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, 1996

                                                        OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934
                                                                            
For the transition period from                   to 
                               -----------------    ----------------- 
                         Commission file number: 0-19217


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

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

Richman Tax Credit Properties III L.P.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut                                           06830
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code:  (203) 869-0900

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required to file such reports),  and (2) has been subject to filing requirements
for the past 90 days. Yes X No ___.






<PAGE>



                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements


                             Table of Contents                        Page


Balance Sheets as of September 29, 1996 (Unaudited) and 
March 30, 1996 (Unaudited)..........................................

Statements of Operations for the three and six month 
periods ended September 29, 1996 (Unaudited)and 
September 29, 1995 (Unaudited)......................................

Statements of Cash Flows for the six months ended
September 29, 1996 (Unaudited) and September 29, 1995 (Unaudited)...

Notes to Financial Statements as of September 29, 1996 (Unaudited)..






<PAGE>

<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 BALANCE SHEETS
                      SEPTEMBER 29, 1996 AND MARCH 30, 1996
                                   (UNAUDITED)



                                                                                   September 29,         March 30,
                                                                        Notes            1996                 1996
                                                                        -----   ----------------------------------
<S>                                                                    <C>      <C>                  <C>
ASSETS

Cash and cash equivalents                                                        $      590,447     $       389,931
Restricted cash                                                           3           1,102,327           1,102,327
Investments in bonds available-for-sale                                   2           2,847,823           3,070,375
Investment in local partnerships                                          3          12,007,749          13,241,594
Interest receivable                                                                      22,625              28,008
                                                                                ------------------   ------------------

                                                                                 $   16,570,971      $   17,832,235
                                                                                 ==============      ==============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities
   Accounts payable and accrued expenses                                        $       762,831     $       717,878
   Payable to general partner                                                           734,757             669,472
   Capital contributions payable                                          3           1,102,327           1,102,327
   Other                                                                                 21,200              25,950
                                                                                ------------------   ----------------

                                                                                      2,621,115           2,515,627
                                                                                ----------------     ----------------

Partners' equity (deficit)
   General partner                                                                     (174,265)             1,180)
   Limited partners, $1,000 stated value per unit (35,883 units of
     limited partnership interest outstanding)                                       14,277,481         15,572,895
   Unrealized loss on investments in bonds available-for-sale, net        2            (153,360)           (95,107)
                                                                                ----------------     ----------------- 

                                                                                     13,949,856         15,316,608
                                                                                ---------------      ---------------

                                                                                 $   16,570,971     $   17,832,235
                                                                                 ==============      ==============





See Notes to Financial Statements.

</TABLE>






<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF OPERATIONS
          THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 29, 1996 AND 1995
                                   (UNAUDITED)



                                                          Three Months    Six Months Ended     Three Months    Six Months Ended
                                                        Ended September     September 29,    Ended September     September 29,
                                                              29,                                  29,
                                               Notes             1996              1996               1995             1995
                                               -----    -------------------------------------------------------------------
<S>                                          <C>        <C>               <C>               <C>                <C>
REVENUE

Interest                                                $        78,986   $       157,422   $         77,954   $      173,506
                                                        ---------------   ---------------   ----------------   --------------

TOTAL REVENUE                                                    78,986           157,422             77,954          173,506
                                                        ----------------  ----------------  -----------------  ---------------

EXPENSES

Administration fees                                              57,642           115,285            57,643           115,286
Management fees                                                  57,642           115,285            57,643           115,286
Professional fees                                                 5,647            13,849             8,810            21,422
Printing, postage and other                                       3,237            11,166             3,668            10,498
Amortization                                                                                                            3,125
                                                        -------------------------------------------------------------------------

TOTAL EXPENSES                                                  124,168           255,585           127,764           265,617
                                                        ---------------   ---------------   ---------------    ----------------

Loss from operations                                            (45,182)          (98,163)          (49,810)          (92,111)

Equity in loss of investment in local
   partnerships                                  3             (571,331)       (1,210,336)         (726,456)       (1,601,807)
                                                        ---------------   ---------------   ---------------    --------------- 

NET LOSS                                                $      (616,513)  $    (1,308,499)   $     (776,266)   $   (1,693,918)
                                                        ==============    ==============    ==============      ============= 

NET LOSS ATTRIBUTABLE TO
   General partner                                      $        (6,165)  $       (13,085)   $       (7,762)   $      (16,939)
   Limited partners                                            (610,348)       (1,295,414)         (768,504)       (1,676,979)
                                                        ---------------   ---------------   ---------------    --------------- 

                                                        $      (616,513)  $    (1,308,499)   $     (776,266)   $   (1,693,918)
                                                        ==============    ==============    ==============     ============= 

NET LOSS per unit of limited partnership
   interest (35,883 units of limited
   partnership interest)                                $        (17.01)  $        (36.10)   $       (21.42)   $      (46.74)
                                                        ================  ================  ================   ================ 







                                           See Notes to Financial Statements.
</TABLE>





<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF CASH FLOWS
                  SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
                                   (UNAUDITED)


                                                                                      1996                  1995
                                                                               -------------------   -----------
<S>                                                                            <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Interest received                                                               $       127,104       $       133,589
Cash used for local partnerships for deferred expenses                                   (4,750)               (4,750)
Cash paid for
   administration fees                                                                  (50,000)              (50,000)
   management fees                                                                      (50,000)              (50,000)
   professional fees                                                                    (40,999)              (40,182)
   printing, postage and other expenses                                                  (4,348)               (8,628)
                                                                               -----------------     ----------------- 

Net cash used in operating activities                                                   (22,993)              (19,971)
                                                                               ----------------      ---------------- 

CASH FLOWS FROM INVESTING ACTIVITIES

Maturity/redemption of bonds                                                            200,000
Cash distributions from local partnerships                                               23,509               17,414
Transfer from restricted cash                                                                                300,000
Investment in local partnership                                                                             (300,000)
                                                                               ---------------------- --------------- 

Net cash provided by investing activities                                              223,509                17,414
                                                                               ----------------      -----------------

Net increase (decrease) in cash and cash equivalents                                   200,516                (2,557)

Cash and cash equivalents at beginning of period                                       389,931               663,905
                                                                               ----------------      ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $      590,447       $       661,348
                                                                                ===============       ===============

SIGNIFICANT NON-CASH INVESTING ACTIVITIES

   Unrealized gain (loss) on investments in bonds available-for-sale, net       $      (58,253)      $       151,892
                                                                                ===============       ===============

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




                       See Notes to Financial Statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                     STATEMENTS OF CASH FLOWS - (Continued)
                  SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
                                   (UNAUDITED)




                                                                               1996                   1995
                                                                       --------------------   ------------
<S>                                                                    <C>                    <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES

Net loss                                                                  $  (1,308,499)         $  (1,693,918)

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

   Equity in loss of investment in local partnerships                         1,210,336              1,601,807
   Amortization of organization costs                                                                    3,125
   Amortization of net premium on investments in bonds                            8,427                  9,320
   Accretion of zero coupon bonds                                               (44,128)               (41,919)
   Decrease (increase) in interest receivable                                     5,383                 (7,318)
   Increase in payable to general partner                                        65,285                 65,286
   Increase in accounts payable and accrued expenses                             44,953                 48,396
   Decrease in other liabilities                                                 (4,750)                (4,750)
                                                                       -----------------     ------------------ 

NET CASH USED IN OPERATING ACTIVITIES                                  $        (22,993)      $        (19,971)
                                                                       ================       ================ 























                       See Notes to Financial Statements.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 29, 1996
                                   (UNAUDITED)


1.   Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
     accordance  with  generally  accepted  accounting  principles  for  interim
     financial  information.  They do not include all  information and footnotes
     required by generally accepted accounting principles for complete financial
     statements.  The results of operations  are impacted  significantly  by the
     combined  results  of  operations  of the  Local  Partnerships,  which  are
     provided by the Local  Partnerships  on an unaudited  basis during  interim
     periods.  Accordingly,  the accompanying financial statements are dependent
     on such unaudited  information.  In the opinion of the General Partner, the
     financial  statements  include all adjustments  necessary to present fairly
     the  financial  position  as of  September  29,  1996  and the  results  of
     operations  and  cash  flows  for  the  interim  periods   presented.   All
     adjustments are of a normal recurring nature. The results of operations for
     the  three  and  six  month  periods  ended  September  29,  1996  are  not
     necessarily  indicative  of the results that may be expected for the entire
     year.

     Certain  reclassifications  of  amounts  have been made to  conform  to the
current period presentation.

2.   Investments in Bonds Available-For-Sale

     As of September 29, 1996,  certain  information  concerning  investments in
bonds available-for-sale is as follows:

                                                                   Gross unrealized        Gross
                                                    Amortized           gains           unrealized          Estimated
                                                        cost                               losses          fair value
       <S>                                       <C>               <C>                <C>               <C>
       Description and maturity
       Corporate debt securities
          After one year through five years      $    462,416       $        221      $       (997)       $    461,640
          After five years through ten years          506,911               --             (20,387)            486,524
          After ten years                           1,011,373               --             (56,585)            954,788
                                                  -----------      ---------------    ------------       -------------

                                                    1,980,700                221           (77,969)          1,902,952
                                                  -----------      -------------      ------------        ------------

       U.S. Treasury debt securities
          After ten years                             894,597               --             (58,114)            836,483
                                                 ------------      ---------------    ------------       -------------

       U.S. government and agency securities
          After ten years                             125,886               --             (17,498)            108,388
                                                 -------------     ---------------    ------------       -------------

                                                  $ 3,001,183       $        221        $ (153,581)        $ 2,847,823
                                                  ===========       ============        ==========         ===========

</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                               SEPTEMBER 29, 1996
                                   (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
     $29,057,595,  of which the Partnership has paid  $27,955,268 and $1,102,327
     is  outstanding  as  of  September  29,  1996.   Restricted   cash  in  the
     accompanying   balance  sheet  as  of  September  29,  1996  includes  such
     outstanding capital  contributions.  The outstanding capital  contributions
     are  payable  upon  two  Local  Partnerships'   satisfaction  of  specified
     conditions  related  to  operations.   As  of  June  30,  1996,  the  Local
     Partnerships  have  outstanding  mortgage and  construction  loans  payable
     totaling  approximately  $87,501,000 and accrued  interest  payable on such
     loans  totaling  approximately  $1,627,000,  which are  secured by security
     interests and liens common to mortgage and construction  loans on the Local
     Partnerships' real property and other assets.

     For the six months  ended  September  29,  1996,  the  investment  in Local
Partnerships activity consists of the following:

        <S>                                                              <C>                  <C>
        Investment in Local Partnerships as of March 30, 1996                                 $ 13,241,594

        Equity in loss of investment in Local Partnerships for the
             three months ended
               March 31, 1996                                            $    (639,005)
               June 30, 1996                                                  (571,331)         (1,210,336) (A)
                                                                         ---------------                        

        Cash distributions received from Local Partnerships during the
             three months ended
               June 29, 1996                                                   (20,222)
               September 29, 1996                                               (3,287)           (23,509)
                                                                         -----------------    ------------- 

        Investment in Local Partnerships as of September 29, 1996                            $ 12,007,749
                                                                                              ============


     (A)  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
          for the three and six month  periods  ended June 30, 1996 was $204,724
          and $457,846, respectively, as reflected in the combined statements of
          operations of the Local Partnerships reflected herein Note 3.

     The combined  unaudited balance sheets of the Local Partnerships as of June
     30, 1996 and  December 31, 1995 and the combined  unaudited  statements  of
     operations  of the Local  Partnerships  for the three and six month periods
     ended June 30, 1996 and 1995 are reflected on pages 9 and 10, respectively.

</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                               SEPTEMBER 29, 1996
                                   (UNAUDITED)

3.   Investment in Local Partnerships (continued)

     The combined  balance sheets of the Local  Partnerships as of June 30, 1996
and December 31, 1995 are as follows:

                                                                                 June 30,              December 31,
                                                                                   1996                    1995
                                                                            ------------------     ------------
      <S>                                                        <C>      <C>                     <C>
      ASSETS

      Cash and other investments                                             $     1,019,306         $     1,392,146
      Rental receivable                                                              164,776                 310,169
      Capital contributions receivable                                             1,102,327               1,102,327
      Escrow deposits and reserves                                                 3,784,219               3,403,860
      Land                                                                         3,964,692               3,964,692
      Buildings and improvements (net of accumulated
        depreciation of $21,164,707 and $19,100,770)                              94,370,991              96,409,439
      Intangible assets (net of accumulated amortization of
        $994,467 and $948,812)                                                       786,120                 854,837
      Other                                                                        1,020,279                 747,972
                                                                            ----------------        ----------------

                                                                               $ 106,212,710           $ 108,185,442
                                                                               =============           =============
      LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

      Liabilities
        Accounts payable and accrued expenses                               $        763,882         $       608,574
        Due to related parties                                                     5,143,664               5,363,967
        Mortgage and construction loans                                           87,500,702              87,656,301
        Notes payable                                                                 29,482                  38,848
        Accrued interest                                                           1,626,908               1,524,375
        Other                                                                        563,992                 584,408
                                                                            ----------------        ----------------

                                                                                  95,628,630              95,776,473
                                                                              --------------          --------------
      Partners' equity (deficit)

        American Tax Credit Properties III L.P.
            Capital contributions, net of distributions
               (includes receivable of $1,102,327)                                28,876,011              28,908,501
            Cumulative loss                                                      (16,864,975)            (15,654,639)
                                                                               -------------           ------------- 

                                                                                  12,011,036              13,253,862
                                                                              --------------          --------------
        General partners and other limited partners, including ATCP II
            Capital contributions, net of distributions                              803,103                 791,395
            Cumulative loss                                                       (2,230,059)             (1,636,288)
                                                                             ---------------         --------------- 

                                                                                  (1,426,956)               (844,893)
                                                                             ---------------        ---------------- 

                                                                                  10,584,080              12,408,969
                                                                             ---------------         ---------------

                                                                               $ 106,212,710           $ 108,185,442
                                                                               =============           =============
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                               SEPTEMBER 29, 1996
                                   (UNAUDITED)

3.   Investment in Local Partnerships (continued)

     The combined  statements  of operations  of the Local  Partnerships  for the three and six month periods ended June 30, 1996
     and 1995 are as follows:

                                                     Three Months     Six Months Ended      Three Months      Six Months Ended
                                                    Ended June 30,        June 30,         Ended June 30,         June 30,
                                                           1996               1996               1995                1995
                                                  -----------------------------------------------------------------------
      <S>                                         <C>                 <C>                <C>                 <C>
      REVENUE

      Rental                                        $   2,630,886      $   5,130,715       $   2,553,503       $   5,015,177
      Interest and other                                  101,376             179,841             73,042             138,333
                                                  ---------------     ---------------    ---------------     ---------------

      Total Revenue                                     2,732,262          5,310,556           2,626,545           5,153,510
                                                    -------------     --------------       -------------      --------------

      EXPENSES

      Administrative                                      491,384          1,028,898             512,436           1,030,912
      Utilities                                           255,879            586,566             237,837             518,804
      Operating, maintenance and other                    553,114          1,015,675             504,823           1,011,445
      Taxes and insurance                                 313,085            630,207             305,486             592,319
      Interest (including amortization of
        $31,708, $70,293, $48,226 and $99,282)
                                                          935,532          1,789,380             843,426           1,715,778
      Depreciation                                      1,030,753          2,063,937           1,029,710           2,066,289
                                                    -------------     --------------       -------------      --------------

      Total Expenses                                    3,579,747          7,114,663           3,433,718           6,935,547
                                                    -------------     --------------       -------------      --------------

      NET LOSS                                      $    (847,485)     $  (1,804,107)      $    (807,173)      $  (1,782,037)
                                                    =============      =============       =============       ============= 

      NET LOSS ATTRIBUTABLE TO
        American Tax Credit Properties III L.P.     $    (571,331)     $  (1,210,336)      $    (726,456)      $  (1,601,807)
        General partners and other limited
           partners, including ATCP II, which
           includes $204,724, $457,846, $25,829
           and $53,538 of American Tax Credit
           Properties III L.P. equity in loss
           in excess of investment                       (276,154)          (593,771)            (80,717)           (180,230)
                                                   --------------     --------------      --------------     --------------- 

                                                    $    (847,485)     $  (1,804,107)      $    (807,173)      $  (1,782,037)
                                                    =============      =============       =============       ============= 
</TABLE>

     The combined results of operations of the Local  Partnerships for the three
     and six month periods ended June 30, 1996 are not necessarily indicative of
     the results that may be expected for an entire operating period.






<PAGE>

4.   Additional Information

     Additional  information,  including  the audited  March 30, 1996  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, 1996 on file with the  Securities
     and Exchange Commission.


<PAGE>
                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

Material Changes in Financial Condition

As of September 29, 1996, Registrant has not experienced a significant change in
financial  condition as compared to March 30, 1996.  Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from  operations  of the Local  Partnerships.  During the six months  ended
September  29,  1996,  Registrant  received  cash  from  interest  earnings  and
distributions  from Local  Partnerships  and utilized cash for normal  operating
expenses.  During the six months ended September 29, 1996, Registrant recorded a
net  unrealized  loss on  bonds  available-for-sale  of  approximately  $58,000,
resulting  in a net  unrealized  loss of  approximately  $153,000  reflected  in
Registrant's  partners'  equity (deficit) as of September 29, 1996. In addition,
during the six months ended September 29, 1996, Registrant recorded accretion of
zero coupon bonds of approximately  $44,000, which was offset by amortization of
net premium on investments in bonds of  approximately  $8,000,  while restricted
cash remained  unchanged. In addition, during the six months ended September 29,
1996, Registrant received $200,000 from the maturity of investments in bonds
held for working capital purposes.  During the six months ended  September 29,
1996,  the investment in Local Partnerships decreased as a result of
Registrant's equity in the Local  Partnerships'  net loss for the six  months 
ended  June 30,  1996 of $1,210,336  and by  cash  distributions  received  from
Local  Partnerships  of $23,509.

The Properties are principally  comprised of subsidized and leveraged low-income
multifamily  residential  complexes  located  throughout  the United  States and
Puerto Rico. The rents of the  Properties,  many of which receive rental subsidy
payments,  including  payments  under  Section 8 of Title II of the  Housing and
Community  Development  Act of 1974 ("Section 8"), are subject to specific laws,
regulations  and  agreements  with  federal  and  state  agencies.  The  subsidy
agreements  expire at various times during and after the  Compliance  Periods of
the  Local  Partnerships.   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 and debt structure of any
or all Local Partnerships currently receiving such subsidy or similar subsidies.
In addition,  the Local  Partnerships  have various  financing  structures which
include (i) required debt service  payments  ("Mandatory Debt Service") and (ii)
debt service payments which are payable only from available cash flow subject to
the terms and  conditions of the notes,  which may be subject to specific  laws,
regulations  and  agreements  with   appropriate   federal  and  state  agencies
("Non-Mandatory  Debt  Service  or  Interest").  In  the  event  rents  are  not
sufficient to cover operating expenses,  Mandatory Debt Service requirements and
other charges,  the Local General  Partners are obligated to provide advances to
cover deficits for a certain period of time up to certain  amounts (the "Deficit
Guarantee").  A Local  General  Partner's  funding of such Deficit  Guarantee is
dependent on its liquidity or ability to borrow the required  funds.  During the
six months ended June 30, 1996,  revenue from operations,  Local General Partner
advances and reserves of the Local  Partnerships  have generally been sufficient
to  cover  the  operating  expenses  and  Mandatory  Debt  Service.   The  Local
Partnerships  are effectively  operating at or near break even levels,  although
certain Local Partnerships'  accounting  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. As discussed
below, certain Local Partnerships'  operating  information indicates below break
even operations after taking into account their mortgage and financing structure
and the required deferral of property management fees.

The terms of the partnership  agreement of Justin  Associates (the "Justin Local
Partnership") require the Local General Partners of the Justin Local Partnership
to advance funds to cover operating  deficits up to $266,000 through March, 1997
and to cause the management agent to defer property  management fees in order to
avoid a default under the  mortgage.  The Justin Local  Partnership  incurred an
operating  deficit of  approximately  $17,000 for the six months  ended June 30,
1996,  which  includes  property   management  fees  of  approximately   $8,000.
Accordingly,  the net operating deficit was approximately $9,000. As of June 30,
1996, the Local General Partners have advanced approximately $33,000 under their
Deficit  Guarantee  obligation.  Of  Registrant's  total annual  Low-income  Tax
Credits, approximately 6.44% is allocated from the Justin Local Partnership.




<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.

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

The terms of the partnership  agreement of Christian  Street Commons  Associates
(the "Christian Street Local Partnership") require the Local General Partners of
the  Christian  Street Local  Partnership  to advance  funds to cover  operating
deficits up to $150,000  through 2008 and to cause the management agent to defer
property  management  fees in order to avoid a default under the  mortgage.  The
Christian   Street  Local   Partnership   incurred  an   operating   deficit  of
approximately  $12,000 for the six months  ended June 30, 1996,  which  includes
property management fees of approximately $2,000. Accordingly, the net operating
deficit  was  approximately  $10,000.  As of June 30,  1996,  the Local  General
Partner  has  advanced   approximately   $32,000  under  its  Deficit  Guarantee
obligation.  Of Registrant's total annual Low-income Tax Credits,  approximately
2.08% is allocated from the Christian Street Local Partnership.

The Local General  Partners of Sydney Engel  Associates (the "Sydney Engel Local
Partnership")  report that although the Sydney Engel Local  Partnership  has not
closed on its final  mortgages  with  certain  agencies  of the City of New York
("NYC"),  it has communicated with NYC that it is ready to close. The closing of
the mortgages has been delayed due to technical  issues  regarding the structure
of the loans and a  guaranteed  investment  contract  to be  purchased  from the
outstanding   capital   contribution  due  from  Registrant  in  the  amount  of
approximately  $1,018,000,  which  will be paid  upon  completion  of the  final
closing of the loans.

The terms of the partnership  agreement of Ellinwood  Heights  Apartments,  L.P.
(the "Ellinwood Heights Local  Partnership")  require the Local General Partners
of the Ellinwood  Heights Local  Partnership to advance funds to cover operating
deficits up to $70,000  through 1996 and to cause the management  agent to defer
property  management  fees in order to avoid a default under the  mortgage.  The
Ellinwood   Heights  Local   Partnership   incurred  an  operating   deficit  of
approximately  $17,000 for the six months  ended June 30, 1996,  which  includes
property management fees of approximately $8,000. Accordingly, the net operating
deficit was approximately  $9,000.  Of Registrant's  total annual Low-income Tax
Credits,  approximately  .6% is  allocated  from  the  Ellinwood  Heights  Local
Partnership.

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  and Emerging  Issues Task
Force  ("EITF")  Issue No. 94-1,  "Accounting  for Tax Benefits  Resulting  from
Investments  in  Affordable  Housing  Projects."  Under  the  equity  method  of
accounting and in accordance with EITF Issue No. 94-1, the investment is carried
at cost which  includes  capital  contributions  payable,  and is  adjusted  for
Registrant's share of the Local  Partnership's  results of operations and by any
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.  Any equity in loss in excess of
Registrant's  investment  balance in a Local  Partnership  is allocated to other
partners'  capital in each such Local  Partnership.  As a result,  the equity in
loss of investment in Local Partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become zero.

Cumulative  losses  and cash  distributions  in  excess of  investment  in Local
Partnerships  may result  from a variety  of  circumstances,  including  a Local
Partnership's  accounting  policies,   subsidy  structure,  debt  structure  and
operating deficits, among other things. Accordingly,  cumulative losses and cash
distributions  in excess of the  investment  are not  necessarily  indicative of
adverse  operating  results of a Local  Partnership.  See discussion above under
Material Changes in Financial  Condition  regarding  certain Local  Partnerships
currently operating below economic break even levels.




<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

Three Months Ended September 29, 1996

For the three months ended  September  29,  1996,  Registrant  had a net loss of
approximately $616,000,  which included an equity in loss of investment in Local
Partnerships of approximately $571,000 for the three months ended June 30, 1996.
Registrant's  loss from operations for the three months ended September 29, 1996
of  approximately  $45,000 was attributable to interest revenue of approximately
$79,000,  exceeded by operating  expenses of  approximately  $124,000.  Interest
income for future  periods is expected to decline as investments in bonds mature
and are utilized for Registrant's  operating expenses and Temporary  Investments
are utilized to make payments of capital contributions to Local Partnerships.

The Local Partnerships' net loss of approximately  $847,000 for the three months
ended  June  30,  1996  was   attributable   to  rental  and  other  revenue  of
approximately $2,732,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,517,000 and approximately $1,062,000
of depreciation and amortization expenses.

Three Months Ended September 29, 1995

For the three months ended  September  29,  1995,  Registrant  had a net loss of
approximately $776,000,  which included an equity in loss of investment in Local
Partnerships of approximately $726,000 for the three months ended June 30, 1995.
Registrant's  loss from operations for the three months ended September 29, 1995
of  approximately  $50,000 was attributable to interest revenue of approximately
$78,000, exceeded by operating expenses of approximately $128,000.

The Local Partnerships' net loss of approximately  $807,000 for the three months
ended  June  30,  1995  was   attributable   to  rental  and  other  revenue  of
approximately $2,627,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $2,356,000 and approximately $1,078,000
of depreciation and amortization expenses.

Six Months Ended September 29, 1996

For the six  months  ended  September  29,  1996,  Registrant  had a net loss of
approximately  $1,308,000,  which  included an equity in loss of  investment  in
Local Partnerships of approximately $1,210,000 for the six months ended June 30,
1996.  Registrant's  loss from operations for the six months ended September 29,
1996  of   approximately   $98,000  was  attributable  to  interest  revenue  of
approximately   $157,000,   exceeded  by  operating  expenses  of  approximately
$255,000.  Interest  income  for  future  periods  is  expected  to  decline  as
investments in bonds mature and are utilized for Registrant's operating expenses
and Temporary Investments are utilized to make payments of capital contributions
to Local Partnerships.

The Local Partnerships' net loss of approximately  $1,804,000 for the six months
ended  June  30,  1996  was   attributable   to  rental  and  other  revenue  of
approximately $5,311,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,981,000 and approximately $2,134,000
of depreciation and amortization expenses.




<PAGE>

                                        AMERICAN TAX CREDIT PROPERTIES III L.P.


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

Six Months Ended September 29, 1995

For the six  months  ended  September  29,  1995,  Registrant  had a net loss of
approximately  $1,694,000,  which  included an equity in loss of  investment  in
Local Partnerships of approximately $1,602,000 for the six months ended June 30,
1995.  Registrant's  loss from operations for the six months ended September 29,
1995  of   approximately   $92,000  was  attributable  to  interest  revenue  of
approximately $174,000, exceeded by operating expenses of approximately $263,000
and amortization of organization costs of approximately $3,000.

The Local Partnerships' net loss of approximately  $1,782,000 for the six months
ended  June  30,  1995  was   attributable   to  rental  and  other  revenue  of
approximately $5,154,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,770,000 and approximately $2,166,000
of depreciation and amortization expenses.

Three and Six Month Periods Ended September 29, 1996 versus
Three and Six Month Periods Ended September 29, 1995

Registrant's  operations for the three months ended  September 29, 1996 resulted
in a  net  loss  of  approximately  $616,000  as  compared  to  a  net  loss  of
approximately  $776,000 for the same period in 1995. The decrease in net loss is
primarily  attributable  to a decrease  in the equity in loss of  investment  in
Local Partnerships of approximately $155,000. The decrease in the equity in loss
of  investment in Local  Partnerships  is primarily the result of an increase in
the  nonrecognition  of losses in excess of  Registrant's  investment in certain
Local  Partnerships  in  accordance  with the  equity  method of  accounting  of
approximately $179,000.

Registrant's  operations for the six months ended September 29, 1996 resulted in
a  net  loss  of  approximately   $1,308,000  as  compared  to  a  net  loss  of
approximately  $1,694,000 for the same period in 1995. This decrease in net loss
is primarily  attributable  to a decrease in the equity in loss of investment in
Local Partnerships of approximately $391,000. The decrease in the equity in loss
of investment in Local  Partnerships is primarily a result of an increase in the
nonrecognition  of losses in excess of Registrant's  investment in certain Local
Partnerships in accordance with the equity method of accounting of approximately
$404,000.






<PAGE>


                     AMERICAN TAX CREDIT PROPERTIES III L.P.

                           Part II - OTHER INFORMATION


  Item 1. Legal Proceedings

          None

  Item 2. Changes in Securities

          None

  Item 3. Defaults Upon Senior Securities

          None

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

          None

  Item 5. Other Information

          None

  Item 6. Exhibits and Reports on Form 8-K

          None





<PAGE>

                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has 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: November  13, 1996   /s/ Richard Paul Richman
       ------------------   ------------------------
                            Richard Paul Richman
                            President, Chief Executive
                            Officer and Director of the
                            general partner of the
                            General Partner


Dated: November  13, 1996  /s/ Neal Ludeke
       ------------------  ---------------
                           Neal Ludeke
                           Vice President and
                           Treasurer of the general partner
                           of the General Partner
                           (Principal Financial and Accounting
                            Officer of Registrant)