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, 2005

                                       OR

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

For the transition period from ____________ to ____________

                         Commission file number: 0-19217


                     American Tax Credit Properties III L.P.
                     ---------------------------------------
             (Exact name of Registrant as specified in its charter)


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


 Richman Tax Credit Properties III L.P.
         340 Pemberwick Road
        Greenwich, 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 is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer |_| Accelerated Filer |_| Non-Accelerated Filer |X|


Yes |_| No |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|
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


Table of Contents                                                           Page
-----------------                                                           ----

Balance Sheets..............................................................   3

Statements of Operations....................................................   4

Statements of Cash Flows....................................................   5

Notes to Financial Statements...............................................   7


                                       2
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                                 BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       December 30,      March 30,
                                                                           Notes           2005            2005
                                                                       ------------    ------------    ------------
<S>                                                                    <C>             <C>             <C>
ASSETS

Cash and cash equivalents                                                              $     61,779    $     58,001
Investments in bonds                                                              2       1,728,773       1,936,474
Investment in local partnerships                                                  3         567,462         751,675
Interest receivable                                                                           5,675           1,599
                                                                                       ------------    ------------
                                                                                       $  2,363,689    $  2,747,749
                                                                                       ============    ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

   Accounts payable and accrued expenses                                               $    610,570    $    622,126
   Payable to general partner and affiliates                                              2,141,694       1,973,908
                                                                                       ------------    ------------

                                                                                          2,752,264       2,596,034
                                                                                       ------------    ------------
Commitments and contingencies                                                   3,4

Partners' equity (deficit)

   General partner                                                                         (319,404)       (314,335)
   Limited partners (35,883 units of limited partnership interest
     outstanding)                                                                           (91,305)        410,557
   Accumulated other comprehensive income, net                                    2          22,134          55,493
                                                                                       ------------    ------------

                                                                                           (388,575)        151,715
                                                                                       ------------    ------------

                                                                                       $  2,363,689    $  2,747,749
                                                                                       ============    ============
</TABLE>

                       See Notes to Financial Statements.


                                       3
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                          Three Months    Nine Months     Three Months     Nine Months
                                                              Ended           Ended           Ended           Ended
                                                          December 30,    December 30,    December 30,    December 30,
                                              Notes           2005            2005            2004            2004
                                          ------------    ------------    ------------    ------------    ------------
<S>                                       <C>             <C>             <C>             <C>             <C>
REVENUE

Interest                                                  $     22,932    $     74,567    $     30,380    $     96,538
Other income from local partnerships                 3           2,533          37,743           6,786          32,955
                                                          ------------    ------------    ------------    ------------

TOTAL REVENUE                                                   25,465         112,310          37,166         129,493
                                                          ------------    ------------    ------------    ------------
EXPENSES

Administration fees                                             57,643         172,929          57,643         172,929
Management fees                                                 57,643         172,929          57,643         172,929
Professional fees                                               16,286          55,395          15,538          52,788
State of New Jersey filing fee                                   6,511          24,388           6,002          18,499
Printing, postage and other                                      9,569          19,868           5,213          14,717
                                                          ------------    ------------    ------------    ------------

TOTAL EXPENSES                                                 147,652         445,509         142,039         431,862
                                                          ------------    ------------    ------------    ------------

                                                              (122,187)       (333,199)       (104,873)       (302,369)

Equity in loss of investment in local
  partnerships                                       3         (60,678)       (173,732)        (34,410)       (239,565)
                                                          ------------    ------------    ------------    ------------

NET LOSS                                                      (182,865)       (506,931)       (139,283)       (541,934)

Other comprehensive loss                             2         (12,981)        (33,359)        (24,731)        (98,226)
                                                          ------------    ------------    ------------    ------------

COMPREHENSIVE LOSS                                        $   (195,846)   $   (540,290)   $   (164,014)   $   (640,160)
                                                          ============    ============    ============    ============

NET LOSS ATTRIBUTABLE TO

   General partner                                        $     (1,828)   $     (5,069)   $     (1,392)   $     (5,419)
   Limited partners                                           (181,037)       (501,862)       (137,891)       (536,515)
                                                          ------------    ------------    ------------    ------------
                                                          $   (182,865)   $   (506,931)   $   (139,283)   $   (541,934)
                                                          ============    ============    ============    ============
NET LOSS per unit of limited partnership
  interest (35,883 units of limited
  partnership interest)                                   $      (5.05)   $     (13.99)   $      (3.84)   $     (14.95)
                                                          ============    ============    ============    ============
</TABLE>

                       See Notes to Financial Statements.


                                       4
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                            STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED DECEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               2005           2004
                                                          ------------    ------------
<S>                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Interest received                                         $      9,418    $     46,677

Cash paid for
     administration fees                                       (12,592)       (183,489)
     management fees                                          (165,480)       (220,781)
     professional fees                                         (66,968)        (68,929)
     State of New Jersey filing fee                            (26,371)        (24,995)
     printing, postage and other expenses                      (17,868)        (16,717)
                                                          ------------    ------------

Net cash used in operating activities                         (279,861)       (468,234)
                                                          ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from maturities/redemptions and sales of bonds        235,415         401,193
Cash distributions from local partnerships                      48,224          42,955
                                                          ------------    ------------

Net cash provided by investing activities                      283,639         444,148
                                                          ------------    ------------

Net increase (decrease) in cash and cash equivalents             3,778         (24,086)

Cash and cash equivalents at beginning of period                58,001         103,242
                                                          ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                $     61,779    $     79,156
                                                          ============    ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized loss on investments in bonds, net              $    (33,359)   $    (98,226)
                                                          ============    ============
</TABLE>

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

                       See Notes to Financial Statements.


                                       5
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                     STATEMENTS OF CASH FLOWS - (continued)
                  NINE MONTHS ENDED DECEMBER 30, 2005 AND 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 2005           2004
                                                                             ------------    ------------
<S>                                                                          <C>             <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Net loss                                                                     $   (506,931)   $   (541,934)

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

   Equity in loss of investment in local partnerships                             173,732         239,565
   Distributions from local partnerships classified as other income               (37,743)        (32,955)
   Amortization of net premium on investments in bonds                              1,068           3,448
   Gain on redemptions and sales of bonds                                          (1,193)
   Accretion of zero coupon bonds                                                 (62,141)        (65,165)
   Decrease in interest receivable                                                 (4,076)         13,049
   Decrease in accounts payable and accrued expenses                              (11,556)       (140,637)
   Increase in payable to general partner and affiliates                          167,786          57,588
                                                                             ------------    ------------

NET CASH USED IN OPERATING ACTIVITIES                                        $   (279,861)   $   (468,234)
                                                                             ============    ============
</TABLE>

                       See Notes to Financial Statements.


                                       6
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 30, 2005
                                   (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 for interim financial information. They do not include
      all information and footnotes required by accounting principles generally
      accepted in the United States of America for complete financial
      statements. The results of operations are impacted significantly by the
      combined results of operations of the Local Partnerships, which are
      provided by the Local Partnerships on an unaudited basis during interim
      periods. Accordingly, the accompanying financial statements are dependent
      on such unaudited information. In the opinion of the General Partner, the
      financial statements include all adjustments necessary to present fairly
      the financial position as of December 30, 2005 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, 2005 are not necessarily indicative
      of the results that may be expected for the entire year.

2.    Investments in Bonds

      As of December 30, 2005, certain information concerning investments in
      bonds is as follows:

<TABLE>
<CAPTION>
                                                        Gross          Gross
                                        Amortized     unrealized     unrealized      Estimated
Description and maturity                  cost          gains          losses       fair value
------------------------              ------------   ------------   ------------   ------------
<S>                                   <C>            <C>            <C>            <C>
Corporate debt securities
  After one year through five years   $    202,775   $      9,424   $         --   $    212,199
                                      ------------   ------------   ------------   ------------

U.S. Treasury debt securities
  After one year through five years      1,503,864         12,710             --      1,516,574
                                      ------------   ------------   ------------   ------------

                                      $  1,706,639   $     22,134   $         --   $  1,728,773
                                      ============   ============   ============   ============
</TABLE>


                                       7
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 30, 2005
                                   (UNAUDITED)

3.    Investment in Local Partnerships

      The Partnership owns limited partnership interests in forty-three Local
      Partnerships representing capital contributions in the aggregate amount of
      $29,264,476, all of which have been paid. As of September 30, 2005, the
      Local Partnerships have outstanding mortgage loans payable totaling
      approximately $81,402,000 and accrued interest payable on such loans
      totaling approximately $4,728,000, which are secured by security interests
      and liens common to mortgage loans on the Local Partnerships' real
      property and other assets.

      For the nine months ended December 30, 2005, the investment in local
      partnerships activity consists of the following:

         Investment in local partnerships as of March 30, 2005      $  751,675

         Equity in loss of investment in local partnerships           (173,732)*

         Cash distributions received from Local Partnerships           (48,224)

         Cash distributions from Local Partnerships classified
           as other income                                              37,743
                                                                    ----------

         Investment in local partnerships as of December 30, 2005   $  567,462
                                                                    ==========

      * Equity in loss of investment in local partnerships is limited to the
      Partnership's investment balance in each Local Partnership; any excess is
      applied to other partners' capital in any such Local Partnership. The
      amount of such excess losses applied to other partners' capital was
      $1,871,407 for the nine months ended September 30, 2005 as reflected in
      the combined statement of operations of the Local Partnerships reflected
      herein Note 3.

      As of September 30, 2005, Westminster Apartments Limited Partnership
      ("Westminster") was in default under the terms of its first mortgage;
      payments of principal, interest and replacement reserve deposits are over
      six years in arrears, resulting in a cumulative arrearage of approximately
      $674,000. The lender has indicated a willingness to restructure the debt,
      whereby payments will be required only to the extent that Westminster
      generates available annual cash flow; in addition, the lender would
      receive all residual proceeds upon the sale of Westminster. There can be
      no assurance that the issues will be resolved and the mortgage remains in
      default without a formal forbearance as of February 2006.

      The combined unaudited balance sheets of the Local Partnerships as of
      September 30, 2005 and December 31, 2004 and the combined unaudited
      statements of operations of the Local Partnerships for the three and nine
      month periods ended September 30, 2005 and 2004 are reflected on pages 9
      and 10, respectively.


                                       8
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 30, 2005
                                   (UNAUDITED)

3.    Investment in Local Partnerships (continued)

      The combined balance sheets of the Local Partnerships as of September 30,
      2005 and December 31, 2004 are as follows:

<TABLE>
<CAPTION>
                                                      September 30,     December 31,
                                                          2005              2004
                                                     --------------    --------------
<S>                                                  <C>               <C>
ASSETS

Cash and cash equivalents                            $    1,242,718    $    1,420,670
Rents receivable                                            537,128           431,307
Escrow deposits and reserves                              5,960,533         5,491,520
Land                                                      3,910,215         3,910,215
Buildings and improvements (net of accumulated
  depreciation of $58,036,754 and $55,018,504)           57,492,827        60,312,727
Intangible assets (net of accumulated amortization
  of $582,407 and $594,230)                                 463,290           488,609

Other assets                                              1,568,849         1,131,804
                                                     --------------    --------------

                                                     $   71,175,560    $   73,186,852
                                                     ==============    ==============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

  Accounts payable and accrued expenses              $    2,135,065    $    1,520,547
  Due to related parties                                  5,300,933         5,281,845
  Mortgage loans                                         81,402,114        82,069,326
  Accrued interest                                        4,727,913         4,510,931
  Other liabilities                                         902,545           886,655
                                                     --------------    --------------

                                                         94,468,570        94,269,304
                                                     --------------    --------------
Partners' equity (deficit)

  American Tax Credit Properties III L.P.
     Capital contributions, net of distributions         28,722,706        28,769,504
     Cumulative loss                                    (26,801,560)      (26,627,828)
                                                     --------------    --------------

                                                          1,921,146         2,141,676
                                                     --------------    --------------

  General partners and other limited partners
     Capital contributions, net of distributions           (289,916)         (332,555)
     Cumulative loss                                    (24,924,240)      (22,891,573)
                                                     --------------    --------------

                                                        (25,214,156)      (23,224,128)
                                                     --------------    --------------

                                                        (23,293,010)      (21,082,452)
                                                     --------------    --------------

                                                     $   71,175,560    $   73,186,852
                                                     ==============    ==============
</TABLE>


                                       9
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 30, 2005
                                   (UNAUDITED)

3.    Investment in Local Partnerships (continued)

      The combined statements of operations of the Local Partnerships for the
      three and nine month periods ended September 30, 2005 and 2004 are as
      follows:

<TABLE>
<CAPTION>
                                                 Three Months        Nine Months     Three Months      Nine Months
                                                     Ended             Ended            Ended            Ended
                                                 September 30,      September 30,    September 30,    September 30,
                                                     2005               2005             2004              2004
                                                 -------------      -------------    -------------    -------------
<S>                                              <C>                <C>              <C>              <C>
REVENUE

Rental                                           $   3,051,684      $   9,033,235    $   2,925,633    $   8,774,705
Interest and other                                      76,758            241,170            4,529          185,342
                                                 -------------      -------------    -------------    -------------

TOTAL REVENUE                                        3,128,442          9,274,405        2,930,162        8,960,047
                                                 -------------      -------------    -------------    -------------
EXPENSES

Administrative                                         597,867          1,967,789          654,346        2,183,870
Utilities                                              269,905          1,021,256          229,514          972,340
Operating and maintenance                              979,257          2,612,519          706,181        2,292,160
Taxes and insurance                                    318,465            944,845          308,772          940,641
Financial                                              558,880          1,890,818          695,772        2,070,664
Depreciation and amortization                        1,014,263          3,043,577          998,824        3,017,867
                                                 -------------      -------------    -------------    -------------

TOTAL EXPENSES                                       3,738,637         11,480,804        3,593,409       11,477,542
                                                 -------------      -------------    -------------    -------------

NET LOSS                                         $    (610,195)     $  (2,206,399)   $    (663,247)   $  (2,517,495)
                                                 =============      =============    =============    =============
NET LOSS ATTRIBUTABLE TO

American Tax Credit Properties III L.P.          $     (60,678)     $    (173,732)   $     (34,410)   $    (239,565)
General partners and other limited
   partners, which includes $507,793,
   $1,871,407, $774,832 and $1,478,142 of
   Partnership loss in excess of investment           (549,517)        (2,032,667)        (628,837)      (2,277,930)
                                                 -------------      -------------    -------------    -------------

                                                 $    (610,195)     $ (2,206,399)    $    (663,247)   $ (2,517,495)
                                                 =============      =============    =============    =============
</TABLE>

      The combined results of operations of the Local Partnerships for the nine
      months ended September 30, 2005 are not necessarily indicative of the
      results that may be expected for an entire operating period.

4.    Additional Information

      Additional information, including the audited March 30, 2005 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, 2005 on file with the
      Securities and Exchange Commission.


                                       10
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

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

Material Changes in Financial Condition

As of December 30, 2005, American Tax Credit Properties III L.P. (the
"Registrant") has not experienced a significant change in financial condition as
compared to March 30, 2005. Principal changes in assets are comprised of
periodic transactions and adjustments and equity in loss from operations of the
local partnerships (the "Local Partnerships"), which own low-income multifamily
residential complexes (the "Properties") that qualify 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, 2005,
Registrant received cash from interest revenue, proceeds from
maturities/redemptions and sales of bonds and distributions from Local
Partnerships and utilized cash for operating expenses. Cash and cash equivalents
and investments in bonds decreased, in the aggregate, by approximately $204,000
during the nine months ended December 30, 2005 (which includes a net unrealized
loss on investments in bonds of approximately $33,000, amortization of net
premium on investments in bonds of approximately $1,000 and accretion of zero
coupon bonds of approximately $62,000). Notwithstanding circumstances that may
arise in connection with the Properties, Registrant does not expect to realize
significant gains or losses on its investments in bonds, if any. During the nine
months ended December 30, 2005, the investment in local partnerships decreased
as a result of Registrant's equity in the Local Partnerships' net loss for the
nine months ended September 30, 2005 of $173,732 and cash distributions received
from Local Partnerships of $10,481 (exclusive of distributions from Local
Partnerships of $37,743 classified as other income). Accounts payable and
accrued expenses includes deferred administration fees of $556,673 and payable
to general partner and affiliates represents deferred management and
administration fees in the accompanying balance sheet as of December 30, 2005.

Results of Operations

Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in local partnerships
in accordance with the equity method of accounting. Accordingly, the investment
is carried at cost, and is adjusted for Registrant's share of each Local
Partnership's results of operations and by cash distributions received. Equity
in loss of each investment in Local Partnership allocated to Registrant is
recognized to the extent of Registrant's investment balance in each Local
Partnership. Equity in loss in excess of Registrant's investment balance in a
Local Partnership is allocated to other partners' capital in any such Local
Partnership. As a result, the reported equity in loss of investment in local
partnerships is expected to decrease as Registrant's investment balances in the
respective Local Partnerships become zero. The combined statements of operations
of the Local Partnerships reflected in Note 3 to Registrant's financial
statements include the operating results of all Local Partnerships, irrespective
of Registrant's investment balances.

Cumulative losses and cash distributions in excess of investment in local
partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. 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. See discussion
below under Local Partnership Matters regarding certain Local Partnerships
currently operating below economic break even levels.

Registrant's operations for the three months ended December 30, 2005 and 2004
resulted in net losses of $182,865 and $139,283, respectively. The increase in
net loss is primarily attributable to an increase in equity in loss of
investment in local partnerships of approximately $26,000, which increase is
primarily attributable to an increase in the net operating losses of certain
Local Partnerships in which Registrant continues to have an investment balance.
Other comprehensive loss for the three months ended December 30, 2005 and 2004
resulted from a net unrealized loss on investments in bonds of $12,981 and
$24,731, respectively.

The Local Partnerships' net loss of approximately $610,000 for the three months
ended September 30, 2005 was attributable to rental and other revenue of
approximately $3,128,000, exceeded by operating and interest expense (including
interest on non-mandatory debt) of approximately $2,724,000 and approximately
$1,014,000 of depreciation and amortization expense. The Local Partnerships' net
loss of approximately $663,000 for the three months ended September 30, 2004 was
attributable to rental and other revenue of approximately $2,930,000, exceeded
by operating and interest expense (including interest on non-mandatory debt) of
approximately $2,594,000 and approximately $999,000 of depreciation and
amortization expense. The results of operations of the Local Partnerships for
the three months ended September 30, 2005 are not necessarily indicative of the
results that may be expected in future periods.


                                       11
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

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

Registrant's operations for the nine months ended December 30, 2005 and 2004
resulted in net losses of $506,931 and $541,934, respectively. Other
comprehensive loss for the nine months ended December 30, 2005 and 2004 resulted
from a net unrealized loss on investments in bonds of $33,359 and $98,226,
respectively.

The Local Partnerships' net loss of approximately $2,206,000 for the nine months
ended September 30, 2005 was attributable to rental and other revenue of
approximately $9,274,000, exceeded by operating and interest expense (including
interest on non-mandatory debt) of approximately $8,436,000 and approximately
$3,044,000 of depreciation and amortization expense. The Local Partnerships' net
loss of approximately $2,517,000 for the nine months ended September 30, 2004
was attributable to rental and other revenue of approximately $8,960,000,
exceeded by operating and interest expense (including interest on non-mandatory
debt) of approximately $8,460,000 and approximately $3,018,000 of depreciation
and amortization expense. The results of operations of the Local Partnerships
for the nine months ended September 30, 2005 are not necessarily indicative of
the results that may be expected in future periods.

Local Partnership Matters

Registrant's primary objective has been to provide Low-income Tax Credits to
limited partners generally over a ten year period. The relevant state tax credit
agency has allocated each of Registrant's 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 substantially fully exhausted by the Local
Partnerships 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"). In addition, certain of the Local
Partnerships have 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, regardless of
any sale of the Properties by the Local Partnerships after the Compliance
Period. The Properties must satisfy various requirements including rent
restrictions and tenant income limitations (the "Low-income Tax Credit
Requirements") in order to maintain eligibility for the recognition of the
Low-income Tax Credit at all times during the Compliance Period. Once a Local
Partnership has become eligible for the Low-income Tax Credit, it may lose such
eligibility and suffer an event of recapture if its Property fails to remain in
compliance with the Low-income Tax Credit Requirements. Through December 31,
2005, none of the Local Partnerships have reported an event of recapture of
Low-income Tax Credits. It is the General Partner's intention to sell or assign
Registrant's interests in Local Partnerships subsequent to the expiration of the
respective Compliance Periods. It is uncertain as to the amount, if any, that
Registrant will receive with respect to each specific Property from such sales
and assignments.

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 during and after the Compliance Periods of the Local Partnerships. 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 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 contracts are currently subject to renewal under
applicable HUD guidelines.


                                       12
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

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

The Local Partnerships have various financing structures which include (i)
required debt service payments ("Mandatory Debt Service") and (ii) debt service
payments which are payable only from available cash flow subject to the terms
and conditions of the notes, which may be subject to specific laws, regulations
and agreements with appropriate federal and state agencies ("Non-Mandatory Debt
Service or Interest"). In the event rents are not sufficient to cover operating
expenses, Mandatory Debt Service requirements and other charges, certain general
partners of the Local Partnerships (the "Local General Partners") are obligated
to provide advances to cover deficits for a certain period of time up to certain
amounts (the "Deficit Guarantee"). A Local General Partner's funding of such
Deficit Guarantee is dependent on its liquidity or ability to borrow the
required funds. During the nine months ended September 30, 2005, revenue from
operations of the Local Partnerships have generally been sufficient to cover
operating expenses and Mandatory Debt Service. Substantially all of the Local
Partnerships are effectively operating at or above break even levels, although
certain Local Partnerships' operating information reflects operating deficits
that do not represent cash deficits due to their mortgage and financing
structure and the required deferral of property management fees. However, as
discussed below, certain Local Partnerships' operating information indicates an
operating deficit after taking into account their mortgage and financing
structure and any required deferral of property management fees.

The terms of the partnership agreement of Westminster Apartments Limited
Partnership ("Westminster") require the Local General Partner to advance funds
to cover operating deficits through the Compliance Period. As of September 30,
2005, Westminster was in default under the terms of its first mortgage; payments
of principal, interest and replacement reserve deposits are over six years in
arrears, resulting in a cumulative arrearage of approximately $674,000. The
lender has indicated a willingness to restructure the debt, whereby payments
will be required only to the extent that Westminster generates available annual
cash flow; in addition, the lender would receive all residual proceeds upon the
sale of Westminster. There can be no assurance that the issues will be resolved
and the mortgage remains in default without a formal forbearance as of February
2006. Westminster reported an operating deficit of approximately $79,000 for the
nine months ended September 30, 2005, which amount includes a provision for
replacement reserve deposits of $1,184 per month and debt service payments of
$6,245 per month. Registrant's investment balance in Westminster, after
cumulative equity losses, became zero during the year ended March 30, 1999.
Westminster generated approximately $63.2 per Unit to the limited partners upon
the expiration of its Low-income Tax Credit allocation in 2003.

The terms of the partnership agreement of Sydney Engel Associates L.P. ("Sydney
Engel") require the Local General Partners to cause the management agent to
defer property management fees in order to avoid a default under the mortgage.
Sydney Engel reported an operating deficit of approximately $146,000 for the
nine months ended September 30, 2005, which includes property management fees of
approximately $43,000. The Local General Partners represent that payments on the
mortgage are current; the Property does not incur real estate taxes. Effective
July 1, 2005, one of Sydney Engel's mortgages was amended whereby the Mandatory
Debt Service for the remainder of 2005 has been reduced by approximately
$129,000. Registrant's investment balance in Sydney Engel, after cumulative
equity losses, became zero during the year ended March 30, 1997. The Compliance
Period in connection with Sydney Engel expired on December 31, 2005.

The terms of the partnership agreement of Orange City Plaza Limited Partnership
("Orange City") require the Local General Partner to advance funds to cover all
operating deficits through the Compliance Period and to cause the management
agent to defer property management fees in order to avoid a default under the
mortgage. Orange City reported an operating deficit of approximately $21,000 for
the nine months ended September 30, 2005, which includes property management
fees of approximately $14,000. The Local General Partner represents that
payments on the mortgage and real estate taxes are current. Registrant's
investment balance in Orange City, after cumulative equity losses, became zero
during the year ended March 30, 2002. Orange City generated approximately $24.8
per Unit to the limited partners upon the expiration of its Low-income Tax
Credit allocation in 2002.


                                       13
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

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

The terms of the partnership agreement of Justin Associates ("Justin") require
the Local General Partners to cause the management agent to defer property
management fees in order to avoid a default under the mortgage. Justin incurred
an operating deficit of approximately $20,000 for the nine months ended
September 30, 2005, which includes property management fees of approximately
$13,000. The Local General Partners represent that payments on the mortgage and
real estate taxes are current. Registrant's investment balance in Justin, after
cumulative equity losses, became zero during the year ended March 30, 2002.
Justin generated approximately $99.0 per Unit to the limited partners upon the
expiration of its Low-income Tax Credit allocation in 2002.

Critical Accounting Policies and Estimates

The financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, 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 financial statements.

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

      2.    If the book value of Registrant's investment in a Local Partnership
            exceeds the estimated value derived by management, Registrant
            reduces its investment in any such Local Partnership and includes
            such reduction in equity in loss of investment in local
            partnerships. A loss in value of an investment in a Local
            Partnership other than a temporary decline would be recorded as an
            impairment loss. Impairment is measured by comparing the investment
            carrying amount to the sum of the total amount of the remaining tax
            credits to be allocated to Registrant and the estimated residual
            value of the investment.

      3.    Registrant does not consolidate the accounts and activities of the
            Local Partnerships, which are considered Variable Interest Entities
            under Financial Accounting Standards Board Interpretation No. 46 -
            Revised ("FIN 46R"), "Consolidation of Variable Interest Entities,"
            because Registrant is not considered the primary beneficiary.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Registrant has invested a significant portion of its working capital reserves in
corporate bonds and U.S. Treasury instruments. The market value of such
investments is subject to fluctuation based upon changes in interest rates
relative to each investment's maturity date and the associated bond rating.
Since Registrant's investments in bonds have various maturity dates through
2008, the value of such investments may be adversely impacted in an environment
of rising interest rates in the event Registrant decides to liquidate any such
investment prior to its maturity. Although Registrant may utilize reserves to
pay for its operating expenses and/or assist an under performing Property, it
otherwise intends to hold such investments to their respective maturities.
Therefore, Registrant does not anticipate any material adverse impact in
connection with such investments.

Item 4. Controls and Procedures

As of December 30, 2005, under the direction of the Chief Executive Officer and
Chief Financial Officer, Registrant evaluated the effectiveness of its
disclosure controls and procedures and concluded that such disclosure controls
and procedures were effective as of December 30, 2005. No changes occurred
during the quarter ended December 30, 2005 that materially affected, or are
reasonably likely to materially affect, Registrant's internal control over
financial reporting.


                                       14
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                           Part II - OTHER INFORMATION

Item 1. Legal Proceedings

        Registrant is not aware of any material legal proceedings.

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


                                       15
<PAGE>

                                   SIGNATURES

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

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

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

                                     by: Richman Housing Credits Inc.,
                                         general partner


Dated: February 13, 2006             /s/ David Salzman
                                     -------------------------------------------
                                     by: David Salzman
                                         Chief Executive Officer


Dated: February 13, 2006             /s/ Neal Ludeke
                                     -------------------------------------------
                                     by: Neal Ludeke
                                         Chief Financial Officer


                                       16