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 September 29, 1998

                                                           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

<TABLE>
Item 1. Financial Statements
                                                                                                     
<S>                                                                                                 <C>
                                                  Table of Contents                                       Page


Balance Sheets as of September 29, 1998 (Unaudited) and March 30, 1998 (Unaudited)...........................

Statements of Operations for the three and six month periods ended September 29, 1998 (Unaudited)
     and September 29, 1997 (Unaudited)......................................................................

Statements of Cash Flows for the six months ended September 29, 1998 (Unaudited)
     and September 29, 1997 (Unaudited)......................................................................

Notes to Financial Statements as of September 29, 1998 (Unaudited)...........................................

</TABLE>





<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.
                                                     BALANCE SHEETS
                                                      (UNAUDITED)

<TABLE>
<S>                                                                     <C>            <C>                <C>
                                                                                  September 29,         March 30,
                                                                        Notes           1998                 1998
                                                                        -----   ---------------      --------------
ASSETS

Cash and cash equivalents                                                       $       494,976     $       419,372
Restricted cash                                                           4              84,433              84,433
Investments in bonds available-for-sale                                   3           3,128,592           3,065,441
Investment in local partnerships                                          4           7,608,502           8,515,114
Interest receivable                                                                      21,136              21,909
                                                                                ---------------      --------------

                                                                                $    11,337,639     $    12,106,269
                                                                                 ==============      ==============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

   Accounts payable and accrued expenses                                        $     1,042,979     $       997,634
   Payable to general partner                                                           995,899             930,614
   Capital contributions payable                                          4              84,433              84,433
   Other                                                                                 11,700              16,450
                                                                                ---------------      --------------

                                                                                      2,135,011           2,029,131
                                                                                ---------------      --------------

Commitments and contingencies                                             4

Partners' equity (deficit)

   General partner                                                                     (225,124)           (214,858)
   Limited partners (35,883 units of limited partnership interest
     outstanding)                                                                     9,242,377          10,258,714
   Accumulated other comprehensive income, net                           2,3            185,375              33,282
                                                                                ----------------     --------------

                                                                                      9,202,628          10,077,138
                                                                                ---------------      --------------

                                                                                $    11,337,639      $   12,106,269
                                                                                ===============      ==============


</TABLE>












                                           See Notes to Financial Statements.





<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<S>                                          <C>            <C>                 <C>               <C>                <C>
                                                        Three Months     Six Months Ended      Three Months     Six Months Ended
                                                       Ended September     September 29,     Ended September      September 29,
                                                             29,                                   29,
                                              Notes           1998               1998               1997                1997
                                              -----   ---------------   ------------------- -----------------    -----------
REVENUE

Interest                                                 $     61,673      $      123,532     $       85,664     $      151,393
Other income from local partnerships                            1,580               5,752                                 4,172
                                                         ------------      --------------     --------------     --------------

TOTAL REVENUE                                                  63,253             129,284             85,664            155,565
                                                         ------------      --------------     ---------------    --------------

EXPENSES

Administration fees                                            57,642             115,285             57,642            115,285
Management fees                                                57,642             115,285             57,642            115,285
Professional fees                                               8,937              21,349              7,349             18,099
Printing, postage and other                                     4,042              13,897              4,336             10,236
                                                         ------------      --------------     --------------     --------------

TOTAL EXPENSES                                                128,263             265,816            126,969            258,905
                                                         ------------      --------------     --------------     --------------

Loss from operations                                          (65,010)           (136,532)           (41,305)          (103,340)

Equity in loss of investment in local
   partnerships                                 4            (434,420)           (890,071)          (552,778)        (1,068,467)
                                                         ------------      --------------     --------------     -------------- 

NET LOSS                                                     (499,430)         (1,026,603)          (594,083)        (1,171,807)

Other comprehensive income                     2,3            125,219             152,093             65,174            130,989
                                                         ------------      --------------     --------------     --------------

COMPREHENSIVE LOSS                                       $   (374,211)     $     (874,510)    $     (528,909)    $   (1,040,818)
                                                         ============      ==============     ==============     ==============



NET LOSS ATTRIBUTABLE TO

   General partner                                       $     (4,994)     $      (10,266)    $       (5,941)    $      (11,718)
   Limited partners                                          (494,436)         (1,016,337)          (588,142)        (1,160,089)
                                                         ------------      --------------     --------------     -------------- 

                                                         $   (499,430)     $   (1,026,603)    $     (594,083)    $   (1,171,807)
                                                         ============      ==============     ==============     =============== 
 
NET LOSS per unit of limited partnership
   interest (35,883 units of limited
   partnership interest)                                 $     (13.78)     $       (28.32)    $       (16.39)    $       (32.33)
                                                         ============      ==============     ==============     ============== 

</TABLE>





                                           See Notes to Financial Statements.





<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF CASH FLOWS
                  SIX MONTHS ENDED SEPTEMBER 29, 1998 AND 1997
                                   (UNAUDITED)

<TABLE>
<S>                                                                                 <C>                 <C>
                                                                                    1998                1997
                                                                                ------------      --------------
CASH FLOWS FROM OPERATING ACTIVITIES

Interest received                                                               $    88,247       $       96,375
Cash used for local partnerships for deferred expenses                               (4,750)              (4,750)
Cash paid for
   administration fees                                                              (50,000)             (50,000)
   management fees                                                                  (50,000)             (50,000)
   professional fees                                                                (42,099)             (39,599)
   printing, postage and other expenses                                             (13,087)             (15,110)
                                                                                -----------       -------------- 

Net cash used in operating activities                                               (71,689)             (63,084)
                                                                                -----------       -------------- 

CASH FLOWS FROM INVESTING ACTIVITIES

Cash distributions and other income from local partnerships                          22,293               18,559
Maturity/redemption of bonds                                                        125,000               75,000
Transfer from restricted cash                                                                          1,224,775
Investment in local partnerships                                                                      (1,224,775)
                                                                                -----------       -------------- 

Net cash provided by investing activities                                           147,293               93,559
                                                                                -----------       --------------

Net increase in cash and cash equivalents                                            75,604               30,475

Cash and cash equivalents at beginning of period                                    419,372              409,413
                                                                                -----------       --------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $   494,976       $      439,888
                                                                                ===========       ==============


SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized gain on investments in bonds available-for-sale, net                 $   152,093       $      130,989
                                                                                ============      ==============

</TABLE>

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













                                           See Notes to Financial Statements.





<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                     STATEMENTS OF CASH FLOWS - (Continued)
                  SIX MONTHS ENDED SEPTEMBER 29, 1998 AND 1997
                                   (UNAUDITED)

<TABLE>
<S>                                                                         <C>                      <C>
                                                                                     1998                1997
                                                                                --------------    --------------
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Net loss                                                                        $(1,026,603)       $ (1,171,807)

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

   Equity in loss of investment in local partnerships                               890,071           1,068,467
   Distributions from local partnerships classified as other income                  (5,752)             (4,172)
   Loss on maturity/redemption of investments in bonds                                  677
   Amortization of net premium on investments in bonds                                6,629               7,453
   Accretion of zero coupon bonds                                                   (43,364)            (66,157)
   Decrease in interest receivable                                                      773               3,686
   Increase in payable to general partner                                            65,285              65,285
   Increase in accounts payable and accrued expenses                                 45,345              38,911
   Decrease in other liabilities                                                     (4,750)             (4,750)
                                                                                -----------        ------------  

NET CASH USED IN OPERATING ACTIVITIES                                           $   (71,689)       $    (63,084)
                                                                                ===========        ============ 


</TABLE>



























                                           See Notes to Financial Statements.





<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 29, 1998
                                   (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  September  29,  1998  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  six  month  periods  ended  September  29,  1998  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.    Comprehensive Income

     On  March  31,  1998,  the  Partnership   adopted  Statement  of  Financial
     Accounting Standard ("SFAS") No. 130, "Reporting  Comprehensive Income." As
     a result,  the  statements  of  operations  include  an  amount"  for other
     comprehensive  income, as well as comprehensive  loss. Other  comprehensive
     income (loss)  consists of revenues,  expenses,  gains and losses that have
     affected  partners'  equity (deficit) but which are excluded from net loss.
     Other comprehensive income in the accompanying statements of operations for
     the three and six month  periods  ended  September 29, 1998 resulted from a
     net unrealized gain on investments in bonds  available-for-sale of $125,219
     and $152,093,  respectively.  Accumulated other comprehensive income in the
     accompanying  balance  sheet as of  September  29,  1998  reflects  the net
     unrealized gain on investments in bonds available-for-sale of $185,375. The
     balance sheet as of March 30, 1998 and the statements of operations for the
     three and six month  periods  ended  September  29,  1997  include  certain
     reclassifications to reflect the adoption of SFAS No. 130.


3.   Investments in Bonds Available-For-Sale

     As of September 29, 1998, certain information concerning investments in 
     bonds available-for-sale is as follows:
     <TABLE>
     <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                          $  138,904        $      --        $        (174)        $ 138,730
          After one year through five years           537,855             22,015            --                559,870
          After five years through ten years          703,538             40,184            --                743,722
          After ten years                             505,419                   706               --          506,125
                                                   ----------      ----------------   ----------------      ---------

                                                    1,885,716             62,905              (174)         1,948,447
       U.S. Treasury debt securities
          After ten years                           1,057,501            122,644                  --        1,180,145
                                                 ------------      -------------      -------------------------------

                                                 $  2,943,217       $    185,549      $        (174)     $  3,128,592
                                                 ============       ============      =============      ============

     </TABLE>
     <PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                    NOTES TO FINANCIAL STATEMENTS-(Continued)
                               SEPTEMBER 29, 1998
                                   (UNAUDITED)


4.   Investment in Local Partnerships

     The Partnership  owns limited  partnership  interests in forty-three  Local
     Partnerships  representing capital contributions in the aggregate amount of
     $29,264,476,  of which the Partnership has paid $29,180,043 and $84,433 are
     outstanding as of September 29, 1998.  Restricted cash in the  accompanying
     balance sheet as of September 29, 1998 represents such outstanding  capital
     contribution, which is payable upon one Local Partnership's satisfaction of
     specified conditions related to operations.  As of June 30, 1998, the Local
     Partnerships have outstanding mortgage loans payable totaling approximately
     $86,649,000   and  accrued   interest   payable  on  such  loans   totaling
     approximately $2,283,000, which are secured by security interests and liens
     common to mortgage loans on the Local Partnerships' real property and other
     assets.

     For the six months  ended  September  29,  1998,  the  investment  in Local
     Partnerships activity consists of the following:
         <TABLE>
         <S>                                                                <C>              <C>
           Investment in Local Partnerships as of March 30, 1998                         $  8,515,114

           Equity in loss of investment in Local Partnerships                                (890,071)*

           Cash distributions received from Local Partnerships                                (22,293)

           Cash distributions classified as other income
                                                                                                5,752

           Investment in Local Partnerships as of September 29, 1998                     $  7,608,502
                                                                                         ============

         </TABLE>
     *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  was
      $592,085  for the six  months  ended  June 30,  1998 as  reflected  in the
      combined  statement  of  operations  of the Local  Partnerships  reflected
      herein Note 4.

     The combined  unaudited balance sheets of the Local Partnerships as of June
     30, 1998 and  December 31, 1997 and the combined  unaudited  statements  of
     operations  of the Local  Partnerships  for the three and six month periods
     ended June 30, 1998 and 1997 are reflected on pages 9 and 10, respectively.





     <PAGE>
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                               SEPTEMBER 29, 1998
                                   (UNAUDITED)


4.   Investment in Local Partnerships (continued)

     The combined balance sheets of the Local Partnerships as of June 30, 1998 
     and December 31, 1997 are as follows:
     <TABLE>
     <S>                                                                             <C>                   <C>
                                                                                       June 30,          December 31,
                                                                                          1998                1997
                                                                                  -----------------      ------------------
      ASSETS

      Cash and cash equivalents                                                   $     1,391,111     $       863,259
      Rents receivable                                                                    391,363             456,077
      Capital contributions receivable                                                     84,433              84,433
      Escrow deposits and reserves                                                      4,626,886           4,403,622
      Land                                                                              3,910,215           3,910,215
      Buildings and improvements (net of accumulated depreciation of
        $29,053,096 and $27,045,787)                                                   85,606,836          87,586,072
      Intangible assets (net of accumulated amortization of $604,831 and
        $584,504)                                                                         738,172             762,749
      Other                                                                                 888,907         1,401,766
                                                                                  -----------------   ---------------

                                                                                   $   97,637,923       $  99,468,193
                                                                                   ==============       =============

      LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

      Liabilities

        Accounts payable and accrued expenses                                     $        491,205    $       442,564
        Due to related parties                                                          5,124,036           5,247,688
        Mortgage loans                                                                 86,649,493          86,919,773
        Notes payable                                                                      31,753              62,111
        Accrued interest                                                                2,282,510           2,109,721
        Other                                                                              603,468             580,863
                                                                                  ----------------    ----------------

                                                                                       95,182,465          95,362,720
                                                                                  ---------------      --------------
      Partners' equity (deficit)

        American Tax Credit Properties III L.P.
           Capital contributions, net of distributions (includes
               receivable of $84,433)                                                  29,020,603          29,048,449
           Cumulative loss                                                            (21,412,947)        (20,522,876)
                                                                                   --------------      -------------- 

                                                                                        7,607,656           8,525,573
                                                                                  ---------------     ---------------

        General partners and other limited partners, including ATCP II
           Capital contributions, net of distributions                                   (154,835)          (123,346)
           Cumulative loss                                                             (4,997,363)        (4,296,754)
                                                                                  ---------------     -------------- 

                                                                                       (5,152,198)        (4,420,100)

                                                                                         2,455,458          4,105,473
                                                                                  ----------------    ---------------

                                                                                  $    97,637,923      $  99,468,193
                                                                                  ===============      =============
    </TABLE>





    <PAGE>


                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                               SEPTEMBER 29, 1998
                                   (UNAUDITED)

4.   Investment in Local Partnerships (continued)

     The combined  statements of operations  of the Local  Partnerships  for the
     three and six month periods ended June 30, 1998 and 1997 are as follows:
    <TABLE>
    <S>                                                  <C>                <C>               <C>                 <C>
                                                      Three Months       Six Months      Three Months       Six Months
                                                          Ended            Ended             Ended            Ended
                                                        June 30,          June 30,         June 30,          June 30,
                                                           1998            1998              1997             1997
                                                     ---------------  ---------------   ---------------  ---------

      REVENUE

      Rental                                         $  2,650,051      $   5,265,766    $  2,584,104      $  5,205,060
      Interest and other                                     84,687          163,966            87,181          168,790
                                                     --------------   --------------    --------------   --------------

      TOTAL REVENUE                                     2,734,738         5,429,732        2,671,285         5,373,850
                                                     ------------     -------------     ------------     -------------

      EXPENSES

      Administrative                                      498,220           993,705          526,913         1,036,508
      Utilities                                           233,713           513,644          241,748           530,441
      Operating, maintenance and other                    556,042         1,143,828          562,896         1,038,125
      Taxes and insurance                                 318,121           647,946          326,146           652,464
      Financial (including amortization of
        $12,285, $24,577, $14,284 and $25,938)            855,385         1,713,980          850,088         1,734,006
      Depreciation                                      1,003,726         2,007,309        1,038,254         2,055,186
                                                     ------------     -------------     ------------     -------------

      TOTAL EXPENSES                                    3,465,207         7,020,412        3,546,045         7,046,730
                                                     ------------     -------------     ------------     -------------

      NET LOSS                                       $   (730,469)     $ (1,590,680)    $   (874,760)     $ (1,672,880)
                                                     ============      ============     ============      ============ 

      NET LOSS ATTRIBUTABLE TO

      American Tax Credit Properties III L.P.        $   (434,420)    $    (890,071)    $   (552,778)     $ (1,068,467)
      General partners and other limited
         partners, including ATCP II, which
         includes $236,063, $592,085, $250,285
         and $464,675 of American Tax Credit
         Properties III L.P. loss in excess of
         investment                                      (296,049)          (700,609)        (321,982)        (604,413)
                                                     ------------     --------------    -------------    ------------- 

                                                     $   (730,469)     $ (1,590,680)    $   (874,760)     $ (1,672,880)
                                                     ============      ============     ============      ============ 
    </TABLE>
     The combined results of operations of the Local  Partnerships for the three
     and six month periods ended June 30, 1998 are not necessarily indicative of
     the results that may be expected for an entire operating period.

5.   Additional Information

     Additional  information,  including  the audited  March 30, 1998  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, 1998 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  September  29,  1998,  American  Tax  Credit  Properties  III  L.P.  (the
"Registrant") has not experienced a significant change in financial condition as
compared  to March 30,  1998.  Principal  changes  in assets  are  comprised  of
periodic  transactions  and  adjustments  and  anticipated  equity  in loss from
operations  of the  local  partnerships  (the  "Local  Partnerships")  which own
low-income  multifamily  residential  complexes (the "Properties") which qualify
for the  low-income  tax credit in  accordance  with  Section 42 of the Internal
Revenue  Code  (the  "Low-income  Tax  Credit").  During  the six  months  ended
September  29,  1998,   Registrant   received   cash  from   interest   revenue,
maturity/redemption  of bonds and  distributions  from  Local  Partnerships  and
utilized cash for operating expenses.  Cash and cash equivalents and investments
in  bonds  available-for-sale  increased,  in the  aggregate,  by  approximately
$139,000  during the six months ended  September 29, 1998 (which  included a net
unrealized gain on investments in bonds of approximately $152,000,  amortization
of net premium on investments in bonds of approximately  $7,000 and accretion of
zero coupon bonds of approximately $43,000).  Notwithstanding circumstances that
may arise in  connection  with the  Properties,  Registrant  does not  expect to
realize  significant gains or losses on its investments in bonds, if any. During
the six months ended  September 29, 1998, the  investment in Local  Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the six  months  ended  June 30,  1998 of  $890,071  and cash  distributions
received from Local  Partnerships of $22,293  (exclusive of  distributions  from
Local  Partnerships of $5,752 classified as other income).  Accounts payable and
accrued  expenses  and payable to general  partner in the  accompanying  balance
sheet  as of  September  29,  1998  include  deferred  administration  fees  and
management fees, respectively.

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.  Accordingly, the investment
is  carried  at cost,  which  includes  capital  contributions  payable,  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. The combined statements of operations of the Local Partnerships  reflected
in Note 4 to Registrant's  financial statements include the operating results of
all Local Partnerships, irrespective of Registrant's investment balances.

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 below under
Local  Partnership  Matters  regarding  certain  Local  Partnerships   currently
operating below economic break even levels.

Registrant's  operations for the three months ended  September 29, 1998 and 1997
resulted in net losses of $499,430 and $594,083,  respectively.  The decrease in
net loss is primarily attributable to a decrease in equity in loss of investment
in Local Partnerships of approximately $118,000,  partially offset by a decrease
in interest revenue of approximately $24,000. Other comprehensive income for the
three months ended  September 29, 1998 and 1997  resulted from a net  unrealized
gain on  investments  in bonds  available  for-sale  of  $125,219  and  $65,174,
respectively.

The Local Partnerships' net loss of approximately  $730,000 for the three months
ended  June  30,  1998  was   attributable   to  rental  and  other  revenue  of
approximately $2,735,000, exceeded by operating and interest expenses (including
interest on non-mandatory  debt) of approximately  $2,449,000 and  approximately
$1,016,000 of depreciation and amortization  expenses.  The Local  Partnerships'
net loss of approximately  $875,000 for the three months ended June 30, 1997 was
attributable to rental and other revenue of approximately  $2,671,000,  exceeded
by operating and interest expenses (including interest on non-mandatory debt) of
approximately  $2,494,000  and  approximately  $1,052,000  of  depreciation  and
amortization  expenses.  The results of operations of the Local Partnerships for
the three  months  ended June 30,  1998 are not  necessarily  indicative  of the
results that may be expected in future periods.


<PAGE>


                                        AMERICAN TAX CREDIT PROPERTIES III L.P.

Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations (continued)
          
Registrant's  operations  for the six months ended  September  29, 1998 and 1997
resulted  in  net  losses  of  $1,026,603  and  $1,171,807,   respectively.  The
difference in net loss is primarily attributable to a decrease in equity in loss
of investment in Local Partnerships of approximately  $178,000 which includes an
increase in the nonrecognition of losses in excess of Registrant's investment in
Local  Partnerships  of  approximately  $127,000 in  accordance  with the equity
method of  accounting,  partially  offset by a decrease in  interest  revenue of
approximately  $28,000.  Other  comprehensive  income for the six  months  ended
September 29, 1998 and 1997 resulted from a net  unrealized  gain on investments
in bonds available-for-sale of $152,093 and $130,989, respectively.

The Local Partnerships' net loss of approximately  $1,591,000 for the six months
ended  June  30,  1998  was   attributable   to  rental  and  other  revenue  of
approximately $5,430,000, exceeded by operating and interest expenses (including
interest on non-mandatory  debt) of approximately  $4,989,000 and  approximately
$2,032,000 of depreciation and amortization  expenses.  The Local  Partnerships'
net loss of approximately  $1,673,000 for the six months ended June 30, 1997 was
attributable to rental and other revenue of approximately  $5,374,000,  exceeded
by operating and interest expenses (including interest on non-mandatory debt) of
approximately  $4,966,000  and  approximately  $2,081,000  of  depreciation  and
amortization  expenses.  The results of operations of the Local Partnerships for
the six months ended June 30, 1998 are not necessarily indicative of the results
that may be expected in future periods.

Local Partnership Matters

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  pursuant  to  subsidy  agreements  ("HAP  Contracts")  are  subject to
specific laws,  regulations and agreements with federal and state agencies.  One
Local  Partnership's  HAP  Contracts are scheduled to expire in 1999 after being
extended  during 1998 for one year.  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,  certain general partners of the Local
Partnerships (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
six  months  ended  June  30,  1998,   revenue  from  operations  of  the  Local
Partnerships,   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'  operating  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
any required deferral of property management fees.

The terms of the partnership  agreement of Christian  Street Commons  Associates
(the "Christian Street Local Partnership") require the Local General Partners 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  $7,000  for the six months  ended June 30,
1998, which includes  property  management fees of approximately  $2,000.  As of
June 30, 1998, the Local General  Partners have advanced  approximately  $84,000
under their Deficit  Guarantee  obligation and payments on the mortgage and real
estate  taxes are  current.  Registrant's  investment  balance in the  Christian
Street Local Partnership, after cumulative equity losses, became zero during the
year ended March 30, 1998. Of Registrant's  total annual Low-income Tax Credits,
approximately 2% is allocated from the Christian Street Local Partnership.

Fulton Street Houses Limited Partnership (the "Fulton Street Local Partnership")
has an escrow of  approximately  $285,000 as of June 30, 1998 to cover operating
deficits and there are no Mandatory  Debt Service  payments or real estate taxes
during the Compliance  Period.  The Fulton Street Local Partnership  incurred an
operating deficit of approximately  $15,000 for the six months June 30, 1998. Of
Registrant's total annual Low-income Tax Credits,  approximately 8% is allocated
from the Fulton Street 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  Batesville  Family,  L.P.  (the
"Batesville Local  Partnership")  require the management agent to defer property
management  fees in order to avoid a default under the mortgage.  The Batesville
Local Partnership incurred an operating deficit of approximately $16,000 for the
six months ended June 30,  1998,  which  includes  property  management  fees of
approximately  $1,000.  Payments  on the  mortgage  and real  estate  taxes  are
current.  Registrant's  investment  balance in the Batesville Local Partnership,
after  cumulative  equity  losses,  became  zero during the year ended March 30,
1997. Of Registrant's  total annual Low-income Tax Credits,  approximately 1% is
allocated from the Batesville Local Partnership.

The  terms  of the  partnership  agreement  of  Westminster  Apartments  Limited
Partnership  (the  "Westminster  Local  Partnership")  require the Local General
Partner to advance funds to cover operating  deficits  through 2009 and to cause
the  management  agent to  defer  property  management  fees in order to avoid a
default  under the  mortgage.  The  Westminster  Local  Partnership  incurred an
operating  deficit of  approximately  $12,000 for the six months  ended June 30,
1998, which includes property management fees of approximately $7,000.  Payments
on the mortgage and real estate taxes are current.  Of Registrant's total annual
Low-income Tax Credits, approximately 4% is allocated from the Westminster Local
Partnership.

Adoption of Accounting Standard

On March 31, 1998, Registrant adopted Statement of Financial Accounting Standard
("SFAS") No. 130,  "Reporting  Comprehensive  Income." SFAS No. 130  establishes
standards for reporting and display of  comprehensive  income and its components
(revenues,  expenses,  gains  and  losses)  in a  full  set  of  general-purpose
financial  statements.  The adoption of SFAS No. 130 has not materially impacted
Registrant's financial position and results of operations.







<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 duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
<TABLE>
<S>                                         <C>                                   <C>

                                                               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: November 5, 1998                                        /s/  Richard Paul Richman
       ----------------                                        -------------------------
                                                                    Richard Paul Richman
                                                                    President, Chief Executive
                                                                    Officer and Director of the
                                                                    general partner of the
                                                                    General Partner


Dated: November 5, 1998                                        /s/  Neal Ludeke
       ----------------                                        ----------------
                                                                    Neal Ludeke
                                                                    Vice President and
                                                                    Treasurer of the general partner
                                                                    of the General Partner
                                                                    (Principal Financial and Accounting
                                                                    Officer of Registrant)

</TABLE>