UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549











FORM
10-Q





(Mark
One)


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





For the
Quarterly Period Ended June 29,
2009





OR





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





For the
Transition Period from  to
____________





Commission
File Number: 0-19217





American Tax Credit
Properties III L.P.


(Exact
Name of Registrant as Specified in its Charter)





Delaware
                    
                    13-3545006(State or Other Jurisdiction of
                    
                    (I.R.S. EmployerIncorporation or Organization)
                    
                    Identification
      No.)





Richman
      Tax Credit Properties III L.P.340
      Pemberwick RoadGreenwich, Connecticut
                    
                    06831(Address
      of Principal Executive Offices)
                    
                    (Zip
      Code)





Registrant’s
Telephone Number, Including Area Code:  (203)
869-0900





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 filing requirements for the
past 90 days.





Yes  x  No  ̈





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





Yes   ̈   No
 ̈





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





Large
Accelerated Filer   ̈  Accelerated
Filer  ̈  Non-Accelerated
Filer  ̈   Smaller
Reporting Company  x





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





Yes  ̈  No
x





As of
August 4, 2009, there are 35,883 units of limited partnership interest
outstanding.





AMERICAN
TAX CREDIT PROPERTIES III L.P.





PART
I - FINANCIAL
INFORMATION





Item
      1. Financial
      Statements.Table of Contents
                      
                      PageBalance
      Sheets
                      
                      3Statements
      of Operations
                      
                      4Statements
      of Cash Flows
                      
                      5Notes
      to Financial Statements
                      
                      7


2


AMERICAN
TAX CREDIT PROPERTIES III L.P.


BALANCE
SHEETS


(UNAUDITED)





June 29,
                
                
                March 30,2009
                
                
                2009ASSETSCash
      and cash equivalents
                
                $
                886,359
                
                
                $
                946,612Prepaid
      expenses
                
                
                1,678Investment
      in local partnerships
                
                
                517,894
                
                
                
                529,970$
                1,405,931
                
                
                $
                1,476,582LIABILITIES
      AND PARTNERS’ DEFICITLiabilitiesAccounts
      payable and accrued expenses
                
                $
                468,695
                
                
                $
                523,447Payable
      to general partner and affiliates
                
                
                3,038,885
                
                
                
                2,934,7193,507,580
                
                
                
                3,458,166Commitments
      and contingenciesPartners’
      deficitGeneral
      partner
                
                
                (2,101,649
                )
                
                
                (1,981,584
                )Limited
      partners (35,883 units of limited partnership interest
      outstanding)
                
                
                —
                
                
                
                —(2,101,649
                )
                
                
                (1,981,584
                )$
                1,405,931
                
                
                $
                1,476,582





See Notes
to Financial Statements.


3


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF OPERATIONS


THREE
MONTHS ENDED JUNE 29, 2009 AND 2008


(UNAUDITED)





2009
              
              
              2008REVENUEInterest
              
              $
              187
              
              
              $
              8,450Other
      income from local partnerships
              
              
              30,017
              
              
              
              21,610TOTAL
      REVENUE
              
              
              30,204
              
              
              
              30,060EXPENSESAdministration
      fees
              
              
              54,670
              
              
              
              55,385Management
      fees
              
              
              54,669
              
              
              
              55,385Professional
      fees
              
              
              31,209
              
              
              
              27,846State
      of New Jersey filing fee
              
              
              4,764
              
              
              
              5,021Printing,
      postage and other
              
              
              2,881
              
              
              
              3,232TOTAL
      EXPENSES
              
              
              148,193
              
              
              
              146,869(117,989
              )
              
              
              (116,809
              )Equity
      in loss of investment in local partnerships
              
              
              (2,076
              )
              
              
              (13,614
              )NET
      LOSS
              
              
              (120,065
              )
              
              
              (130,423
              )Other
      comprehensive loss, net
              
              
              
              
              
              
              (3,426
              )COMPREHENSIVE
      LOSS
              
              $
              (120,065
              )
              
              $
              (133,849
              )NET
      LOSS ATTRIBUTABLE TOGeneral
      partner
              
              $
              (120,065
              )
              
              $
              (130,423
              )Limited
      partners
              
              
              —
              
              
              
              —$
              (120,065
              )
              
              $
              (130,423
              )NET LOSSper unit of
      limited partnership interest (35,883 units of limited partnership
      interest)
              
              $
              —
              
              
              $
              —





See Notes
to Financial Statements.


4


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF CASH FLOWS


THREE
MONTHS ENDED JUNE 29, 2009 AND 2008


(UNAUDITED)





2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIESInterest
      received
                
                $
                187
                
                
                $
                3,620Cash
      paid foradministration
      fees
                
                
                (5,173
                )
                
                
                (2,587
                )professional
      fees
                
                
                (74,073
                )
                
                
                (15,121
                )State
      of New Jersey filing fee
                
                
                (16,369
                )
                
                
                (20,412
                )printing,
      postage and other expenses
                
                
                (4,842
                )
                
                
                (1,861
                )Net
      cash used in operating activities
                
                
                (100,270
                )
                
                
                (36,361
                )CASH
      FLOWS FROM INVESTING ACTIVITIESProceeds
      from maturities/redemptions and sales of investments in
    bonds
                
                
                
                
                
                
                872,000Distributions
      received from local partnerships
                
                
                40,017
                
                
                
                21,610Net
      cash provided by investing activities
                
                
                40,017
                
                
                
                893,610Net
      increase (decrease) in cash and cash equivalents
                
                
                (60,253
                )
                
                
                857,249Cash
      and cash equivalents at beginning of period
                
                
                946,612
                
                
                
                380,660CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                886,359
                
                
                $
                1,237,909SIGNIFICANT
      NON-CASH INVESTING ACTIVITIESUnrealized
      loss on investments in bonds, net
                
                
                
                
                
                $
                (3,426
                )




See
reconciliation of net loss to net cash used in operating activities on page
6.





See Notes
to Financial Statements.


5


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF CASH FLOWS - (continued)


THREE
MONTHS ENDED JUNE 29, 2009 AND 2008


(UNAUDITED)





2009
              
              
              2008RECONCILIATION
      OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIESNet
      loss
              
              $
              (120,065
              )
              
              $
              (130,423
              )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesEquity
      in loss of investment in local partnerships
              
              
              2,076
              
              
              
              13,614Distributions
      from local partnerships classified as other income
              
              
              (30,017
              )
              
              
              (21,610
              )Accretion
      of zero coupon bonds
              
              
              
              
              
              
              (4,830
              )Increase
      in prepaid expenses
              
              
              (1,678
              )
              
              
              (5,021
              )Increase
      in payable to general partner and affiliates
              
              
              104,166
              
              
              
              108,183Increase
      (decrease) in accounts payable and accrued expenses
              
              
              (54,752
              )
              
              
              3,726NET
      CASH USED IN OPERATING ACTIVITIES
              
              $
              (100,270
              )
              
              $
              (36,361
              )





See Notes
to Financial Statements.


6


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS


JUNE
29, 2009


(UNAUDITED)





1.
            Basis
      of Presentation





The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information.  They do not include all
information and footnotes required by GAAP for complete financial
statements.  The results of operations are impacted by the combined
results of operations of the Local Partnerships, which are provided by the Local
Partnerships on an unaudited basis during interim
periods.  Accordingly, the accompanying financial statements are
dependent on such unaudited information.  In the opinion of the
General Partner, the financial statements include all adjustments necessary to
present fairly the financial position as of June 29, 2009 and the results of
operations and cash flows for the interim periods presented.  All
adjustments are of a normal recurring nature.  The results of
operations for the three months ended June 29, 2009 are not necessarily
indicative of the results that may be expected for the entire year.





Recent Accounting
Pronouncements





In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
(“FIN”) No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which
interprets Statement of Financial Accounting Standard (“SFAS”) No. 109,
“Accounting for Income Taxes” (“SFAS 109”).  FIN 48 requires all
taxpayers to analyze all material positions they have taken or plan to take in
all tax returns that have been filed or should have been filed with all taxing
authorities for all years still subject to challenge by those taxing
authorities.  If the position taken is “more-likely-than-not” to be
sustained by the taxing authority on its technical merits and if there is more
than a 50% likelihood that the position would be sustained if challenged and
considered by the highest court in the relevant jurisdiction, the tax
consequences of that position should be reflected in the taxpayer’s GAAP
financial statements.  Earlier proposed interpretations of SFAS 109
had recommended a “probable” standard for recognition of tax consequences rather
than the “more-likely-than-not” standard finally adopted.  Because the
Partnership is a pass-through entity and is not required to pay income taxes,
FIN 48 does not currently have any impact on its financial
statements.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
(“SFAS 157”).  SFAS 157 defines fair value, establishes a framework
for measuring fair value in accordance with GAAP and expands disclosures about
fair value measurements.  SFAS 157 applies to other accounting
pronouncements that require or permit fair value
measurements.  Accordingly, SFAS 157 does not require any new fair
value measurements.  SFAS 157 is effective for fiscal years beginning
after November 15, 2007.  The Partnership adopted SFAS 157
effective March 31, 2008.  On February 6, 2008 the FASB approved the
Financial Staff Position (“FSP”) that defers the effective date of SFAS 157 by
one year for nonfinancial assets and liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis.  The partial adoption of SFAS 157 for financial assets and
liabilities did not have a material impact on the Partnership’s financial
position, results of operations or cash flows.





The
Partnership adopted SFAS 157 as of March 31, 2008, with the exception of the
application of the statement to nonrecurring nonfinancial assets and
nonfinancial liabilities.  Nonrecurring nonfinancial assets and
liabilities for which the Partnership has not applied the provisions of SFAS 157
include investment in local partnerships, which is accounted for under the
equity method of accounting.





SFAS 157
establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value.  These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets for identical assets
or liabilities; Level 2, defined as inputs other than quoted prices for similar
assets or liabilities in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.





Financial
assets accounted for at historical cost which approximates fair value on a
recurring basis as of June 29, 2009 are cash and cash equivalents of $886,359 as
reflected in the accompanying balance sheet.  Cash and cash
equivalents are carried at historical cost which approximates fair value based
on quoted market prices for identical securities (Level 1
inputs).


7


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


JUNE
29, 2009


(UNAUDITED)





1.
            Basis
      of Presentation (continued)





In
February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities - including an amendment of FASB Statement No.
115” (“SFAS 159”).  SFAS 159 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.  SFAS 159 is effective for fiscal
years beginning after November 15, 2007.  On March 31, 2008, the
Partnership adopted SFAS 159 and elected not to apply the provisions of
SFAS 159 to its eligible financial assets and financial liabilities on the
date of adoption.  Accordingly, the initial application of SFAS 159
had no effect on the Partnership’s financial statements.





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS
141R”).  SFAS 141R changes the accounting for acquisitions
specifically eliminating the step acquisition model, changing the recognition of
contingent consideration from being recognized when it is probable to being
recognized at the time of acquisition, and disallowing the capitalization of
transaction costs and delays when restructurings related to acquisitions can be
recognized.  SFAS 141R is effective for fiscal years ending after
December 15, 2008.  The adoption of SFAS 141R has not had an impact on
the Partnership’s financial position or results of operations.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 replaces the concept of minority interest with
noncontrolling interests in subsidiaries.  Noncontrolling interests
will now be reported as a component of equity in the consolidated statement of
financial position.  Earnings attributable to noncontrolling interests
will continue to be reported as a part of consolidated earnings; however, SFAS
160 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement.  In addition, SFAS 160 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity.  SFAS 160
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests.  All other requirements of SFAS 160
shall be applied prospectively.  SFAS 160 is effective for the first
annual reporting period beginning on or after December 15, 2008.  The
adoption of SFAS 160 has not had an impact on the Partnership’s financial
position or results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  The current hierarchy of GAAP is
set forth in the American Institute of Certified Public Accountants (“AICPA”)
Statement on Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles” (“SAS
69”).  SFAS 162 is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles for
nongovernmental entities.  SFAS 162 is effective 60 days following the
Securities and Exchange Commission's (the “SEC”) approval of the Public Company
Accounting Oversight Board’s proposed amendments to SAS 69.  The
Partnership is currently evaluating the impact of SFAS 162 on its financial
statements, but does not believe that the adoption of SFAS 162 will have a
material effect on its financial condition or results of operations since SFAS
162 does not directly impact the accounting principles applied in the
preparation of the Partnership’s financial statements.





In
November 2008, the Emerging Issues Task Force (“EITF”) issued EITF
No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF
08-6”), 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.  EITF 08-6 shall be effective in
fiscal years beginning on or after December 15, 2008, and interim
periods within those fiscal years.  EITF 08-6 shall be applied
prospectively with early application prohibited.  The adoption of EITF
08-6 has not had an impact on the Partnership’s financial position or results of
operations.


8


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


JUNE
29, 2009


(UNAUDITED)





1.
            Basis
      of Presentation (continued)





In April
2009, the FASB issued FSP 107-1 and APB 28-1 “Interim Disclosures about Fair
Value of Financial Instruments.”  The FSP 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.  The FSP is effective for the Partnership as of June 30,
2009 and will not impact the Partnership’s financial condition or results of
operations.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”).  SFAS 165 establishes 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.  SFAS
165 is effective for the Partnership as of June 30, 2009.  The
adoption of SFAS 165 is not expected to have a material impact on the
Partnership’s financial condition or results of operations.





2.
            Investment
      in Local Partnerships





The
Partnership originally acquired limited partner interests (the “Local
Partnership Interests”) in forty-three Local Partnerships representing capital
contributions in the aggregate amount of $29,384,966, which includes voluntary
advances made to a certain Local Partnership.  As of July 22, 2009,
the Partnership holds a Local Partnership Interest in forty Local
Partnerships.





For the
three months ended June 29, 2009, the investment in local partnerships activity
consists of the following:





Investment
      in local partnerships as of March 30, 2009
                  
                  $
                  529,970Equity
      in loss of investment in local partnerships
                  
                  
                  (2,076
                  )*Distributions
      received from Local Partnerships
                  
                  
                  (40,017
                  )Distributions
      classified as other income
                  
                  
                  30,017Investment
      in local partnerships as of June 29, 2009
                  
                  $
                  517,894





*
              Equity
      in loss of investment in local partnerships is limited to the
      Partnership's investment balance in each Local Partnership; any excess is
      applied to other partners' capital in any such Local
      Partnership.




The
Partnership’s investment balance in NP-89 Limited Dividend Housing Association
Limited Partnership (“NP-89”) represents more than 20% of the Partnership’s
total assets as of June 29, 2009 and the equity in loss of investment in local
partnerships reflected above is attributable to NP-89.  The following
financial information represents certain unaudited operating statement data of
NP-89 for the three months ended March 31, 2009:





Revenue
                  
                  $
                  321,674Net
      loss
                  
                  $
                  (2,097
                  )





On July
22, 2009, the Partnership withdrew from Westminster Apartments Limited
Partnership (“Westminster”), in connection with which the Partnership received
$10.  The Partnership’s investment balance in Westminster, after
cumulative equity losses, became zero during the year ended March 30,
1999.





The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property.  As a result, the Property has been vacant since
October 2007.  Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid, representing principal and accrued interest in excess of
$1,885,000 as of June 2009.  The Local General Partner of Queen Lane
further represents that the lender has not issued a notice of default and that
real estate taxes are in arrears approximately $27,000 as of June
2009.  The Local General Partner of Queen Lane is examining the
potential to sell the Property.  The Partnership’s investment balance
in Queen Lane, after cumulative equity losses, became zero during the year ended
March 30, 2001.


9


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


JUNE
29, 2009


(UNAUDITED)





3.
            Additional
      Information





Additional
information, including the audited March 30, 2009 Financial Statements and the
Organization, Purpose and Summary of Significant Accounting Policies, is
included in the Partnership's Annual Report on Form 10-K for the fiscal year
ended March 30, 2009 on file with the Securities and Exchange
Commission.


10


AMERICAN
TAX CREDIT PROPERTIES III L.P.





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





Material Changes in
Financial Condition





As of
June 29, 2009, American Tax Credit Properties III L.P. (the “Registrant”) has
not experienced a significant change in financial condition as compared to March
30, 2009.  Principal changes in assets are comprised of periodic
transactions and adjustments and equity in loss from operations of the local
partnerships (the “Local Partnerships”), which own low-income multifamily
residential complexes (the “Properties”) that qualified for the low-income tax
credit in accordance with Section 42 of the Internal Revenue Code (the
“Low-income Tax Credit”).  During the three months ended June 29,
2009, Registrant received cash from interest revenue and distributions from
Local Partnerships and utilized cash for operating expenses.  Cash and
cash equivalents decreased by approximately $60,000 during the three months
ended June 29, 2009.  During the three months ended June 29, 2009, the
investment in local partnerships decreased as a result of equity in the Local
Partnerships’ net loss for the three months ended March 31, 2009 of $2,076 and
distributions received from Local Partnerships of $10,000 (excluding $30,017 of
distributions classified as other income from local
partnerships).  Accounts payable and accrued expenses includes
deferred administration fees of $440,673 and payable to general partner and
affiliates represents deferred management and administration fees in the
accompanying balance sheet as of June 29, 2009.





Results of
Operations





Registrant’s
operating results are dependent upon the operating results of the Local
Partnerships and are impacted by the Local Partnerships’ policies.  In
addition, the operating results herein are not necessarily the same for tax
reporting.  Registrant accounts for its investment in local
partnerships in accordance with the equity method of
accounting.  Accordingly, the investment is carried at cost and is
adjusted for Registrant’s share of each Local Partnership’s results of
operations and by cash distributions received.  Equity in loss of each
investment in Local Partnership allocated to Registrant is recognized to the
extent of Registrant’s investment balance in each Local
Partnership.  Equity in loss in excess of Registrant’s investment
balance in a Local Partnership is allocated to other partners’ capital in any
such Local Partnership.  As a result, the reported equity in loss of
investment in local partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become
zero.





Cumulative
losses and cash distributions in excess of investment in local partnerships may
result from a variety of circumstances, including a Local Partnership's
accounting policies, subsidy structure, debt structure and operating deficits,
among other things.  In addition, the book value of Registrant’s
investment in each Local Partnership (the “Local Partnership Carrying Value”)
may be reduced if the Local Partnership Carrying Value is considered to exceed
the estimated value derived by management.  Accordingly, cumulative
losses and cash distributions in excess of the investment or an adjustment to a
Local Partnership’s Carrying Value are not necessarily indicative of adverse
operating results of a Local Partnership.





Registrant’s
operations for the three months ended June 29, 2009 and 2008 have not varied
significantly, as reflected by the net losses of $120,065 and $130,423,
respectively.  Other comprehensive loss for the three months ended
June 29, 2008 resulted from a net unrealized loss on investments in bonds of
$3,426.  Registrant’s investments in bonds as reflected in
Registrant’s balance sheet as of March 30, 2008 matured during the three months
ended June 29, 2008.


11


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
2.       Management’s Discussion and
Analysis of Financial Condition and Results of Operations
(continued).





Local Partnership
Matters





Registrant's
primary objective, to provide Low-income Tax Credits to its limited partners
(the “Limited Partners”), has been completed.  The relevant state tax
credit agency allocated each of the Local Partnerships an amount of Low-income
Tax Credits, which are generally available for a ten year period from the year
the Property is placed in service (the “Ten Year Credit Period”).  The
Ten Year Credit Period was fully exhausted with respect to all of the Properties
as of December 31, 2003.  The required holding period of each
Property, in order to avoid Low-income Tax Credit recapture, is fifteen years
from the year in which the Low-income Tax Credits commence on the last building
of the Property (the "Compliance Period").  The Compliance Period of
all of the Local Partnerships had expired as of December 31, 2007.  In
addition, certain of the Local Partnerships entered into agreements with the
relevant state tax credit agencies whereby the Local Partnerships must maintain
the low-income nature of the Properties for a period which exceeds the
Compliance Period (in certain circumstances, up to 50 years from when the
Property is placed in service, but commonly 30 years from the date any such
Property is placed in service), regardless of a sale of the Properties by the
Local Partnerships after the Compliance Period (the “Extended Use
Provisions”).  Although the Extended Use Provisions do not extend the
Compliance Period of the respective Local Partnerships, such provisions limit
the number and availability of potential purchasers of the
Properties.  Accordingly, a sale of a Property may happen well after
the expiration of the Compliance Period and/or may be significantly
discounted.  Registrant is in the process of disposing of its Local
Partnership Interests.  As of July 22, 2009, Registrant owns forty of
the forty-three Local Partnership Interests originally
acquired.  Registrant has served a demand on the local general
partners (the “Local General Partners”) of all remaining Local Partnerships to
commence a sale process to dispose of the Properties.  In the event a
sale cannot be consummated, it is the General Partner’s intention to sell or
assign Registrant’s Local Partnership Interests.  Following the final
disposition of its Local Partnership Interests, Registrant intends to dissolve
and does not intend to conduct any business.  It is uncertain as to
the amount, if any, that Registrant will receive with respect to each specific
Property from such sales or assignments.  There can be no assurance as
to when Registrant will dispose of its remaining Local Partnership
Interests.





The
Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico.  Many of the Local Partnerships receive rental subsidy
payments, including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8").  The subsidy
agreements expire at various times.  Since October 1997, the United
States Department of Housing and Urban Development (“HUD”) has issued a series
of directives related to project based Section 8 contracts that define owners’
notification responsibilities, advise owners of project based Section 8
properties of what their options are regarding the renewal of Section 8
contracts, provide guidance and procedures to owners, management agents,
contract administrators and HUD staff concerning renewal of Section 8 contracts,
provide policies and procedures on setting renewal rents and handling renewal
rent adjustments and provide the requirements and procedures for opting-out of a
Section 8 project based contract.  Registrant cannot reasonably
predict legislative initiatives and governmental budget negotiations, the
outcome of which could result in a reduction in funds available for the various
federal and state administered housing programs including the Section 8
program.  Such changes could adversely affect the future net operating
income (“NOI”) before debt service and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar
subsidies.  Three Local Partnerships’ Section 8 contracts are
currently subject to renewal under applicable HUD guidelines.





The Local
Partnerships have various financing structures which include (i) required debt
service payments ("Mandatory Debt Service") and (ii) debt service payments which
are payable only from available cash flow subject to the terms and conditions of
the notes, which may be subject to specific laws, regulations and agreements
with appropriate federal and state agencies ("Non-Mandatory Debt Service or
Interest").  Registrant has no legal obligation to fund any operating
deficits of the Local Partnerships.





On July
22, 2009, Registrant withdrew from Westminster Apartments Limited Partnership
(“Westminster”), in connection with which Registrant received
$10.  Registrant’s investment balance in Westminster, after cumulative
equity losses, became zero during the year ended March 30,
1999.


12


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
(continued).





The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property.  As a result, the Property has been vacant since
October 2007.  Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid, representing principal and accrued interest in excess of
$1,885,000 as of June 2009.  The Local General Partner of Queen Lane
further represents that the lender has not issued a notice of default and that
real estate taxes are in arrears approximately $27,000 as of June
2009.  The Local General Partner of Queen Lane is examining the
potential to sell the Property.  Registrant’s investment balance in
Queen Lane, after cumulative equity losses, became zero during the year ended
March 30, 2001.





Critical Accounting Policies
and Estimates





The
accompanying financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”), which
requires Registrant to make certain estimates and assumptions.  The
following section is a summary of certain aspects of those accounting policies
that may require subjective or complex judgments and are most important to the
portrayal of Registrant’s financial condition and results of
operations.  Registrant believes that there is a low probability that
the use of different estimates or assumptions in making these judgments would
result in materially different amounts being reported in the accompanying
financial statements.





·
            Registrant
      accounts for its investment in local partnerships in accordance with the
      equity method of accounting.





·
            If
      the book value of Registrant’s investment in a Local Partnership exceeds
      the estimated value derived by management, Registrant reduces its
      investment in any such Local Partnership and includes such reduction in
      equity in loss of investment in local partnerships.  Registrant
      makes such assessment at least annually in the fourth quarter of its
      fiscal year or whenever there are indications that a permanent impairment
      may have occurred.  A loss in value of an investment in a Local
      Partnership other than a temporary decline would be recorded as an
      impairment loss.  Impairment is measured by comparing the
      investment carrying amount to the estimated residual value of the
      investment.





·
            Registrant
      does not consolidate the accounts and activities of the Local
      Partnerships, which are considered Variable Interest Entities under
      Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No.
      46 - Revised, “Consolidation of Variable Interest Entities” (“FIN 46(R)”),
      because Registrant is not considered the primary
      beneficiary.  Registrant’s balance in investment in local
      partnerships represents the maximum exposure to loss in connection with
      such investments.  Registrant’s exposure to loss on the Local
      Partnerships is mitigated by the condition and financial performance of
      the underlying Properties as well as the strength of the Local General
      Partners.





Recent Accounting
Pronouncements





In June
2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes”
(“FIN 48”), which interprets Statement of Financial Accounting Standard (“SFAS”)
No. 109, “Accounting for Income Taxes” (“SFAS 109”).  FIN 48 requires
all taxpayers to analyze all material positions they have taken or plan to take
in all tax returns that have been filed or should have been filed with all
taxing authorities for all years still subject to challenge by those taxing
authorities.  If the position taken is “more-likely-than-not” to be
sustained by the taxing authority on its technical merits and if there is more
than a 50% likelihood that the position would be sustained if challenged and
considered by the highest court in the relevant jurisdiction, the tax
consequences of that position should be reflected in the taxpayer’s GAAP
financial statements.  Earlier proposed interpretations of SFAS 109
had recommended a “probable” standard for recognition of tax consequences rather
than the “more-likely-than-not” standard finally adopted.  Because
Registrant is a pass-through entity and is not required to pay income taxes, FIN
48 does not currently have any impact on its financial
statements.


13


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
(continued).





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
(“SFAS 157”).  SFAS 157 defines fair value, establishes a framework
for measuring fair value in accordance with GAAP and expands disclosures about
fair value measurements.  SFAS 157 applies to other accounting
pronouncements that require or permit fair value
measurements.  Accordingly, SFAS 157 does not require any new fair
value measurements.  SFAS 157 is effective for fiscal years beginning
after November 15, 2007.  Registrant adopted SFAS 157 effective
March 31, 2008.  On February 6, 2008 the FASB approved the Financial
Staff Position (“FSP”) that defers the effective date of SFAS 157 by one year
for nonfinancial assets and liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis.  The
partial adoption of SFAS 157 for financial assets and liabilities did not
have a material impact on Registrant’s financial position, results of operations
or cash flows.





Registrant
adopted SFAS 157 as of March 31, 2008, with the exception of the application of
the statement to nonrecurring nonfinancial assets and nonfinancial
liabilities.  Nonrecurring nonfinancial assets and liabilities for
which Registrant has not applied the provisions of SFAS 157 include investment
in local partnerships, which is accounted for under the equity method of
accounting.





SFAS 157
establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value.  These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets for identical assets
or liabilities; Level 2, defined as inputs other than quoted prices for similar
assets or liabilities in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.





Financial
assets accounted for at historical cost which approximates fair value on a
recurring basis as of June 29, 2009 are cash and cash equivalents of $886,359 as
reflected in the accompanying balance sheet.  Cash and cash
equivalents are carried at historical cost which approximates fair value based
on quoted market prices for identical securities (Level 1
inputs).





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS
141R”).  SFAS 141R changes the accounting for acquisitions
specifically eliminating the step acquisition model, changing the recognition of
contingent consideration from being recognized when it is probable to being
recognized at the time of acquisition, and disallowing the capitalization of
transaction costs and delays when restructurings related to acquisitions can be
recognized.  SFAS 141R is effective for fiscal years ending after
December 15, 2008.  The adoption of SFAS 141R has not had an impact on
Registrant’s financial position or results of operations.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS
160”).  SFAS 160 replaces the concept of minority interest with
noncontrolling interests in subsidiaries.  Noncontrolling interests
will now be reported as a component of equity in the consolidated statement of
financial position.  Earnings attributable to noncontrolling interests
will continue to be reported as a part of consolidated earnings; however, SFAS
160 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement.  In addition, SFAS 160 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity.  SFAS 160
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests.  All other requirements of SFAS 160
shall be applied prospectively.  SFAS 160 is effective for the first
annual reporting period beginning on or after December 15, 2008.  The
adoption of SFAS 160 has not had an impact on Registrant’s financial position or
results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  The current hierarchy of GAAP is
set forth in the American Institute of Certified Public Accountants (“AICPA”)
Statement on Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles” (“SAS
69”).  SFAS 162 is intended to improve financial reporting by
identifying a consistent framework, or hierarchy, for selecting accounting
principles to be used in preparing financial statements that are presented in
conformity with U.S. generally accepted accounting principles for
nongovernmental entities.  SFAS 162 is effective 60 days following the
Securities and Exchange Commission's (the “SEC”) approval of the Public Company
Accounting Oversight Board’s proposed amendments to SAS
69.  Registrant is currently evaluating the impact of SFAS 162 on its
financial statements, but does not believe that the adoption of SFAS 162 will
have a material effect on its financial condition or results of operations since
SFAS 162 does not directly impact the accounting principles applied in the
preparation of Registrant’s financial statements.








14





AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
(continued).





In
November 2008, the Emerging Issues Task Force (“EITF”) issued EITF
No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF
08-6”), 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.  EITF 08-6 shall be effective in
fiscal years beginning on or after December 15, 2008, and interim
periods within those fiscal years.  EITF 08-6 shall be applied
prospectively with early application prohibited.  The adoption of EITF
08-6 has not had an impact on Registrant’s financial position or results of
operations.





In April
2009, the FASB issued FSP 107-1 and APB 28-1 “Interim Disclosures about Fair
Value of Financial Instruments.”  The FSP 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.  The FSP is effective for Registrant as of June 30, 2009
and will not impact Registrant’s financial condition or results of
operations.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”).  SFAS 165 establishes 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.  SFAS
165 is effective for Registrant as of June 30, 2009.  The adoption of
SFAS 165 is not expected to have a material impact on Registrant’s financial
condition or results of operations.





Forward-Looking
Information





As a
cautionary note, with the exception of historical facts, the matters discussed
in this quarterly report on Form 10-Q are “forward-looking” statements within
the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform
Act”).  Forward-looking statements may relate to, among other things,
current expectations, forecasts of future events, future actions, future
performance generally, business development activities, capital expenditures,
strategies, the outcome of contingencies, future financial results, financing
sources and availability and the effects of regulation and
competition.  Words such as “anticipate,” “expect,” “intend,” “plan,”
“seek,” “estimate” and other words and terms of similar meaning in connection
with discussions of future operating or financial performance signify
forward-looking statements.  Registrant may also provide written
forward-looking statements in other materials released to the
public.  Such statements are made in good faith by Registrant pursuant
to the “Safe Harbor” provisions of the Reform Act.  Registrant
undertakes no obligation to update publicly or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.  Such forward-looking statements involve known risks,
uncertainties and other factors that may cause Registrant’s actual results of
operations or actions to be materially different from future results of
operations or actions expressed or implied by the forward-looking
statements.





Item
3. Quantitative and Qualitative
Disclosure About Market Risk.





None.





Item
4. Controls and
Procedures.





Disclosure
controls and procedures are controls and procedures that are designed to ensure
that information required to be disclosed by Registrant in reports that
Registrant files or submits under the Exchange Act is recorded, processed,
summarized and timely reported as provided in SEC rules and
forms.  Registrant periodically reviews the design and effectiveness
of its disclosure controls and procedures, including compliance with various
laws and regulations that apply to its operations.  Registrant makes
modifications to improve the design and effectiveness of its disclosure controls
and procedures, and may take other corrective action, if its reviews identify a
need for such modifications or actions.  In designing and evaluating
the disclosure controls and procedures, Registrant recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.




Registrant
has carried out an evaluation, under the supervision and the participation of
its management, including the Chief Executive Officer and Chief Financial
Officer of the general partner of the General Partner, of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of
the three months ended June 29, 2009.  Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer of the general partner of
the General Partner concluded that Registrant’s disclosure controls and
procedures were effective as of June 29, 2009.


15


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
4T. Internal Control Over
Financial Reporting.





There
were no changes in Registrant’s internal control over financial reporting during
the three months ended June 29, 2009 that have materially affected, or are
reasonably likely to materially affect, Registrant’s internal control over
financial reporting.





16


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Part
II - OTHER
INFORMATION





Item
      1.
            Legal
      Proceedings.





None.





Item 1A.
            Risk
      Factors.





There
have been no material changes from the risk factors previously disclosed in Item
1A of Registrant’s Annual Report on Form 10-K for the year ended March 30,
2009.





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





None.





Item
      3.
            Defaults Upon Senior
      Securities.





None;
      see Item 2 of Part I regarding the mortgage default of a certain Local
      Partnership.





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





None.





Item
      5.
            Other
      Information.





None.





Item
      6.
            Exhibits.





Exhibit
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer.


Exhibit
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer.


Exhibit
32.1 Section 1350 Certification of Chief Executive Officer.


Exhibit
32.2 Section 1350 Certification of Chief Financial Officer.


17





SIGNATURES





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





AMERICAN
      TAX CREDIT PROPERTIES III L.P.(a
      Delaware limited partnership)By:     Richman
      Tax Credit Properties III L.P.,General
PartnerBy:     Richman
      Housing Credits Inc.,general
      partnerDated:
      August 4, 2009
                    
                    /s/David
      SalzmanBy: 
      David SalzmanChief
      Executive OfficerDated:
      August 4, 2009
                    
                    /s/James
      HusseyBy:  James
      HusseyChief
      Financial OfficerDated:
      August 4, 2009
                    
                    /s/Richard
      Paul RichmanBy:  Richard
      Paul RichmanDirector


18