UNITED STATES
                                           SECURITIES AND EXCHANGE COMMISSION
                                                 Washington, D.C. 20549


                                                       FORM 10-Q

(Mark One)
[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934
 ---                                                                  

For the quarterly period ended December 30, 1996

                                                           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. Employer
incorporation or organization)                        Identification No.)

Richman Tax Credit Properties III L.P.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut
                                                             06830
(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 ___.




<PAGE>


                                        AMERICAN TAX CREDIT PROPERTIES III L.P.

                                             PART I - FINANCIAL INFORMATION


Item 1. Financial Statements


                                                  Table of Contents       


Balance Sheets as of December 30, 1996 (Unaudited) and March 30, 1996 
     (Unaudited)

Statements of Operations for the three and nine month periods ended 
      December 30, 1996 (Unaudited)and December 30, 1995 (Unaudited)

Statements of Cash Flows for the nine months ended December 30, 1996 (Unaudited)
     and December 30, 1995 (Unaudited)

Notes to Financial Statements as of December 30, 1996 (Unaudited)



<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.
                                                     BALANCE SHEETS
                                          DECEMBER 30, 1996 AND MARCH 30, 1996
                                                      (UNAUDITED)

<TABLE>
<CAPTION>



                                                                                   December 30,          March 30,
                                                                        Notes            1996                 1996
                                                                        -----   ----------------------------------
<S>                                                                    <C>      <C>                  <C>
ASSETS

Cash and cash equivalents                                                       $       385,461     $       389,931
Restricted cash                                                           3           1,301,227           1,102,327
Investments in bonds available-for-sale                                   2           2,932,798           3,070,375
Investment in local partnerships                                          3          11,406,727          13,241,594
Interest receivable                                                                      34,516              28,008
                                                                                ------------------   ------------------

                                                                                 $   16,060,729      $   17,832,235
                                                                                 ==============      ==============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities
   Accounts payable and accrued expenses                                        $       806,318      $      717,878
   Payable to general partner                                                           767,403             669,472
   Capital contributions payable                                          3           1,301,227           1,102,327
   Other                                                                                 21,200              25,950
                                                                                ------------------   ------------------

                                                                                      2,896,148           2,515,627
                                                                                ----------------     ----------------

Partners' equity (deficit)
   General partner                                                                     (182,789)           (161,180)
   Limited partners (35,883 units of limited partnership interest
     outstanding)                                                                    13,433,606          15,572,895
   Unrealized loss on investments in bonds available-for-sale, net        2            (86,236)             (95,107)
                                                                                -----------------    ----------------- 

                                                                                     13,164,581           15,316,608
                                                                                ---------------      ---------------

                                                                                 $   16,060,729      $   17,832,235
                                                                                 ==============      ==============









                                           See Notes to Financial Statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                               AMERICAN TAX CREDIT PROPERTIES III L.P.
                                    STATEMENTS OF OPERATIONS
                   THREE AND NINE MONTH PERIODS ENDED DECEMBER 30, 1996 AND 1995
                                                            (UNAUDITED)




                                                          Three Months       Nine Months       Three Months       Nine Months
                                                         Ended December    Ended December     Ended December    Ended December
                                                              30,                30,               30,                30,
                                               Notes             1996              1996               1995             1995
                                               -----    -------------------------------------------------------------------
<S>                                          <C>        <C>               <C>               <C>                <C>
REVENUE

Interest                                                $         79,701   $      237,123   $         78,796    $      252,302
                                                        ----------------   --------------   ----------------    --------------

TOTAL REVENUE                                                      79,701         237,123              78,796          252,302
                                                        ----------------- ---------------   -----------------  ---------------

EXPENSES

Administration fees                                              57,646           172,931             57,645           172,931
Management fees                                                  57,646           172,931             57,645           172,931
Professional fees                                                13,911            27,760             14,435            35,857
Printing, postage and other                                       2,975            14,141              1,923            12,421
Amortization                                                                                                                3,125
                                                        -------------------------------------------------------------------------

TOTAL EXPENSES                                                  132,178            387,763           131,648            397,265
                                                        ---------------   ----------------   ---------------   ----------------

Loss from operations                                            (52,477)         (150,640)           (52,852)         (144,963)

Equity in loss of investment in local
   partnerships                                  3             (601,022)       (2,010,258)          (731,406)       (2,333,213)
                                                        ---------------   ---------------    ---------------   --------------- 

NET LOSS                                                 $     (653,499)    $  (2,160,898)    $     (784,258)    $  (2,478,176)
                                                         ==============     =============     ==============     ============= 

NET LOSS ATTRIBUTABLE TO
   General partner                                      $         (6,535) $       (21,609)  $         (7,843)  $       (24,782)
   Limited partners                                            (646,964)       (2,139,289)          (776,415)       (2,453,394)
                                                        ---------------    --------------    ---------------   --------------- 

                                                         $     (653,499)    $  (2,160,898)    $     (784,258)    $  (2,478,176)
                                                         ==============     =============     ==============     ============= 

NET LOSS per unit of limited partnership
   interest (35,883 units of limited
   partnership interest)                                $         (18.03) $         (59.62) $         (21.64)  $         (68.37)
                                                        ================  ================  ================   ================ 




                                           See Notes to Financial Statements.
</TABLE>




<PAGE>
<TABLE>
<CAPTION>


                                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                                              STATEMENTS OF CASH FLOWS
                                    NINE MONTHS ENDED DECEMBER 30, 1996 AND 1995
                                                    (UNAUDITED)




                                                                                      1996                  1995
                                                                               -------------------   -----------
<S>                                                                            <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Interest received                                                               $       177,063       $       186,771
Cash used for local partnerships for deferred expenses                                   (4,750)               (4,750)
Cash paid for
   administration fees                                                                  (75,000)              (75,000)
   management fees                                                                      (75,000)              (75,000)
   professional fees                                                                    (40,999)              (41,357)
   printing, postage and other expenses                                                 (10,393)                (9,900)
                                                                               ----------------      ----------------- 

Net cash used in operating activities                                                   (29,079)              (19,236)
                                                                               ----------------      ---------------- 

CASH FLOWS FROM INVESTING ACTIVITIES

Maturity/redemption of bonds                                                            200,000
Cash distributions from local partnerships                                               23,509                17,414
Transfer from (to) restricted cash                                                     (198,900)              300,000
Investment in a local partnership                                                                            (300,000)
                                                                               ---------------------- --------------- 

Net cash provided by investing activities                                                24,609                 17,414
                                                                               ----------------      -----------------

Net decrease in cash and cash equivalents                                                (4,470)               (1,822)

Cash and cash equivalents at beginning of period                                        389,931               663,905
                                                                               ----------------      ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $       385,461       $       662,083
                                                                                ===============       ===============

SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized gain on investments in bonds available-for-sale, net                $           8,871      $       287,263
                                                                               =================      ===============

Increase in capital contributions payable                                       $       198,900
                                                                                ===============


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





                                           See Notes to Financial Statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>






                                 AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 STATEMENTS OF CASH FLOWS - (Continued)
                              NINE MONTHS ENDED DECEMBER 30, 1996 AND 1995
                                                  (UNAUDITED)



                                                                                       1996                  1995
                                                                               --------------------  ------------
<S>                                                                            <C>                   <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Net loss                                                                         $  (2,160,898)        $  (2,478,176)

Adjustments to reconcile net loss to net cash used in operating activities

   Equity in loss of investment in local partnerships                                2,010,258             2,333,213
   Amortization of organization costs                                                                          3,125
   Amortization of net premium on investments in bonds                                  12,639                13,980
   Accretion of zero coupon bonds                                                      (66,191)              (63,982)
   Increase in interest receivable                                                      (6,508)              (15,529)
   Increase in payable to general partner                                               97,931                97,931
   Increase in accounts payable and accrued expenses                                    88,440                94,952
   Decrease in other liabilities                                                           (4,750)               (4,750)
                                                                               ------------------    ------------------ 

NET CASH USED IN OPERATING ACTIVITIES                                          $        (29,079)     $        (19,236)
                                                                               ================      ================ 




















                                           See Notes to Financial Statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                                NOTES TO FINANCIAL STATEMENTS
                                                      DECEMBER 30, 1996
                                                         (UNAUDITED)


1.   Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial  information.  They do not include all  information and footnotes
     required by generally accepted accounting principles for complete financial
     statements.  The results of operations  are impacted  significantly  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  December  30,  1996  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  and  nine  month  periods  ended  December  30,  1996  are  not
     necessarily  indicative  of the results that may be expected for the entire
     year.

     Certain  reclassifications  of  amounts  have been made to  conform  to the
     current period presentation.

2.   Investments in Bonds Available-For-Sale

     As of December 30, 1996,  certain  information  concerning  investments  in
     bonds available-for-sale is as follows:

       <S>                                       <C>               <C>                <C>               <C>
                                                                   Gross unrealized        Gross
                                                    Amortized           gains           unrealized          Estimated
       Description and maturity                         cost                               losses          fair value

       Corporate debt securities
          Within one year                         $      77,545    $        --          $     (1,115)     $      76,430
          After one year through five years             383,321             3,535                (22)           386,834
          After five years through ten years            506,713               215            (11,896)           495,032
          After ten years                             1,010,135             4,945            (36,278)           978,802
                                                   ------------     -------------       ------------      -------------

                                                      1,977,714             8,695            (49,311)         1,937,098
                                                   ------------     -------------       ------------       ------------

       U.S. Treasury debt securities
          After ten years                               915,460             --               (35,459)           880,001
                                                  -------------    ----------------     ------------      -------------

       U.S. government and agency securities
          After ten years                               125,860             --               (10,161)           115,699
                                                  -------------    ----------------     ------------      -------------

                                                    $ 3,019,034      $      8,695        $   (94,931)       $ 2,932,798
                                                    ===========      =============       ===========        ===========

</TABLE>



<PAGE>
<TABLE>
<CAPTION>



                                        AMERICAN TAX CREDIT PROPERTIES III L.P.
                                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                                                      DECEMBER 30, 1996
                                                         (UNAUDITED)


3.   Investment in Local Partnerships

The  Partnership  owns  limited  partnership   interests  in  forty-three  Local
     Partnerships  representing capital contributions in the aggregate amount of
     $29,256,495,  of which the Partnership has paid  $27,955,268 and $1,301,227
     is outstanding as of December 30, 1996. Restricted cash in the accompanying
     balance  sheet as of December 30, 1996 includes  such  outstanding  capital
     contributions,  which are payable upon two Local Partnerships' satisfaction
     of specified  conditions  related to operations.  As of September 30, 1996,
     the Local  Partnerships  have outstanding  mortgage and construction  loans
     payable totaling approximately  $87,430,000 and accrued interest payable on
     such loans totaling approximately $1,712,000, which are secured by security
     interests and liens common to mortgage and construction  loans on the Local
     Partnerships' real property and other assets.

     For the nine months  ended  December  30,  1996,  the  investment  in Local
     Partnerships activity consists of the following:

        <S>                                                              <C>                  <C>
        Investment in Local Partnerships as of March 30, 1996                                 $ 13,241,594

        Investment in a Local Partnership during the nine months
            ended December 30, 1996                                                                198,900

        Equity in loss of investment in Local Partnerships for the
             three months ended
               March 31, 1996                                            $  (837,905)
               June 30, 1996                                                (571,331)
               September 30, 1996                                           (601,022)              (2,010,258) (A)
                                                                         -----------                            

        Cash distributions received from Local Partnerships during the
             nine months ended December 30, 1996                                                      (23,509)
                                                                                              --------------- 

        Investment in Local Partnerships as of December 30, 1996                              $ 11,406,727
                                                                                              ============


     (A)  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 amount of such excess losses  applied to other  partners'  capital
          for the three and nine month  periods  ended  September  30,  1996 was
          $91,556 and  $350,502,  respectively,  as  reflected  in the  combined
          statements of operations of the Local  Partnerships  reflected  herein
          Note 3.

     The  combined  unaudited  balance  sheets of the Local  Partnerships  as of
     September  30,  1996  and  December  31,  1995 and the  combined  unaudited
     statements of operations of the Local  Partnerships  for the three and nine
     month  periods  ended  September 30, 1996 and 1995 are reflected on pages 9
     and 10, respectively.

</TABLE>




<PAGE>
<TABLE>
<CAPTION>



                                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                     NOTES TO FINANCIAL STATEMENTS - (Continued)
                                                      DECEMBER 30, 1996
                                                         (UNAUDITED)

3.   Investment in Local Partnerships (continued)

     The combined  balance sheets of the Local  Partnerships as of September 30,
     1996 and December 31, 1995 are as follows:

                                                                              September 30,            December 31,
                                                                                   1996                    1995
                                                                            ------------------     ------------
      <S>                                                        <C>      <C>                     <C>
      ASSETS

      Cash and other investments                                             $     1,244,420         $     1,392,146
      Rental receivable                                                              309,208                 310,169
      Capital contributions receivable                                             1,102,327               1,102,327
      Escrow deposits and reserves                                                 3,944,313               3,403,860
      Land                                                                         3,964,692               3,964,692
      Buildings and improvements (net of accumulated
        depreciation of $22,206,599 and $19,100,770)                              93,357,969              96,409,439
      Intangible assets (net of accumulated amortization of
        $1,013,403 and $948,812)                                                     766,503                 854,837
      Other                                                                          708,449                 747,972
                                                                            ----------------        ----------------
                                                                               $ 105,397,881           $ 108,185,442
                                                                               =============           =============
      LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

      Liabilities

        Accounts payable and accrued expenses                               $        697,280        $        608,574
        Due to related parties                                                     5,129,816               5,363,967
        Mortgage and construction loans                                           87,429,901              87,656,301
        Notes payable                                                                 30,709                  38,848
        Accrued interest                                                           1,711,540               1,524,375
        Other                                                                        574,444                 584,408
                                                                            ----------------        ----------------

                                                                                  95,573,690              95,776,473
                                                                              --------------          --------------
      Partners' equity (deficit) American Tax Credit Properties III L.P.
            Capital contributions, net of distributions
               (includes receivable of $1,102,327)                                28,872,724              28,908,501
            Cumulative loss                                                      (17,664,897)            (15,654,639)
                                                                               -------------           ------------- 
                                                                                  11,207,827              13,253,862
                                                                              --------------          --------------
        General partners and other limited partners, including ATCP II
            Capital contributions, net of distributions                              803,070                 791,395
            Cumulative loss                                                       (2,186,706)             (1,636,288)
                                                                             ---------------         --------------- 
                                                                                  (1,383,636)               (844,893)
                                                                             ---------------        ---------------- 

                                                                                   9,824,191              12,408,969
                                                                             ---------------         ---------------

                                                                               $ 105,397,881           $ 108,185,442
                                                                               =============           =============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                     NOTES TO FINANCIAL STATEMENTS - (Continued)
                                                      DECEMBER 30, 1996
                                                         (UNAUDITED)

3.   Investment in Local Partnerships (continued)

     The combined  statements of operations  of the Local  Partnerships  for the
     three and nine  month  periods  ended  September  30,  1996 and 1995 are as
     follows:

                                                     Three Months        Nine Months        Three Months     Nine Months Ended
                                                   Ended September     Ended September    Ended September      September 30,
                                                         30,                 30,                30,
                                                           1996               1996               1995                1995
                                                  -----------------------------------------------------------------------
      <S>                                         <C>                 <C>                <C>                 <C>
      REVENUE
      Rental                                        $   2,579,221      $   7,709,936       $   2,488,054       $   7,503,231
      Interest and other                                   55,980             235,821              75,643            213,976
                                                  ---------------     ---------------    ----------------    ---------------

      TOTAL REVENUE                                     2,635,201          7,945,757           2,563,697           7,717,207
                                                    -------------     --------------      --------------      --------------

      EXPENSES
      Administrative                                      491,257          1,520,155             496,016           1,526,928
      Utilities                                           176,214            762,780             217,062             735,866
      Operating, maintenance and other                    473,663          1,489,338             460,711           1,472,156
      Taxes and insurance                                 337,661            967,868             305,392             897,711
      Interest (including amortization of
        $18,936, $89,229, $49,052 and $148,334)
                                                          871,083          2,660,463             850,289           2,566,067
      Depreciation                                      1,041,892          3,105,829           1,051,171           3,117,460
                                                    -------------     --------------      --------------      --------------

      TOTAL EXPENSES                                    3,391,770         10,506,433           3,380,641          10,316,188
                                                    -------------      -------------      --------------       -------------

      NET LOSS                                      $    (756,569)     $  (2,560,676)      $    (816,944)      $  (2,598,981)
                                                    =============      =============       =============       ============= 
      NET LOSS ATTRIBUTABLE TO
        American Tax Credit Properties III L.P.     $    (601,022)     $  (2,010,258)      $    (731,406)      $  (2,333,213)
        General partners and other limited
           partners, including ATCP II, which
           includes $91,556, $350,502, $25,081
           and $78,619 of American Tax Credit
           Properties III L.P. loss in excess
           of investment                                 (155,547)           (550,418)           (85,538)           (265,768)
                                                   --------------     ---------------    ---------------     --------------- 

                                                    $    (756,569)     $  (2,560,676)      $    (816,944)      $  (2,598,981)
                                                    =============      =============       =============       ============= 
</TABLE>



     The combined results of operations of the Local  Partnerships for the three
     and nine  month  periods  ended  September  30,  1996  are not  necessarily
     indicative  of the  results  that may be expected  for an entire  operating
     period.

4.   Additional Information

     Additional  information,  including  the audited  March 30, 1996  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, 1996 on file with the  Securities
     and Exchange Commission.


<PAGE>



                                        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 December 30, 1996,  Registrant has not experienced a significant change in
financial  condition as compared to March 30, 1996.  Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from  operations  of the Local  Partnerships.  During the nine months ended
December  30,  1996,   Registrant  received  cash  from  interest  earnings  and
distributions from Local Partnerships and utilized cash for operating  expenses.
During the nine  months  ended  December  30,  1996,  Registrant  recorded a net
unrealized gain on bonds  available-for-sale of approximately $9,000,  resulting
in a net unrealized  loss of  approximately  $86,000  reflected in  Registrant's
partners' equity (deficit) as of December 30, 1996. In addition, during the nine
months ended  December 30, 1996,  Registrant  recorded  accretion of zero coupon
bonds of approximately $66,000 which was partially offset by amortization of net
premium on investments in bonds of approximately  $13,000.  In addition,  during
the nine months ended December 30, 1996,  Registrant  received $200,000 from the
maturity of investments in bonds held for working capital  purposes.  During the
nine months ended  December  30,  1996,  the  investment  in Local  Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for  the  nine  months  ended   September  30,  1996  of  $2,010,258   and  cash
distributions  received from Local Partnerships of $23,509,  partially offset by
an increase in investment in a Local Partnership of $198,900.

The Properties are principally  comprised of subsidized and leveraged low-income
multifamily  residential  complexes  located  throughout  the United  States and
Puerto Rico. The rents of the  Properties,  many of which receive rental subsidy
payments,  including  payments  under  Section 8 of Title II of the  Housing and
Community  Development  Act of 1974 ("Section 8"), are subject to specific laws,
regulations  and  agreements  with  federal  and  state  agencies.  The  subsidy
agreements  expire at various times during and after the  Compliance  Periods of
the  Local  Partnerships.   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 and debt structure of any
or all Local Partnerships currently receiving such subsidy or similar subsidies.
In addition,  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").  In  the  event  rents  are  not
sufficient to cover operating expenses,  Mandatory Debt Service requirements and
other charges,  the Local General  Partners are obligated to provide advances to
cover deficits for a certain period of time up to certain  amounts (the "Deficit
Guarantee").  A Local  General  Partner's  funding of such Deficit  Guarantee is
dependent on its liquidity or ability to borrow the required  funds.  During the
nine months ended  September 30, 1996,  revenue from  operations,  Local General
Partner  advances and reserves of the Local  Partnerships  have  generally  been
sufficient  to  cover  the  operating   expenses  and  Mandatory  Debt  Service.
Substantially all of the Local Partnerships are effectively operating at or near
break even levels,  although certain Local Partnerships'  accounting information
reflects  operating  deficits that do not  represent  cash deficits due to their
mortgage  and  financing   structure  and  the  required  deferral  of  property
management  fees.  However,  as discussed  below,  certain  Local  Partnerships'
operating  information  indicates below break even operations  after taking into
account  their  mortgage and financing  structure  and the required  deferral of
property management fees.

The terms of the partnership  agreement of Justin  Associates (the "Justin Local
Partnership") require the Local General Partners of the Justin Local Partnership
to advance funds to cover operating  deficits up to $266,000 through March, 1997
and to cause the management agent to defer property  management fees in order to
avoid a default under the  mortgage.  The Justin Local  Partnership  incurred an
operating  deficit of approximately  $18,000 for the nine months ended September
30, 1996,  which includes  property  management fees of  approximately  $13,000.
Accordingly, the net operating deficit was approximately $5,000. As of September
30,  1996,  the Local  General  Partners of the Justin  Local  Partnership  have
advanced  approximately  $38,000 under their Deficit  Guarantee  obligation.  Of
Registrant's  total  annual  Low-income  Tax  Credits,  approximately  6.44%  is
allocated from the Justin Local Partnership.





<PAGE>


                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

The terms of the partnership  agreement of Christian  Street Commons  Associates
(the "Christian Street Local Partnership") require the Local General Partners of
the  Christian  Street Local  Partnership  to advance  funds to cover  operating
deficits up to $150,000  through 2008 and to cause the management agent to defer
property  management  fees in order to avoid a default under the  mortgage.  The
Christian   Street  Local   Partnership   incurred  an   operating   deficit  of
approximately  $16,000 for the nine  months  ended  September  30,  1996,  which
includes property management fees of approximately $3,000. Accordingly,  the net
operating deficit was approximately $13,000. As of September 30, 1996, the Local
General  Partners  of the  Christian  Street  Local  Partnership  have  advanced
approximately $40,000 under their Deficit Guarantee obligation.  Of Registrant's
total annual Low-income Tax Credits,  approximately  2.08% is allocated from the
Christian Street Local Partnership.

The terms of the partnership  agreement of Ellinwood  Heights  Apartments,  L.P.
(the "Ellinwood Heights Local  Partnership")  require the Local General Partners
of the Ellinwood  Heights Local  Partnership to advance funds to cover operating
deficits up to $70,000  through 1996 and to cause the management  agent to defer
property  management  fees in order to avoid a default under the  mortgage.  The
Ellinwood   Heights  Local   Partnership   incurred  an  operating   deficit  of
approximately  $16,000 for the nine  months  ended  September  30,  1996,  which
includes property management fees of approximately $12,000. Accordingly, the net
operating  deficit  was  approximately  $4,000.  Of  Registrant's  total  annual
Low-income  Tax  Credits,  approximately  .6% is  allocated  from the  Ellinwood
Heights Local Partnership.

The Local General  Partners of Sydney Engel  Associates (the "Sydney Engel Local
Partnership"),  (of  which  one  is an  affiliate  of  the  general  partner  of
Registrant and owns a one-fourth minority general partner interest), report that
the Sydney Engel Local  Partnership  is  anticipating  closing on its  permanent
mortgages  with the City of New  York.  Upon  closing,  Registrant  will pay the
Sydney  Engel  Local  Partnership  its  outstanding   capital   contribution  of
approximately  $1,216,900,  which includes an additional capital contribution of
approximately $198,900 (included in investment in Local Partnerships and capital
contributions  payable in  Registrant's  balance sheet as of December 30, 1996),
which  reflects the interest  earned by Registrant  on the original  outstanding
capital contribution pending closing of the mortgages.  Registrant has continued
to  receive  the full  Low-income  Tax  Credits  from  the  Sydney  Engel  Local
Partnership as generally  anticipated.  The Local General Partners of the Sydney
Engel Local  Partnership  have utilized the  additional  time to negotiate  more
favorable  terms on the anticipated  permanent  mortgages than those included in
the original commitment.

Results of Operations

Registrant's  operating  results are dependent upon the operating results of the
Local  Partnerships and are  significantly  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  and Emerging  Issues Task
Force  ("EITF")  Issue No. 94-1,  "Accounting  for Tax Benefits  Resulting  from
Investments  in  Affordable  Housing  Projects."  Under  the  equity  method  of
accounting and in accordance with EITF Issue No. 94-1, the investment is carried
at cost which  includes  capital  contributions  payable,  and is  adjusted  for
Registrant's share of the Local  Partnership's  results of operations and by any
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.  Any equity in loss in excess of
Registrant's  investment  balance in a Local  Partnership  is allocated to other
partners'  capital in each such Local  Partnership.  As a result,  the 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. Accordingly,  cumulative losses and cash
distributions  in excess of the  investment  are not  necessarily  indicative of
adverse  operating  results of a Local  Partnership.  See discussion above under
Material Changes in Financial  Condition  regarding  certain Local  Partnerships
currently operating below economic break even levels.



<PAGE>


                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

Three Months Ended December 30, 1996

For the three months  ended  December  30,  1996,  Registrant  had a net loss of
approximately $653,000,  which included an equity in loss of investment in Local
Partnerships of approximately  $601,000 for the three months ended September 30,
1996.  Nonrecognition of losses in excess of Registrant's  investment in certain
Local  Partnerships  during the period was approximately  $92,000.  Registrant's
loss  from   operations  for  the  three  months  ended  December  30,  1996  of
approximately  $52,000 was  attributable  to interest  revenue of  approximately
$80,000,  exceeded by operating  expenses of  approximately  $132,000.  Interest
revenue for future periods is expected to decline as investments in bonds mature
and are utilized for Registrant's  operating expenses and Temporary  Investments
are utilized to make payments of capital contributions to Local Partnerships.

The Local Partnerships' net loss of approximately  $757,000 for the three months
ended  September  30,  1996 was  attributable  to rental  and other  revenue  of
approximately $2,635,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,331,000 and approximately $1,061,000
of depreciation and amortization expenses.

Three Months Ended December 30, 1995

For the three months  ended  December  30,  1995,  Registrant  had a net loss of
approximately $784,000,  which included an equity in loss of investment in Local
Partnerships of approximately  $731,000 for the three months ended September 30,
1995.  Nonrecognition of losses in excess of Registrant's  investment in certain
Local  Partnerships  during the period was approximately  $25,000.  Registrant's
loss  from   operations  for  the  three  months  ended  December  30,  1995  of
approximately  $53,000 was  attributable  to interest  revenue of  approximately
$79,000, exceeded by operating expenses of approximately $132,000.

The Local Partnerships' net loss of approximately  $817,000 for the three months
ended  September  30,  1995 was  attributable  to rental  and other  revenue  of
approximately $2,564,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,281,000 and approximately $1,100,000
of depreciation and amortization expenses.

Nine Months Ended December 30, 1996

For the nine  months  ended  December  30,  1996,  Registrant  had a net loss of
approximately  $2,161,000,  which  included an equity in loss of  investment  in
Local  Partnerships  of  approximately  $2,010,000  for the  nine  months  ended
September  30,  1996.   Nonrecognition  of  losses  in  excess  of  Registrant's
investment in certain  Local  Partnerships  during the period was  approximately
$350,000.  Registrant's  loss from operations for the nine months ended December
30, 1996 of  approximately  $151,000  was  attributable  to interest  revenue of
approximately   $237,000,   exceeded  by  operating  expenses  of  approximately
$388,000.  Interest  revenue  for  future  periods  is  expected  to  decline as
investments in bonds mature and are utilized for Registrant's operating expenses
and Temporary Investments are utilized to make payments of capital contributions
to Local Partnerships.

The Local Partnerships' net loss of approximately $2,561,000 for the nine months
ended  September  30,  1996 was  attributable  to rental  and other  revenue  of
approximately $7,946,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $7,312,000 and approximately $3,195,000
of depreciation and amortization expenses.



<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

Nine Months Ended December 30, 1995

For the nine  months  ended  December  30,  1995,  Registrant  had a net loss of
approximately  $2,478,000,  which  included an equity in loss of  investment  in
Local  Partnerships  of  approximately  $2,333,000  for the  nine  months  ended
September  30,  1995.   Nonrecognition  of  losses  in  excess  of  Registrant's
investment in certain  Local  Partnerships  during the period was  approximately
$79,000.  Registrant's  loss from  operations for the nine months ended December
30, 1995 of  approximately  $145,000  was  attributable  to interest  revenue of
approximately $252,000, exceeded by operating expenses of approximately $394,000
and amortization of organization costs of approximately $3,000.

The Local Partnerships' net loss of approximately $2,599,000 for the nine months
ended  September  30,  1995 was  attributable  to rental  and other  revenue  of
approximately $7,717,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $7,050,000 and approximately $3,266,000
of depreciation and amortization expenses.

Three and Nine Month Periods Ended December 30, 1996 v.
Three and Nine Month Periods Ended December 30, 1995

Registrant's operations for the three months ended December 30, 1996 resulted in
a net loss of approximately  $653,000 as compared to a net loss of approximately
$784,000 for the same period in 1995.  The decrease in net loss is  attributable
to a  decrease  in the equity in loss of  investment  in Local  Partnerships  of
approximately  $130,000  which is  primarily  the result of an  increase  in the
nonrecognition  of losses in excess of Registrant's  investment in certain Local
Partnerships in accordance with the equity method of accounting of approximately
$66,000.

Registrant's  operations for the nine months ended December 30, 1996 resulted in
a  net  loss  of  approximately   $2,161,000  as  compared  to  a  net  loss  of
approximately  $2,478,000  for the same period in 1995. The decrease in net loss
is primarily  attributable  to a decrease in the equity in loss of investment in
Local Partnerships of approximately $323,000 which is primarily the result of an
increase in the nonrecognition of losses in excess of Registrant's investment in
certain Local Partnerships in accordance with the equity method of accounting of
approximately $272,000.




<PAGE>


                                         AMERICAN TAX CREDIT PROPERTIES III L.P.

                                                Part II - OTHER INFORMATION


  Item 1. Legal Proceedings

          None

  Item 2. Changes in Securities

          None

  Item 3. Defaults Upon Senior Securities

          None

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

          None

  Item 5. Other Information

          None

  Item 6. Exhibits and Reports on Form 8-K

          None





<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 thereunto duly authorized.


                                  AMERICAN TAX CREDIT PROPERTIES III L.P.
                                  (a Delaware limited partnership)

                                  By:    Richman Tax Credit Properties III L.P.,
                                         General Partner

                                         by: Richman Housing Credits Inc.,
                                         general partner


Dated:   February 13, 1997               /s/ Richard Paul Richman
         -----------------               ------------------------
                                          Richard Paul Richman
                                          President, Chief Executive
                                          Officer and Director of the
                                          general partner of the
                                          General Partner


Dated:   February 13, 1997               /s/ Neal Ludeke
                                          Neal Ludeke
                                          Vice President and
                                          Treasurer of the general partner
                                          of the General Partner
                                          (Principal Financial and Accounting
                                          Officer of Registrant)