UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549







FORM
10-Q





(Mark
One)


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





For the
Quarterly Period Ended September
29, 2010





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
November 3, 2010, there are 35,883 units of limited partnership interest
outstanding.





AMERICAN
TAX CREDIT PROPERTIES III L.P.





PART
I - FINANCIAL
INFORMATION





Table of
Contents


PageItem
      1.
                                    Financial Statements.Balance
      Sheets
                                    
                                    3Statements
      of Operations
                                    
                                    4Statements
      of Cash Flows
                                    
                                    5Notes
      to Financial Statements
                                    
                                    6Item
      2.
                                    Management’s Discussion and Analysis of
      FinancialCondition and Results of
      Operations.
                                    
                                    8Item
      3.
                                    Quantitative and Qualitative Disclosure About
      Market Risk.
                                    
                                    10Item
      4.
                                    Controls and Procedures.
                                    
                                    11Item
      4T.
                                    Internal Control Over Financial
      Reporting.
                                    
                                    11


2


AMERICAN
TAX CREDIT PROPERTIES III L.P.


BALANCE
SHEETS


(UNAUDITED)





September 29,
                
                
                March 30,2010
                
                
                2010ASSETSCash
      and cash equivalents
                
                $
                782,487
                
                
                $
                312,127Investment
      in mutual fund
                
                
                519,492
                
                
                
                512,962Investment
      in bond
                
                
                100,100
                
                
                
                —Interest
      receivable
                
                
                99
                
                
                
                —Investment
      in local partnerships
                
                
                —
                
                
                
                516,163$
                1,402,178
                
                
                $
                1,341,252LIABILITIES
      AND PARTNERS’ EQUITY (DEFICIT)LiabilitiesAccounts
      payable and accrued expenses
                
                $
                470,159
                
                
                $
                518,831Payable
      to general partner and affiliates
                
                
                3,390,893
                
                
                
                3,217,1893,861,052
                
                
                
                3,736,020Commitments
      and contingenciesPartners’
      equity (deficit)General
      partner
                
                
                (2,464,210
                )
                
                
                (2,394,768
                )Limited
      partners (35,883 units of limited partnership interest
      outstanding)
                
                
                —
                
                
                
                —Accumulated
      other comprehensive income
                
                
                5,336
                
                
                
                —(2,458,874
                )
                
                
                (2,394,768
                )$
                1,402,178
                
                
                $
                1,341,252





See Notes
to Financial Statements.


3


AMERICAN
TAX CREDIT PROPERTIES III L.P.


STATEMENTS
OF OPERATIONS


THREE
AND SIX MONTH PERIODS ENDED SEPTEMBER 29, 2010 AND 2009


(UNAUDITED)





Three Months
                  Ended
                  September 29,
                
                
                Six Months
                  Ended
                  September 29,
                
                
                Three Months
                  Ended
                  September 29,
                
                
                Six Months
                  Ended
                  September 29,2010
                
                
                2010
                
                
                2009
                
                
                2009REVENUEInterest
                
                $
                3,728
                
                
                $
                5,724
                
                
                $
                760
                
                
                $
                947Other
      income from local partnerships
                
                
                2,540
                
                
                
                20,403
                
                
                
                
                
                
                
                30,017TOTAL
      REVENUE
                
                
                6,268
                
                
                
                26,127
                
                
                
                760
                
                
                
                30,964EXPENSESAdministration
      fees
                
                
                34,776
                
                
                
                89,419
                
                
                
                50,562
                
                
                
                105,232Management
      fees
                
                
                34,777
                
                
                
                89,419
                
                
                
                50,563
                
                
                
                105,232Professional
      fees
                
                
                16,256
                
                
                
                33,436
                
                
                
                21,710
                
                
                
                52,919State
      of New Jersey filing fee
                
                
                4,581
                
                
                
                8,901
                
                
                
                419
                
                
                
                5,183Printing,
      postage and other
                
                
                4,184
                
                
                
                7,859
                
                
                
                1,765
                
                
                
                4,646TOTAL
      EXPENSES
                
                
                94,574
                
                
                
                229,034
                
                
                
                125,019
                
                
                
                273,212(88,306
                )
                
                
                (202,907
                )
                
                
                (124,259
                )
                
                
                (242,248
                )Equity
      in income of investment in local partnerships
                
                
                51,410
                
                
                
                84,423
                
                
                
                20,517
                
                
                
                18,441Loss
      prior to gain on sale of limited partner interests/local partnership
      properties
                
                
                (36,896
                )
                
                
                (118,484
                )
                
                
                (103,742
                )
                
                
                (223,807
                )Gain
      on sale of limited partner interests/local partnership
      properties
                
                
                49,042
                
                
                
                49,042
                
                
                
                10
                
                
                
                10NET
      INCOME (LOSS)
                
                
                12,146
                
                
                
                (69,442
                )
                
                
                (103,732
                )
                
                
                (223,797
                )Other
      comprehensive income
                
                
                7,977
                
                
                
                5,336COMPREHENSIVE
      INCOME (LOSS)
                
                $
                20,123
                
                
                $
                (64,106
                )
                
                $
                (103,732
                )
                
                $
                (223,797
                )NET
      INCOME (LOSS) ATTRIBUTABLE TOGeneral
      partner
                
                $
                12,146
                
                
                $
                (69,442
                )
                
                $
                (103,732
                )
                
                $
                (223,797
                )Limited
      partners
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —$
                12,146
                
                
                $
                (69,442
                )
                
                $
                (103,732
                )
                
                $
                (223,797
                )NET INCOME (LOSS)per
      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


SIX
MONTHS ENDED SEPTEMBER 29, 2010 AND 2009


(UNAUDITED)





2010
                
                
                2009CASH
      FLOWS FROM OPERATING ACTIVITIESInterest
      received
                
                $
                8,194
                
                
                $
                947Cash
      paid forAdministration
      fees
                
                
                (5,134
                )
                
                
                (9,051
                )Management
      fees
                
                
                
                
                
                
                (50,000
                )Professional
      fees
                
                
                (71,216
                )
                
                
                (94,929
                )State
      of New Jersey filing fee
                
                
                (15,398
                )
                
                
                (16,369
                )Printing,
      postage and other expenses
                
                
                (12,254
                )
                
                
                (5,210
                )Net
      cash used in operating activities
                
                
                (95,808
                )
                
                
                (174,612
                )CASH
      FLOWS FROM INVESTING ACTIVITIESInvestments
      in mutual fund
                
                
                (2,923
                )Investment
      in bond
                
                
                (100,940
                )Proceeds
      in connection with sale of limited partner interests/local partnership
      properties
                
                
                649,628
                
                
                
                10Distributions
      received from local partnerships
                
                
                20,403
                
                
                
                40,017Net
      cash provided by investing activities
                
                
                566,168
                
                
                
                40,027Net
      increase (decrease) in cash and cash equivalents
                
                
                470,360
                
                
                
                (134,585
                )Cash
      and cash equivalents at beginning of period
                
                
                312,127
                
                
                
                946,612CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                
                $
                782,487
                
                
                $
                812,027RECONCILIATION
      OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIESNet
      loss
                
                $
                (69,442
                )
                
                $
                (223,797
                )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesEquity
      in income of investment in local partnerships
                
                
                (84,423
                )
                
                
                (18,441
                )Other
      income from local partnerships
                
                
                (20,403
                )
                
                
                (30,017
                )Gain
      on sale of limited partner interests/local partnership
      properties
                
                
                (49,042
                )
                
                
                (10
                )Amortization
      of premium on investment in bond
                
                
                819Increase
      in interest receivable
                
                
                1,651Increase
      in prepaid expenses
                
                
                
                
                
                
                (1,259
                )Increase
      in payable to general partner and affiliates
                
                
                173,704
                
                
                
                151,413Decrease
      in accounts payable and accrued expenses
                
                
                (48,672
                )
                
                
                (52,501
                )NET
      CASH USED IN OPERATING ACTIVITIES
                
                $
                (95,808
                )
                
                $
                (174,612
                )SIGNIFICANT
      NONCASH INVESTING ACTIVITIESUnrealized
      gain on investment in mutual fund
                
                $
                3,607Unrealized
      gain on investment in bond
                
                $
                1,729





See Notes
to Financial Statements.


5


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS


SEPTEMBER
29, 2010


(UNAUDITED)





1.
            Basis
      of Presentation





The
accompanying unaudited financial statements of American Tax Credit Properties
III L.P. (the “Partnership”) 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, in part, 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 unaudited financial statements
are dependent on such unaudited information.  In the opinion of the
General Partner, the accompanying unaudited financial statements include all
adjustments necessary to present fairly the financial position as of September
29, 2010 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 six months ended September
29, 2010 are not necessarily indicative of the results that may be expected for
the entire year.





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 September 29,
2010, the Partnership holds a Local Partnership Interest in thirty-eight Local
Partnerships.  The Partnership has no legal obligation to fund any
operating deficits of the Local Partnerships.





For the
six months ended September 29, 2010, the investment in local partnerships
activity consists of the following:





Investment
      in local partnerships as of March 30, 2010
                  
                  $
                  516,163Equity
      in income of investment in local partnerships
                  
                  
                  84,423
                  *Distributions
      received in connection with sale of Local Partnership Interest applied
      against investment in local partnerships
                  
                  
                  (600,586
                  )Distributions
      received from Local Partnerships
                  
                  
                  (20,403
                  )Distributions
      classified as other income
                  
                  
                  20,403Investment
      in local partnerships as of September 29, 2010
                  
                  $
                  —





*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.





In August
2010, the Partnership sold its Local Partnership Interest in NP-89 Limited
Dividend Housing Association Limited Partnership (“NP-89”) to an affiliate of
the Local General Partner of NP-89 for $649,628.  In connection with
the sale, the Partnership recognized a gain of $49,042; such amount is reflected
as gain on sale of limited partner interests/local partnership properties in the
accompanying unaudited statement of operations for the six months ended
September 29, 2010.  As a result of the sale, the Partnership’s
investment in local partnerships has a zero balance as of September 29,
2010.  The equity in income from the Partnership’s investment in NP-89
for the six months ended June 30, 2010 represents more than 20% of the
Partnership’s net loss as reflected in the accompanying unaudited statement of
operations for the six months ended September 29, 2010.  The following
financial information represents certain unaudited operating statement data of
NP-89 for the six months ended June 30, 2010:





Revenue
                  
                  $
                  659,853Net
      income
                  
                  $
                  85,276


6


AMERICAN
TAX CREDIT PROPERTIES III L.P.


NOTES
TO FINANCIAL STATEMENTS - CONTINUED


SEPTEMBER
29, 2010


(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 $2,055,000 as of October 2010.  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
$20,000 as of October 2010.  The Local General Partner of Queen Lane
is attempting to refinance the mortgages and make the necessary repairs to the
Property.  The Partnership’s investment balance in Queen Lane, after
cumulative equity losses, became zero during the year ended March 30,
2001.





3.
            Investment
      in Mutual Fund





The
Partnership carries its investment in mutual fund (the “Fund”) at estimated fair
value.  The fair value of the Partnership’s investment in mutual fund
is classified within Level 1 of the fair value hierarchy of the guidance on
Fair Value Measurements as defined in Accounting Standards Codification (“ASC”)
Topic 820.  Level 1 inputs utilize quoted prices (unadjusted) in
active markets for identical assets or liabilities that the Partnership has the
ability to access.  The Fund’s net asset value (“NAV”) is $10.07 per
share as of September 29, 2010.  The unrealized gain of $3,607 is
included as a component of accumulated other comprehensive income in the
accompanying unaudited financial statements as of and for the six months ended
September 29, 2010.





4.
            Investment
      in Bond





The
Partnership carries its investment in bond as available-for-sale because such
investment is used to facilitate and provide flexibility for its obligations,
including resolving circumstances that may arise in connection with the Local
Partnerships.  Investment in bond is reflected in the accompanying
unaudited balance sheet as of September 29, 2010 at estimated fair value and is
classified within Level 1 of the fair value hierarchy of the guidance on
Fair Value Measurements (see discussion in Note 3 above).  The
unrealized gain of $1,729 is included as a component of accumulated other
comprehensive income in the accompanying unaudited financial statements as of
and for the six months ended September 29, 2010.





As of
September 29, 2010, certain information concerning investment in bond is as
follows:





Description and maturity
                    
                    Amortized
                        cost
                    
                    
                    Gross
                        unrealized
                        gain
                    
                    
                    Gross
                        unrealized
                        loss
                    
                    
                    Estimated
                        fair valueCorporate
      debt securityAfter
      ten years
                    
                    $
                    98,371
                    
                    
                    $
                    1,729
                    
                    
                    $
                    —
                    
                    
                    $
                    100,100





5.
            Additional
      Information





Additional
information, including the audited March 30, 2010 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, 2010 on file with the Securities and Exchange
Commission.


7


AMERICAN
TAX CREDIT PROPERTIES III L.P.





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





Material Changes in
Financial Condition





As of
September 29, 2010, American Tax Credit Properties III L.P. (the “Registrant”)
experienced a significant change in financial condition as compared to March 30,
2010 primarily as a result of the sale of its limited partner interest (the
“Local Partnership Interest”) in NP-89 Limited Dividend Housing Association
Limited Partnership (“NP-89”) in August 2010 (see discussion below under Results of Operations
and Local Partnership
Matters).  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 six months
ended September 29, 2010, Registrant received cash from interest revenue,
distributions from Local Partnerships and proceeds in connection with the sale
of its Local Partnership Interest in NP-89 and utilized cash for operating
expenses and investments in a mutual fund and a bond.  Cash and cash
equivalents, investment in mutual fund and investment in bond increased, in the
aggregate, by approximately $577,000 during the six months ended September 29,
2010 (which includes unrealized gains on investment in mutual fund and
investment in bond in the aggregate of approximately
$5,000).  Registrant intends to hold the bond until its call date
(September 2013) and therefore does not expect to realize significant gains or
losses on its investment in bond, if any.  During the six months ended
September 29, 2010, the investment in local partnerships decreased as a result
of Registrant’s sale of its Local Partnership Interest in NP-89, the only Local
Partnership in which Registrant continued to have an investment balance (see
discussion below under Results of Operations
and Local Partnership
Matters).  As a result of the sale, Registrant’s investment in
local partnerships has a zero balance as of September 29,
2010.  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 September 29, 2010.





Results of
Operations





Registrant’s
operating results are dependent, in part, 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.  As a result of Registrant’s sale of its Local
Partnership Interest in NP-89, the only Local Partnership in which Registrant
continued to have an investment balance (see discussion below under Local Partnership
Matters), Registrant’s investment in local partnerships has a zero
balance as of September 29, 2010.





Cumulative
losses and cash distributions in excess of investment in local partnerships may
result from a variety of circumstances, including a Local Partnership's
accounting policies, subsidy structure, debt structure and operating deficits,
among other things.  Accordingly, cumulative losses and cash
distributions in excess of the investment are not necessarily indicative of
adverse operating results of a Local Partnership.





Registrant’s
operations for the three months ended September 29, 2010 and 2009 resulted in
net income (loss) of $12,146 and $(103,732), respectively.  The
decrease in net loss from fiscal 2009 to fiscal 2010 is primarily attributable
to (i) an increase in equity in income of investment in local partnerships of
approximately $31,000, which is attributable to an increase in the net operating
income of the Local Partnership in which Registrant continued to have an
investment balance, (ii) gain on the sale of Registrant’s Local Partnership
Interest in NP-89 of approximately $49,000 and (iii) a decrease in
administration fees and management fees in the cumulative amount of
approximately $32,000 resulting from Registrant’s sale of certain Local
Partnership Interests since September 29, 2009.  Other comprehensive
income for the three months ended September 29, 2010 resulted from unrealized
gains on investment in mutual fund and investment in bond of $4,633 and $3,344,
respectively.





Registrant’s
operations for the six months ended September 29, 2010 and 2009 resulted in net
losses of $69,442 and $223,797, respectively.  The decrease in net
loss from fiscal 2009 to fiscal 2010 is primarily attributable to (i) an
increase in equity in income of investment in local partnerships of
approximately $66,000, which is attributable to an increase in the net operating
income of the Local Partnership in which Registrant continued to have an
investment balance, (ii) gain on the sale of Registrant’s Local Partnership
Interest in NP-89 of approximately $49,000 and (iii) a decrease in
administration fees and management fees in the cumulative amount of
approximately $32,000 resulting from Registrant’s sale of certain Local
Partnership Interests since September 29, 2009.  Other comprehensive
income for the six months ended September 29, 2010 resulted from unrealized
gains on investment in mutual fund and investment in bond of $3,607 and $1,729,
respectively.


8


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 September 29, 2010, Registrant owns
thirty-eight 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.  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.  One Local Partnership’s Section 8 contract is 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 August
2010, Registrant sold its Local Partnership Interest in NP-89 to an affiliate of
the Local General Partner of NP-89 for $649,628.  In connection with
the sale, Registrant recognized a gain of $49,042; such amount is reflected as
gain on sale of limited partner interests/local partnership properties in the
accompanying unaudited statement of operations for the six months ended
September 29, 2010.  As a result of the sale, Registrant’s investment
in local partnerships has a zero balance as of September 29,
2010.


9


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 $2,055,000 as of October 2010.  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
$20,000 as of October 2010.  The Local General Partner of Queen Lane
is attempting to refinance the mortgages and make the necessary repairs to 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.





·
            Registrant
      does not consolidate the accounts and activities of the Local
      Partnerships, which are considered Variable Interest Entities as defined
      by Financial Accounting Standards Board (“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 financial strength
      of the Local General Partners.  As a result of Registrant’s sale
      of its local Partnership Interest in NP-89, Registrant’s investment in
      local partnerships has a zero balance as of September 29,
      2010.





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.





Registrant’s
investment in mutual fund (the “Fund”) is subject to certain
risk.  The fixed income securities in which the Fund invests are
subject to interest rate risk, credit risk, prepayment risk, counterparty risk,
municipal securities risk, liquidity risk, management risk, government security
risk and valuation risk.  Typically, when interest rates rise, the
market prices of fixed income securities go down.  The Fund is
classified as “non-diversified,” and thus may invest most of its assets in
securities issued by or representing a small number of issuers.  As a
result, the Fund may be more susceptible to the risks associated with these
particular issuers, or to a single economic, political or regulatory occurrence
affecting these issuers.  These risks could adversely affect the
Fund’s net asset value (“NAV”), yield and total return.


10


AMERICAN
TAX CREDIT PROPERTIES III L.P.





Item
      3.
            Quantitative and
      Qualitative Disclosure About Market Risk
    (Continued).





The
market value of Registrant’s investment in bond is subject to fluctuation based
upon changes in interest rates relative to the investment’s maturity date and
the associated bond rating.  Since Registrant’s investment in bond is
callable in 2013, the value of such investment may be adversely impacted in an
environment of rising interest rates in the event Registrant decides to
liquidate the investment prior to its call date.  Although Registrant
may utilize the investment to pay for its operating expenses and/or for certain
Local Partnership matters, it otherwise intends to hold such investment to its
call date.  Therefore, Registrant does not anticipate any material
adverse impact in connection with such investment.





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 September 29, 2010.  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 September 29, 2010.





Item
      4T.
            Internal Control Over
      Financial Reporting.





There
were no changes in Registrant’s internal control over financial reporting during
the three months ended September 29, 2010 that have materially affected, or
are reasonably likely to materially affect, Registrant’s internal control over
financial reporting.


11


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,
2010.





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.
            Removed and
      Reserved.





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.


12





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:
      November 3, 2010
            
            /s/David
      SalzmanBy:
            David
      SalzmanChief
      Executive OfficerDated:
      November 3, 2010
            
            /s/James
      HusseyBy:
            James
      HusseyChief
      Financial OfficerDated:
      November 3, 2010
            
            /s/Richard
      Paul RichmanBy:
            Richard
      Paul RichmanDirector




13