UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





(Mark
One)


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





For the
Quarterly Period Ended December
30, 2009





OR





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





For the
Transition Period from 
to ____________





Commission
File Number: 0-19217





American Tax Credit
Properties III L.P.


(Exact
Name of Registrant as Specified in its Charter)





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





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





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





Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to filing requirements for the
past 90 days.





Yes  x  No  ̈





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





Yes   ̈  No  ̈





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





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





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





Yes   ̈ No x





As of
February 10, 2010, there are 35,883 units of limited partnership interest
outstanding.





AMERICAN
TAX CREDIT PROPERTIES III L.P.





PART
I - FINANCIAL
INFORMATION





Item
1. Financial
Statements.





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


2


AMERICAN
TAX CREDIT PROPERTIES III L.P.


BALANCE
SHEETS


(UNAUDITED)





December 30,
                
                
                March 30,2009
                
                
                2009ASSETSCash
      and cash equivalents
                
                $
                817,368
                
                
                $
                946,612Investment
      in local partnerships
                
                
                547,303
                
                
                
                529,970$
                1,364,671
                
                
                $
                1,476,582LIABILITIES
      AND PARTNERS’ DEFICITLiabilitiesAccounts
      payable and accrued expenses
                
                $
                485,854
                
                
                $
                523,447Payable
      to general partner and affiliates
                
                
                3,145,277
                
                
                
                2,934,7193,631,131
                
                
                
                3,458,166Commitments
      and contingenciesPartners’
      deficitGeneral
      partner
                
                
                (2,266,460
                )
                
                
                (1,981,584
                )Limited
      partners (35,883 units of limited partnership interest
      outstanding)
                
                
                —
                
                
                
                —(2,266,460
                )
                
                
                (1,981,584
                )$
                1,364,671
                
                
                $
                1,476,582





See Notes
to Financial Statements.


3


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF OPERATIONS


THREE
AND NINE MONTH PERIODS ENDED DECEMBER 30, 2009 AND 2008


(UNAUDITED)





Three Months
                  Ended
                  December 30,
                
                
                Nine Months
                  Ended
                  December 30,
                
                
                Three Months
                  Ended
                  December 30,
                
                
                Nine Months
                  Ended
                  December 30,2009
                
                
                2009
                
                
                2008
                
                
                2008REVENUEInterest
                
                $
                780
                
                
                $
                1,727
                
                
                $
                1,629
                
                
                $
                14,441Other
      income from local partnerships
                
                
                5,660
                
                
                
                35,677
                
                
                
                1,580
                
                
                
                25,690TOTAL
      REVENUE
                
                
                6,440
                
                
                
                37,404
                
                
                
                3,209
                
                
                
                40,131EXPENSESAdministration
      fees
                
                
                32,160
                
                
                
                137,392
                
                
                
                55,385
                
                
                
                166,155Management
      fees
                
                
                32,159
                
                
                
                137,391
                
                
                
                55,385
                
                
                
                166,155Professional
      fees
                
                
                14,939
                
                
                
                67,858
                
                
                
                22,625
                
                
                
                66,467State
      of New Jersey filing fee
                
                
                4,763
                
                
                
                9,946
                
                
                
                5,160
                
                
                
                16,037Printing,
      postage and other
                
                
                2,390
                
                
                
                7,036
                
                
                
                (577
                )
                
                
                4,433TOTAL
      EXPENSES
                
                
                86,411
                
                
                
                359,623
                
                
                
                137,978
                
                
                
                419,247(79,971
                )
                
                
                (322,219
                )
                
                
                (134,769
                )
                
                
                (379,116
                )Equity
      in income of investment in local partnerships
                
                
                18,892
                
                
                
                37,333
                
                
                
                52,895
                
                
                
                37,620Loss
      prior to gain on sale of limited partner interests/local partnership
      properties
                
                
                (61,079
                )
                
                
                (284,886
                )
                
                
                (81,874
                )
                
                
                (341,496
                )Gain
      on sale of limited partner interests/local partnership
      properties
                
                
                
                
                
                
                10NET
      LOSS
                
                
                (61,079
                )
                
                
                (284,876
                )
                
                
                (81,874
                )
                
                
                (341,496
                )Other
      comprehensive loss, net
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,426
                )COMPREHENSIVE
      LOSS
                
                $
                (61,079
                )
                
                $
                (284,876
                )
                
                $
                (81,874
                )
                
                $
                (344,922
                )NET
      LOSS ATTRIBUTABLE TOGeneral
      partner
                
                $
                (61,079
                )
                
                $
                (284,876
                )
                
                $
                (81,874
                )
                
                $
                (341,496
                )Limited
      partners
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —$
                (61,079
                )
                
                $
                (284,876
                )
                
                $
                (81,874
                )
                
                $
                (341,496
                )NET LOSSper unit of
      limited partnership interest (35,883 units of limited partnership
      interest)
                
                $
                —
                
                
                $
                —
                
                
                $
                —
                
                
                $
                —





See Notes
to Financial Statements.


4


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF CASH FLOWS


NINE
MONTHS ENDED DECEMBER 30, 2009 AND 2008


(UNAUDITED)





2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIESInterest
      received
                
                $
                1,727
                
                
                $
                9,611Cash
      paid foradministration
      fees
                
                
                (14,225
                )
                
                
                (11,638
                )management
      fees
                
                
                (50,000
                )
                
                
                (100,000
                )professional
      fees
                
                
                (97,997
                )
                
                
                (88,552
                )State
      of New Jersey filing fee
                
                
                (16,369
                )
                
                
                (20,412
                )printing,
      postage and other expenses
                
                
                (8,067
                )
                
                
                (23,089
                )Net
      cash used in operating activities
                
                
                (184,931
                )
                
                
                (234,080
                )CASH
      FLOWS FROM INVESTING ACTIVITIESProceeds
      from maturities/redemptions and sales of investments in
    bonds
                
                
                
                
                
                
                872,000Proceeds
      in connection with sale of limited partner interests/local partnership
      properties
                
                
                10Distributions
      received from local partnerships
                
                
                55,677
                
                
                
                25,690Net
      cash provided by investing activities
                
                
                55,687
                
                
                
                897,690Net
      increase (decrease) in cash and cash equivalents
                
                
                (129,244
                )
                
                
                663,610Cash
      and cash equivalents at beginning of period
                
                
                946,612
                
                
                
                380,660CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                817,368
                
                
                $
                1,044,270SIGNIFICANT
      NON-CASH INVESTING ACTIVITIESUnrealized
      loss on investments in bonds, net
                
                
                
                
                
                $
                (3,426
                )











See Notes
to Financial Statements.


5


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF CASH FLOWS - (Continued)


NINE
MONTHS ENDED DECEMBER 30, 2009 AND 2008


(UNAUDITED)





2009
              
              
              2008RECONCILIATION
      OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIESNet
      loss
              
              $
              (284,876
              )
              
              $
              (341,496
              )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesEquity
      in income of investment in local partnerships
              
              
              (37,333
              )
              
              
              (37,620
              )Distributions
      from local partnerships classified as other income
              
              
              (35,677
              )
              
              
              (25,690
              )Gain
      on sale of limited partner interests/local partnership
      properties
              
              
              (10
              )Accretion
      of zero coupon bonds
              
              
              
              
              
              
              (4,830
              )Increase
      in payable to general partner and affiliates
              
              
              210,558
              
              
              
              220,672Decrease
      in accounts payable and accrued expenses
              
              
              (37,593
              )
              
              
              (45,116
              )NET
      CASH USED IN OPERATING ACTIVITIES
              
              $
              (184,931
              )
              
              $
              (234,080
              )





See Notes
to Financial Statements.


6


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS


DECEMBER
30, 2009


(UNAUDITED)





1.
            Basis
      of Presentation





The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information.  They do not include all
information and footnotes required by GAAP for complete financial
statements.  The results of operations are impacted by the combined
results of operations of the Local Partnerships, which are provided by the Local
Partnerships on an unaudited basis during interim
periods.  Accordingly, the accompanying financial statements are
dependent on such unaudited information.  In the opinion of the
General Partner, the accompanying financial statements include all adjustments
necessary to present fairly the financial position as of December 30, 2009 and
the results of operations and cash flows for the interim periods
presented.  All adjustments are of a normal recurring
nature.  The results of operations for the nine months ended December
30, 2009 are not necessarily indicative of the results that may be expected for
the entire year.





Recent Accounting
Pronouncements





The
Financial Accounting Standards Board (“FASB”) issued Interpretation (“FIN”) No.
48, “Accounting for Uncertainty in Income Taxes,” as codified by FASB Accounting
Standards Codification (“ASC”) Topic 740; Subtopic 10, which interprets
Statement of Financial Accounting Standard (“SFAS”) No. 109, “Accounting for
Income Taxes,” as codified by ASC Topic 740; Subtopic 10.  ASC Topic
740; Subtopic 10 requires all taxpayers to analyze all material positions they
have taken or plan to take in all tax returns that have been filed or should
have been filed with all taxing authorities for all years still subject to
challenge by those taxing authorities.  If the position taken is
“more-likely-than-not” to be sustained by the taxing authority on its technical
merits and if there is more than a 50% likelihood that the position would be
sustained if challenged and considered by the highest court in the relevant
jurisdiction, the tax consequences of that position should be reflected in the
taxpayer’s GAAP financial statements.  Because the Partnership is a
pass-through entity and is not required to pay income taxes, ASC Topic 740;
Subtopic 10 does not currently have any impact on its financial
statements.





FASB
issued SFAS No. 157, “Fair Value Measurements,” as codified by ASC Topic 820,
which defines fair value, establishes a framework for measuring fair value in
accordance with GAAP and expands disclosures about fair value
measurements.  ASC Topic 820 applies to other accounting
pronouncements that require or permit fair value
measurements.  Accordingly, ASC Topic 820 does not require any new
fair value measurements.  ASC Topic 820 is effective for fiscal years
beginning after November 15, 2007.  The Partnership adopted ASC
Topic 820 effective March 31, 2008.  On February 6, 2008 FASB approved
the Financial Staff Position (“FSP”) that deferred the effective date of ASC
Topic 820 by one year for nonfinancial assets and liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis.  The partial adoption of ASC Topic 820 for
financial assets and liabilities did not have a material impact on the
Partnership’s financial position, results of operations or cash
flows.





The
Partnership adopted ASC Topic 820 as of March 31, 2008, with the exception of
the application of the statement to nonrecurring nonfinancial assets and
nonfinancial liabilities.  Nonrecurring nonfinancial assets and
liabilities for which the Partnership has not applied the provisions of ASC
Topic 820 include investment in local partnerships, which is accounted for under
the equity method of accounting.





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





Financial
assets accounted for at historical cost which approximates fair value on a
recurring basis as of December 30, 2009 are cash and cash equivalents of
$817,368 as reflected in the accompanying unaudited balance
sheet.  Cash and cash equivalents are carried at historical cost which
approximates fair value based on quoted market prices for identical securities
(Level 1 inputs).


7


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


DECEMBER
30, 2009


(UNAUDITED)





1.
            Basis
      of Presentation (continued)





FASB
issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - including an amendment of FASB Statement No. 115,” as codified by
ASC Topic 825; Subtopic 10, which permits entities to choose to measure many
financial instruments and certain other items at fair value.  The fair
value election is designed to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions.  ASC Topic 825; Subtopic 10 is
effective for fiscal years beginning after November 15, 2007.  On
March 31, 2008, the Partnership adopted ASC Topic 825; Subtopic 10 and elected
not to apply the provisions to its eligible financial assets and financial
liabilities on the date of adoption.  Accordingly, the initial
application of ASC Topic 825; Subtopic 10 had no effect on the Partnership’s
financial statements.





FASB
issued SFAS No. 141R, “Business Combinations,” as codified by ASC Topic 805,
which changes the accounting for acquisitions specifically eliminating the step
acquisition model, changing the recognition of contingent consideration from
being recognized when it is probable to being recognized at the time of
acquisition, and disallowing the capitalization of transaction costs and delays
when restructurings related to acquisitions can be recognized.  ASC
Topic 805 is effective for fiscal years ending after December 15, 2008 and its
adoption has not had an impact on the Partnership’s financial position or
results of operations.





FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51,” as codified by ASC Topic 810, which
replaces the concept of minority interest with noncontrolling interests in
subsidiaries.  Noncontrolling interests will now be reported as a
component of equity in the consolidated statement of financial
position.  Earnings attributable to noncontrolling interests will
continue to be reported as a part of consolidated earnings; however, ASC Topic
810 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement.  In addition, ASC Topic 810 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity.  ASC Topic 810
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests.  All other requirements of ASC Topic
810 shall be applied prospectively.  ASC Topic 810 is effective for
the first annual reporting period beginning on or after December 15, 2008 and
its adoption has not had an impact on the Partnership’s financial position or
results of operations.





The
Emerging Issues Task Force (“EITF”) issued EITF No. 08-6, “Equity Method
Investment Accounting Considerations,” as codified by ASC Topic 323; Subtopic
10, which addresses how the initial carrying value of an equity method
investment should be determined, how an impairment assessment of an underlying
indefinite-lived intangible asset of an equity method investment should be
performed, how an equity method investee’s issuance of shares should be
accounted for, and how to account for a change in an investment from the equity
method to the cost method.  ASC Topic 323; Subtopic 10 shall be
effective in fiscal years beginning on or after December 15, 2008, and
interim periods within those fiscal years.  ASC Topic 323; Subtopic 10
shall be applied prospectively with early application prohibited and its
adoption has not had an impact on the Partnership’s financial position or
results of operations.





In April
2009, FASB issued FSP 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” as codified by ASC Topic 825; Subtopic 10, which
requires disclosure about the method and significant assumptions used to
establish the fair value of financial instruments for interim reporting periods
as well as annual statements.  ASC Topic 825; Subtopic 10 is effective
for the Partnership as of June 30, 2009 and its adoption did not impact the
Partnership’s financial condition or results of operations.  The
Partnership has no financial instruments as of December 30, 2009.





In May
2009, FASB issued SFAS No. 165, “Subsequent Events,” as codified by ASC Topic
855, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued.  ASC Topic 855 is effective
for the Partnership as of June 30, 2009 and its adoption did not impact the
Partnership’s financial condition or results of operations.


8


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


DECEMBER
30, 2009


(UNAUDITED)





1.
            Basis
      of Presentation (continued)





In June
2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),”
as codified by ASC Topic 810; Subtopic 10.  ASC Topic 810; Subtopic 10
amends existing consolidation guidance for variable interest entities, requires
ongoing reassessment to determine whether a variable interest entity must be
consolidated, and requires additional disclosures regarding involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement.  ASC Topic 810; Subtopic 10 will be effective for
the Partnership’s fiscal year beginning March 31, 2010.  The
Partnership is currently evaluating the effects of ASC Topic 810; Subtopic 10 on
its financial statements.





2.
            Investment
      in Local Partnerships





The
Partnership originally acquired limited partner interests (the “Local
Partnership Interests”) in forty-three Local Partnerships representing capital
contributions in the aggregate amount of $29,384,966, which includes voluntary
advances made to a certain Local Partnership.  As of December 30,
2009, the Partnership holds a Local Partnership Interest in forty Local
Partnerships.  The Partnership has no legal obligation to fund any
operating deficits of the Local Partnerships.





For the
nine months ended December 30, 2009, the investment in local partnerships
activity consists of the following:





Investment
      in local partnerships as of March 30, 2009
                  
                  $
                  529,970Equity
      in income of investment in local partnerships
                  
                  
                  37,333
                  *Distributions
      received from Local Partnerships
                  
                  
                  (55,677
                  )Distributions
      classified as other income
                  
                  
                  35,677Investment
      in local partnerships as of December 30, 2009
                  
                  $
                  547,303





*
              In
      the event the operations of a Local Partnership result in a loss, equity
      in loss of each investment in Local Partnership allocated to the
      Partnership is recognized to the extent of the Partnership’s investment
      balance in each Local Partnership.  Equity in loss in excess of
      the Partnership’s investment balance in a Local Partnership is allocated
      to other partners’ capital in any such Local
  Partnership.





The
Partnership’s investment balance in NP-89 Limited Dividend Housing Association
Limited Partnership (“NP-89”) represents more than 20% of the Partnership’s
total assets as of December 30, 2009 and the equity in income of investment in
local partnerships reflected above is attributable to NP-89.  The
following financial information represents certain unaudited operating statement
data of NP-89 for the nine months ended September 30, 2009:





Revenue
                  
                  $
                  959,534Net
      income
                  
                  $
                  37,710





In July
2009, the Partnership withdrew from Westminster Apartments Limited Partnership
(“Westminster”), in connection with which the Partnership received
$10.  Such amount is reflected as gain on sale of limited partner
interests/local partnership properties in the accompanying unaudited statement
of operations for the nine months ended December 30, 2009.  The
Partnership’s investment balance in Westminster, after cumulative equity losses,
became zero during the year ended March 30, 1999.





In
December 2009, the Partnership assigned one-half of its 99% Local Partnership
Interest in Sydney Engel Associates L.P. (“Sydney Engel”) to an affiliate of the
Local General Partner of Sydney Engel.  The Partnership did not
receive any proceeds in connection with the assignment.  The
Partnership’s investment balance in Sydney Engel, after cumulative equity
losses, became zero during the year ended March 30, 1997.


9


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - (Continued)


DECEMBER
30, 2009


(UNAUDITED)





2.
            Investment
      in Local Partnerships (continued)





The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property.  As a result, the Property has been vacant since
October 2007.  Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid or formally extended, representing principal and accrued
interest of approximately $1,932,000 as of December 2009.  The Local
General Partner of Queen Lane further represents that the lender has not issued
a notice of default and that real estate taxes are in arrears approximately
$37,000 as of December 2009.  The Local General Partner of Queen Lane
is examining the potential to sell the Property.  The Partnership’s
investment balance in Queen Lane, after cumulative equity losses, became zero
during the year ended March 30, 2001.





3.
            Additional
      Information





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





4.
            Subsequent
      Events





Management
has evaluated all activity of the Partnershipthrough
February 10, 2010 and concluded that no subsequent events have occurred that
would require recognition in the accompanying financial statements or disclosure
in the notes thereto.


10


AMERICAN
TAX CREDIT PROPERTIES III L.P.





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





Material Changes in
Financial Condition





As of
December 30, 2009, American Tax Credit Properties III L.P. (the “Registrant”)
has not experienced a significant change in financial condition as compared to
March 30, 2009.  Principal changes in assets are comprised of periodic
transactions and adjustments and equity in income (loss) from operations of the
local partnerships (the “Local Partnerships”), which own low-income multifamily
residential complexes (the “Properties”) that qualified for the low-income tax
credit in accordance with Section 42 of the Internal Revenue Code (the
“Low-income Tax Credit”).  During the nine months ended December 30,
2009, Registrant received cash from interest revenue and distributions from
Local Partnerships and utilized cash for operating expenses.  Cash and
cash equivalents decreased by approximately $129,000 during the nine months
ended December 30, 2009.  During the nine months ended December 30,
2009, the investment in local partnerships increased as a result of equity in
the Local Partnerships’ net income for the nine months ended September 30, 2009
of $37,333, partially offset by distributions received from Local Partnerships
of $20,000 (excluding $35,677 of distributions classified as other income from
local partnerships).  Accounts payable and accrued expenses includes
deferred administration fees of $440,673 and payable to general partner and
affiliates represents deferred management and administration fees in the
accompanying unaudited balance sheet as of December 30, 2009.





Results of
Operations





Registrant’s
operating results are dependent upon the operating results of the Local
Partnerships and are impacted by the Local Partnerships’ policies.  In
addition, the operating results herein are not necessarily the same for tax
reporting.  Registrant accounts for its investment in local
partnerships in accordance with the equity method of
accounting.  Accordingly, the investment is carried at cost and is
adjusted for Registrant’s share of each Local Partnership’s results of
operations and by cash distributions received.  In the event the
operations of a Local Partnership result in a loss, 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.





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





Although
Registrant’s operations for the three months ended December 30, 2009 and 2008
have not varied significantly, as reflected by the net losses of $61,079 and
$81,874, respectively, administration and management fees decreased in the
cumulative amount of approximately $46,000 as a result of Registrant’s disposal
of its limited partner interests (the “Local Partnership Interests”) in
Westminster Apartments Limited Partnership (“Westminster”) and Sydney Engel
Associates L.P. (“Sydney Engel”) (see discussion below under Local Partnership
Matters) and equity in income of investment in local partnerships
decreased by approximately $34,000, which decrease is attributable to a decrease
in the net operating income of the Local Partnership in which Registrant
continues to have an investment balance.





Registrant’s
operations for the nine months ended December 30, 2009 and 2008 resulted in net
losses of $284,876 and $341,496, respectively.  Administration and
management fees decreased in the cumulative amount of approximately $58,000 as a
result of Registrant’s disposal of its Local Partnership Interests in
Westminster and Sydney Engel (see discussion below under Local Partnership
Matters).  Other comprehensive loss for the nine months ended
December 30, 2008 resulted from a net unrealized loss on investments in bonds of
$3,426.  Registrant’s investments in bonds as reflected in
Registrant’s balance sheet as of March 30, 2008 matured during the nine months
ended December 30, 2008.


11





AMERICAN
TAX CREDIT PROPERTIES III L.P.




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




Local Partnership
Matters





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





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





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





In July
2009, Registrant withdrew from Westminster, in connection with which Registrant
received $10.  Such amount is reflected as gain on sale of limited
partner interests/local partnership properties in the accompanying unaudited
statement of operations for the nine months ended December 30,
2009.  Registrant’s investment balance in Westminster, after
cumulative equity losses, became zero during the year ended March 30,
1999.





In
December 2009, Registrant assigned one-half of its 99% Local Partnership
Interest in Sydney Engel to an affiliate of the Local General Partner of Sydney
Engel.  Registrant did not receive any proceeds in connection with the
assignment.  Registrant’s investment balance in Sydney Engel, after
cumulative equity losses, became zero during the year ended March 30,
1997.




12




AMERICAN
TAX CREDIT PROPERTIES III L.P.





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





The Local
General Partner of Queen Lane Investors (“Queen Lane”) represents that, as a
result of a dispute between the local housing agency (the “Agency”) and the
Local General Partner of Queen Lane regarding the adequacy of certain unit
repairs mandated by the Agency, the Local General Partner of Queen Lane
requested that the Agency cancel the Section 8 voucher contract in connection
with the Property.  As a result, the Property has been vacant since
October 2007.  Two of Queen Lane’s mortgages matured in 2007 but have
not been repaid or formally extended, representing principal and accrued
interest of approximately $1,932,000 as of December 2009.  The Local
General Partner of Queen Lane further represents that the lender has not issued
a notice of default and that real estate taxes are in arrears approximately
$37,000 as of December 2009.  The Local General Partner of Queen Lane
is examining the potential to sell the Property.  Registrant’s
investment balance in Queen Lane, after cumulative equity losses, became zero
during the year ended March 30, 2001.





Critical Accounting Policies
and Estimates





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





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





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





·
            Registrant
      does not consolidate the accounts and activities of the Local
      Partnerships, which are considered Variable Interest Entities under
      Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No.
      46 - Revised, “Consolidation of Variable Interest Entities,” as codified
      by FASB Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10,
      because Registrant is not considered the primary
      beneficiary.  Registrant’s balance in investment in local
      partnerships represents the maximum exposure to loss in connection with
      such investments.  Registrant’s exposure to loss on the Local
      Partnerships is mitigated by the condition and financial performance of
      the underlying Properties as well as the strength of the Local General
      Partners.





Recent Accounting
Pronouncements





FASB
issued FIN No. 48, “Accounting for Uncertainty in Income Taxes,” as codified by
ASC Topic 740; Subtopic 10, which interprets Statement of Financial Accounting
Standard (“SFAS”) No. 109, “Accounting for Income Taxes,” as codified by ASC
Topic 740; Subtopic 10.  ASC Topic 740; Subtopic 10 requires all
taxpayers to analyze all material positions they have taken or plan to take in
all tax returns that have been filed or should have been filed with all taxing
authorities for all years still subject to challenge by those taxing
authorities.  If the position taken is “more-likely-than-not” to be
sustained by the taxing authority on its technical merits and if there is more
than a 50% likelihood that the position would be sustained if challenged and
considered by the highest court in the relevant jurisdiction, the tax
consequences of that position should be reflected in the taxpayer’s GAAP
financial statements.  Because Registrant is a pass-through entity and
is not required to pay income taxes, ASC Topic 740; Subtopic 10 does not
currently have any impact on its financial statements.




13




AMERICAN
TAX CREDIT PROPERTIES III L.P.





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




FASB
issued SFAS No. 157, “Fair Value Measurements,” as codified by ASC Topic 820,
which defines fair value, establishes a framework for measuring fair value in
accordance with GAAP and expands disclosures about fair value
measurements.  ASC Topic 820 applies to other accounting
pronouncements that require or permit fair value
measurements.  Accordingly, ASC Topic 820 does not require any new
fair value measurements.  ASC Topic 820 is effective for fiscal years
beginning after November 15, 2007.  Registrant adopted ASC Topic
820 effective March 31, 2008.  On February 6, 2008 FASB approved the
Financial Staff Position (“FSP”) that deferred the effective date of ASC Topic
820 by one year for nonfinancial assets and liabilities that are recognized or
disclosed at fair value in the financial statements on a nonrecurring
basis.  The partial adoption of ASC Topic 820 for financial assets and
liabilities did not have a material impact on Registrant’s financial position,
results of operations or cash flows.





Registrant
adopted ASC Topic 820 as of March 31, 2008, with the exception of the
application of the statement to nonrecurring nonfinancial assets and
nonfinancial liabilities.  Nonrecurring nonfinancial assets and
liabilities for which Registrant has not applied the provisions of ASC Topic 820
include investment in local partnerships, which is accounted for under the
equity method of accounting.





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





Financial
assets accounted for at historical cost which approximates fair value on a
recurring basis as of December 30, 2009 are cash and cash equivalents of
$817,368 as reflected in the accompanying unaudited balance
sheet.  Cash and cash equivalents are carried at historical cost which
approximates fair value based on quoted market prices for identical securities
(Level 1 inputs).





FASB
issued SFAS No. 141R, “Business Combinations,” as codified by ASC Topic 805,
which changes the accounting for acquisitions specifically eliminating the step
acquisition model, changing the recognition of contingent consideration from
being recognized when it is probable to being recognized at the time of
acquisition, and disallowing the capitalization of transaction costs and delays
when restructurings related to acquisitions can be recognized.  ASC
Topic 805 is effective for fiscal years ending after December 15, 2008 and its
adoption has not had an impact on Registrant’s financial position or results of
operations.





FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51,” as codified by ASC Topic 810, which
replaces the concept of minority interest with noncontrolling interests in
subsidiaries.  Noncontrolling interests will now be reported as a
component of equity in the consolidated statement of financial
position.  Earnings attributable to noncontrolling interests will
continue to be reported as a part of consolidated earnings; however, ASC Topic
810 requires that income attributable to both controlling and noncontrolling
interests be presented separately on the face of the consolidated income
statement.  In addition, ASC Topic 810 provides that when losses
attributable to noncontrolling interests exceed the noncontrolling interest’s
basis, losses continue to be attributed to the noncontrolling interest as
opposed to being absorbed by the consolidating entity.  ASC Topic 810
requires retroactive adoption of the presentation and disclosure requirements
for existing minority interests.  All other requirements of ASC Topic
810 shall be applied prospectively.  ASC Topic 810 is effective for
the first annual reporting period beginning on or after December 15, 2008 and
its adoption has not had an impact on Registrant’s financial position or results
of operations.





The
Emerging Issues Task Force (“EITF”) issued EITF No. 08-6, “Equity Method
Investment Accounting Considerations,” as codified by ASC Topic 323; Subtopic
10, which addresses how the initial carrying value of an equity method
investment should be determined, how an impairment assessment of an underlying
indefinite-lived intangible asset of an equity method investment should be
performed, how an equity method investee’s issuance of shares should be
accounted for, and how to account for a change in an investment from the equity
method to the cost method.  ASC Topic 323; Subtopic 1 shall be
effective in fiscal years beginning on or after December 15, 2008, and
interim periods within those fiscal years.  ASC Topic 323; Subtopic 1
shall be applied prospectively with early application prohibited and its
adoption has not had an impact on Registrant’s financial position or results of
operations.






14




AMERICAN
TAX CREDIT PROPERTIES III L.P.





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





In April
2009, FASB issued FSP 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” as codified by ASC Topic 825; Subtopic 10, which
requires disclosure about the method and significant assumptions used to
establish the fair value of financial instruments for interim reporting periods
as well as annual statements.  ASC Topic 825; Subtopic 10 is effective
for Registrant as of June 30, 2009 and its adoption did not impact Registrant’s
financial condition or results of operations.  Registrant has no
financial instruments as of December 30, 2009.





In May
2009, FASB issued SFAS No. 165, “Subsequent Events,” as codified by ASC Topic
855, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued.  ASC Topic 855 is effective
for Registrant as of June 30, 2009 and its adoption did not impact Registrant’s
financial condition or results of operations.





In June
2009, FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),”
as codified by ASC Topic 810; Subtopic 10.  ASC Topic 810; Subtopic 10
amends existing consolidation guidance for variable interest entities, requires
ongoing reassessment to determine whether a variable interest entity must be
consolidated, and requires additional disclosures regarding involvement with
variable interest entities and any significant changes in risk exposure due to
that involvement.  ASC Topic 810; Subtopic 10 will be effective for
Registrant’s fiscal year beginning March 31, 2010.  Registrant is
currently evaluating the effects of ASC Topic 810; Subtopic 10 on its financial
statements.





Forward-Looking
Information





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





Item
      3.
            Quantitative and
      Qualitative Disclosure About Market
Risk.





None.





Item
      4.
            Controls and
      Procedures.





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




Registrant
has carried out an evaluation, under the supervision and the participation of
its management, including the Chief Executive Officer and Chief Financial
Officer of the general partner of the General Partner, of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined
in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of
the three months ended December 30, 2009.  Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer of the general partner
of the General Partner concluded that Registrant’s disclosure controls and
procedures were effective as of December 30, 2009.






15




AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
      4T.
            Internal Control Over
      Financial Reporting.





There
were no changes in Registrant’s internal control over financial reporting during
the three months ended December 30, 2009 that have materially affected, or
are reasonably likely to materially affect, Registrant’s internal control over
financial reporting.




16




AMERICAN
TAX CREDIT PROPERTIES III L.P.





Part
II - OTHER
INFORMATION





Item
      1.
            Legal
      Proceedings.





None.





Item 1A.
            Risk
      Factors.





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





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





None.





Item
      3.
            Defaults Upon Senior
      Securities.





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





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





None.





Item
      5.
            Other
      Information.





None.





Item
      6.
            Exhibits.





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


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


Exhibit
32.1 - Section 1350 Certification of Chief Executive Officer.


Exhibit
32.2 - Section 1350 Certification of Chief Financial Officer.






17




SIGNATURES





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





AMERICAN
      TAX CREDIT PROPERTIES III L.P.(a
      Delaware limited partnership)By:     
      Richman Tax Credit Properties III L.P.,General
      PartnerBy:     
      Richman Housing Credits Inc.,general
      partnerDated:
      February 10, 2010
                                  
                                  /s/David
      SalzmanBy: 
      David SalzmanChief
      Executive OfficerDated:
      February 10, 2010
                                  
                                  /s/James
      HusseyBy: 
      James HusseyChief
      Financial OfficerDated:
      February 10, 2010
                                  
                                  /s/Richard
      Paul RichmanBy: 
      Richard Paul RichmanDirector




18