UNITED STATES


SECURITIES AND EXCHANGE COMMISSION





Washington, D.C. 20549





FORM 10-K





(Mark One)





S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934


For the fiscal year ended March 31, 2011





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: 0-21895








WNC HOUSING TAX CREDIT FUND V, L.P., Series 3


(Exact name of registrant as specified in its charter)





California
33-6163848(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)





Securities registered pursuant to Section 12(b) of the Act:





NONE





Securities registered pursuant to section 12(g) of the Act:





UNITS OF LIMITED PARTNERSHIP INTEREST


(Title of Class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act


Yes_____ No ___X__








Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes_____ No __X _








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 __ X _ No____





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  S





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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer___ Accelerated filer___  Non-accelerated filer  XSmaller 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





State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.





INAPPLICABLE








DOCUMENTS INCORPORATED BY REFERENCE





List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).





NONE  2


PART I.





Item 1.  Business





Organization





WNC Housing Tax Credit Fund V, L.P., Series 3 (the “Partnership”) is a California limited partnership formed under the laws of the State of California on March 28, 1995, and commenced operations on October 24, 1995.  The Partnership was formed to acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which owns multi-family or senior 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 Complex. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).





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





Pursuant to a registration statement filed with the Securities and Exchange Commission (the “SEC”) on July 26, 1995, the Partnership commenced a public offering of 25,000 units of limited partnership interest ("Partnership Units") at a price of $1,000 per Partnership Unit.  As of the close of the public offering on January 21, 1996 a total of 18,000 Partnership Units representing $17,558,985 had been sold.  Holders of Partnership Units are referred to herein as “Limited Partners.”





Sempra Energy Financial, a California corporation, which is not an affiliate of the Partnership or General Partner, has purchased 4,560 Partnership Units, which represents 25.3% of the Partnership Units outstanding.  Sempra Energy Financial invested $4,282,600.  A discount of $277,400 was allowed due to a volume discount.  On July 1, 2006 Sempra Energy Financial transferred their 4,560 Partnership Units to Sempra Section 42, LLC.  Western Financial Savings Bank, which is not an affiliate of the Partnership or General Partner, has purchased 1,068 Partnership Units, which represent 5.9% of the Partnership Units outstanding.  Western Financial Savings Bank invested $1,000,000.  A discount of $68,000 was allowed due to a volume discount.  See Item 12(b) in this 10-K.





The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the Partnership Agreement (as defined below) or law.




Description of Business





The Partnership's principal business objective was to provide its Limited Partners with Low Income Housing Tax Credits.  The Partnership's principal business therefore consisted of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will owned and operated a Housing Complex which qualified for the Low Income Housing Tax Credits.  In general, under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15-year compliance period (the “Compliance Period”), and under state law may have to be maintained as low income housing for 30 or more years.  3




As a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture of Low Income Housing Tax Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships (“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy” below) and (ii) to eliminate the possibility of posting a bond against potential recapture.  The Partnership is seeking to sell its Local Limited Partnership Interests.  Nonetheless, because of (i) the nature of the Housing Complexes and the Local Limited Partnership Interests, (ii) the difficulty of predicting the resale market for low income housing,(iii) the current economy, and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership dated March 28, 1995 (the "Partnership Agreement"), will be accomplished in the near term. Furthermore, the recent codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests.  If a Local Limited Partnership Interest or the related Housing Complex is not sold, it is anticipated that the Local General Partner would continue to operate such Housing Complex.





The Partnership originally invested in eighteen Local Limited Partnerships, three of which had been sold or otherwise disposed of as of March 31, 2011.  Each of these Local Limited Partnerships owns or owned a single Housing Complex that was eligible for the Low Income Housing Tax Credits.  Certain Local Limited Partnerships may also benefit from additional government programs promoting low- or moderate-income housing.





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 must satisfy the “reasonable belief” test outlined above to avoid recapture.





The following table reflects the 15-year compliance period of the fifteen Housing Complexes:





Expiration Date for 15-year compliance periodLocal Limited Partnership Name
15-year Expiration DateAlliance Apartments I Limited Partnership
2010Blessed Rock of El Monte
2012Broadway Apartments, Limited Partnership
2013Curtis Associates I, L.P.
2012Escatawpa Village Associates, Limited Partnership
2011Hastings Apartments I, Limited Partnership
2011Heritage Apartments I, L.P.
2012Hillcrest Associates, A Limited Partnership
2011Patten Towers, L.P. II
2011Prairieland Properties of Syracuse II, L.P.
2012Rosedale Limited Partnership
2011Shepherd South Apartments I, Ltd.
2010Solomon Associates I, L.P.
2012Talladega County Housing Ltd.
2011The Willows Apartments, L.P.
2011  4




With that in mind, the General Partner is continuing its review of the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements.  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 March 31, 2011.  As of March 31, 2011 two of the Housing Complexes had completed their 15 year compliance period. The proceeds from the disposition of any of the Housing Complexes 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 partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. 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 from the proceeds remaining after payment of Partnership obligations and funding of reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement). The General Partner would then be entitled to receive proceeds equal to their 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.





As of March 31, 2011, the Partnership sold the Housing Complex of two Local Limited Partnerships, Cascade Pines II, L.P. (“Cascade Pines”) and Evergreen Apartments I Limited Partnership, (“Evergreen”). The Partnership also sold its Local Limited Partnership Interest in Raymond S. King Apartments, L.P.





Raymond S. King Apartments, L.P.  will complete its 15-year compliance period in 2011; therefore there is a risk of tax credit recapture.  The last year in which Low Income Housing Tax Credits were generated by this Local Limited Partnership was 2007.  The executed Purchase Agreement states that Raymond S. King must remain in compliance with Section 42 of the IRS code. Until the completion of the Compliance Period, the purchaser must furnish the Partnership with certain reports proving that the Housing Complex is still in compliance with the IRS code.





Patten Towers L.P. II (“Patten Towers”) had its annual HUD inspection for 2010 on February 3, 2011 and received a score of 71C. The property was listed for sale with a national brokerage firm from July of 2008 through September 2009.   An acceptable offer was received in December 2010.  Currently, the potential purchaser and the Partnership are working with the lender on terms for a refinance.  As of June 13, 2011 it appears that terms have been agreed on by all parties and a third party legal counsel is beginning to draft up Purchase Agreements.  It is anticipated that the potential transaction could close in August 2011. The Partnership does not anticipate proceeds from the sale. Any sale transaction completed would require that the property maintain compliance with the Section 42 tax credit provisions, thereby avoiding recapture of any previously claimed tax credits. As of March 31, 2011, the Partnership’s investment balance in Patten Towers was $0.   The Compliance Period for this property ends December 31, 2011. The proposed sale is pending lender approval.





Item 1A.  Risk Factors





Set forth below are the risks the Partnership believes are the most significant material to the Limited Partners.  The Partnership and the Local Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time.  This section contains some forward-looking statements.  For an explanation of the qualifications and limitations on forward-looking statements, see Item 7.  5





(a)           Risks arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits





Low Income Housing Tax Credits might not be available.  If a Housing Complex does not satisfy the requirements of Internal Revenue Code Section 42, then the Housing Complex will not be eligible for Low Income Housing Tax Credits.





Low Income Housing Tax Credits might be less than anticipated.  The Local General Partners will calculate the amount of the Low Income Housing Tax Credits.  No opinion of counsel will cover the calculation of the amount of Low Income Housing Tax Credits.  The IRS could challenge the amount of the Low Income Housing Tax Credits claimed for any Housing Complex under any of a number of provisions set forth in Internal Revenue Code Section 42.  A successful challenge by the IRS would decrease the amount of the Low Income Housing Tax Credits from the amount paid for by the Partnership.





Unless a bond is posted or a Treasury Direct Account is established, Low Income Housing Tax Credits may be recaptured if Housing Complexes are not owned and operated for 15 years.  Housing Complexes must comply with Internal Revenue Code Section 42 for the 15-year Compliance Period.  Low Income Housing Tax Credits will be recaptured with interest to the extent that a Housing Complex is not rented as low income housing or in some other way does not satisfy the requirements of Internal Revenue Code Section 42 during the Compliance Period.  For example, unless a bond is posted or a Treasury Direct Account is established, recapture with interest would occur if:





·
a Local Limited Partnership disposed of its interest in a Housing Complex during the Compliance Period, or


·
the Partnership disposed of its interest in a Local Limited Partnership during the Compliance Period.





For these purposes, disposition includes transfer by way of foreclosure.





It will be up to the Partnership to determine whether to post a bond.  There is no obligation under the agreements with the Local Limited Partnerships that the Local Limited Partnerships must do so.





There can be no assurance that recapture will not occur.  If it does, recapture will be of a portion of all Low Income Housing Tax Credits taken in prior years for that Housing Complex, plus interest.  During the first 11 years of the Compliance Period, non-compliance results in one-third of the credits up to that point for the particular Housing Complex being recaptured, plus interest.  Between years 12 and 15, the recapture is phased out ratably.





Sales of Housing Complexes after 15 years are subject to limitations which may impact a Local Limited Partnership’s ability to sell its Housing Complex.  Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing Complex is located.  The extended low income housing commitment states the number of years that the Local Limited Partnership and any subsequent owners must rent the Housing Complex as low income housing.  Under Federal law, the commitment must be for at least 30 years.  The commitment actually agreed to may be significantly longer than 30 years.  In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years.  On any sale of the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period.  This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes.  The sale of a Housing Complex may be subject to other restrictions.  For example, Federal lenders or subsidizers may have the right to approve or disapprove a purchase of a Housing Complex. 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 amount of cash will be distributed to the Limited Partners. As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money originally invested in the Partnership.





As part of the recently enacted health care legislation, Congress has codified the economic substance doctrine. Because of its recent enactment, the full reach of this provision is unclear.  Inasmuch as Housing Complexes might offer no benefit to a purchaser other than tax benefits, it is possible that the economic substance doctrine could be interpreted to limit deduction of tax losses from Housing Complexes, which would be expected to have a significant adverse effect on the sale value of the Housing Complexes and the Local Limited Partnership Interests.  6





Limited Partners can only use Low Income Housing Tax Credits in limited amounts.  The ability of an individual or other non-corporate Limited Partner to claim Low Income Housing Tax Credits on his individual tax return is limited. For example, an individual Limited Partner can use Low Income Housing Tax Credits to reduce his tax liability on:





·
an unlimited amount of passive income, which is income from entities such as the Partnership, and


·
$25,000 in income from other sources.





However, the use of Low Income Housing Tax Credits by an individual against these types of income is subject to ordering rules, which may further limit the use of Low Income Housing Tax Credits.  Some corporate Limited Partners are subject to similar and other limitations. They include corporations which provide personal services, and corporations which are owned by five or fewer shareholders.





Any portion of a Low Income Housing Tax Credit which is allowed to a Limited Partner under such rules is then aggregated with all of the Limited Partner’s other business credits.  The aggregate is then subject to the general limitation on all business credits.  That limitation provides that a Limited Partner can use business credits to offset the Limited Partner’s annual tax liability equal to $25,000 plus 75% of the Limited Partner’s tax liability in excess of $25,000. However, business credits may not be used to offset any alternative minimum tax.  All of these concepts are extremely complicated.





(b)           Risks related to investment in Local Limited Partnerships and Housing Complexes





Because the Partnership has few investments, each investment will have a great impact on the Partnership’s results of operations.  Any single Housing Complex experiencing poor operating performance, impairment of value or recapture of Low Income Housing Tax Credits will have a significant impact upon the Partnership as a whole.





The failure to pay mortgage debt could result in a forced sale of a Housing Complex. Each Local Limited Partnership leverages the Partnership’s investment therein by incurring mortgage debt.  A Local Limited Partnership’s revenues could be less than its debt payments and taxes and other operating costs.  If so, the Local Limited Partnership would have to use working capital reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure.  The same results could occur if government subsidies ceased.  Foreclosure would result in a loss of the Partnership’s capital invested in the Housing Complex.  Foreclosure could also result in a recapture of Low Income Housing Tax Credits, and a loss of Low Income Housing Tax Credits for the year in which the foreclosure occurs. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the Local Limited Partnership’s ability to pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment.  Balloon payments maturing prior to the end of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or at all.





The Partnership does not control the Local Limited Partnerships and must rely on the Local General Partners. The Local General Partners will make all management decisions for the Local Limited Partnerships and the Housing Complexes.  The Partnership has very limited rights with respect to management of the Local Limited Partnerships. The Partnership will not be able to exercise any control with respect to Local Limited Partnership business decisions and operations. Consequently, the success of the Partnership will depend on the abilities of the Local General Partners.


7





Housing Complexes subsidized by other government programs are subject to additional rules which may make it difficult to operate and sell Housing Complexes.  Some or all of the Housing Complexes receive or may receive government financing or operating subsidies in addition to Low Income Housing Tax Credits.  The following are risks associated with some such subsidy programs:




·
Obtaining tenants for the Housing Complexes.  Government regulations limit the types of people who can rent subsidized housing. These regulations may make it more difficult to rent the residential units in the Housing Complexes.


·
Obtaining rent increases.  In many cases rents can only be increased with the prior approval of the subsidizing agency.


·
Limitations on cash distributions.  The amount of cash that may be distributed to owners of subsidized Housing Complexes is less than the amount that could be earned by the owners of non-subsidized Housing Complexes.


·
Limitations on sale or refinancing of the Housing Complexes.  A Local Limited Partnership may be unable to sell its Housing Complex or to refinance its mortgage loan without the prior approval of the lender. The lender may withhold such approval in the discretion of the Jender. Approval may be subject to conditions, including the condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a mortgage may result in the assessment of a prepayment penalty.


·
Limitations on transfers of interests in Local Limited Partnerships.  The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the Jender.  The Jender may withhold such approval in the discretion of the Jender.  Approval may be subject to conditions.


·
Limitations on removal and admission of Local General Partners.  The Partnership may be unable to remove a Local General Partner from a Local Limited Partnership except for cause, such as the violation of the rules of the lender or state allocating authority.  Regulations may prohibit the removal of a Local General Partner or permit removal only with the prior approval of the lender.  Regulations may also require approval of the admission of a successor Local General Partner even upon the death or other disability of a Local General Partner.


·
Limitations on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative appropriations. The rental revenues of a Housing Complex, when combined with the maximum committed subsidy, may be insufficient to meet obligations. Congress or the state legislature, as the case may be, may fail to appropriate or increase the necessary subsidy.  In those events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement could be negotiated.


·
Possible changes in applicable regulations.  Legislation may be enacted which adversely revises provisions of outstanding mortgage loans.  Such legislation has been enacted in the past.


·
Limited Partners may not receive distributions if Housing Complexes are sold.  There is no assurance that Limited Partners will receive any cash distributions from the sale or refinancing of a Housing Complex.  The price at which a Housing Complex is sold may not be high enough to pay the mortgage and other expenses at the Local Limited Partnership and partnership levels which must be paid at such time.  If that happens, a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses.





Uninsured casualties could result in losses and recapture. There are casualties which are either uninsurable or not economically insurable.  These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters.  If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property.  Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property.  A portion of prior tax credits could be recaptured and future tax credits could be lost if the Housing Complex were not restored within a reasonable period of time.  And liability judgments against the Local Limited Partnership could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost of liability and casualty insurance has increased in recent years.  Casualty insurance has become more difficult to obtain and may require large deductible amounts.  8





Housing Complexes without financing or operating subsidies may be unable to pay operating expenses. If a Local Limited Partnership were unable to pay operating expenses, one result could be a forced sale of its Housing Complex In this regard, some of the Local Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits.  Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are important to the feasibility of low income housing.  Those Housing Complexes rely solely on rents to pay expenses. However, in order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged to tenants.  Over time, the expenses of a Housing Complex will increase.  If a Local Limited Partnership cannot increase its rents, it may be unable to pay increased operating expenses.





The Partnership’s investment protection policies will be worthless if the net worth of the Local General Partners is not sufficient to satisfy their obligations.  There is a risk that the Local General Partners will be unable to perform their financial obligations to the Partnership.  The General Partner has not established a minimum net worth requirement for the Local General Partners.  Rather, each Local General Partner demonstrates a net worth which the General Partner believes is appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make to the Partnership.  Moreover, other creditors may have claims on these assets. No escrow accounts or other security arrangements will be established to ensure performance of a Local General Partner’s obligations. The cost to enforce a Local General Partner’s obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership.





Fluctuating economic conditions can reduce the value of real estate. The Partnership’s principal business objective is providing its Limited Partners with Low Income Housing Tax Credits, not the generation of gains from the appreciation of real estate held by the Local Limited Partnerships.    In its financial statements, the Partnership has carried its investments in Local Limited Partnerships at values reflecting the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership of its interests in the Local Limited Partnerships.  As of all periods presented, the Partnership had reduced the carrying amount to $0 with respect to all of its investments.





Any investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the ability to realize a profit or even to recover invested capital. Among these conditions are:





·
the general and local job market,


·
the availability and cost of mortgage financing,


·
monetary inflation,


·
tax, environmental, land use and zoning policies,


·
the supply of and demand for similar properties,


·
neighborhood conditions,


·
the availability and cost of utilities and water.





A loss in value of an investment in a Local Limited Partnership, other than a temporary decline, is recorded by the Partnership in its financial statements as an impairment loss. Impairment is measured by comparing the Partnership’s carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and any estimated residual value to the Partnership. For the years ended March 31, 2011, 2010 and 2009, impairment loss related to investments in Local Limited Partnerships was $0, $0 and $1,115,739, respectively.





(c)           Tax risks other than those relating to tax credits





In addition to the risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks.  Additional Federal income tax risks associated with the ownership of Partnership Units and the operations of the Partnership and the Local Limited Partnerships include, but are not limited to, the following:  9




No opinion of counsel as to certain matters.  No legal opinion is obtained regarding matters:





·
the determination of which depends on future factual circumstances,


·
which are peculiar to individual Limited Partners, or


·
which are not customarily the subject of an opinion.





The more significant of these matters include:





·
allocating purchase price among components of a property, particularly as between buildings and fixtures, the cost of which is depreciable, and the underlying land, the cost of which is not depreciable,


·
characterizing expenses and payments made to or by the Partnership or a Local Limited Partnership,


·
identifying the portion of the costs of any Housing Complex which qualify for historic and other tax credits,


·
applying to any specific Limited Partner the limitation on the use of tax credits and tax losses.  Limited Partners must determine for themselves the extent to which they can use tax credits and tax losses, and


·
the application of the alternative minimum tax to any specific Limited Partner, or the calculation of the alternative minimum tax by any Limited Partner.  The alternative minimum tax could reduce the tax benefits from an investment in the Partnership.


There can be no assurance, therefore, that the IRS will not challenge some of the tax positions adopted by the Partnership.  The courts could sustain an IRS challenge.  An IRS challenge, if successful, could have a detrimental effect on the Partnership’s ability to realize its investment objectives.





Passive activity rules will limit deduction of the Partnership’s losses and impose tax on interest income.  The Internal Revenue Code imposes limits on the ability of most investors to claim losses from investments in real estate.  An individual may claim these so-called passive losses only as an offset to income from investments in real estate or rental activities.  An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest.  These passive activity rules will restrict the ability of most Limited Partners to use losses from the Partnership as an offset of non-passive income.





The Partnership may earn interest income on its reserves and loans.  The passive activity rules generally will categorize interest as portfolio income, and not passive income. Passive losses cannot be used as an offset to portfolio income.  Consequently, a Limited Partner could pay tax liability on portfolio income from the Partnership.





At risk rules might limit deduction of the Partnership’s losses.  If a significant portion of the financing used to purchase Housing Complexes does not consist of qualified nonrecourse financing, the “at risk” rules will limit a Limited Partner’s ability to claim Partnership losses to the amount the Limited Partner invests in the Partnership.  The “at risk” rules of the Internal Revenue Code generally limit a Limited Partner’s ability to deduct Partnership losses to the sum of:





·
the amount of cash the Limited Partner invests in the Partnership, and


·
the Limited Partner’s share of Partnership qualified nonrecourse financing.





Qualified nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person actively and regularly engaged in the business of lending money.





Tax liability on sale of a Housing Complex or Local Limited Partnership Interest may exceed the cash available from the sale.  When a Local Limited Partnership sells a Housing Complex it may recognize gain. Such gain is equal to the difference between:





·
the sales proceeds plus the amount of indebtedness secured by the Housing Complex, and


·
the adjusted basis for the Housing Complex. The adjusted basis for a Housing Complex is its original cost, plus capital expenditures, minus depreciation.


10


Similarly, when the Partnership sells an interest in a Local Limited Partnership the Partnership may recognize gain. Such gain is equal to the difference between:


·
the sales proceeds plus the Partnership’s share of the amount of indebtedness secured by the Housing Complex, and


·
the adjusted basis for the interest.  The adjusted basis for an interest in a Local Limited Partnership is the amount paid for the interest, plus income allocations and cash distributions, less loss allocations.





Accordingly, gain will be increased by the depreciation deductions taken during the holding period for the Housing Complex.  In some cases, a Limited Partner could have a tax liability from a sale greater than the cash distributed to the Limited Partner from the sale.





IRS could audit the returns of the Partnership, the Local Limited Partnerships or the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity.  The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership.  Similarly, only one judicial proceeding can be filed to contest an IRS determination.  A contest by the Partnership of any IRS determination might result in high legal fees.





An audit of the Partnership or a Local Limited Partnership also could result in an audit of a Limited Partner.  An audit of a Limited Partner’s tax returns could result in adjustments both to items that are related to the Partnership and to unrelated items.  The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.





A successful IRS challenge to tax allocations of the Partnership or a Local Limited Partnership would reduce the tax benefits of an investment in the Partnership.Under the Internal Revenue Code, a partnership’s allocation of income, gains, deductions, losses and tax credits must have substantial economic effect.  Substantial economic effect is a highly-technical concept.  The fundamental principle is two-fold.  If a partner will benefit economically from an item of partnership income or gain, that item must be allocated to him so that he bears the correlative tax burden.  Conversely, if a partner will suffer economically from an item of partnership deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit.  If a partnership’s allocations do not have substantial economic effect, then the partnership’s tax items are allocated in accordance with each partner’s interest in the partnership. The IRS might challenge the allocations made by the Partnership:





·
between the Limited Partners and the General Partner,


·
among the Limited Partners, or


·
between the Partnership and a Local General Partner.





If any allocations were successfully challenged, a greater share of the income or gain or a lesser share of the losses or tax credits might be allocated to the Limited Partners.  This would increase the tax liability or reduce the tax benefits to the Limited Partners.





Tax liabilities could arise in later years of the Partnership.  After a period of years following commencement of operations by a Local Limited Partnership, the Local Limited Partnership may generate profits rather than losses.  A Limited Partner would have tax liability on his share of such profits unless he could offset the income with:





·
unused passive losses from the Partnership or other investments, or


·
current passive losses from other investments.





In such circumstances, the Limited Partner would not receive a cash distribution from the Partnership with which to pay any tax liability.  11




IRS challenge to tax treatment of expenditures could reduce losses. The IRS may contend that fees and payments of the Partnership or a Local Limited Partnership:





·
should be deductible over a longer period of time or in a later year,


·
are excessive and may not be capitalized or deducted in full,


·
should be capitalized and not deducted, or


·
may not be included as part of the basis for computing tax credits.





Any such contention by the IRS could adversely impact, among other things:





·
the eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits,


·
the adjusted basis of a Housing Complex used to compute depreciation,


·
the correct deduction of fees,


·
the amortization of organization and offering expenses and start-up expenditures.





If the IRS were successful in any such contention, the anticipated Low Income Housing Tax Credits and losses of the Partnership would be reduced, perhaps substantially.





Changes in tax law might reduce the value of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits are allocated to a Housing Complex at commencement of the 10-year credit period, there can be no assurance that future legislation may not adversely affect an investment in the Partnership. For example, legislation could reduce or eliminate the value of Low Income Housing Tax Credits.  In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses.  These tax losses generally were used to reduce an investor’s income from all sources on a dollar-for-dollar basis.  Investments in low income housing were made in reliance on the availability of such tax benefits.  However, tax legislation enacted in 1986 severely curtailed deduction of such losses.





New administrative or judicial interpretations of the law might reduce the value of tax credits.  Many of the provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by the IRS in regulations, rulings or public announcements, or by the courts.  In the future, these provisions may be interpreted or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships.  The IRS constantly reviews the Federal tax rules, and can revise its interpretations of established concepts.  Any such revisions could reduce or eliminate tax benefits associated with an investment in the Partnership.





State income tax laws may adversely affect the Limited Partners.  A Limited Partner may be required to file income tax returns and be subject to tax and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located, the Partnership or a Local Limited Partnership engages in business activities, or the Limited Partner is a resident.  Corporate Limited Partners may be required to pay state franchise taxes.





The tax treatment of particular items under state or local income tax laws may vary materially from the Federal income tax treatment of such items.  Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law.  The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances.  12




(d)           Risks related to the Partnership and the Partnership Agreement





The Partnership may be unable to timely provide financial reports to the Limited Partners which would adversely affect their ability to monitor Partnership operations..Historically, the Partnership has been unable to timely file and provide investors with all of its required periodic reports. In some instances, the delay has been significant.  Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership in a timely manner.  There cannot be any assurance that the Local General Partners will satisfy these obligations.  If not, the Partnership would be unable to provide to the Limited Partners in a timely manner its financial statements and other reports.  That would impact the Limited Partners’ ability to monitor Partnership operations.  The Partnership’s failure to meet its filing requirements under the Securities Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning the Partnership.  The failure to file could also result in sanctions imposed by the SEC.  Any defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.





Lack of liquidity of investment.  There is no public market for the purchase and sale of Partnership Units.  and it is unlikely that one will develop.  Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price.  Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years.  Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market.  The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer.  The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.





The Limited Partners will not control the Partnership and must rely totally on the General Partner.  The General Partner will make all management decisions for the Partnership.  Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership.  Limited Partners have no right or power to take part in Partnership management.





Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority.  The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to:





·
remove the General Partner and elect a replacement general partner,


·
amend the Partnership Agreement,


·
terminate the Partnership.





Accordingly, a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the Partnership Units opposed such action.





Limitations on liability of the General Partner to the Partnership.  The ability of Limited Partners to sue the General Partner and it affiliates is subject to limitations.  The Partnership Agreement limits the liability of the General Partner and it affiliates to the Limited Partners.  The General Partner and it affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct.





Therefore, Limited Partners may be less able to sue the General Partner and it affiliates than would be the case if such provisions were not included in the Partnership Agreement.





Associates and its affiliates are serving as the general partners of many other partnerships.  Depending on their corporate area of responsibility, the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership.  These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership‘s capital in Local Limited Partnerships.  13




The interests of Limited Partners may conflict with the interests of the General Partner and its affiliates.  The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership.  The General Partner and its affiliates receive substantial compensation from the Partnership.  The General Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold. The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The result of these conflicts could be that the General Partner may make investments which are less desirable, or on terms which are less favorable, to the Partnership than might otherwise be the case. The Partnership has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.





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 its affiliates.





The Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner.  These accrued payables increased by approximately $49,500 for each of the years ended March 31 2010, 2009 and 2008, respectively.  The Partnership’s future contractual cash obligations consist solely of its obligations to pay future annual asset management fees.  These will equal approximately $49,500 per year through the termination of the Partnership, which must occur no later than December 31, 2050.  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 the existing  contractual  obligations  and 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.





Associates agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through June 30, 2012.





Item 1B.  Unresolved Staff Comments





Not Applicable





Item 2. Properties





Through its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes.  The following table reflects the status of the fifteen Housing Complexes for which the Partnership had ownership during the year, as of the dates or for the periods indicated:  14





As of March 31, 2011

As of December 31, 2010Local Limited Partnership Name
Location
General Partner Name
Partnership's Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Number of Units
Estimated Aggregate Low Income Housing Tax  Credits (1)
Mortgage Balances of Local Limited PartnershipsAlliance Apartments I Limited Partnership
Alliance, Nebraska
Retro Development, Inc.
604,000
$    604,000

19
$    363,000
$     308,000Blessed Rock of El Monte
El Monte, California
Everland, Inc.
2,511,000
2,511,000

137
4,404,000
2,843,000Broadway Apartments, Limited Partnership
Hobbs, New Mexico
Trianon - Broadway, LLC, a New Mexico Limited Liability Company
2,029,000
2,029,000

78
2,335,000
1,218,000Curtis Associates I, L.P.
Curtis, Nebraska
Joseph A. Shepard and Kenneth M. Vitor
88,000
88,000

12
156,000
401,000Escatawpa Village Associates, Limited Partnership
Escatawpa, Mississippi
Clifford E. Olsen
249,000
249,000

32
458,000
849,000Hastings Apartments I, Limited Partnership
Hastings, Nebraska
Retro Development, Inc. of Oklahoma and Most Worshipful Prince Hall Grand Lodge
542,000
542,000

18
1,005,000
115,000Heritage Apartments I, L.P.
Berkeley, Missouri
Joseph A. Shepard and Kenneth M. Vitor
752,000
752,000

30
1,333,000
595,000Hillcrest Associates, A Limited Partnership
Ontario, Oregon
Riley J. Hill
354,000
354,000

28
683,000
1,241,000


15


As of March 31, 2011

As of December 31, 2010Local Limited Partnership Name
Location
General Partner Name
Partnership's Total Investment in Local Limited Partnerships

Amount of Investment Paid to Date

Number of Units
Estimated Aggregate

Low IncomeHousing

Tax  Credits (1)
Mortgage Balances of Local Limited PartnershipsPatten Towers, L.P. II (2)
Chattanooga, Tennessee
Patten Towers Partners, LLC
2,154,000

2,154,000

221
3,938,000
4,109,000Prairieland Properties of Syracuse II, L.P.
Syracuse, Kansas
Kenneth M. Vitor
85,000

85,000

8
152,000
280,000Rosedale Limited Partnership
Silver City, New Mexico
Deke Noftsker and ABO Corporation
309,000

309,000

32
547,000
1,264,000Shepherd South Apartments I, Ltd.
Shepherd, Texas
Donald W. Sowell
121,000

121,000

24
223,000
507,000Solomon Associates I, L.P.
Solomon, Kansas
Joseph A. Shepard and Kenneth M. Vitor
138,000

138,000

16
250,000
544,000Talladega County Housing Ltd.
Talladega, Alabama
Apartment Developers, Inc. and Thomas H. Cooksey
653,000

653,000

30
1,200,000
676,000The Willows Apartments Limited Partnership
Morganton, North Carolina
John C. Loving, Gordon D. Brown, Jr. and Western N.C. Housing Partnership

841,000

841,000

36

1,545,000

969,000$
11,430,000
$
11,430,000

721
$
18,592,000
$
15,919,000




(1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the Compliance Period.All of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners.





(2)  The Local Limited Partnership has been identified for disposition.  16





For the year ended December 31, 2010Local Limited

Partnership Name
Rental Income
Net Income (Loss)

Low Income Housing Tax Credits Allocated to PartnershipAlliance Apartments I Limited Partnership
$                     91,000
$                          (29,000)

N/ABlessed Rock of El Monte
978,000
69,000

N/ABroadway Apartments, Limited Partnership
451,000
(118,000)

N/ACurtis Associates I, L.P.
53,000
(13,000)

N/AEscatawpa Village Associates, Limited Partnership
212,000
(11,000)

N/AHastings Apartments I, Limited Partnership
85,000
(30,000)

N/AHeritage Apartments I, L.P.
149,000
(45,000)

N/AHillcrest Associates, A Limited Partnership
202,000
(28,000)

N/APatten Towers, L.P. II (1)
1,640,000
(3,745,000)

N/APrairieland Properties of Syracuse II, L.P.
46,000
(11,000)

N/ARosedale Limited Partnership
184,000
(43,000)

N/AShepherd South Apartments I, Ltd.
124,000
(6,000)

N/ASolomon Associates I, L.P.
80,000
(12,000)

N/ATalladega County Housing Ltd.
112,000
(46,000)

N/AThe Willows Apartments Limited Partnership

158,000

(22,000)

N/A$
4,565,000
$
(4,090,000)





N/A – All of the Low Income Housing Tax Credits have been allocated to the Partnership and there are no future Low Income Housing Tax Credits expected to be received.





(1) The Local Limited Partnership has been identified for disposition.


17





WNC Housing Tax Credit Fund V, L.P., Series 3Occupancy RatesAs of December 31,Local Limited Partnership Name
Location
General Partner Name
2010
2009
2008
2007
2006Alliance Apartments I Limited Partnership
Alliance, Nebraska
Retro Development, Inc.
95%
100%
89%
100%
100%Blessed Rock of El Monte
El Monte, California
Everland, Inc.
100%
100%
100%
99%
100%Broadway Apartments, Limited Partnership
Hobbs, New Mexico
Trianon - Broadway, LLC, a New Mexico Limited Liability Company
96%
97%
97%
99%
92%Cascade Pines, L.P. II
Atlanta, Georgia
Urban Residential Management, Inc., a Georgia Corporation
N/A
N/A
N/A
N/A
57%Curtis Associates I, L.P.
Curtis, Nebraska
Joseph A. Shepard and

Kenneth M. Vitor
92%
92%
83%
92%
92%Escatawpa Village Associates, Limited Partnership
Escatawpa, Mississippi
Clifford E. Olsen
100%
100%
100%
100%
100%Hastings Apartments I, Limited Partnership
Hastings, Nebraska
Retro Development, Inc. of Oklahoma and Most Worshipful Prince Hall Grand Lodge
89%
100%
83%
94%
100%Heritage Apartments I, L.P.
Berkeley, Missouri
Joseph A. Shepard and

Kenneth M. Vitor
100%
100%
100%
100%
97%Hillcrest Associates, A Limited Partnership
Ontario, Oregon
Riley J. Hill
86%
100%
93%
96%
96%Patten Towers, L.P. II (1)
Chattanooga, Tennessee
Patten Towers Partners, LLC
98%
97%
96%
93%
86%Prairieland Properties of Syracuse II, L.P.
Syracuse, Kansas
Kenneth M. Vitor
100%
100%
88%
100%
100%  18





WNC Housing Tax Credit Fund V, L.P., Series 3Occupancy RatesAs of December 31,Local Limited Partnership Name
Location
General Partner Name
2010
2009
2008
2007
2006Raymond S. King Apartments Limited Partnership
Greensboro, North Carolina
Project Homestead, Inc.
N/A
N/A
83%
96%
100%Rosedale Limited Partnership
Silver City, New Mexico
Deke Noftsker and ABO Corporation
100%
59%
100%
88%
97%Shepherd South Apartments I, Ltd.
Shepherd, Texas
Donald W. Sowell
88%
100%
96%
92%
92%Solomon Associates I, L.P.
Solomon, Kansas
Joseph A. Shepard and Kenneth M. Vitor
75%
81%
88%
81%
88%Talladega County Housing Ltd.
Talladega, Alabama
Apartment Developers, Inc. and Thomas H. Cooksey
100%
87%
97%
90%
97%The Willows Apartments Limited Partnership
Morganton, North Carolina
John C. Loving, Gordon D. Brown, Jr. and Western N.C. Housing Partnership
94%

97%

100%

97%

97%Weighted Average
93%

96%

96%

95%

94%
  N/A - The Local Limited Partnership was sold prior to the respective year end.





(1) The Local Limited Partnership has been identified for disposition.  19




Item 3.  Legal Proceedings





NONE





Item 4.  (Removed and Reserved)





PART II.





Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of


of Equity Securities




Item 5a.





a)
The Partnership Units are not traded on a public exchange but were sold through a public offering.  It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists.  Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied.





b)
At March 31, 2011, there were 876 Limited Partners and 0 assignees of Partnership Units who were not admitted as Limited Partners.





c)
The Partnership was not designed to provide cash distributions to Limited Partners.  It is possible that the partnership could make distributions from sale proceeds. If the partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and any then accrued obligations of the partnership. There can be no assurance in this regard. Any distributions would be made in accordance with the terms of the Partnership Agreement.  For all periods presented there were no cash distributions to the Limited Partners.





d)
No securities are authorized for issuance by the Partnership under equity compensation plans.





e)
The Partnership does not issue common stock.





f)
No unregistered securities were sold by the Partnership during the year ended March 31, 2011.





Item 5b. Use of Proceeds





NOT APPLICABLE





Item 5c. Purchases of Equity Securities by the Issuers and Affiliated Purchasers





NONE  20




Item 6.  Selected Financial Data





Selected balance sheet information for the Partnership is as follows:





March 31,2011

2010

2009

2008

2007ASSETSCash
$
27,292
$
12,762
$
9,498
$
83,448
$
46,994Investments in Local Limited

Partnerships, net

-

-

-

1,120,103

1,912,366Other assets

4,857

-

-

-

-Total Assets
$
32,149
$
12,762
$
9,498
$
1,203,551
$
1,959,360


LIABILITIESAccrued expenses
$
-
$
-
$
4,000
$
4,000
$
4,000Accrued fees and expenses due to General Partner and affiliates

731,192

707,256

648,548

1,781,320

1,738,278Total Liabilities

731,192

707,256

652,548

1,785,320

1,742,278PARTNERS' EQUITY (DEFICIT)

(699,043)

(694,494)

(643,050)

(581,769)

217,082Total Liabilities and

Partners’ Equity (Deficit)
$
32,149
$
12,762
$
9,498
$
1,203,551
$
1,959,360





Selected results of operations, cash flows and other information for the Partnership are as follows:





For the Years Ended March 31,2011

2010

2009

2008

2007Loss  from  operations
$
(281,208)
$
(198,808)
$
(1,532,255)
$
(590,333)
$
(3,724,657)Equity in losses of Local Limited Partnerships

-

-

(903)

(208,618)

1,545,903Loss on sale of Local

Limited Partnership

-

(5,724)

-

-

-Interest income

4

4

23

100

135Net loss
$
(281,204)
$
(204,528)
$
(1,533,135)
$
(798,851)
$
(2,178,619)Net loss allocated to:General Partner
$
(2,812)
$
(2,045)
$
(15,331)
$
(7,989)
$
(21,786)Limited Partners
$
(278,392)
$
(202,483)
$
(1,517,804)
$
(790,862)
$
(2,156,833)Net loss per Partnership Unit
$
(15.47)
$
(11.25)
$
(84.32)
$
(43.94)
$
(119.82)Outstanding weighted Partnership Units

18,000

18,000

18,000

18,000

18,000





Note 1 - Loss from operations for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 include a charge for impairment losses on investments in Local Limited Partnerships of $0, $0,  $1,115,739, $559,408 and $2,336,855, respectively  (See Note 2 to the financial statements).  21




For the Years Ended March 31,2011

2010

2009

2008

2007Net cash provided by (used in):Operating activities
$
14,530
$
3,264
$
(73,950)
$
24,504
$
(301,823)Investing activities

-

-

-

11,950

16,134Financing activities

-

-

-

-

309,523





Net change in cash

14,530

3,264

(73,950)

36,454

23,834Cash, beginning of

period

12,762

9,498

83,448

46,994

23,160Cash, end of period
$
27,292
$
12,762
$
9,498
$
83,448
$
46,994








Low Income Housing Tax Credits per Partnership Unit were as follows for the years ended December 31:





2010

2009

2008

2007

2006Federal
$
-
$
-
$
6
$
51
$
91State

-

-

-

-

-Total
$
-
$
-
$
6
$
51
$
91





Item 7.  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-K 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 Credits property market and the economy in general, changes in law rules and regulations, and  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-K and in other reports filed with the SEC.  The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere in this filing.





Critical Accounting Policies and Certain Risks and Uncertainties





The Partnership believes that the following discussion addresses the Partnership’s most significant accounting policies, which are the most critical to aid in fully understanding and evaluating the Partnership’s reported financial results, and certain of the Partnership’s risks and uncertainties.  22




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.





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 ata least annually or 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 product of the remaining future Low Income Housing Tax Credits estimated to be allocable 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 account and are being amortized over 27.5 years. (See Notes 2 and 3 to the financial statements.)





"Equity in losses of Local Limited Partnerships" for each year ended March 31 have been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report 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.





Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance.  Distributions received after the investment has reached zero are recognized as distribution income.




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.





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 as an asset 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, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on 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.


23





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.





Impact of Recent Accounting Pronouncements





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, 2007 and shall be applied prospectively except for very limited transactions.  In February 2008, 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 February 2007, the FASB issued accounting guidance for The Fair Value Option for Financial Assets and Financial Liabilities. This guidance permits entities to choose to measure many financial instruments and certain other items at fair value.  The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. It is effective for fiscal years beginning after November 15, 2007.  On April 1, 2008, the Partnership adopted GAAP for The Fair Value Option for Financial Assets and Financial Liabilities and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of the guidance had no effect on the Partnership.





In November 2008, 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 did 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 had 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 did 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-K.  24




In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs).  The amended guidance modifies the consolidation model to one based on control and economics, and replaced quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that 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 amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE.  Additionally, the amendment requires enhanced and expanded disclosures around VIEs.  This amendment is effective for fiscal years beginning after November 15, 2009.  The adoption of this guidance on April 1, 2010 did not have a material effect on the Partnership’s financial statements.





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.





Certain Risks and Uncertainties





See Item 1A for a discussion of risks regarding the Partnership.





All of the Low Income Housing Tax Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership does not anticipate being allocated any Low Income Housing Tax Credits from the Local Limited Partnerships in the future. Until all Local Limited Partnerships have completed the Compliance Period, risks exist for potential recapture of prior Low Income Housing Tax Credits.





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





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 its 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.





Financial Condition





For the year ended March 31, 2011





The Partnership’s assets at March 31, 2011 consisted of $27,000 in cash and $5,000 in other assets.  Liabilities at March 31, 2011 consisted of $731,000 of accrued fees and expenses due to General Partner and affiliates. (See “Future Contractual Cash Obligations” below)


25




Results of Operations





Year Ended March 31, 2011 Compared to Year Ended March 31, 2010The Partnership’s net loss for the year ended March 31, 2011 was $(281,000), reflecting an increase of $(76,000) from the net loss experienced for the year ended March 31, 2010 of $(205,000).  This was mainly caused by a large increase in write off of advances to Local Limited Partnerships of $(143,000). The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships.  The accounting and legal fees decreased by $70,000 largely due to the timing of the accounting work performed.  Reporting fees and distribution income decreased by $(29,000) and increased by $20,000, respectively, for the year ended March 31, 2011. Local Limited Partnerships pay the reporting fees and distribution income to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.





Year Ended March 31, 2010 Compared to Year Ended March 31, 2009The Partnership’s net loss for the year ended March 31, 2010 was $(205,000), reflecting a decrease of $1,328,000 from the net loss experienced for the year ended March 31, 2009 of $(1,533,000).  This was mainly caused by a large decrease in impairment loss of $1,116,000. As of March 31, 2009, all investment balances were zero, therefore there was no impairment analysis to be performed during the year ended March 31, 2010. There was also a $271,000 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 $3,000 during the year ended March 31, 2010.  The decrease in amortization is due to the fact that the acquisition fees were impaired to zero as of March 31, 2009 and therefore no further amortization could be taken during the year ended March 31, 2010.  The accounting and legal expenses increased by $(42,000) largely due to the timing of the accounting work being performed.  Reporting fees and distribution income decreased by $(4,000) and $(19,000), respectively, for the year ended March 31, 2010. Local Limited Partnerships pay the reporting fees and distribution income to the Partnership when the Local Limited Partnership’s cash flow will allow for the payment.  During the year ended March 31, 2010, the Partnership sold its interest in one Local Limited Partnership, Raymond S. King, L.P., receiving $1 for its interest.  The appraised value was significantly less than the outstanding debt therefore it was in the best interest of the Partnership to sell its Limited Partnership interest.  The Partnership incurred approximately $(6,000) in expenses related to the disposition therefore a loss on sale of Local Limited Partnership was recorded during the year ended March 31, 2010.  There were no dispositions during the year ended March 31, 2009, therefore there were no gains or losses on sale of Local Limited Partnerships during that year.





Liquidity and Capital Resources





Year Ended March 31, 2011 Compared to Year Ended March 31, 2010


The net increase in cash during the year ended March 31, 2011 was $15,000 compared to a net increase in cash for the year ended March 31, 2010 of $3,000.  During the year ended March 31, 2011, the Partnership made $(240,000) of advances to Local Limited Partnerships compared to $(98,000) advanced during the year ended March 31, 2010.  At the time the advances were needed the Partnership did not have sufficient cash to make the advances to the Local Limited Partnerships.  Therefore, $240,000 and $51,000 of those advances were first advanced from the General Partner or an affiliate to the Partnership then the Partnership advanced the funds to the Local Limited Partnerships for the years ended March 31, 2011 and 2010, respectively.  The Partnership paid $(9,000) of outstanding payables during the year ended March 31, 2010 while no such payments were made during the year ended March 31, 2011.  During the year ended March 31, 2011 the Partnership did reimburse the General Partner or an affiliate $(35,000). During the year ended March 31, 2010 due to low cash balances throughout the year the Partnership was not able to reimburse the General Partner or an affiliate for operating expenses paid on its behalf.  Lastly, the Partnership had received $50,000 in cash for reporting fees and distribution income for the year ended March 31, 2011 compared to $59,000 received during the year ended March 31, 2010.  As explained above the reporting fees and distribution income will vary year to year depending on the operations of the underlying Housing Complexes.  The non-cash financing activities increased by $277,000 during the year ended March 31, 2011 and by $153,000 during the year ended March 31, 2010, due to advances made in prior years that were forgiven by the General Partner or an affiliate and converted to contributions by the General Partner.


26





Year Ended March 31, 2010 Compared to Year Ended March 31, 2009The net increase in cash during the year ended March 31, 2010 was $3,000 compared to a net decrease in cash for the year ended March 31, 2009 of $(74,000), which resulted in a net change of $77,000.  During the year ended March 31, 2010, the Partnership made advances that totaled $(98,000), to two Local Limited Partnerships.  At the time the advances were needed the Partnership did not have sufficient cash to make the advances to the Local Limited Partnerships.  Therefore, $51,000 of those advances were first advanced from the General Partner or an affiliate to the Partnership then the Partnership advanced the funds to the Local Limited Partnerships.  The actual cash decrease for the advances to the Local Limited Partnerships was $(47,000) during the year ended March 31, 2010.  During the year ended March 31, 2009,  $(369,000) was advanced to troubled Local Limited Partnerships. Of the $(369,000) approximately $248,000 was advanced from the General Partner or an affiliate to the Partnership due to the Partnership not having sufficient cash to advance to the Local Limited Partnerships.  Therefore the actual cash decrease during the year ended March 31, 2009 for advances was $(121,000).  The Partnership also paid $(9,000) during the year ended March 31, 2010 to a third party vendor for outstanding payables.  There were no payables paid to third parties directly from the Partnership during the year ended March 31, 2009.  During the year ended March 31, 2010 due to low cash balances throughout the year the Partnership was not able to reimburse the General Partner or an affiliate for operating expenses paid on its behalf but during the year ended March 31, 2009 the Partnership did reimburse the General Partner or an affiliate $(32,000).  Lastly, the Partnership had received $59,000 in cash for reporting fees and distribution income for the year ended March 31, 2010 compared to $82,000 received during the year ended March 31, 2009.  As explained above the reporting fees and distribution income will vary year to year depending on the operations of the underlying Housing Complexes.  The non-cash financing activities increased by $1,472,000 during the year ended March 31, 2009 and by $153,000 during the year ended March 31, 2010, due to advances made in prior years that were forgiven by the General Partner or an affiliate and converted to contributions by the General Partner.





Accrued payables, which consist primarily of related party management fees due to the General Partner, increased (decreased) by approximately $24,000, $59,000 and $(1,133,000) for the years ended March 31, 2011, 2010 and 2009, respectively. The General Partner does 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.




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 June 30, 2012.





Other Matters





Patten Towers L.P. II (“Patten Towers”) had its annual HUD inspection for 2010 on February 3, 2011 and received a score of 71C. The property was listed for sale with a national brokerage firm from July of 2008 thru September 2009.   An acceptable offer was received in December 2010.  Currently the potential purchaser and the Partnership are working with the lender on terms for a refinance.  As of June 13, 2011 it appears that terms have been agreed on by all parties and a third party legal counsel is beginning to draft up Purchase Agreements.  It is anticipated that the potential transaction could close in August 2011.The Partnership does not anticipate proceeds from the sale. Any sale transaction completed would require that the property maintain compliance with the Section 42 tax credit provisions, thereby avoiding recapture of any previously claimed tax credits. As of March 31, 2011, the Partnership’s investment balance in Patten Towers was $0.   The Compliance Period for this property ends December 31, 2011. The proposed sale is pending lender approval.





The Partnership has a 99% limited partnership investment in Heritage Apartments, L.P. (“Heritage”).  Heritage is a defendant in several wrongful death lawsuits and related injury lawsuits.  Heritage carries general liability and extended liability insurance.  The management of Heritage has confirmed that the insurance company is paying the remaining six claims which range from $500 - $2,000 each.  If for any reason Heritage is unsuccessful in its defense and the insurer denies coverage or the insurance coverage proves to be inadequate, the Partnership may be required to sell its investment or may otherwise lose its investment in Heritage, which was $0 at both March 31, 2011 and 2010.  Loss of the Heritage investment could result in the cessation and recapture of tax credits and certain prior tax deductions.


27


Partnership’s Future Contractual Cash Obligations





The following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2011:





2012

2013

2014

2015

2016

Thereafter

TotalAsset management fees(1)
$
780,692
$
49,500
$
49,500
$
49,500
$
49,500
$
1,683,000
$
2,661,692Total contractual cash obligations
$
780,692
$
49,500
$
49,500
$
49,500
$
49,500
$
1,683,000
$
2,661,692





(1)
Asset management fees are payable annually until termination of the Partnership, which is to occur no later than December 31, 2050. The estimate of the fees payable included herein assumes the retention of the Partnership’s interest in all Housing Complexes until December 31, 2050. Amounts due to the General Partner as of March 31, 2011 have been included in the 2012 column.  The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership.





For additional information regarding our asset management fees, see Note 3 to the financial statements included elsewhere herein.





Off-Balance Sheet Arrangements





The Partnership has no off-balance sheet arrangements.





Exit Strategy





See Item 1 for information in this regard.





Impact of Recent Accounting Pronouncements





See footnote 1 to the audited financial statements.





Item 7A.  Quantitative and Qualitative Disclosures Above Market Risk





NOT APPLICABLE





Item 8. Financial Statements and Supplementary Data  28


REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM
  To the Partners
 WNC Housing Tax Credit Fund V, L.P., Series 3
  We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund V, L.P., Series 3 (the Partnership) as of March 31, 2011 and 2010, and the related statements of operations, partners’ equity (deficit) and cash flows for each of the years in the three-year period ended March 31, 2011.  The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund V, L.P., Series 3 as of March 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2011, in conformity with accounting principles generally accepted in the United States of America.
  Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The schedules listed under Item 15(a)(2) in the index related to years above are presented for the purpose of complying with the Securities and Exchange Commission’s rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole.
  /s/Reznick Group, P.C
 Bethesda, Maryland
 June 27, 2011


29
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 BALANCE SHEETS


March 31,2011

2010ASSETSCash

$
27,292
$
12,762Investments in Local Limited Partnerships, net (Notes 2 and 3)


-

-Other assets


4,857

-Total Assets

$
32,149
$
12,762LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)Liabilities:Accrued fees and expenses due to General Partner and affiliates (Note 3)


731,192

707,256Total Liabilities


731,192

707,256Partners’ equity (deficit)General Partner


2,844,266

2,570,423Limited Partners (25,000 Partnership Units authorized;18,000 Partnership Units issued and outstanding)


(3,543,309)

(3,264,917)Total Partners’ Equity (Deficit)


(699,043)

(694,494)Total Liabilities and Partners’ Equity (Deficit)

$
32,149
$
12,762


See accompanying notes to financial statements
 30
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 STATEMENTS OF OPERATIONS


For the Years Ended March 31,2011

2010

2009Reporting fees
$
24,179
$
53,230
$
57,563Distribution income

25,347

5,389

24,650Total income

49,526

58,619

82,213Operating expenses and loss:Amortization (Notes 2 and 3)

-

-

3,461Asset management fees (Note 3)

49,500

49,500

49,500Impairment loss (Note 2)

-

-

1,115,739Accounting and legal fees

31,923

101,767

59,802Write off of advances to Local Limited  Partnerships (Note 5)

240,254

97,553

368,824Other

9,057

8,607

17,142Total operating expenses and loss

330,734

257,427

1,614,468Loss  from operations

(281,208)

(198,808)

(1,532,255)Equity in losses of Local Limited  Partnerships (Note 2)

-

-

(903)Loss on sale of Local Limited

Partnership

-

(5,724)

-Interest income

4

4

23Net loss
$
(281,204)
$
(204,528)
$
(1,533,135)Net loss allocated to:General Partner
$
(2,812)
$
(2,045)
$
(15,331)Limited Partners
$
(278,392)
$
(202,483)
$
(1,517,804)Net loss per Partnership Unit
$
(15.47)
$
(11.25)
$
(84.32)Outstanding weighted Partnership Units

18,000

18,000

18,000


See accompanying notes to financial statements
 31
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)
 
 For the Years Ended March 31, 2011, 2010 and 2009


General Partner

Limited Partners

TotalPartners’ equity (deficit) at March 31, 2008
$
962,861
$
(1,544,630)
$
(581,769)Contributions (Note 6)

1,471,854

-

1,471,854Net loss

(15,331)

(1,517,804)

(1,533,135)Partners’ equity (deficit) at March 31, 2009

2,419,384

(3,062,434)

(643,050)Contributions (Note 6)

153,084

-

153,084Net loss

(2,045)

(202,483)

(204,528)Partners’ equity (deficit) at March 31, 2010

2,570,423

(3,264,917)

(694,494)Contributions (Note 6)

276,655

-

276,655Net loss

(2,812)

(278,392)

(281,204)Partners’ equity (deficit) at March 31, 2011
$
2,844,266
$
(3,543,309)
$
(699,043)


See accompanying notes to financial statements
 32
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 STATEMENTS OF CASH FLOWS


For The Years Ended

March 31,2011

2010

2009Cash flows from operating activities:

Net loss
$
(281,204)
$
(204,528)
$
(1,533,135)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Amortization

-

-

3,461Impairment loss

-

-

1,115,739Equity in losses of Local Limited

Partnerships

-

-

903Increase in other assets

(4,857)

-

-Decrease in accrued expenses

-

(4,000)

-Increase in accrued fees and expenses due to General Partner and affiliates

300,591

206,068

339,082Loss on sale of investments in Local Limited Partnerships

-

5,724

-Net cash provided by (used in) operating activities

14,530

3,264

(73,950)Cash flows from investing activities:Advances to Local Limited Partnerships

(240,254)

(97,553)

(368,824)Write off of advances to Local Limited

Partnerships

240,254

97,553

368,824Net cash provided by investing activities

-

-

-Net increase (decrease) in cash

14,530

3,264

(73,950)Cash, beginning of year

12,762

9,498

83,448Cash, end of year
$
27,292
$
12,762
$
9,498SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONTaxes paid
$
800
$
800
$
800NON-CASH FINANCING ACTIVITIESAdvances made to the Partnership by the

General Partner in prior years were

converted to General Partner equity
$
276,655
$
153,084
$
1,471,854


See accompanying notes to financial statements
 33
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization





WNC Housing Tax Credit Fund V, L.P., Series 3 (the “Partnership”) is a California limited partnership formed under the laws of the State of California on March 28, 1995, and commenced operations on October 24, 1995.  The Partnership was formed to acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which owns multi-family or senior 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 Complex. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).





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





The Partnership shall continue in full force and effect until December 31, 2050 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 had concluded in January 1996, at which time 18,000 Partnership Units representing subscriptions in the amount of $17,558,985, net of $441,015 of discounts for volume purchases, had been accepted.  The General Partner has a 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership.  The investors (the “Limited Partners”) in the Partnership will be allocated the remaining 99% of these items in proportion to their respective investments.





The proceeds from the disposition of any of the Housing Complexes 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 partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement.  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 from the proceeds remaining after payment of Partnership obligations and funding reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement).  The General Partner would then be entitled to receive proceeds equal to their 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.





34
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





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 Credits 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 first 15 years, 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.





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.





All of the Low Income Housing Tax Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership does not anticipate being allocated any Low Income Housing Tax Credits from the Local Limited Partnerships in the future. Until all Local Limited Partnerships have completed the 15 year Low Income Housing Tax Credit Compliance Period, (“Compliance Period”) risks exist for potential recapture of prior Low Income Housing Tax Credits received.


35
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





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 June 30, 2012.





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 its 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.





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.





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 as Low Income Housing Tax Credits are no longer available. 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 March 31, 2011.  As of March 31, 2011, two of the Housing Complexes had completed their Compliance Period.





In prior years, the Partnership sold the Housing Complex of two Local Limited Partnerships, Cascade Pines II, L.P. (“Cascade Pines”) and Evergreen Apartments I Limited Partnership, (“Evergreen”). The Partnership also sold its Local Limited Partnership Interest of Raymond S. King Apartments, L.P.


36
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Raymond S. King will complete its 15-year compliance period in 2011; therefore there is a risk of tax credit recapture.  The last year in which Low Income Housing Tax Credits were generated by this Local Limited Partnership was 2007.  The executed Purchase Agreement states that Raymond S. King must remain in compliance with Section 42 of the IRS code. Until the completion of the Compliance Period, the purchaser must furnish the Partnership with certain reports proving that the Housing Complex is still in compliance with the IRS code.





Patten Towers L.P. II (“Patten Towers”) had its annual HUD inspection for 2010 on February 3, 2011 and received a score of 71C. The property was listed for sale with a national brokerage firm from July of 2008 thru September 2009.   An acceptable offer was received in December 2010.  Currently the potential purchaser and the Partnership are working with the lender on terms for a refinance.  As of June 13, 2011 it appears that terms have been agreed on by all parties and a third party legal counsel is beginning to draft up Purchase Agreements.  It is anticipated that the potential transaction could close in August 2011.The Partnership does not anticipate proceeds from the sale. Any sale transaction completed would require that the property maintain compliance with the Section 42 tax credit provisions, thereby avoiding recapture of any previously claimed tax credits. As of March 31, 2011, the Partnership’s investment balance in Patten Towers was $0.   The Compliance Period for this property ends December 31, 2011. The proposed sale is pending lender approval.





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 allocable 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 account and are being amortized over 27.5 years. (See Notes 2 and 3)





"Equity in losses of Local Limited Partnerships" for each year ended March 31 have been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero.





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.  37
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





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 as an asset 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, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on 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 from the Local Limited Partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. For all periods presented all investment accounts in Local Limited Partnerships 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.  For all periods presented, the Partnership had no cash equivalents.





Reporting Comprehensive Income





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





Net Loss Per Partnership Unit





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





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.


38
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND 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 27.5 years using the straight-line method. Amortization expense for the years ended March 31 2011, 2010 and 2009 was $0, $0 and $3,461, respectively.  During the years ended March 31, 2011, 2010 and 2009, an impairment loss of $0, $0 and $169,940, respectively, was recorded against these fees and costs.





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 tax credits allocated to the Partnership and any estimated residual value of the investment.  For the years ended March 31, 2011, 2010 and 2009, impairment loss related to investments in Local Limited Partnerships was $0, $0 and $945,799, 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 investment’s carrying amount after impairment and the related intangible assets 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 investment. During the years ended March 31, 2011, 2010 and 2009 an impairment loss of $0, $0 and $169,940, respectively, was recorded against the related intangibles.





Impact of Recent Accounting Pronouncements





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, 2007 and shall be applied prospectively except for very limited transactions.  In February 2008, 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 February 2007, the FASB issued accounting guidance for The Fair Value Option for Financial Assets and Financial Liabilities. This guidance permits entities to choose to measure many financial instruments and certain other items at fair value.  The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. It is effective for fiscal years beginning after November 15, 2007.  On April 1, 2008, the Partnership adopted GAAP for The Fair Value Option for Financial Assets and Financial Liabilities and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of the guidance had no effect on the Partnership.




39
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





In November 2008, 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 did 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 had 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 did 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 Company did not include the disclosure in this Form 10-K.





In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs).  The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that 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 amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE.  Additionally, the amendment requires enhanced and expanded disclosures around VIEs.  This amendment is effective for fiscal years beginning after November 15, 2009.  The adoption of this guidance on April 1, 2010 did not have a material effect on the Partnership’s financial statements.





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.


40
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS





As of March 31, 2011 and 2010, the Partnership owned interests in 15 Local Limited Partnerships, each of which owns one Housing Complex, consisting of an aggregate of 721 apartment units. 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%, 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, except for one of the investments for which the Partnership is entitled to 49.49% of such amount.





The Partnership’s investments in Local Limited Partnerships as shown in the balance sheets at March 31, 2011 and  2010, are approximately $1,677,000 and $(2,431,000), respectively, greater than (less than) the Partnership's equity at the preceding December 31 as shown in the Local Limited Partnerships’ combined condensed financial statements presented below.  This difference is primarily due to unrecorded losses as discussed below, and acquisition, selection and other costs related to the acquisition of the investments which have been capitalized in the Partnership's investment account along with impairment losses recorded in the Partnership’s investment account.





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 tax credits allocated to the Partnership and any estimated residual value of the investment. For the years ended March 31, 2011, 2010 and 2009, impairment loss related to investments in Local Limited Partnerships was $0, $0 and $945,799, 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 investments carrying amount after impairment and any related intangible assets to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the fund and the estimated residual value of the investment. During the years ended March 31, 2011, 2010 and 2009 an impairment loss of $0, $0 and $169,940, respectively, was recorded against the related intangibles.




At March 31, 2011 and 2010, the investment accounts in all the Local Limited Partnerships have reached a zero balance.  Consequently, a portion of the Partnerships estimate of its share of losses for the years ended March 31 2011, 2010 and 2009 amounting to approximately $4,083,000, $554,000 and $1,578,000, respectively, has not been recognized.  As of March 31, 2011, the aggregate share of net losses not recognized by the Partnership amounted to $7,789,000


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





For The Years Ended

March 31,2011

2010

2009Investments per balance sheet, beginning

of period
$
-
$
-
$
1,120,103Impairment loss

-

-

(1,115,739)Equity in losses of Local Limited

Partnerships

-

-

(903)Amortization of paid acquisition fees and costs

-

-

(3,461)Investment per balance sheet, end of period
$
-
$
-
$
-


41
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued





The financial information from the individual financial statements of the Local Limited Partnerships include rental and interest subsidies.  Rental subsidies are included in total revenues and interest subsidies are generally netted in interest expense.  Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows:





COMBINED CONDENSED BALANCE SHEETS





2010

2009ASSETSBuildings and improvements (net of accumulated depreciation as of December 31, 2010 and 2009 of $11,380,000  and $16,833,000, respectively)
$
17,330,000
$
21,210,000Land

2,090,000

2,318,000Other assets

2,437,000

2,665,000Total assets
$
21,857,000
$
26,193,000





LIABILITIESMortgage and construction loans payable
$
15,919,000
$
16,340,000Due to affiliates

3,598,000

3,246,000Other liabilities

856,000

942,000Total liabilities

20,373,000

20,528,000PARTNERS' EQUITY (DEFICIT)WNC Housing Tax Credit Fund V, L.P.,

Series 3

(1,677,000)

2,431,000Other partners

3,161,000

3,234,000Total partners’ equity (deficit)

1,484,000

5,665,000Total liabilities and partners’ equity

(deficit)
$
21,857,000
$
26,193,000


42
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued





COMBINED CONDENSED STATEMENTS OF OPERATIONS





2010

2009

2008Revenues
$
4,799,000
$
4,578,000
$
4,497,000Expenses:Operating expenses

3,728,0000

3,243,000

3,384,000Interest expense

746,000

754,000

782,000Depreciation and amortization

1,296,000

1,290,000

1,305,000Impairment

3,119,000

-

640,000Total expenses

8,889,000

5,287,000

6,111,000Net loss
$
(4,090,000)
$
(709,000)
$
(1,614,000)Net loss  allocable to the Partnership
$
(4,083,000)
$
(554,000)
$
(1,546,000)Net loss recorded by the Partnership
$
-
$
-
$
(1,000)





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 and/or the Local General Partner may be required to sustain the operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership's investment 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.





Troubled Housing Complexes





Patten Towers L.P. II (“Patten Towers”) had its annual HUD inspection for 2010 on February 3, 2011 and received a score of 71C. The property was listed for sale with a national brokerage firm from July of 2008 thru September 2009.   An acceptable offer was received in December 2010. The Partnership does not anticipate proceeds from the sale. Any sale transaction completed would require that the property maintain compliance with the Section 42 tax credit provisions, thereby avoiding recapture of any previously claimed tax credits. As of March 31, 2011, the Partnership’s investment balance in Patten Towers was $0.   The Compliance Period for this property ends December 31, 2011. The proposed sale is pending lender approval.


43
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued





The Partnership has a 99% limited partnership investment in Heritage Apartments, L.P. (“Heritage”).  Heritage is a defendant in several wrongful death lawsuits and related injury lawsuits.  Heritage carries general liability and extended liability insurance.  The management of Heritage has confirmed that the insurance company is paying the remaining six claims which range from $500 - $2,000 each.  If for any reason Heritage is unsuccessful in its defense and the insurer denies coverage or the insurance coverage proves to be inadequate, the Partnership may be required to sell its investment or may otherwise lose its investment in Heritage, which was $0, at March 31, 2011 and 2010, respectively.  Loss of the Heritage investment could result in the cessation and recapture of tax credits and certain prior tax deductions.





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 for the following fees:





Acquisition fees of up to 7.5% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships.  At the end of all periods presented the Partnership incurred total acquisition fees of $1,200,785, which have been included in investments in Local Limited Partnerships. As of all periods presented, the fees had been fully amortized or impaired. 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.





Reimbursement of costs incurred by of the General Partner or by an affiliate of Associates in connection with the acquisition of Local Limited Partnerships.  These reimbursements have not exceeded 1% of the gross proceeds.  At the end of all periods presented, the Partnership incurred acquisition costs of $120,510, which have been included in Investments in Local Limited Partnerships. Accumulated amortization was $120,510 for all periods presented.




An annual asset management fee equal to the greater amount of (i) $2,000 for each Housing complex, or (ii) 0.275% of gross proceeds.  In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index.  However, in no event will the maximum amount exceed 0.2% of the invested assets of the Partnership, as defined. “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.  Management fees of $49,500 were incurred during each of the years ended March 31, 2011, 2010 and 2009, of which $0 was paid during all three years presented.





A subordinated disposition fee in an amount equal to 1% of the sale price may be received in connection with the sale or disposition of a Housing Complex or Local Limited Partnership interest.  Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 14% through December 31, 2006 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 during all periods presented.





The Partnership reimbursed 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 $35,000, $0 and $35,250 during the years ended March 31, 2011, 2010 and 2009, respectively.


44
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 3 - RELATED PARTY TRANSACTIONS, continued





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





March 31,2011

2010Asset management fee payable
$
522,125
$
472,625Expenses paid by the General Partner or an affiliate on behalf of the Partnership

117,275

214,631Advances made to the Partnership from the General Partner or affiliates

91,792

20,000Total
$
731,192
$
707,256





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 the future foreseeable working capital requirements of the Partnership. 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 June 30, 2012.





NOTE 4 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)





The following is a summary of the quarterly operations for the years ended March 31 (rounded):





2011

June 30

September 30

December 31

March 31Income
$
1,000
$
42,000
$
-
$
7,000Operating expenses

(15,000)

(43,000)

(255,000)

(18,000)Loss from operations

(14,000)

(1,000)

(255,000)

(11,000)Net loss
$
(14,000)
$
(1,000)
$
(255,000)
$
(11,000)Net loss available to Limited Partners
$
(14,000)
$
(1,000)
$
(253,000)
$
(11,000)Net loss per Partnership Unit
$
(1)
$
-
$
(14)
$
(1)


45
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 4 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued





2010

June 30

September 30

December 31

March 31Income
$
34,000
$
10,000
$
5,000
$
10,000Operating expenses

(40,000)

(41,000)

(122,000)

(54,000)Loss from operations

(6,000)

(31,000)

(117,000)

(44,000)Loss on sale of Local Limited Partnerships

-

-

-

(6,000)Net loss
$
(6,000)
$
(31,000)
$
(117,000)
$
(50,000)Net loss available to Limited Partners
$
(6,000)
$
(31,000)
$
(116,000)
$
(9,000)Net loss per Partnership Unit
$
-
$
(2)
$
(7)
$
(3)








2009

June 30

September 30

December 31

March 31Income
$
2,000
$
71,000
$
1,000
$
8,000Operating expenses

(1,134,000)

(162,000)

(161,000)

(157,000)Loss from operations

(1,132,000)

(91,000)

(160,000)

(149,000)Equity in losses of Local Limited Partnerships

(1,000)

-

-

-Net loss
$
(1,133,000)
$
(91,000)
$
(160,000)
$
(149,000)Net loss available to Limited Partners
$
(1,122,000)
$
(91,000)
$
(158,000)
$
(147,000)Net loss per Partnership Unit
$
(62)
$
(5)
$
(9)
$
(8)





NOTE 5 – ADVANCES TO LOCAL LIMITED PARTNERSHIPS





As of March 31, 2011, 2010 and 2009, the Partnership in total had voluntarily advanced $1,995,678, $1,755,424 and $1,818,241, respectively, to four Local Limited Partnerships, Hasting Apartments I, Alliance Apartments I, Patten Towers L. P. II, and  Broadway Apartments, L.P.  The total advances made during the year ended March 31, 2011 were $240,254, which were also reserved for as of March 31, 2011. All advances were reserved in full in the year they were advanced.


46
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO FINANCIAL STATEMENTS - CONTINUED
 For the Years Ended March 31, 2011, 2010 and 2009




NOTE 6 –CONTRIBUTIONS BY THE GENERAL PARTNER





During the year ended March 31, 2011, the Partnership was relieved of debt owed to the General Partner totaling $276,655. The Partnership had received $168,462 in cash advances from the General Partner, which were in turn advanced by the Partnership to certain Local Limited Partnerships to help aid the Local Limited Partnerships with their operational issues.  The advances were deemed to be uncollectible by the General Partner, and as such, the debt was forgiven. The remaining $108,193 of debt that was relieved was for operating expenses that were paid by the General Partner or an affiliate on the Partnership’s behalf.  Due to the continuous low cash balances in the Partnership, the General Partner deemed the amount to be uncollectible, therefore the debt was forgiven. The cancellation of debt was recorded by the Partnership as a capital contribution from the General Partner.





During the year ended March 31, 2010, the Partnership had $153,084 in expenses paid by the General Partner or affiliates on its behalf.   The General Partner forgave the debt as it was deemed uncollectible.  The cancellation of that debt is considered a capital contribution by the General Partner to the Partnership and as such it is reflected in the statement of partners’ equity (deficit) in the Partnership’s financial statements.





During the year ended March 31, 2009, the Partnership had $39,030 in expenses paid by the General Partner or affiliates on its behalf.   The General Partner forgave the debt as it was deemed uncollectible.  The cancellation of that debt is considered a capital contribution by the General Partner to the Partnership and as such it is reflected in the statement of partners’ equity (deficit) in the Partnership’s financial statements.   Additionally, the Partnership was relieved of debt owed to the General Partner totaling $1,432,824.   The Partnership had received cash advances from the General Partner, which were in turn advanced by the Partnership to certain Local Limited Partnerships to help aid the Local Limited Partnerships with their operational issues.  The advances were deemed to be uncollectible by the General Partner, and as such, the debt was forgiven. The cancellation of debt was recorded by the Partnership as a capital contribution from the General Partner.




Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
 
 NONE


47




Item 9A. Controls and Procedures





(a)           Evaluation of 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 Rules 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.





(b)           Management’s annual report on internal control over financial reporting





The management of Associates is responsible for establishing and maintaining for the Partnership adequate internal control over financial reporting as that term is defined in Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f), and for performing an assessment of the effectiveness of internal control over financial reporting as of March 31, 2011. The internal control process of Associates, as it is applicable to the Partnership, was designed to provide reasonable assurance to Associates regarding the preparation and fair presentation of published financial statements, and includes those policies and procedures that:





(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;


(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that the Partnership’s receipts and expenditures are being made only in accordance with authorization of the management of Associates; and


(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on the financial statements.


48




All internal control processes, no matter how well designed, have inherent limitations. Therefore, even those processes determined to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.





Management of Associates assessed the effectiveness of its internal control over financial reporting, as it is applicable to the Partnership, as of the end of the Partnership’s most recent fiscal year. In making this assessment, it used the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, management of Associates concluded that, for the reasons set forth above under “Disclosure controls and procedures” the internal control over financial reporting, as it is applicable to the Partnership, was not effective as of March 31, 2011.


For purposes of the Securities Exchange Act of 1934, the term “material weakness” is a deficiency, or a combination of deficiencies, in a reporting company’s internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.  For the reasons discussed above in this Item 9A, sub-section (a) under the caption “Disclosure Controls and Procedures,” the Partnership’s internal control over financial reporting has not been effective in permitting timely reporting of the Partnership’s financial information.  Accordingly, the management of Associates believes that this inability to generate timely reports constitutes a material weakness in its internal control over financial reporting.





(c)          Changes in internal controls


There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended March 31, 2011, that materially affected, or are reasonably likely to materially affect, the    Partnership’s  internal control over financial reporting.





Item 9B. Other Information





NONE





PART III.





Item 10. Directors, Executive Officers and Corporate Governance





(a)
Identification of Directors, (b) Identification of Executive Officers, (c) Identification of Certain Significant Employees, (d) Family Relationships, and (e) Business Experience





Neither the General Partner nor the Partnership has directors, executives officers or employees of its own.  The business of the Partnership is conducted primarily through Associates.  Associates is a California corporation which was organized in 1971.  The following biographical information is presented for the officers and employees of Associates with principal responsibility for the Partnership’s affairs.





Wilfred N. Cooper, Sr.
ChairmanWilfred N. Cooper, Jr.
President and Chief Executive OfficerMichael J. Gaber
Chief Operating Officer and Executive Vice PresidentDavid N. Shafer, Esq.
Executive Vice PresidentDarrick Metz
Senior Vice President - OriginationsChristine A. Cormier
Senior Vice President – Fund ManagementMelanie R. Wenk
Vice President – Accounting and Finance - Chief Financial OfficerPaula Hall
Vice President – Asset ManagementGregory S. Hand
Vice President – AcquisitionsKelly Henderson
Vice President – AcquisitionsThomas F. Maxwell
Vice President – OriginationsKay L. Cooper
Director of WNC & Associates, Inc.Jennifer E. Cooper
Director of WNC & Associates, Inc.





49





In addition to Wilfred N. Cooper, Sr., the directors of WNC & Associates, Inc. are Wilfred N. Cooper, Jr., Kay L. Cooper and Jennifer E. Cooper.





Wilfred N. Cooper, Sr., age 80, is the founder and Chairman of the Board of Directors of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a general partner in some of the partnerships previously sponsored by WNC & Associates, Inc. Mr. Cooper has been actively involved in the affordable housing industry since 1968. Previously, during 1970 and 1971, he was founder and a principal of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate investment firm. For 12 years before that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. He has testified before committees of the U.S. Senate and the U.S. House of Representatives on matters pertaining to the affordable housing industry. Mr. Cooper is a Life Director of the National Association of Home Builders (“NAHB”), a National Trustee for NAHB’s Political Action Committee, and a past Chairman of NAHB’s Multifamily Council. He is a Life Trustee of the National Housing Conference, and a co-founder and Director Emeritus of the California Housing Consortium. He is the husband of Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.





Wilfred N. Cooper, Jr., age 48, is President, Chief Executive Officer, Secretary, a Director and a member of the Acquisition Committee of WNC & Associates, Inc. He is President and a Director of, and a registered principal with, WNC Capital Corporation. He has been involved in real estate investment and acquisition activities since 1988 when he joined WNC & Associates, Inc. Previously, he served as a Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper serves on the Orange County Advisory Board of U.S. Bank and the New York State Association for Affordable Housing, the Board of Trustees of NHC, and the Tax Policy Council of the National Trust for Historic Preservation.  He is a member of the Urban Land Institute and of Vistage International, a global network of business leaders and chief executives. He is the son of Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American University in 1985 with a Bachelor of Arts degree.





Michael J. Gaber, age 45, is Chief Operating Officer, an Executive Vice President, chair of the Acquisition Committee and oversees the Property Acquisition and Investment Management groups of WNC & Associates, Inc. Mr. Gaber has been involved in real estate acquisition, valuation and investment activities since 1989 and has been associated with WNC & Associates, Inc. since 1997. Prior to joining WNC & Associates, Inc., he was involved in the valuation and classification of major assets, restructuring of debt and analysis of real estate taxes with a large financial institution. Mr. Gaber is a member of the Housing Credit Group of NAHB and of National Housing and Rehabilitation Association (“NH&RA”). Mr. Gaber graduated from the California State University, Fullerton in 1991 with a Bachelor of Science degree in Business Administration – Finance.





David N. Shafer, age 58, is an Executive Vice President, chair of the Portfolio Disposition Committee, a member of the Acquisition Committee and oversees the New Markets Tax Credit group of WNC & Associates, Inc. Mr. Shafer has been active in the real estate industry since 1984. Before joining WNC & Associates, Inc. in 1990, he was engaged as an attorney in the private practice of law with a specialty in real estate and taxation. Mr. Shafer is a Director and past President of the California Council of Affordable Housing, a Director of the Council for Affordable and Rural Housing and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree cum laude and from the University of San Diego in 1986 with a Master of Laws degree in Taxation.





Darrick Metz, age 40, is Senior Vice President – Originations of WNC & Associates, Inc. He has been involved in multifamily property underwriting, acquisition and investment activities since 1991. Prior to joining WNC in 1999, he was employed by a Minnesota development company specializing in Tax Credit and market rate multifamily projects. Mr. Metz also worked with the Minnesota Housing Finance Agency (“MHFA”), where he held the position of Senior Housing Development Officer. While at MHFA, he was responsible for the allocation of Tax Credits, HOME funds and state loan products. Mr. Metz is active in the Qualified Allocation Plan Tax Credit Advisory Committee for the Wisconsin Housing and Economic Development Authority, a member of MHFA’s Multifamily Technical Assistance and a board member of NH&RA. He graduated from St. Cloud State University in 1993 with a Bachelor of Science degree in finance/economics.


50





Christine A. Cormier, age 52, is Senior Vice President – Fund Management, a member of the Placement Committee and the Disposition Committee, and oversees the fund management group of WNC & Associates, Inc. Ms. Cormier has been active in the real estate industry since 1985. Prior to joining WNC in 2008, Ms. Cormier was with another major tax credit syndicator for over 12 years where she was the Managing Director of investor relations. Ms. Cormier graduated from Bentley University in 1982 with a Bachelor of Science degree (summa cum laude) in accounting and computer science.





Melanie R. Wenk, age 43, is Vice President – Accounting and Finance – Chief Financial Officer of WNC & Associates, Inc. She oversees WNC’s corporate and partnership accounting group, which is responsible for SEC reporting and New Markets Tax Credit compliance. Prior to joining WNC in 2003, Ms. Wenk was associated as a public accountant with BDO Seidman, LLP. She graduated from the California Polytechnic State University, Pomona in 1999 with a Bachelor of Science degree in accounting.





Paula Hall, age 44, is Vice President – Asset Management, a member of the Acquisition Committee, and oversees the asset management group of WNC & Associates, Inc. She joined WNC in 1997 and has more than 21 years of property management experience. Ms. Hall is a Certified Occupancy Specialist (CPO), Housing Credit Certified Professional (HCCP), and Certified Property Manager (CPM) candidate. Prior to joining WNC, she was a property manager for NHP Property Management (AIMCO) where she oversaw operations, training and development.





Gregory S. Hand, age 47, is Vice President – Acquisitions and oversees the property underwriting activities of the Irvine office of WNC & Associates, Inc. Mr. Hand has been involved in real estate analysis, development and management since 1987. Prior to joining WNC in 1998, he was a portfolio asset manager with a national Tax Credit sponsor with responsibility for the management of $200 million in assets. Prior to that, he was a finance manager with The Koll Company and a financial analyst with The Irvine Company. Mr. Hand graduated from Iowa State University in 1987 with a Bachelor of Business Administration degree in finance.





Kelly Henderson, Esq., age 39, is Vice President – Acquisitions and oversees the property underwriting activities of the New York City office of WNC & Associates, Inc. Prior to joining WNC in 2006, she was Vice President – Acquisitions and Senior Counsel with a national Tax Credit syndicator.  Ms. Henderson has been underwriting Tax Credit properties since 1999. She graduated from the State University of New York at Geneseo in 1993 with a Bachelor of Arts degree in political science, and from the New England School of Law in 1996 with a Juris Doctor degree.  She is licensed to practice law in the States of New York and Massachusetts.





Thomas F. Maxwell, age 59, is Vice President – Originations of the Northeast Region. He has 17 years of experience in the Tax Credit industry, and more than 30 years of real estate experience, including originating, structuring and closing all types of affordable housing developments. Prior to joining WNC in 2009, he served as a team leader for a national Tax Credit syndicator for nine years. Mr. Maxwell graduated from Case Western Reserve University in 1974 with a Bachelor of Arts degree in English, and from Boston University in 1980 with a Master of Business Administration degree.





Kay L. Cooper, age 73, is a Director of WNC & Associates, Inc. and has not otherwise been engaged in business activities during the previous five years. Kay Cooper was the sole proprietor of Agate 108, a manufacturer and retailer of home accessory products from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the mother of Wilfred Cooper, Jr. Ms. Cooper graduated from the University of Southern California in 1958 with a Bachelor of Science degree.





Jennifer E. Cooper, age 47, is a Director of WNC & Associates, Inc. and has not otherwise been engaged in business activities during the previous five years. She is the wife of Wilfred Cooper, Jr. and attended the University of Texas from 1981 to 1986.





51


(f)     Involvement in Certain Legal Proceedings





None.





(g)
Promoters and Control Persons





Inapplicable.





(h)
Audit Committee Financial Expert, and (i) Identification of the audit Committee





Neither the Partnership nor Associates has an audit committee.





(j)
Changes to Nominating Procedures





Inapplicable.





(k)     Compliance With Section 16(a) of the Exchange Act





None.





(l)    Code of Ethics





Associates has adopted a Code of Ethics which applies to the Chief Executive Officer and Chief Financial Officer of Associates.  The Code of Ethics will be provided without charge to any person who requests it.  Such requests should be directed to:  Investor Relations at (714) 662-5565 extension 187.





Item 11.  Executive Compensation





The General Partner and its affiliates are not permitted under Section 5.6 of the Partnership’s Agreement of Limited Partnership (the “Agreement,” incorporated as Exhibit 3.1 to this report) to receive any salary, fees, profits, distributions or allocations from the Partnership or any Local Limited Partnership in which the Partnership invests except as expressly allowed by the Agreement.  The compensation and other economic benefits to the General Partner and its affiliates provided for in the Agreement are summarized below.





(a)  Compensation for Services





For services rendered by the General Partner or an Affiliate of the General Partner in connection with the administration of the affairs of the Partnership, the General Partner or any such Affiliate may receive an annual asset management fee equal to the greater of (i) $2,000 for each Housing Complex, or (ii) 0.275% of gross proceeds.  In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index.  However, in no event will the maximum amount exceed 0.2% of the invested assets of the Local Limited Partnerships, including the Partnership’s allocable share of the mortgages.  The asset management fee is payable with respect to the previous calendar quarter on the first day of each calendar quarter during the year. Accrued but unpaid asset management fees for any year are deferred without interest and are payable in subsequent years from any funds available to the Partnership after payment of all other costs and expenses of the Partnership, including any capital reserves then determined by the General Partner to no longer be necessary to be retained by the Partnership, or from the proceeds of a sale or refinancing of Partnership assets.  Asset management fees of $49,500 were incurred during each of the years ended March 31, 2011, 2010 and 2009, of which $0 was paid for each of the years ended March 31, 2011, 2010 and 2009.





Subject to a number of terms and conditions set forth in the Agreement, the General Partner and its Affiliates may be entitled to compensation for services actually rendered or to be rendered in connection with (i) selecting, evaluating, structuring, negotiating and closing the Partnership's investments in Local Limited Partnership Interests, (ii) the acquisition or development of Properties for the Local Limited Partnerships, or (iii) property management services actually rendered by the General Partner or its Affiliates respecting the Properties owned by Local Limited Partnerships.  The Partnership has completed its investment stage, so no compensation for the services in (i) or (ii) has been paid during the period covered by this report and none will be paid in the future.  None of the services described in (iii) were rendered and no such compensation was payable for such services during the periods covered by this report.





52


(b)  Operating Expenses





Reimbursement to the General Partner or any of its Affiliates of Operating Cash Expenses is subject to specific restrictions in Section 5.3.3 of the Partnership’s Agreement of Limited Partnership (the “Agreement,” incorporated as Exhibit 3.1 to this report).  The Agreement defines “Operating Cash Expenses” as





“ . . . the amount of cash disbursed by the Partnership . . . in the ordinary course of business for the payment of its operating expenses, such as expenses for management, utilities, repair and maintenance, insurance, investor communications, legal, accounting, statistical and bookkeeping services, use of computing or accounting equipment, travel and telephone expenses, salaries and direct expenses of Partnership employees while engaged in Partnership business, and any other operational and administrative expenses necessary for the prudent operation of the Partnership. Without limiting the generality of the foregoing, Operating Cash Expenses shall include fees paid by the Partnership to any General Partner or any Affiliate of a General Partner permitted by this Agreement and the actual cost of goods, materials and administrative services used for or by the Partnership, whether incurred by a General Partner, an Affiliate of a General Partner or a non-Affiliated Person in performing the foregoing functions. As used in the preceding sentence, actual cost of goods and materials means the actual cost of goods and materials used for or by the Partnership and obtained from entities not Affiliated with a General Partner, and actual cost of administrative services means the pro rata cost of personnel (as if such persons were employees of the Partnership) associated therewith, but in no event to exceed the Competitive amount.”





The Agreement provides that no such reimbursement shall be permitted for services for which a General Partner or any of its Affiliates is entitled to compensation by way of a separate fee.  Furthermore, no such reimbursement is to be made for (a) rent or depreciation, utilities, capital equipment or other such administrative items, and (b) salaries, fringe benefits, travel expenses and other administrative items incurred or allocated to any "controlling person" of a General Partner or any Affiliate of a General Partner. For the purposes of Section 5.3.4, "controlling person" includes, but is not limited to, any person, however titled, who performs functions for a General Partner or any Affiliate of a General Partner similar to those of: (1) chairman or member of the board of directors; (2) executive management, such as president, vice president or senior vice president, corporate secretary or treasurer; (3) senior management, such as the vice president of an operating division who reports directly to executive management; or (4) those holding 5% or more equity interest in such General Partner or any such Affiliate of a General Partner or a person having the power to direct or cause the direction of such General Partner or any such Affiliate of a General Partner, whether through the ownership of voting securities, by contract or otherwise.





The unpaid operating expenses reimbursable to the General Partner or its affiliates were $117,275, $214,631 and $103,032 for the years ended March 31, 2011, 2010 and 2009, respectively.  The Partnership reimbursed the General    Partner or its affiliates for operating expenses of $35,000, $0 and $35,250 during the years ended March 31, 2011, 2010 and 2009, respectively.





(c)   Interest in Partnership





The General Partner receives 1% of the Partnership’s allocated Low Income Housing Tax Credits, which approximated $0, $0 and $0 for the years ended December 31, 2011, 2010 and 2009, respectively.  The General Partner is also entitled to receive 1% of the Partnership’s operating income or losses, gain or loss from the sale of property and operating cash distributions. There were no distributions of operating cash to the General Partner during the years ended March 31, 2011, 2010 and 2009.  The General Partner has an interest in sale or refinancing proceeds as follows: after the Limited Partners have received a return of their capital, General Partner may receive an amount equal to its capital contribution, less any prior distribution of such proceeds, then the General Partner may receive 1% and the Limited Partners 99% of any remaining proceeds.  There were no such distributions of cash to the General Partner during the years ended March 31, 2011, 2010 and 2009.




(d)   Subordinated Disposition Fee





A subordinated disposition fee in an amount equal to 1% of the sale price may be received in connection with the sale or disposition of a Housing Complex or Local Limited Partnership interest.  Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 14% through December 31, 2006 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.





53


Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters





(a)
Securities Authorized for Issuance Under Equity Compensation Plans





The Partnership has no compensation plans under which interests in the Partnership are authorized for issuance.





(b)
Security Ownership of Certain Beneficial Owners





The following are the only limited partners known to the General Partner to own beneficially in excess of 5% of the outstanding Partnership Units as of March 31, 2011 and 2010.





Title of Class
Name and Address of Beneficial Owner
Amount of Units Controlled
Percent of ClassUnits of Limited Partnership Interests
Sempra Section 42, LLC

P.O. Box 126943

San Diego, CA 92113-6943
4,560 units
25.3%Units of Limited Partnership Interests
Western Financial Savings Bank

23 Pasteur

Irvine, CA 92718
1,068 units
5.9%





(c)
Security Ownership of Management





Neither the General Partner, Associates, its affiliates, nor any of the officers or directors of the General Partner, Associates, or its affiliates own directly or beneficially any Partnership Units.





(d)
Changes in Control





The management and control of Associates may be changed at any time in accordance with their respective organizational documents, without the consent or approval of the Limited Partners.  In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances.





Item 13.  Certain Relationships and Related Transactions, and Director Independence





(a)
The General Partner manages all of the Partnership's affairs.  The transactions with the General Partner are    primarily in the form of fees paid by the Partnership for services rendered to the Partnership, reimbursement of expenses, and the General Partner’s interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership’s financial statements.





(b)
The Partnership has no directors.


54




Item 14.  Principal Accountant Fees and Services





The following is a summary of fees paid to the Partnership’s principal independent registered public accounting firm for the years ended March 31:





2011

2010Audit Fees
$
24,260
$
85,899Audit-related Fees

-

-Tax Fees

3,035

3,035All Other Fees

-

-TOTAL
$
27,295
$
88,934





The Partnership has no Audit Committee. All audit services and any permitted non-audit services performed by the Partnership’s independent auditors are preapproved by the General Partner.





PART IV.





Item 15.  Exhibits and Financial Statement Schedules





(a)(1)      List of Financial statements included in Part II hereof





Balance Sheets, March 31, 2011 and 2010


Statements of Operations for the years ended March 31, 2011, 2010 and 2009


Statements of Partners’ Equity (Deficit) for the years ended March 31, 2011, 2010 and 2009


Statements of Cash Flows for the years ended March 31, 2011, 2010 and 2009


Notes to Financial Statements





(a)(2)      List of Financial statement schedules included in Part IV hereof:





Schedule III, Real Estate Owned by Local Limited Partnerships





(a)(3)
Exhibits.





3.1
Articles of incorporation and by-laws: The registrant is not incorporated.  The Partnership Agreement is included as Exhibit B to the Prospectus, filed as Exhibit 28.1 to Form 10-K dated December 31, 1995 is hereby incorporated herein by reference as exhibit 3.1.





31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14 or 15d-14, (filed herewith)





31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14 or 15d-14,  (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) 55


WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2011As of March 31, 2011

As of December 31, 2010Local Limited

Partnership Name
Location
Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValueAlliance Apartments I Limited Partnership
Alliance, Nebraska
$ 604,000
$  604,000

$  308,000
$  148,000
$    1,400,000
$  590,000
$ 958,000Blessed Rock of El Monte
El Monte, California
2,511,000
2,511,000

2,843,000
1,334,000
8,338,000
2,829,000
6,843,000Broadway Apartments, Limited Partnership
Hobbs, New Mexico
2,029,000
2,029,000

1,218,000
70,000
3,430,000
1,752,000
1,748,000Curtis Associates I, L.P.
Curtis, Nebraska
88,000
88,000

401,000
10,000
535,000
281,000
264,000Escatawpa Village Associates, Limited Partnership
Escatawpa, Mississippi
249,000
249,000

849,000
40,000
1,378,000
701,000
717,000Hastings Apartments I, Limited Partnership
Hastings, Nebraska
542,000
542,000

115,000
32,000
1,303,000
577,000
758,000Heritage Apartments I, L.P.
Berkeley, Missouri
752,000
752,000

595,000
105,000
1,597,000
793,000
909,000Hillcrest Associates, a Limited Partnership
Ontario, Oregon
354,000
354,000

1,241,000
96,000
1,605,000
662,000
1,039,000Patten Towers, L.P. II (1)
Chattanooga, Tennessee
2,154,000
2,154,000

4,109,000
52,000
2,093,000
-
2,145,000


56


WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2011As of March 31, 2011

As of December 31, 2010Local Limited

Partnership Name
Location
Total Investment in  Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValuePrairieland Properties of Syracuse II, L.P.
Syracuse, Kansas
85,000
85,000

280,000
25,000
504,000
263,000
266,000Rosedale Limited Partnership
Silver City, New Mexico
309,000
309,000

1,264,000
40,000
1,736,000
896,000
880,000Shepherd South Apartments I, Ltd.
Shepherd, Texas
121,000
121,000

507,000
12,000
788,000
329,000
471,000Solomon Associates I, L.P.
Solomon, Kansas
138,000
138,000

544,000
16,000
728,000
406,000
338,000Talladega County Housing Ltd.
Talladega, Alabama
653,000
653,000

676,000
62,000
1,446,000
599,000
909,000The Willows Apartments Limited Partnership
Morganton, North Carolina

841,000

841,000


969,000

48,000

1,829,000

702,000

1,175,000$
11,430,000
$
11,430,000

$
15,919,000
$
2,090,000
$
28,710,000
$
11,380,000
$
19,420,000




(1) The Local Limited Partnership has been identified for disposition.  57





WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2011For the year ended December 31, 2010Local Limited Partnership Name
Rental Income
Net Income (Loss)
Estimated Useful Life (Years)Alliance Apartments I Limited Partnership
91,000
(29,000)
40Blessed Rock of El Monte
978,000
69,000
40Broadway Apartments, Limited Partnership
451,000
(118,000)
40Curtis Associates I, L.P.
53,000
(13,000)
27.5Escatawpa Village Associates, Limited Partnership
212,000
(11,000)
27.5Hastings Apartments I, Limited Partnership
85,000
(30,000)
40Heritage Apartments I, L.P.
149,000
(45,000)
27.5Hillcrest Associates, A Limited Partnership
202,000
(28,000)
40Patten Towers, L.P. II (1)
1,640,000
(3,745,000)
27.5Prairieland Properties of Syracuse II, L.P.
46,000
(11,000)
27.5Rosedale Limited Partnership
184,000
(43,000)
30Shepherd South Apartments I, Ltd.
124,000
(6,000)
40Solomon Associates I, L.P.
80,000
(12,000)
27.5Talladega County Housing Ltd.
112,000
(46,000)
40The Willows Apartments Limited Partnership

158,000

(22,000)
40$
4,565,000
$
4,090,000





(1) The Local Limited Partnership has been identified for disposition.  58


WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2010As of March 31, 2010

As of December 31, 2009Local Limited

Partnership Name
Location
Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValueAlliance Apartments I Limited Partnership
Alliance, Nebraska
$       604,000
$  604,000

$   316,000
$     148,000
$  1,401,000
$  554,000
$ 995,000Blessed Rock of El Monte
El Monte, California
2,511,000
2,511,000

3,087,000
1,324,000
8,275,000
2,600,000
6,999,000Broadway Apartments, Limited Partnership
Hobbs, New Mexico
2,029,000
2,029,000

1,181,000
70,000
3,431,000
1,626,000
1,875,000Curtis Associates I, L.P.
Curtis, Nebraska
88,000
88,000

407,000
10,000
535,000
260,000
285,000Escatawpa Village Associates, Limited Partnership
Escatawpa, Mississippi
249,000
249,000

859,000
40,000
1,378,000
652,000
766,000Hastings Apartments I, Limited Partnership
Hastings, Nebraska
542,000
542,000

132,000
32,000
1,303,000
538,000
797,000Heritage Apartments I, L.P.
Berkeley, Missouri
752,000
752,000

610,000
105,000
1,597,000
735,000
967,000Hillcrest Associates, a Limited Partnership
Ontario, Oregon
354,000
354,000

1,248,000
96,000
1,605,000
623,000
1,078,000Patten Towers, L.P. II (1)
Chattanooga, Tennessee
2,154,000
2,154,000

4,170,000
290,000
11,512,000
6,269,000
5,533,000


59


WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2010As of March 31, 2010

As of December 31, 2009Local Limited

Partnership Name
Location
Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValuePrairieland Properties of Syracuse II, L.P.
Syracuse, Kansas
85,000
85,000

293,000
25,000
503,000
242,000
286,000Rosedale Limited Partnership
Silver City, New Mexico
309,000
309,000

1,272,000
40,000
1,733,000
828,000
945,000Shepherd South Apartments I, Ltd.
Shepherd, Texas
121,000
121,000

522,000
12,000
773,000
308,000
477,000Solomon Associates I, L.P.
Solomon, Kansas
138,000
138,000

550,000
16,000
721,000
378,000
359,000Talladega County Housing Ltd.
Talladega, Alabama
653,000
653,000

708,000
62,000
1,447,000
562,000
947,000The Willows Apartments Limited Partnership
Morganton, North Carolina

841,000

841,000


985,000

48,000

1,829,000

658,000

1,219,000$
11,430,000
$
11,430,000

$
16,340,000
$
2,318,000
$
38,043,000
$
16,833,000
$
23,528,000




(1) The Local Limited Partnership has been identified for disposition.


60





WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2010For the year ended December 31, 2009Local Limited Partnership Name
Rental Income
Net Income (Loss)
Status
Year Investment Acquired
Estimated Useful Life (Years)Alliance Apartments I Limited Partnership
$                     86,000
$              (30,000)
Completed
1997
40Blessed Rock of El Monte
956,000
61,000
Completed
1997
40Broadway Apartments, Limited Partnership
449,000
(104,000)
Completed
1997
40Curtis Associates I, L.P.
54,000
(18,000)
Completed
1997
27.5Escatawpa Village Associates, Limited Partnership
203,000
(40,000)
Completed
1997
27.5Hastings Apartments I, Limited Partnership
89,000
(19,000)
Completed
1996
40Heritage Apartments I, L.P.
147,000
(38,000)
Completed
1997
27.5Hillcrest Associates, A Limited Partnership
210,000
(22,000)
Completed
1997
40Patten Towers, L.P. II (1)
1,535,000
(391,000)
Completed
1996
27.5Prairieland Properties of Syracuse II, L.P.
46,000
(12,000)
Completed
1997
27.5Rosedale Limited Partnership
191,000
(43,000)
Completed
1997
30Shepherd South Apartments I, Ltd.
118,000
2,000
Completed
1996
40Solomon Associates I, L.P.
85,000
(10,000)
Completed
1997
27.5Talladega County Housing Ltd.
114,000
(29,000)
Completed
1996
40The Willows Apartments Limited Partnership

160,000

(16,000)
Completed
1997
40$
4,443,000
$
(709,000)





(1) The Local Limited Partnership has been identified for disposition.  61





WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2009As of March 31, 2009

As of December 31, 2008Local Limited

Partnership Name
Location
Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValueAlliance Apartments I Limited Partnership
Alliance, Nebraska
$                     604,000
$             604,000

$              320,000
$            148,000
$          1,401,000
$            517,000
$       1,032,000Blessed Rock of El Monte
El Monte, California
2,511,000
2,511,000

3,347,000
1,323,000
8,254,000
2,375,000
7,202,000Broadway Apartments, Limited Partnership
Hobbs, New Mexico
2,029,000
2,029,000

1,196,000
70,000
3,430,000
1,499,000
2,001,000Curtis Associates I, L.P.
Curtis, Nebraska
88,000
88,000

409,000
10,000
531,000
238,000
303,000Escatawpa Village Associates, Limited Partnership
Escatawpa, Mississippi
249,000
249,000

864,000
40,000
1,377,000
601,000
816,000Hastings Apartments I, Limited Partnership
Hastings, Nebraska
542,000
542,000

140,000
32,000
1,303,000
500,000
835,000Heritage Apartments I, L.P.
Berkeley, Missouri
752,000
752,000

626,000
105,000
1,596,000
675,000
1,026,000Hillcrest Associates, a Limited Partnership
Ontario, Oregon
354,000
354,000

1,255,000
96,000
1,605,000
585,000
1,116,000Patten Towers, L.P. II (1)
Chattanooga, Tennessee
2,154,000
2,154,000

4,229,000
290,000
11,481,000
5,816,000
5,955,000 62


WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2009As of March 31, 2009

As of December 31, 2008Local Limited

Partnership Name
Location
Total Investment in Local Limited Partnerships
Amount of Investment Paid to Date

Mortgage Balances of Local Limited Partnerships
Land
Building and Equipment
Accumulated Depreciation
Net Book ValuePrairieland Properties of Syracuse II, L.P.
Syracuse, Kansas
85,000
85,000

299,000
25,000
498,000
223,000
300,000Raymond S. King Apartments Limited Partnership
Greensboro, North Carolina
437,000
437,000

782,000
10,000
1,091,000
372,000
729,000Rosedale Limited Partnership
Silver City, New Mexico
309,000
309,000

1,278,000
40,000
1,730,000
758,000
1,012,000Shepherd South Apartments I, Ltd.
Shepherd, Texas
121,000
121,000

529,000
12,000
765,000
288,000
489,000Solomon Associates I, L.P.
Solomon, Kansas
138,000
138,000

552,000
16,000
719,000
351,000
384,000Talladega County Housing Ltd.
Talladega, Alabama
653,000
653,000

722,000
62,000
1,447,000
525,000
984,000The Willows Apartments Limited Partnership
Morganton, North Carolina

841,000

841,000

1,000,000

48,000

1,829,000

615,000

1,262,000$
11,867,000
$
11,867,000
$
17,548,000
$
2,327,000
$
39,057,000
$
15,938,000
$
25,446,000








(1) The Local Limited Partnership has been identified for disposition.  63





WNC Housing Tax Credit Fund V, L.P., Series 3Schedule IIIReal Estate Owned by Local Limited PartnershipsMarch 31, 2009For the year ended December 31, 2008Local Limited Partnership Name
Rental Income
Net Income (Loss)
Status
Year Investment Acquired
Estimated Useful Life (Years)Alliance Apartments I Limited Partnership
$                   89,000
$           (16,000)
Completed
1997
40Blessed Rock of El Monte
946,000
(26,000)
Completed
1997
40Broadway Apartments, Limited Partnership
417,000
(87,000)
Completed
1997
40Curtis Associates I, L.P.
50,000
(17,000)
Completed
1997
27.5Escatawpa Village Associates, Limited Partnership
189,000
(58,000)
Completed
1997
27.5Hastings Apartments I, Limited Partnership
80,000
(23,000)
Completed
1996
40Heritage Apartments I, L.P.
141,000
(45,000)
Completed
1997
27.5Hillcrest Associates, A Limited Partnership
200,000
(30,000)
Completed
1997
40Patten Towers, L.P. II (1)
1,459,000
(1,175,000)
Completed
1996
27.5Prairieland Properties of Syracuse II, L.P.
46,000
(5,000)
Completed
1997
27.5Raymond S. King Apartments Limited Partnership
53,000
(70,000)
Completed
1997
30Rosedale Limited Partnership
181,000
(29,000)
Completed
1997
30Shepherd South Apartments I, Ltd.
109,000
7,000
Completed
1996
40Solomon Associates I, L.P.
84,000
(12,000)
Completed
1997
27.5Talladega County Housing Ltd.
110,000
(17,000)
Completed
1996
40The Willows Apartments Limited Partnership

154,000

(11,000)
Completed
1997
40$
4,308,000
$
(1,614,000)





(1) The Local Limited Partnership has been identified for disposition.  64











SIGNATURES








Pursuant to the requirements of Section 13 or 15(d) 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 V, L.P., SERIES 3





By:           WNC & Associates, Inc.,


General Partner





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


Wilfred N. Cooper, Jr.,


President of WNC & Associates, Inc.





Date:           June 27, 2011


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.











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


Wilfred N. Cooper, Jr.,


Chief Executive Officer, President and Director of WNC & Associates, Inc. (principal executive officer)





Date:           June 27, 2011








By:           /s/ Melanie R. Wenk


Melanie R. Wenk


Vice-President - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer)





Date:           June 27, 2011








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


Wilfred N. Cooper, Sr.,


Chairman of the Board of WNC & Associates, Inc.





Date:           June 27, 2011








By:           /s/ Kay L. Cooper


Kay L. Cooper


Director of WNC & Associates, Inc.





Date:           June 27, 2011