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 31, 2010





OR





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





For the transition period from ________ to ___________





Commission file number: 0-24855





WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5





California
33-0745418(State or other jurisdiction of
(I.R.S. Employerincorporation or organization)
Identification No.)17782 Sky Park CircleIrvine, CA
92614-6404(Address of principal executive offices)
(Zip Code)





(714) 662-5565


(Telephone number)





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 such filing requirements for the past 90 days.





Yes ___No _X__





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





Yes ___No _X__





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer___ Accelerated filer___  Non-accelerated filer___X__Smaller reporting company___





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


Yes ___No _X_  WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 INDEX TO FORM 10 – Q
 
 For the Quarterly Period Ended December 31, 2010




PART I. FINANCIAL INFORMATIONItem 1.
Financial StatementsCondensed Balance SheetsAs of December 31, 2010 and March 31, 2010
3Condensed Statements of OperationsFor the Three and Nine Months Ended December  31, 2010 and 2009
4Condensed Statement of Partners' DeficitFor the Nine Months Ended December 31, 2010
5Condensed Statements of Cash FlowsFor the Nine Months Ended December 31, 2010 and 2009
6Notes to Condensed Financial Statements

7Item 2.
Management's Discussion and Analysis of FinancialCondition and Results of Operations
17Item 3.
Quantitative and Qualitative Disclosures about Market Risks

20Item 4T.
Controls and Procedures

20PART II. OTHER INFORMATIONItem 1.
Legal Proceedings

21Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

21Item 3.
Defaults Upon Senior Securities

21Item 4.
(Removed and Reserved)

21Item 5.
Other Information

21Item 6.
Exhibits

21Signatures


22


2
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 CONDENSED BALANCE SHEETS
 (unaudited)




December 31, 2010

March 31, 2010ASSETSCash
$
37,298
$
38,295Investments in Local Limited Partnerships, net (Notes 2 and 3)

-

281,192Total Assets
$
37,298
$
319,487LIABILITIES AND PARTNERS' DEFICITLiabilities:Accrued fees and expenses due toGeneral Partner and affiliates (Note 3)
$
955,587
$
885,799Partners’ Deficit:General Partner

(73,368)

(69,848)Limited Partners (25,000 Partnership Units authorized;25,000 Partnership Units issued and outstanding)

(844,921)

(496,464)Total Partners’ Deficit

(918,289)

(566,312)Total Liabilities and Partners’ Deficit
$
37,298
$
319,487


See accompanying notes to condensed financial statements
 3
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 CONDENSED STATEMENTS OF OPERATIONS
 
 For the Three and Nine Months Ended December 31, 2010 and 2009
 (unaudited)


2010

2009Three Months

Nine Months

Three Months

Nine MonthsReporting fees
$
4,000
$
4,000
$
-
$
10,000Recovery of bad debt

-

-

-

35,696Total operating income

4,000

4,000

-

45,696Operating expenses and loss:Amortization (Note 2)

-

-

-

2,115Asset management fees (Note 3)

16,738

50,214

16,904

51,548Legal and accounting fees

29,892

38,943

9,297

15,171Impairment loss (Note 2)

-

195,226

-

955,137Write off of advances to LocalLimited  Partnerships (Note 4)

-

-

15,000

15,000Other

2,216

5,632

2,456

5,904Total operating expenses and loss

48,846

290,015

43,657

1,044,875Loss from operations

(44,846)

(286,015)

(43,657)

(999,179)Equity in losses of LocalLimited Partnerships (Note 2)

-

(85,966)

(122,108)

(405,493)Gain on sale of investments in Local

Limited Partnerships

20,000

20,000

-

1,123Interest income

1

4

10

32Net loss
$
(24,845)
$
(351,977)
$
(165,755)
$
(1,403,517)Net loss allocated to:General Partner
$
(248)
$
(3,520)
$
(1,658)
$
(14,035)Limited Partners
$
(24,597)
$
(348,457)
$
(164,097)
$
(1,389,482)Net loss per Partnership Unit
$
(1)
$
(14)
$
(7)
$
(56)Outstanding weighted

Partnership Units

25,000

25,000

25,000

25,000
  See accompanying notes to condensed financial statements
 4
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 CONDENSED STATEMENT OF PARTNERS’ DEFICIT
 
 For the Nine Months Ended December 31, 2010
 (unaudited)





General

LimitedPartner

Partners

TotalPartners’ deficit at March 31, 2010
$
(69,848)
$
(496,464)
$
(566,312)Net loss

(3,520)

(348,457)

(351,977)Partners’ deficit at December 31, 2010
$
(73,368)
$
(844,921)
$
(918,289)


See accompanying notes to condensed financial statements
 5
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 CONDENSED STATEMENTS OF CASH FLOWS
 
 For the Nine Months Ended December 31, 2010 and 2009
 (unaudited)


2010

2009Cash flows from operating activities:Net loss
$
(351,977)
$
(1,403,517)Adjustments to reconcile net loss to netcash provided by (used in) operating activities:Amortization

-

2,115Impairment loss

195,226

955,137Equity in losses of  Local Limited Partnerships

85,966

405,493Gain on sale of investments in Local Limited Partnerships

(20,000)

(1,123)Collection of reporting fees from the disposition of the

Local Limited Partnership

-

(10,000)Increase in accrued fees and expenses due toGeneral Partner and affiliates

69,788

56,316Net cash provided by (used in) operating activities

(20,997)

14,421Cash flows from investing activities:Proceeds from sale of investments in Local Limited

Partnerships

20,000

36,819Recovery of advances made to Local Limited Partnerships

that were previously written off

-

(35,696)Advances to Local Limited Partnerships

-

(15,000)Write off of advances to Local Limited Partnerships

-

15,000Net cash provided by investing activities

20,000

1,123Net increase (decrease) in cash

(977)

15,544Cash, beginning of period

38,295

22,245Cash, end of period
$
37,298
$
37,789SUPPLEMENTAL DISCLOSURE OF

CASH FLOW INFORMATIONTaxes paid
$
-
$
-
  See accompanying notes to condensed financial statements
 6
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)
  NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





General





The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the nine months ended December 31, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2011.  For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended March 31, 2010.





Organization





WNC Housing Tax Credit Fund VI, L.P., Series 5 a California Limited Partnership (the "Partnership"), was formed on March 3, 1997 under the laws of the State of California. The Partnership was formed to acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which own multi-family housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).  The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).





WNC & Associates, Inc. is the general partner of the Partnership (the “General Partner” or “Associates”).  The chairman and president owns all of the outstanding stock of Associates.  The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own.





The Partnership shall continue to be in full force and effect until December 31, 2052 unless terminated prior to that date pursuant to the partnership agreement or law.





The financial statements include only activity relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners.





The Partnership Agreement authorized the sale of up to 25,000 units of limited partnership interest (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units has concluded and 25,000 Partnership Units, representing subscriptions in the amount of $24,918,175, net of discounts of $54,595 for volume purchases and dealer discounts of $27,230 had been accepted.  The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership.  The investors in the Partnership (“Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments.


7
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





The proceeds from the disposition of any of the Local Limited Partnership properties will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement.  Any remaining proceeds will then be paid to the Partnership.  The sale of a Housing Complex may be subject to other restrictions and obligations.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership.  Should such distributions occur, the Limited Partners will be entitled to receive distributions equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to its capital contributions from the remainder.  Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.





Risks and Uncertainties





An investment in the Partnership and the Partnership’s investments in Local Limited Partnerships and their Housing Complexes are subject to risks.  These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership’s investments.  Some of those risks include the following:





The Low Income Housing Tax Credit rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction.  Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners.  Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership.





The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives.  Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the Compliance Period, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations.  Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.  8
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the Limited Partners could be reduced if the IRS were successful in such a challenge.  The alternative minimum tax could reduce tax benefits from an investment in the Partnership.  Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.





Anticipated future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership.  However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or their affiliates.  Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership.  The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.





The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through February 28, 2012.





No trading market for the Partnership Units exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners.





Exit Strategy





The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits.  The initial programs have completed their Compliance Periods.





Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits.  A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met.  None of the Housing Complexes have completed their 15-year Compliance Period.





With that in mind, the General Partner is continuing its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.





Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion.  While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of December 31, 2010.  9
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





On December 31, 2010, the Partnership sold its Local Limited Partnership Interest in Chillicothe Plaza Apartments, L.P. (“Chillicothe”) to the Local General Partner.  Chillicothe was appraised at $380,000 and had a mortgage note balance of $548,000. The Local Limited Partnership Interest was sold for $20,000 which was paid to the Partnership.  The Partnership will use the cash proceeds to pay $14,000 of reimbursements of operating expenses to the General Partner and affiliates while the remaining $6,000 will be retained in reserves for future operating expenses.  The Partnership’s investment balance was zero at December 31, 2010, therefore a gain of $20,000 was recorded for the three months ended December 31, 2010.  No cash distribution will be made to the Limited Partners.  The Compliance Period expires in 2013, therefore a surety bond was no longer required and the buyer has indemnified against any Low Income Housing Tax Credit recapture.  If there was a recapture, the maximum exposure would be $425,973 which includes the actual recapture amount and the applicable interest, and equates to $17.04 per Partnership Unit.





Method of Accounting for Investments in Local Limited Partnerships





The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership.  If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership.  The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership.  Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment and were being amortized over 30 years (see Note 2).





“Equity in losses of Local Limited Partnerships” for the periods ended December 31, 2010 and 2009 has been recorded by the Partnership. Management’s estimate for the three-month period is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. In subsequent annual financial statements, upon receiving the actual annual results reported by the Local Limited Partnerships, management reverses its prior estimate and records the actual results reported by the Local Limited Partnerships.  Equity in losses of Local Limited Partnerships allocated to the Partnership are not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships reported net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended (see Note 2).





In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.  10
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continue





Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations.   However, management does not consolidate the Partnership's interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships which are considered VIEs as assets on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership's balance in investment in Local Limited Partnerships represents its maximum exposure to loss. The Partnership's exposure to loss in these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.





Distributions received by the Partnership are accounted for as a reduction of the investment balance.  Distributions received after the investment has reached zero are recognized as income.  As of December 31, 2010, all of the investment balances had reached zero.





Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially differ from those estimates.





Cash and Cash Equivalents





The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.  As of December 31, 2010 and March 31, 2010, the Partnership had no cash equivalents.





Reporting Comprehensive Income





The Partnership had no items of other comprehensive income for all periods presented.





Income Taxes





The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns.  The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure.





Net Loss Per Partnership Unit





Net loss per Partnership Unit includes no dilution and is computed by dividing loss available to Limited Partners by the weighted average number of Partnership Units outstanding during the period.  Calculation of diluted net loss per Partnership Unit is not required.


11
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Revenue Recognition





The Partnership is entitled to receive reporting fees from the Local Limited Partnerships.  The intent of the reporting fees is to offset (in part) administrative costs incurred by the Partnership in corresponding with the Local Limited Partnerships.  Due to the uncertainty of the collection of these fees, the Partnership recognizes reporting fees as collections are made.





Amortization





Acquisition fees and costs were being amortized over 30 years using the straight-line method. Amortization expense for the nine months ended December 31, 2010 and 2009 was $0 and $2,115, respectively. During the nine months ended December 31, 2010 and 2009, impairment loss of $0 and $162,743 was recorded against these fees and costs, respectively.





Impairment





The Partnership reviews its investments in Local Limited Partnership for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment.  For the nine months ended December 31, 2010 and 2009 impairment loss related to investments in Local Limited Partnerships was $195,226 and $792,394, respectively.





The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. During the nine months ended December 31, 2010 and 2009, an impairment loss of $0 and $162,743, respectively, was recorded against the related intangibles.


12
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS





As of December 31, 2010 and March 31, 2010, the Partnership owns limited partnership interests in 12 and 13 Local Limited Partnerships, respectively, which owns one Housing Complex consisting of an aggregate 546 and 574 apartment units, respectively. The respective Local General Partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership.  The Partnership, as a limited partner, is generally entitled to 99.9%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships.





The following is a summary of the equity method activity of the investments in Local Limited Partnerships for the periods presented below:





For the Nine Months Ended

December 31, 2010

For the Year Ended

March 31, 2010Investments per balance sheet, beginning of period
$
281,192
$
1,766,047Equity in losses of Local Limited Partnerships

(85,966)

(955,137)Impairment loss

(195,226)

(527,603)Amortization of capitalized acquisition fees and costs

-

(2,115)Investments per balance sheet, end of period
$
-
$
281,192





For the Nine

Months Ended

December 31, 2010

For the Year Ended

March 31, 2010Investments in Local Limited Partnerships, net
$
-
$
281,192Acquisition fees and costs, net of accumulated amortization of $0 and $0

-

-Investments per balance sheet, end of period
$
-
$
281,192


13
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued





Selected financial information for the nine months ended December 31, 2010 and 2009 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:





COMBINED CONDENSED STATEMENTS OF OPERATIONS2010

2009Revenues
$
2,224,000
$
2,310,000Expenses:Interest expense

551,000

516,000Depreciation and amortization

866,000

921,000Operating expenses

1,641,000

1,707,000Total expenses

3,018,000

3,144,000Net loss


(794,000)

(834,000)Net loss allocable to the Partnership
$
(790,000)
$
(831,000)Net loss recorded by the Partnership
$
(86,000)
$
(405,000)





Certain Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies.  In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership may be required to sustain operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership's investments in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.





TroubledHousing Complexes





Enhanced Limited Partnership (“Enhanced”) has been experiencing operational issues.  The 23 unit property is located in Baton Rouge, Louisiana.  As of December 31, 2010, the occupancy rate was 43% and over the past year it has fluctuated between 35% and 65%.  Management has been continually marketing the project.  The property has also been operating with negative cash flows although the mortgage, property taxes and insurance are all current.   The last year of Low Income Housing Tax Credits was taken in 2008 and therefore the Partnership is still in the Compliance Period, which will end in 2013.  The Partnership is in the beginning stages of discussions with the General Partner regarding purchasing its limited partnership interest.  The Partnership does not anticipate receiving any cash proceeds for its interest but would be seeking either a guarantee for the Compliance Period or a bond issued, due to the risk of recapture through the Compliance Period.  Enhanced is being closely monitored by the Partnership.





NOTE 3 - RELATED PARTY TRANSACTIONS





Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates the following fees:  14
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 3 - RELATED PARTY TRANSACTIONS, continued





(a)
Acquisition fees of up to 7% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships.  The Partnership originally incurred cumulative acquisition fees of $1,750,000.   Accumulated amortization of these capitalized costs was $0 as of December 31, 2010 and March 31, 2010.  The Partnership evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. If an impairment loss related to the acquisition fees is recorded, the accumulated amortization is reduced to zero at that time.  As of December 31, 2010 and March 31, 2010, these fees were fully amortized or impaired.





(b)
Reimbursement of costs incurred by the General Partner or an affiliate in connection with the acquisition of Local Limited Partnerships.  These reimbursements have not exceeded 1.5% of the gross proceeds.  The Partnership originally incurred cumulative acquisition costs of $185,734, which have been included in investments in Local Limited Partnerships.  As of December 31, 2010 and March 31, 2010 these costs were fully amortized or impaired.





(c)
An annual asset management fee equal to 0.2% of the Invested Assets of the Partnership, as defined respectively.  “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnership interests and the Partnership’s allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships.  Asset management fees of $50,214 and $51,548 were incurred during the nine months ended December 31, 2010 and 2009, respectively, of which $10,000 and $7,500 was paid during the nine months ended December 31, 2010 and 2009, respectively.





(d)
The Partnership reimburses the General Partner or its affiliates for operating expenses incurred by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements were $15,000, and $45 during the nine months ended December 31, 2010 and 2009, respectively.


15
 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (unaudited)


NOTE 3 - RELATED PARTY TRANSACTIONS, continued





(e)
A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold.  Payment of this fee is subordinated to the limited partners receiving a preferred return of 12% through December 31, 2010 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort.  No such fee was incurred for all periods presented.





The accrued fees and expenses due to the General Partner and affiliates consist of the following at:





December 31, 2010

March 31, 2010Expenses paid by the General Partner or an affiliate on behalf of the Partnership
$
126,179
$
96,604Advances made to the Partnership from the General

Partner or affiliates

227,025

227,025Asset management fee payable

602,383

562,169Total
$
955,587
$
885,798





The General Partner and/or its affiliates do not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future foreseeable working capital requirements of the Partnership.





NOTE 4 -ADVANCES TO LOCAL LIMITED PARTNERSHIPS





As of December 31 and March 31, 2010, the Partnership in total had voluntarily advanced $874,416, to three Local Limited Partnerships, El Reno Housing Associates, L.P., Hillcrest Heights, L.P. and Mansur Wood Living Center, L.P.  No advances were made during the nine months ended December 31, 2010. All advances were reserved for in full during the year they were advanced.


16


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





Forward-Looking Statements





With the exception of the discussion regarding historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other discussions elsewhere in this Form 10-Q contain forward looking statements.  Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied.  Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.





Risks and uncertainties inherent in forward looking statements include, but are not limited to, the Partnership’s future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the Low Income Housing Tax Credit property market and the economy in general, as well as legal proceedings.  Historical results are not necessarily indicative of the operating results for any future period.





Subsequent written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports filed with the Securities and Exchange Commission.





The following discussion and analysis compares the results of operations for the three and nine months ended December 31, 2010 and 2009, and should be read in conjunction with the condensed unaudited financial statements and accompanying notes included within this report.





Financial Condition





The Partnership’s assets at December 31, 2010 consisted of 37,000 in cash.  Liabilities at December 31, 2010 consisted of $956,000 of accrued fees and expenses due to the General Partner and affiliates.





Results of Operations





Three Months Ended December 31, 2010 Compared to the Three Months Ended December 31, 2009.   The Partnership’s net loss for the three months ended December 31, 2010 was $(25,000), reflecting a decrease of approximately $141,000 from the $(166,000) net loss experienced for the three months ended December 31, 2009.  The decrease in net loss is largely due to the $122,000 decrease in equity in losses of Local Limited Partnerships which is largely due to the fact that all the net investment balance in the Local Limited Partnerships reached zero prior to the three months ended December 31, 2010, therefore no further losses could be recorded.  Gain on sale of investments in Local Limited Partnerships increased by $20,000 due to the sale of a Local Limited Partnership during the three months ended December 31, 2010 compared to no Local Limited Partnerships being disposed of during the three months ended December 31, 2009.  In addition, there was a $15,000 decrease in write off of advances to Local Limited Partnerships.  The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. The reporting fees increased by $4,000 due to the fact that Local Limited Partnerships pay reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  There was an increase of $(21,000) in legal and accounting fees due to the timing of the accounting work being performed.  17


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





Nine Months Ended December 31, 2010 Compared to the Nine Months Ended December 31, 2009. The Partnership’s net loss for the nine months ended December 31, 2010 was $(352,000), reflecting a decrease of approximately $1,052,000 from the $(1,404,000) net loss experienced for the nine months ended December 31, 2009. The decrease in net loss is largely due the $760,000 decrease in impairment loss.  Impairment loss can vary from year to year depending on the operations of the Local Limited Partnerships and the amount of Low Income Housing Tax Credits that are allocated each year.  In addition, there was a decrease of $320,000 in equity in losses of Local Limited Partnership.  As of December 31, 2010, investment balances for all of the Local Limited Partnerships reached zero compared to ten of thirteen Local Limited Partnerships reaching zero as of December 31, 2009.  Since losses cannot be recorded for investments that have reached zero, a decrease in the equity in losses of Local Limited Partnerships would be expected.  During the nine months ended December 31, 2010 gain on sale of investments in Local Limited Partnerships increased by $19,000 compared to the nine months ended December 31, 2009. The gain recorded by the Partnership can vary depending on the sales prices of the Housing Complexes that are sold. In addition, there was a $15,000 decrease in write off of advances to Local Limited Partnerships.  The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships.  Amortization decreased by $2,000 during the nine months ended December 31, 2010.  The decrease in amortization is due to the fact that the acquisition costs and fees were fully amortized and impaired in the prior year.  Legal and accounting fees increased by $(24,000), which was due to the timing of the accounting work being performed.    There was a decrease of $(36,000) in recovery of debt income which was related to the disposed Local Limited Partnership during the nine months ended December 31, 2009.  The reporting fees decreased by $(6,000) for the nine months ended December 31, 2010.  Reporting fees can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.





Liquidity and Capital Resources





Nine Months Ended December 31, 2010 Compared to Nine Months Ended December 31, 2009.  The net decrease in cash during the nine months ended December 31, 2010 was $(1,000) compared to a net increase in cash during the nine months ended December 31, 2009 of $16,000.   The change was largely due to the fact that there was a decrease of $(17,000) in proceeds from sale of Local Limited Partnerships. During the nine months ended December 31, 2010, the Partnership sold one of the Local Limited Partnerships compared to two of the Local Limited Partnerships were sold during the nine months ended December 31, 2009.   In addition, the Partnership paid $(25,000) to the General Partner for accrued asset management fees and the expenses paid on behalf of the Partnership compared to $(8,000) paid during the nine months ended December 31, 2009.  Reporting fee income decreased by $(6,000) during the nine months ended December 31, 2010.  The reporting fees can vary from period to period depending on the Local Limited Partnerships’ cash flow.





During the nine months ended December 31, 2010, accrued payables, which consist primarily of related party asset management fees and advances due to the General Partner, increased by $70,000. The General Partner does not anticipate that the balance of the accrued fees and advances will be paid until such time as capital reserves are in excess of foreseeable working capital requirements of the Partnership.





The Partnership expects its future cash flows, together with its net available assets as of December 31, 2010, to be insufficient to meet all currently foreseeable future cash requirements. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through February 28, 2012.


18


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





Recent Accounting Changes





In September 2006, the Financial Accounting Standards Board (the "FASB") issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2008 and shall be applied prospectively except for very limited transactions. In February 2009, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted U.S. generally accepted accounting principles ("GAAP") for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership's financial statements.





In November 2009, the FASB issued accounting guidance on Equity Method Investment Accounting Considerations that addresses how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee's issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. This guidance is effective in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Partnership adopted the guidance for the interim quarterly period beginning April 1, 2009. The impact of adopting it does not have a material impact on the Partnership's financial condition or results of operations.





In April 2009, the FASB issued accounting guidance for Interim Disclosures about Fair Value of Financial Instruments. This requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as well as annual statements. It became effective for as of and for the interim period ended June 30, 2009 and has no impact on the Partnership's financial condition or results of operations.





In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 30, 2009. The adoption will not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Partnership did not include the disclosure in this Form 10-Q.


19


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





In June 2009, the FASB issued the Accounting Standards Codification (Codification). Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. The Codification is intended to reorganize, rather than change, existing GAAP. Accordingly, all references to currently existing GAAP have been removed and have been replaced with plain English explanations of the Partnership's accounting policies. The adoption of the Codification did not have a material impact on the Partnership's financial position or results of operations.





Item 3. Quantitative and Qualitative Disclosures About Market Risks





NOT APPLICABLE





Item 4T. Controls and Procedures





(a)           Disclosure controls and procedures





As of the end of the period covered by this report, the Partnership’s General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.





The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.





Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.


20


(b)           Changes in internal controls





There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended December 31, 2010 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.





Part II.
Other InformationItem 1.
Legal ProceedingsNONEItem 2.
Unregistered Sales of Equity Securities and Use of ProceedsNONEItem 3.
Defaults Upon Senior SecuritiesNONEItem 4.
(Removed and Reserved)Item 5
Other InformationNONEItem 6.
Exhibits





31.1
Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.  (filed herewith)





31.2
Certification of the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.  (filed herewith)





32.1
Section 1350 Certification of the Chief Executive Officer.  (filed herewith)





32.2
Section 1350 Certification of the Chief Financial Officer.  (filed herewith)


21





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.





WNC HOUSING TAX CREDIT FUND VI, L.P. SERIES 5





By:  WNC & ASSOCIATES, INC. General Partner











By: /s/  Wilfred N. Cooper, Jr.





Wilfred N. Cooper, Jr.


President and Chief Executive Officer of WNC & Associates, Inc.





Date: February 14, 2011











By:  /s/ Melanie R. Wenk





Melanie R. Wenk


Vice-President - Chief Financial Officer of WNC & Associates, Inc.





Date: February 14, 2011


22