**FORM      10-Q**

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

**June      29, 2006**

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

**0-19217**

**American      Tax Credit Properties III L.P.**

| **Delaware**                                   | **13-3545006**                     |
|------------------------------------------------|------------------------------------|
| (State                or other jurisdiction of | (I.R.S.                Employer    |
| incorporation                or organization)  | Identification                No.) |

| **Richman                Tax Credit Properties III L.P.****340                Pemberwick Road****Greenwich,                Connecticut** | **06831**                 |
|------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|
| (Address                of principal executive offices)                                                                                  | (Zip                Code) |

**(203)      869-0900**

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**PART      I - **
**FINANCIAL      INFORMATION**

**Item      1. **
**Financial      Statements**

| **Table                of Contents**         |   |   | **Page** |   |
|----------------------------------------------|--------|--------|----------|--------|
|                                         |   |   |     |   |
| Balance                Sheets                |   |   | 3        |   |
|                                         |   |   |     |   |
| Statements                of Operations      |   |   | 4        |   |
|                                         |   |   |     |   |
| Statements                of Cash Flows      |   |   | 5        |   |
|                                         |   |   |          |   |
| Notes                to Financial Statements |   |   | 7        |   |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**BALANCE      SHEETS**

**(UNAUDITED)**

|                                                                                                      |   |      |   | **June                29,** |   | **March                30,** |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------|--------|-----------------------------|--------|------------------------------|--------|
|                                                                                                      |   | **Notes** |   | **2006**                    |   | **2006**                     |   |
| **ASSETS**                                                                                                |   |      |   |                        |   |                         |   |
|                                                                                                      |   |      |   |                        |   |                         |   |
| Cash                and cash equivalents                                                                  |   |      |   |                        | $      | 43,037                       |   | $ | 151,370 |   |
| Investments                in bonds                                                                       |   |      | 2      |                        |   | 1,382,997                    |   |   | 1,377,915 |   |
| Investment                in local partnerships                                                           |   |      | 3      |                        |   | 577,023                      |   |   | 578,827 |   |
| Prepaid                expenses                                                                           |   |      |   |                        |   | 7,170                        |   |   |   |   |
| Interest                receivable                                                                        |   |      |   |                        |   | 5,630                        |   |   | 1,644 |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        | $      | 2,015,857                    |   | $ | 2,109,756 |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| **LIABILITIES                AND PARTNERS’ EQUITY (DEFICIT)**                                       |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| Liabilities                                                                                               |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| Accounts                payable and accrued expenses                                                      |   |      |   |                        | $      | 518,385                      |   | $ | 518,027 |   |
| Payable                to general partner and affiliates                                                  |   |      |   |                        |   | 2,198,363                    |   |   | 2,111,993 |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   | 2,716,748                    |   |   | 2,630,020 |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| Commitment                and contingencies                                                               |   |      | 3.4    |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| Partners’                equity (deficit)                                                           |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
| General                partner                                                                            |   |      |   |                        |   | (691,278                     | )      |   | (523,856 | ) |
| Limited                partners (35,883 units of limited partnership interest                outstanding) |   |      |   |                        |   | -                            |   |   | - |   |
| Accumulated                other comprehensive income (loss), net                                         |   |      | 2      |                        |   | (9,613                       | )      |   | 3,592 |   |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        |   | (700,891                     | )      |   | (520,264 | ) |
|                                                                                                      |   |      |   |                        |   |                         |   |   |   |   |
|                                                                                                      |   |      |   |                        | $      | 2,015,857                    |   | $ | 2,109,756 |   |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**STATEMENTS      OF OPERATIONS**

**THREE      MONTHS ENDED JUNE 29, 2006 AND 2005**

**(UNAUDITED)**

|                                                                                                                                             |   | **Notes** |   | **2006** |   | **2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|----------|--------|----------|--------|
| **REVENUE**                                                                                                                                      |   |      |   |     |   |     |   |
|                                                                                                                                             |   |      |   |     |   |     |   |
| Interest                                                                                                                                         |   |      |   |     | $      | 23,004   |   | $ | 25,803 |   |
| Other                income from local partnerships                                                                                              |   |      |   |     |   | 16,250   |   |   | 14,993 |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| TOTAL                REVENUE                                                                                                                     |   |      |   |     |   | 39,254   |   |   | 40,796 |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| **EXPENSES**                                                                                                                                     |   |      |   |     |   |     |   |   |   |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| Administration                fees                                                                                                               |   |      |   |     |   | 57,643   |   |   | 57,643 |   |
| Management                fees                                                                                                                   |   |      |   |     |   | 57,643   |   |   | 57,643 |   |
| Professional                fees                                                                                                                 |   |      |   |     |   | 21,203   |   |   | 15,641 |   |
| State                of New Jersey filing fee                                                                                                    |   |      |   |     |   | 7,170    |   |   | 5,297 |   |
| Printing,                postage and other                                                                                                       |   |      |   |     |   | 9,263    |   |   | 5,713 |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| TOTAL                EXPENSES                                                                                                                    |   |      |   |     |   | 152,922  |   |   | 141,937 |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
|                                                                                                                                             |   |      |   |     |   | (113,668 | )      |   | (101,141 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| Equity                in loss of investment in local partnerships                                                                                |   |      | 3      |     |   | (53,754  | )      |   | (48,566 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| **NET                LOSS**                                                                                                                      |   |      |   |     |   | (167,422 | )      |   | (149,707 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| Other                comprehensive income (loss), net                                                                                            |   |      | 2      |     |   | (13,205  | )      |   | 10,276 |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| **COMPREHENSIVE                LOSS**                                                                                                            |   |      |   |     | $      | (180,627 | )      | $ | (139,431 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| **NET                LOSS ATTRIBUTABLE TO**                                                                                                      |   |      |   |     |   |     |   |   |   |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| General                partner                                                                                                                   |   |      |   |     | $      | (167,422 | )      | $ | (1,497 | ) |
| Limited                partners                                                                                                                  |   |      |   |     |   | -        |   |   | (148,210 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
|                                                                                                                                             |   |      |   |     | $      | (167,422 | )      | $ | (149,707 | ) |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
|                                                                                                                                             |   |      |   |     |   |     |   |   |   |   |
| **NET                LOSS**per                unit of limited partnership interest (35,883 units of limited partnership                interest) |   |      |   |     | $      | -        |   | $ | (4.13 | ) |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**STATEMENTS      OF CASH FLOWS**

**THREE      MONTHS ENDED JUNE 29, 2006 AND 2005**

**(UNAUDITED)**

|                                                               |   | **2006** |     | **2005** |   |
|--------------------------------------------------------------------|--------|----------|----------|----------|--------|
| **CASH                FLOWS FROM OPERATING ACTIVITIES**            |   |     |     |     |   |
|                                                               |   |     |     |     |   |
| Interest                received                                   |   | $        | 731      |     | $      | 327 |   |
| Cash                paid for                                       |   |     |     |     |   |   |   |
| administration                fees                                 |   |     | (3,916   | )        |   | (4,096 | ) |
| management                fees                                     |   |     | (25,000  | )        |   |   |   |
| professional                fees                                   |   |     | (6,479   | )        |   | (1,618 | ) |
| State                of New Jersey filing fee                      |   |     | (30,000  | )        |   | (19,088 | ) |
| printing,                postage and other expenses                |   |     | (7,969   | )        |   | (5,713 | ) |
|                                                               |   |     |     |     |   |   |   |
| Net                cash used in operating activities               |   |     | (72,633  | )        |   | (30,188 | ) |
|                                                               |   |     |     |     |   |   |   |
|                                                               |   |     |     |     |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**            |   |     |     |     |   |   |   |
|                                                               |   |     |     |     |   |   |   |
| Advances                to local partnerships                      |   |     | (51,950  | )        |   |   |   |
| Cash                distributions from local partnerships          |   |     | 16,250   |     |   | 24,993 |   |
|                                                               |   |     |     |     |   |   |   |
| Net                cash provided by (used in) investing activities |   |     | (35,700  | )        |   | 24,993 |   |
|                                                               |   |     |     |     |   |   |   |
| Net                decrease in cash and cash equivalents           |   |     | (108,333 | )        |   | (5,195 | ) |
|                                                               |   |     |     |     |   |   |   |
| Cash                and cash equivalents at beginning of period    |   |     | 151,370  |     |   | 58,001 |   |
|                                                               |   |     |     |     |   |   |   |
| **CASH                AND CASH EQUIVALENTS AT END OF PERIOD**      |   | $        | 43,037   |     | $      | 52,806 |   |
|                                                               |   |     |     |     |   |   |   |
| **SIGNIFICANT                NON-CASH INVESTING ACTIVITIES**       |   |     |     |     |   |   |   |
|                                                               |   |     |     |     |   |   |   |
| Unrealized                gain (loss) on investments in bonds, net |   | $        | (13,205  | )        | $      | 10,276 |   |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**STATEMENTS      OF CASH FLOWS - (continued)**

**THREE      MONTHS ENDED JUNE 29, 2006 AND 2005**

**(UNAUDITED)**

|                                                                                                     |   | **2006** |     | **2005** |   |
|----------------------------------------------------------------------------------------------------------|--------|----------|----------|----------|--------|
|                                                                                                     |   |     |     |     |   |
| **RECONCILIATION                OF NET LOSS TO NET CASH USED IN OPERATING                ACTIVITIES**    |   |     |     |     |   |
|                                                                                                     |   |     |     |     |   |
| Net                loss                                                                                  |   | $        | (167,422 | )        | $      | (149,707 | ) |
|                                                                                                     |   |     |     |     |   |   |   |
| Adjustments                to reconcile net loss to net cash used in operating                activities |   |     |     |     |   |   |   |
|                                                                                                     |   |     |     |     |   |   |   |
| Equity                in loss of investment in local partnerships                                        |   |     | 53,754   |     |   | 48,566 |   |
| Distributions                from local partnerships classified as other income                          |   |     | (16,250  | )        |   | (14,993 | ) |
| Amortization                of net premium on investments in bonds                                       |   |     | 308      |     |   | 356 |   |
| Accretion                of zero coupon bonds                                                            |   |     | (18,595  | )        |   | (21,801 | ) |
| Increase                in prepaid expenses                                                              |   |     | (7,170   | )        |   | (5,297 | ) |
| Increase                in interest receivable                                                           |   |     | (3,986   | )        |   | (4,031 | ) |
| Increase                in payable to general partner and affiliates                                     |   |     | 86,370   |     |   | 111,190 |   |
| Increase                in accounts payable and accrued expenses                                         |   |     | 358      |     |   | 5,529 |   |
|                                                                                                     |   |     |     |     |   |   |   |
| **NET                CASH USED IN OPERATING ACTIVITIES**                                                 |   | $        | (72,633  | )        | $      | (30,188 | ) |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**NOTES      TO FINANCIAL STATEMENTS**

**JUNE      29, 2006**

**(UNAUDITED)**

| **1.** | **Basis                of Presentation** |
|--------|------------------------------------------|

| **2.** | **Investments                in Bonds** |
|--------|-----------------------------------------|

| Description                and maturity          |   | Amortizedcost |      | Gross                unrealized gains |   | Grossunrealized                losses |   | Estimatedfair                value |    |
|--------------------------------------------------|--------|---------------|-----------|---------------------------------------|--------|---------------------------------------|--------|------------------------------------|---------|
|                                             |   |          |      |                                  |   |                                  |   |                               |    |
| Corporate                debt securities         |   |          |      |                                  |   |                                  |   |                               |    |   |   |   |   |
| After                one year through five years |   | $             | 202,110   |                                  | $      | 4,844                                 |   | $                                  | — |   | $ | 206,954 |   |
|                                             |   |          |      |                                  |   |                                  |   |                               |    |   |   |   |   |
| U.S.                Treasury debt securities     |   |          |      |                                  |   |                                  |   |                               |    |   |   |   |   |
| After                one year through five years |   |          | 1,190,500 |                                  |   | —                               |   |                               | (14,457 | ) |   | 1,176,043 |   |
|                                             |   |          |      |                                  |   |                                  |   |                               |    |   |   |   |   |
|                                             |   | $             | 1,392,610 |                                  | $      | 4,844                                 |   | $                                  | (14,457 | ) | $ | 1,382,997 |   |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**NOTES      TO FINANCIAL STATEMENTS - (Continued)**

**JUNE      29, 2006**

**(UNAUDITED)**

| **3.** | **Investment                in Local Partnerships** |
|--------|-----------------------------------------------------|

| Investment                in local partnerships as of March 30, 2006                                |   | $      | 578,827 |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                |   |   |    |   |
| Advances                to Local Partnerships                                                       |   |   | 51,950  |   |
|                                                                                                |   |   |    |   |
| Equity                in loss of investment in local partnerships                                   |   |   | (53,754 | )*     |
|                                                                                                |   |   |    |   |
| Cash                distributions received from Local Partnerships                                  |   |   | (16,250 | )      |
| Cash                distributions from Local Partnerships classified as other                income |   |   | 16,250  |   |
|                                                                                                |   |   |    |   |
| Investment                in local partnerships as of June 29, 2006                                 |   | $      | 577,023 |   |

----

**AMERICAN        TAX CREDIT PROPERTIES III L.P.**

**NOTES        TO FINANCIAL STATEMENTS - (Continued)**

**JUNE        29, 2006**

**(UNAUDITED)**

| **3.** | **Investment                  in Local Partnerships (continued)**  |
|--------|-------------------------------------------------------------------------|

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**NOTES      TO FINANCIAL STATEMENTS - (Continued)**

**JUNE      29, 2006**

**(UNAUDITED)**

| **3.** | **Investment                in Local Partnerships (continued)**  |
|--------|-----------------------------------------------------------------------|

|                                                                                                                                     |   | **March                31,** |        | **December                31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|---------------------------------|--------|
|                                                                                                                                     |   | **2006**                     |        | **2005**                        |   |
| **ASSETS**                                                                                                                               |   |                         |        |                            |   |
|                                                                                                                                     |   |                         |        |                            |   |
| Cash                and cash equivalents                                                                                                 |   | $                            | 1,220,813   |                            | $      | 1,309,842 |   |
| Rents                receivable                                                                                                          |   |                         | 576,042     |                            |   | 557,433 |   |
| Escrow                deposits and reserves                                                                                              |   |                         | 5,957,942   |                            |   | 5,633,503 |   |
| Land                                                                                                                                     |   |                         | 3,910,215   |                            |   | 3,910,215 |   |
| Buildings                and improvements (net of accumulated depreciation of $60,046,214                and                $59,020,313) |   |                         | 56,102,300  |                            |   | 57,047,815 |   |
| Intangible                assets (net of accumulated amortization of $583,257 and                $584,157)                               |   |                         | 440,514     |                            |   | 454,845 |   |
| Other                assets                                                                                                              |   |                         | 1,258,397   |                            |   | 1,187,479 |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   | $                            | 69,466,223  |                            | $      | 70,101,132 |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
| **LIABILITIES                AND PARTNERS' EQUITY (DEFICIT)**                                                                            |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
| Liabilities                                                                                                                              |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
| Accounts                payable and accrued expenses                                                                                     |   | $                            | 1,925,600   |                            | $      | 1,907,645 |   |
| Due                to related parties                                                                                                    |   |                         | 5,248,296   |                            |   | 5,206,940 |   |
| Mortgage                loans                                                                                                            |   |                         | 81,026,735  |                            |   | 81,216,029 |   |
| Accrued                interest                                                                                                          |   |                         | 5,307,602   |                            |   | 4,870,519 |   |
| Other                liabilities                                                                                                         |   |                         | 804,212     |                            |   | 871,028 |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         | 94,312,445  |                            |   | 94,072,161 |   |
| Partners'                equity (deficit)                                                                                                |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
| American                Tax Credit Properties III L.P.                                                                                   |   |                         |        |                            |   |   |   |
| Capital                contributions, net of distributions                                                                               |   |                         | 28,711,931  |                            |   | 28,718,103 |   |
| Cumulative                loss                                                                                                           |   |                         | (26,837,819 | )                               |   | (26,784,065 | ) |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         | 1,874,112   |                            |   | 1,934,038 |   |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
| General                partners and other limited partners                                                                               |   |                         |        |                            |   |   |   |
| Capital                contributions, net of distributions                                                                               |   |                         | (420,397    | )                               |   | (416,813 | ) |
| Cumulative                loss                                                                                                           |   |                         | (26,299,937 | )                               |   | (25,488,254 | ) |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         | (26,720,334 | )                               |   | (25,905,067 | ) |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   |                         | (24,846,222 | )                               |   | (23,971,029 | ) |
|                                                                                                                                     |   |                         |        |                            |   |   |   |
|                                                                                                                                     |   | $                            | 69,466,223  |                            | $      | 70,101,132 |   |

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**NOTES      TO FINANCIAL STATEMENTS - (Continued)**

**JUNE      29, 2006**

**(UNAUDITED)**

| **3.** | **Investment                in Local Partnerships (continued)**  |
|--------|-----------------------------------------------------------------------|

|                                                                                                                                                                       |   | **2006** |      | **2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| **REVENUE**                                                                                                                                                                |   |     |      |     |   |
|                                                                                                                                                                       |   |     |      |     |   |
| Rental                                                                                                                                                                     |   | $        | 3,050,578 |     | $      | 2,998,410 |   |
| Interest                and other                                                                                                                                          |   |     | 167,950   |     |   | 98,914 |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| TOTAL                REVENUE                                                                                                                                               |   |     | 3,218,528 |     |   | 3,097,324 |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| **EXPENSES**                                                                                                                                                               |   |     |      |     |   |   |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| Administrative                                                                                                                                                             |   |     | 706,454   |     |   | 709,912 |   |
| Utilities                                                                                                                                                                  |   |     | 564,359   |     |   | 409,956 |   |
| Operating                and maintenance                                                                                                                                   |   |     | 818,763   |     |   | 735,144 |   |
| Taxes                and insurance                                                                                                                                         |   |     | 315,767   |     |   | 322,292 |   |
| Financial                                                                                                                                                                  |   |     | 644,496   |     |   | 676,963 |   |
| Depreciation                and amortization                                                                                                                               |   |     | 1,034,126 |     |   | 987,651 |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| TOTAL                EXPENSES                                                                                                                                              |   |     | 4,083,965 |     |   | 3,841,918 |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| **NET                LOSS**                                                                                                                                                |   | $        | (865,437  | )        | $      | (744,594 | ) |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| **NET                LOSS ATTRIBUTABLE TO**                                                                                                                                |   |     |      |     |   |   |   |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
| American                Tax Credit Properties III L.P.                                                                                                                     |   | $        | (53,754   | )        | $      | (48,566 | ) |
| General                partners and other limited partners, which includes $755,857 and                $659,722                of Partnership loss in excess of investment |   |     | (811,683  | )        |   | (696,028 | ) |
|                                                                                                                                                                       |   |     |      |     |   |   |   |
|                                                                                                                                                                       |   | $        | (865,437  | )        | $      | (744,594 | ) |

| **4.** | **Additional                Information** |
|--------|-------------------------------------------|

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

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

----

**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

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

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**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

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

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**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

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

|   | 1. | Registrant                accounts for its investment in local partnerships in accordance with                the                equity method of accounting since Registrant does not control the                operations of a Local Partnership. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | If                the book value of Registrant’s investment in a Local Partnership exceeds                the estimated value derived by management, Registrant reduces its                investment in any such Local Partnership and includes such reduction                in                equity in loss of investment in local partnerships. Registrant makes                such                assessment at least annually in the fourth quarter of its fiscal                year or                whenever there are indications that a permanent impairment may have                occurred. A loss in value of an investment in a Local Partnership                other                than a temporary decline would be recorded as an impairment loss.                Impairment is measured by comparing the investment carrying amount                to the                sum of the total amount of the remaining tax credits to be allocated                to                Registrant and the estimated residual value of the                investment. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Registrant                does not consolidate the accounts and activities of the Local                Partnerships, which are considered Variable Interest Entities under                Financial Accounting Standards Board Interpretation No. 46 - Revised,                “Consolidation of Variable Interest Entities,” because Registrant is not                considered the primary beneficiary. Registrant’s balance in investment in                local partnerships, plus the risk of recapture of tax credits previously                recognized on such investments, represents the maximum exposure to                loss in                connection with such investments. Registrant's exposure to loss on                the                Local Partnerships is mitigated by the condition and financial performance                of the underlying Properties as well as the strength of the Local                General                Partners and their guarantees against credit                recapture. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      3. **
**Quantitative      and Qualitative Disclosure About Market Risk**

**Item      4. **
**Controls      and Procedures**

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**AMERICAN      TAX CREDIT PROPERTIES III L.P.**

**Part      II - **
**OTHER      INFORMATION**

**Item      1.**
**Legal      Proceedings**

**Item      1A. **
**Risk      Factors**

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

**Item      3.**
**Defaults      Upon Senior Securities**

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

**Item      5.**
**Other      Information**

**Item      6.**
**Exhibits**

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**SIGNATURES**

|                                 |                                                                                                        |                                                                                   |
|--------------------------------------|-------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                                 | **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:                March 14, 2008 |                                                                                                        | /s/                David Salzman                                                       |
|                                 | By:                                                                                               | David              Salzman                                                             |
|                                 |                                                                                                        | Chief                Executive Officer                                                 |
|                                 |                                                                                                        |                                                                                   |
|                                 |                                                                                                        |                                                                                   |
| Dated:                March 14, 2008 |                                                                                                        | /s/                Neal Ludeke                                                         |
|                                 | By:                                                                                                         | Neal              Ludeke                                                               |
|                                 |                                                                                                        | Chief              Financial Officer                                                   |
|                                 |                                                                                                        |                                                                                   |
|                                 |                                                                                                        |                                                                                   |
| Dated:                March 14, 2008 |                                                                                                        | /s/                Richard Paul Richman                                                |
|                                 | By:                                                                                                         | Richard              Paul Richman                                                      |
|                                 | Director                                                                                                    |

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