ESTATE INVESTMENT TRUST FOR THE
                          PERIOD ENDING MARCH 31, 2007

Under Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934

The undersigned each individually certifies that:

1.   I have reviewed this Form 10-QSB, dated May 10, 2007 of Capital Alliance
     Income Trust, Ltd., A Real Estate Investment Trust:

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flow of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers are responsible for establishing
     and maintaining disclosure controls and procedures (as defined in Exchange
     Act Rules 13a-14 and 15d-14) for the registrant and we have:

     o    designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, is made known to us
          by others within those entities, particularly during the period in
          which this report in being prepared;

     o    evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date); and

     o    presented in this report our conclusions about the effectiveness of
          the disclosure controls and procedures based on our evaluation as of
          the Evaluation Date;

5.   The registrant's other certifying officers have disclosed, based on our
     most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors:

     o    all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     o    any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers have indicated in this quarterly
     report, whether there were significant changes in internal controls or in
     other factors that could significantly affect internal controls subsequent
     to the date of our most recent evaluation, including any corrective actions
     with regard to significant deficiencies and material weaknesses.

Dated:        May 10, 2007
                                     /s/ Richard J. Wrensen
                                     ----------------------
                                     Richard J. Wrensen
                                     President and Chief Executive Officer


                                     /s/ Andrea Barney
                                     -----------------
                                     Andrea Barney
                                     Principal Accounting Officer and Controller


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