UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 ______________
 
 FORM
10-K
 
 ______________
 (Mark
One)
 
 þ
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
the fiscal year ended March 31, 2009
 
 OR
 
 o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 Commission
File Number 0-13782
 
 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 (Exact
name of registrant as specified in its charter)
 
 Delaware
                  
                  13-3646846(State
      or other jurisdiction of incorporation or organization)
                  
                  (I.R.S.
      Employer Identification No.)625
      Madison Avenue, New York, New York
                  
                  10022(Address
      of principal executive offices)
                  
                  (Zip
      Code)
 
 Registrant’s
telephone number, including area code (212) 517-3700
 
 Securities
registered pursuant to Section 12(b) of the Act:
 
 None
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Title of
Class
 Limited Partnership Interests and
Beneficial Assignment Certificates
 
 Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.  Yes  o  No  þ
 
 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 o 
No  þ
 
 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  þ   No 
o
 
 Indicate by checkmark 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 (§229.405 of this chapter) during the preceeding 12
months (or for such shorter period that the registrant was required to submit
and post such files).  Yes  o   No o
  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.   þ
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer or a smaller reporting company.  See definitions
of “large accelerated filer”, “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
 Large
      accelerated filer  o
            
            Accelerated
      filer  oNon-accelerated
      filer  o  (Do
      not check if a smaller reporting company)
            
            Smaller
      reporting company  þ
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Act).  Yes  o   No  þ
 
 The approximate aggregate book value of
the voting and non-voting common equity held by non-affiliates of the Registrant
as of September 30, 2008 was ($16,505,000) based on Limited Partner equity
(deficit) as of such date.
 
 Registrant’s voting and non-voting
common equity is not publicly traded.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 None
 
 
  
  PART
I
  Item 1.
Business.
  General
  Independence
Tax Credit Plus L.P. II (the “Partnership”) is a limited partnership which was
formed under the laws of the State of Delaware on February 11, 1992. The general
partner of the Partnership is Related Independence Associates L.P., a Delaware
limited partnership (the “General Partner”). The general partner of the General
Partner is Related Independence Associates Inc., a Delaware corporation
(“RIAI”).  The ultimate parent of the General Partner is Centerline
Holding Company (“Centerline”).
  On
January 19, 1993, the Partnership commenced a public offering (the “Offering”)
of Beneficial Assignment Certificates (“BACs”) representing assignments of
limited partnership interests in the Partnership (“Limited Partnership
Interests”). The Partnership received $58,928,000 of gross proceeds from the
Offering (the “Gross Proceeds”) from 3,475 investors (“BACs holders”). The
Offering was terminated on April 7, 1994.
  The
Partnership’s business is primarily to invest as a limited partner in other
partnerships (“Local Partnerships”, “subsidiaries” or “subsidiary partnership”)
owning apartment complexes (“Apartment Complexes” or “Properties”) that are
eligible for the low-income housing tax credit (“Tax Credit”) enacted in the Tax
Reform Act of 1986, some of which may also be eligible for the historic
rehabilitation tax credit (“Historic Tax Credit”). The Partnership’s investment
in each Local Partnership represents 98.99% of the partnership interests in the
Local Partnership. As of March 31, 2009, the Partnership held interests in
fifteen Local Partnerships and does not anticipate making any additional
investments. However, the Partnership may be required to pay for potential
purchase price adjustments based on tax credit adjustor clauses. As of March 31,
2009, approximately $47,000,000 (not including acquisition fees of approximately
$3,502,000) of the net proceeds of the Offering has been invested in fifteen
Local Partnerships, of which approximately $282,000 remains to be paid
(including approximately $24,000 being held in escrow) to the Local
Partnerships, as certain benchmarks such as occupancy levels must be attained
prior to the release of such funds.  See Item 2.  Properties
below.
  Investment
Objectives/Government Incentives
  The
Partnership was formed to invest in Apartment Complexes that are eligible for
the Tax Credit enacted in the Tax Reform Act of 1986. Some Apartment Complexes
may also be eligible for Historic Tax Credits. The investment objectives of the
Partnership are described below.
  1.
            Entitle
      qualified BACs holders to Tax Credits over the period of the Partnership’s
      entitlement to claim Tax Credits (for each Property, generally ten years
      from the date of investment or, if later, the date the Property is leased
      to qualified tenants; referred to herein as the “Credit Period”) with
      respect to each Apartment Complex.
  2.
            Preserve
      and protect the Partnership’s
capital.
  3.
            Participate
      in any capital appreciation in the value of the Properties and provide
      distributions of sale or refinancing proceeds upon the disposition of the
      Properties.
  4.
            Allocate
      passive losses to individual BACs holders to offset passive income that
      they may realize from rental real estate investments and other passive
      activities, and allocate passive losses to corporate BACs holders to
      offset business income.
  One of
the Partnership’s objectives is to entitle qualified BACs holders to Tax Credits
over the Credit Period. Each of the Local Partnerships in which the Partnership
has acquired an interest has been allocated by the relevant state credit
agencies the authority to recognize Tax Credits during the Credit Period
provided that the Local Partnership satisfies the rent restriction, minimum
set-aside and other requirements for recognition of the Tax Credits at all times
during such period. Once a Local Partnership has become eligible to recognize
Tax Credits, it may lose such eligibility and suffer an event of “recapture” if
its Property fails to remain in compliance with the Tax Credit requirements
during the 15-year period commencing at the beginning of the Credit Period
(“Compliance Period”).  At December 31, 2008, Mansion Court Associates
was required to recapture $190,635 of low-income housing tax
credits.  As of December 31, 2008, all the Local Partnerships have
completed their Credit Periods.  However, each Local Partnership must
continue to comply with the Tax Credit requirements until the end of the
Compliance Period in order to avoid recapture of the Tax Credits.  The
Compliance Periods will continue through December 31, 2012 with respect to the
Properties depending upon when the Compliance Period commenced.
  A loss on
impairment of assets is recorded when management estimates amounts recoverable
through future operations and sale of the Property on an undiscounted basis are
below depreciated cost.  At that time the Property investments
themselves are reduced to estimated fair value (generally using the discounted
cash flow valuation method).  During the year ended March 31, 2009,
the Partnership recorded approximately $463,000 as an aggregate loss on
impairment of assets or reduction to estimated fair value.  Through
March 31, 2009, the Partnership has recorded approximately $6,334,000 as an
aggregate loss on impairment of assets or reduction to estimated fair
value.
  While the
value of the remaining Tax Credits are a factor in calculating fair value, the
expiration of the Credit Period, in and of itself, has not been the only factor
in determining whether there is an impairment and generally does not have any
adverse impact on the fair value of the Local Partnerships.
  There can
be no assurance that the Partnership will achieve its investment objectives as
described above.
    - 2
-
   The
Partnership is subject to the risks incident to potential losses arising from
the management and ownership of improved real estate. The Partnership can also
be affected by poor economic conditions generally; however, no more than 33% of
the Properties are located in any single state. There are also substantial risks
associated with owning interests in properties, as does the Partnership, which
receive government assistance, for example the possibility that Congress may not
appropriate funds to enable the Department of Housing and Urban Development
(“HUD”) to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner’s equity contribution. The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence without HUD’s approval. Furthermore, there
may not be market demand for apartments at full market rents when the rental
assistance contracts expire.
  Segments
  The
Partnership operates in one segment, which is the investment in multi-family
residential property.  Financial information about this segment is set
forth in Item 8 hereto.
  Competition
  The real
estate business is highly competitive and substantially all of the Properties
acquired by the Partnership are expected to have active competition from similar
properties in their respective vicinities. Various other limited partnerships
have, in the past, and may, in the future, be formed by the General Partner
and/or its affiliates to engage in businesses which may be competitive with the
Partnership.
  Employees
  The
Partnership does not have any direct employees. All services are performed for
the Partnership by the General Partner and its affiliates. The General Partner
receives compensation in connection with such activities as set forth in Items
11 and 13. In addition, the Partnership reimburses the General Partner and
certain of its affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership’s Amended and Restated Agreement of Limited Partnership
(the “Partnership Agreement”).
  Item
1A.  Risk Factors
  The
Partnership’s investment as a limited partner in the Local Partnerships is
subject to the risks of potential losses arising from management and ownership
of improved real estate. The Partnership’s investments also could be adversely
affected by poor economic conditions generally, which could increase vacancy
levels and rental payment defaults, and by increased operating expenses, any or
all of which could threaten the financing viability of one or more of the Local
Partnerships.
  There
also are substantial risks associated with the operation of Apartment Complexes
receiving government assistance. These include governmental regulations
concerning tenant eligibility, which may make it more difficult to rent
apartments in the Apartment Complexes; difficulties in obtaining government
approval for rent increases; limitations on the percentage of income which low
and moderate-income tenants may pay as rent; the possibility that Congress may
not appropriate funds to enable HUD to make the rental assistance payments it
has contracted to make; and that when the rental assistance contracts expire,
there may not be market demand for apartments at full market rents in a Local
Partnership’s Apartment Complex.
  Item
1B.  Unresolved Staff Comments
  None
   - 3
-
  
 Item
2.  Properties
  The
Partnership holds a 98.99% limited partnership interest in fifteen Local
Partnerships as of March 31, 2009.  Set forth below is a schedule of
the Local Partnerships including certain information concerning their respective
Apartment Complexes (the “Local Partnership Schedule”). Further information
concerning these Local Partnerships and their Properties, including any
encumbrances affecting the Properties, may be found in Item 15. Schedule
III.
  Local Partnership
Schedule
  Name
      and Location
              
              Date
      Acquired
              
              %
      of Units Occupied at May 1,2009
              
              2008
              
              2007
              
              2006
              
              2005Lincoln
      RenaissanceReading,
      PA (52)
              
              April
      1993
              
              94
              %
              
              94
              %
              
              94
              %
              
              90
              %
              
              98
              %United
      Germano-Millgate Limited PartnershipChicago,
      IL (350)
              
              October
      1993
              
              97
              %
              
              95
              %
              
              95
              %
              
              98
              %
              
              87
              %Mansion
      Court AssociatesPhiladelphia,
      PA (30)
              
              November
      1993
              
              27
              %
              
              33
              %
              
              50
              %
              
              70
              %
              
              87
              %Derby
      Run Associates, L.P.Hampton,
      VA (160)
              
              February
      1994
              
              98
              %
              
              91
              %
              
              94
              %
              
              96
              %
              
              98
              %Renaissance
      Plaza ‘93 Associates , L.P.Baltimore,
      MD (95)
              
              February
      1994
              
              98
              %
              
              97
              %
              
              95
              %
              
              98
              %
              
              99
              %Tasker
      Village AssociatesPhiladelphia,
      PA (28)
              
              May
      1994
              
              96
              %
              
              89
              %
              
              96
              %
              
              100
              %
              
              100
              %Martha
      Bryant Manor, L.P.Los
      Angeles, CA (77)
              
              September
      1994
              
              95
              %
              
              96
              %
              
              99
              %
              
              95
              %
              
              99
              %Colden
      Oaks Limited PartnershipLos
      Angeles, CA (38)
              
              September
      1994
              
              95
              %
              
              97
              %
              
              100
              %
              
              100
              %
              
              97
              %Brynview
      Terrace, L.P.Los
      Angeles, CA (8)
              
              September
      1994
              
              100
              %
              
              75
              %
              
              100
              %
              
              100
              %
              
              100
              %NLEDC,
      L.P.Los
      Angeles, CA (43)
              
              September
      1994
              
              98
              %
              
              100
              %
              
              98
              %
              
              95
              %
              
              98
              %Creative
      Choice Homes VI, Ltd.Miami,
      FL (102)
              
              September
      1994
              
              98
              %
              
              83
              %
              
              86
              %
              
              57
              %
              
              99
              %P&P
      Homes for the Elderly, L.P.Los
      Angeles, CA (107)
              
              September
      1994
              
              98
              %
              
              98
              %
              
              98
              %
              
              96
              %
              
              96
              %Clear
      Horizons Limited PartnershipShreveport,
      LA (84)
              
              December
      1994
              
              94
              %
              
              99
              %
              
              95
              %
              
              94
              %
              
              96
              %Neptune
      Venture, L.P.Neptune
      Township, NJ (99)
              
              April
      1995
              
              100
              %
              
              98
              %
              
              99
              %
              
              100
              %
              
              100
              %Affordable
      Green Associates L.P.New
      York, NY (41)
              
              April
      1995
              
              100
              %
              
              100
              %
              
              100
              %
              
              100
              %
              
              100
              %
 
  All
leases are generally for periods not exceeding one to two years and no tenant
occupies more than 10% of the total rentable square footage in any single
Apartment Complex.
  Rents
from commercial tenants (to which average rental per square foot applies)
comprise less than 5% of the rental revenues of the Partnership. Maximum
allowable rents for the residential units are determined annually by
HUD.
  Management
continuously reviews the physical state of the Properties and suggests to the
respective general partners of the Local Partnerships (“Local General Partners”)
budget improvements which are generally funded from cash flow from operations or
release of replacement reserve escrows.
  Management
continuously reviews the insurance coverage of the Properties and believes such
coverage is adequate.
  See Item
1, Business, above for the general competitive conditions to which the
Properties described above are subject.
    - 4
-
   Real
estate taxes are calculated using rates and assessed valuations determined by
the township or city in which the Property is located. Such taxes have
approximated 1% of the aggregate cost of the Properties as shown in Schedule III
to the financial statements included herein.
  In
connection with investments in Apartment Complexes in development stage, the
General Partner generally required that the Local General Partners provide
completion guarantees and/or undertake to repurchase the Partnership’s interest
in the Local Partnership if construction or rehabilitation was not completed
substantially on time or on budget (“Development Deficit Guarantees”). The
Development Deficit Guarantees generally also required the Local General Partner
to provide any funds necessary to cover net operating deficits of the Local
Partnership until such time as the Apartment Complex had achieved break-even
operations.  The General Partner generally required that the Local
General Partners undertake an obligation to fund operating deficits of the Local
Partnership (up to a stated maximum amount) during a limited period of time
(typically three to five years) following the achievement of break-even
operations (“Operating Deficit Guarantees”).  As of March 31, 2009,
the gross amount of the Operating Deficit Guarantees aggregated approximately
$5,670,000, of which $4,840,000 had expired.  Management does not
expect that expiration to have a material impact on liquidity, based on prior
years’ fundings.  Amounts funded under such agreements are treated as
noninterest bearing loans, which will be paid only out of 50% of available cash
flow or out of available net sale or refinancing proceeds. In some instances,
the Local General Partners have been required to undertake an obligation to
comply with a Rent-Up Guaranty Agreement, whereby the Local General Partner has
agreed to pay liquidated damages if predetermined occupancy rates are not
achieved. These payments are made without a right of repayment. In cases where
the General Partner has deemed it appropriate, the obligations of a Local
General Partner under the Development Deficit, Operating Deficit and/or Rent-Up
Guarantees have been secured by letters of credit and/or cash escrow
deposits.
  Tax
Credits with respect to a given Apartment Complex are available for a ten-year
period that commences when the Property is placed into service. However, the
annual Tax Credits available in the year in which the Apartment Complex is
placed in service must be prorated based upon the months remaining in the year.
The amount of the annual Tax Credit that was not available in the first year was
made available in the eleventh year. In certain cases, the Partnership acquired
its interest in a Local Partnership after the Local Partnership had placed its
Apartment Complex in service. In these cases, the Partnership were allocated Tax
Credits only beginning in the month following the month in which it acquired its
interest and Tax Credits allocated in any prior period were available to the
Partnership.
  Item
3.  Legal Proceedings
  None
  Item
4.  Submission of Matters to a Vote of Security Holders
  None
   - 5
-
  
  PART
II
  Item
5.  Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
  As of
March 31, 2009, the Partnership had issued and outstanding 58,928 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $58,928,000 before volume
discounts of $2,000. All of the issued and outstanding Limited Partnership
Interests have been issued to Independence Assignor Inc. (the “Assignor Limited
Partner”), which has in turn issued 58,928 BACs to the purchasers thereof for an
aggregate purchase price of $58,928,000 reduced by volume discounts of $2,000.
Each BAC represents all of the economic and virtually all of the ownership
rights attributable to a Limited Partnership Interest held by the Assignor
Limited Partner. BACs may be converted into Limited Partnership Interests at no
cost to the holder (other than the payment of transfer costs not to exceed
$100), but Limited Partnership Interests so acquired are not thereafter
convertible into BACs.
  Neither
the BACs nor the Limited Partnership Interests are traded on any established
trading market. The Partnership does not intend to include the BACs for
quotation on NASDAQ or for listing on any national or regional stock exchange or
any other established securities market. The Revenue Act of 1987 contained
provisions which have an adverse impact on investors in “publicly traded
partnerships.”  Accordingly, the General Partner has imposed limited
restrictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. Implementation of the restrictions
should prevent a public trading market from developing and may adversely affect
the ability of an investor to liquidate his or her investment quickly. It is
expected that these procedures will remain in effect until such time, if ever,
as further revision of the Revenue Act of 1987 may permit the Partnership to
lessen the scope of the restrictions.
  As of May
28, 2009, the Partnership has approximately 3,429 registered holders of an
aggregate of 58,928 BACs.
  All of
the Partnership’s general partnership interests, representing an aggregate
capital contribution of $1,000, are held by the General Partner.
  There are
no material legal restrictions in the Partnership Agreement on the ability of
the Partnership to make distributions. However, the Partnership has made no
distributions to the BACs holders as of March 31, 2009.  The
Partnership does not anticipate providing cash distributions to its BACs holders
other than from net refinancing or sales proceeds.
  Transfer
Procedures
  The
Partnership from time to time receives requests by unit holders and others to
transfer BACs and/or limited partnership interests.  Such requests may
occur in connection with tender offers for the Partnership’s
units.  Such requests implicate the Partnership’s policies and
procedures concerning transfers generally and tender offers in particular, which
were adopted by the Partnership pursuant to the terms of its Partnership
Agreement, to ensure compliance with applicable law, avoid adverse tax
consequences for the Partnership and its investors, and preserve the
Partnership’s advantageous tax status.
  In prior
years, the Partnership relied on the 5% safe harbor established by Internal
Revenue Service (“IRS”) regulations to avoid being characterized as a
“publicly-traded partnership” that is taxed as a corporation.  The 5%
safe harbor, however, expired and is no longer available as of December 31,
2005.  Accordingly, the Partnership now relies on a 2% safe harbor
established by another IRS regulation to avoid being characterized as a
“publicly-traded partnership” that is taxed as a corporation.
  A brief
summary of certain of the Partnership’s key policies, practices and requirements
with respect to transfers and tender offers is as follows:
  ·
            No
      transfer (whether for substitution, assignment or otherwise) is effective
      or binding on the Partnership unless and until it is approved by the
      General Partner.
  ·
            No
      transfer will be approved unless the transferor and transferee submit
      complete and properly executed forms of the Partnership’s own transfer
      documentation.  The Partnership does not accept forms of
      transfer documentation other than its own and does not accept signatures
      made by power of attorney in lieu of original signatures by each of the
      transferors and transferees.
  ·
            The
      Partnership will not approve transfers that in the cumulative aggregate
      for any tax year exceed the IRS 2% safe harbor, unless a financially
      responsible person provides the Partnership and its partners with (i) an
      indemnity (in form and substance in all ways acceptable to the General
      Partner) for all liability (including, without limitation, any adverse tax
      consequences) arising from or relating to exceeding the 2% safe harbor and
      (ii) a legal opinion (in form and substance in all ways acceptable to the
      General Partner) that there will be no adverse tax consequences to the
      Partnership and its partners from exceeding the 2% safe
      harbor.
  ·
            In
      order to avoid the undesirable situation of one or more tender offers
      consuming the entire safe harbor limitation early in the tax year and
      leaving the Partnership’s remaining investors with no liquidity
      opportunity for the rest of that tax year, the Partnership restricts the
      cumulative aggregate total of transfers made pursuant to all tender offers
      to 1.5% of its outstanding units in each tax year, unless a financially
      responsible person conducting such tender offer provides the Partnership
      with an acceptable indemnity and legal opinion of the type described
      above.  At the end of each tax year, the General Partner, in its
      discretion, may allow the cumulative total number of transfers (including
      those by tender offer) to reach the 2% safe harbor
  limit.
  ·
            The
      Partnership requires that all tender offers for its units be conducted in
      accordance with all applicable law including, without limitation, the
      federal securities laws.
  The
foregoing is solely a summary of the Partnership’s policies, requirements and
practices with respect to transfers and tender offers.  More complete
information, including a copy of the Partnership’s transfer documentation
package, may be obtained from the Partnership.
   - 6
-
  
  Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
  Liquidity and Capital
Resources
  Through
March 31, 2009, the Partnership has invested all of the net proceeds of its
Offering in fifteen Local Partnerships of which approximately $282,000 remains
to be paid (including approximately $24,000 being held in escrow).
  Short-Term
  The
Partnership’s primary source of funds is a working capital reserve and interest
thereon. This source of funds is available to meet obligations of the
Partnership.  At March 31, 2009, there was a balance of approximately
$295,000 in the working capital reserve. The General Partner believes that these
reserves, plus cash distributions to be received from the operations of the
Local Partnerships, will be sufficient (subject to the continued deferral of
fees payable to the General Partner) to fund the Partnership’s ongoing
operations for the foreseeable future.  During the years ended March
31, 2009 and 2008, amounts received from operations of the Local Partnerships
were approximately $139,000 and $200,000, respectively. Management anticipates
receiving distributions from operations in the future, although not to a level
sufficient to permit providing cash distributions to BACs holders.
  For the
year ended March 31, 2009, cash and cash equivalents of the Partnership and its
fifteen consolidated Local Partnerships increased approximately
$214,000.  This increase was due to a decrease in cash held in escrow
relating to investing activities ($313,000) and cash provided by operating
activities ($980,000) which exceeded improvements to property and equipment
($275,000), net principal payments of mortgage notes ($625,000), capitalization
of consolidated subsidiaries attributable to minority interest ($147,000) and a
decrease in due to local general partners and affiliates relating to investing
and financing activities ($32,000).  Included in the adjustments to
reconcile the net loss to net cash provided by operating activities is
depreciation and amortization ($3,441,000) and loss on impairment of property
($463,000).
  Total
expenses for the years ended March 31, 2009 and 2008, excluding depreciation and
amortization, interest, general and administrative – related parties and loss on
impairment of property, totaled $8,613,462 and $8,225,472,
respectively.
  Accounts
payable as of March 31, 2009 and 2008 was $747,108 and $788,866,
respectively.  Accounts payable are short term liabilities which are
expected to be paid from operating cash flows, working capital balances at the
Local Partnership level, Local General Partner advances and in certain
circumstances advances from the Partnership.   Because the
provisions of the secondary loans defer the payment of accrued interest of the
respective Local Partnerships, the Partnership believes it (and the applicable
Local Partnerships) has sufficient liquidity and ability to generate cash and to
meet existing and known or reasonably likely future cash requirements over both
the short and long term.
  Accrued
interest as of March 31, 2009 and 2008 was $22,239,687 and $20,403,716,
respectively.  Accrued interest represents the accrued interest on all
mortgage loans, which include primary and secondary loans.  Certain
secondary loans have provisions such that interest is accrued but not payable
until a future date.  The Partnership anticipates the payment of
accrued interest on the secondary loans (which make up the majority of the
accrued interest payable amount which have been accumulating since the
Partnership’s investment in the respective Local Partnership) will be made from
future refinancings or sales proceeds of the respective Local
Partnerships.  In addition, each Local Partnership’s mortgage notes
are collateralized by the land and buildings of the respective Local
Partnership, and are without further recourse to the Partnership.
  Partnership
management fees owed to the General Partner amounting to approximately
$5,393,000 and $4,847,000 were accrued and unpaid as of March 31, 2009 and 2008,
respectively (see Note 8 in Item 8).  Without the General Partner’s
advances and continued accrual without payment of certain fees and expense
reimbursements, the Partnership would not be in a position to meet its
obligations.
  Long-Term
  For a
discussion of contingencies affecting certain Local Partnerships, see Results of
Operations of Certain Local Partnerships, below. Since the maximum loss the
Partnership would be liable for is its net investment in the respective
subsidiary partnerships, the resolution of the existing contingencies is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way. However, the Partnership’s loss of its investment
in a Local Partnership may result in recapture of Tax Credits if the investment
is lost before expiration of the Credit Period.
  Except as
described above, management is not aware of any trends or events, commitments or
uncertainties, which have not otherwise been disclosed that will or are likely
to impact liquidity in a material way. Management believes the only impact would
be from laws that have not yet been adopted. The portfolio is diversified by the
location of the Properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining Properties in
the portfolio may be experiencing upswings. However the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The Partnership has invested the proceeds of its Offering
in 15 Local Partnerships, all of which had their Tax Credits fully in place
during the Credit Periods.  As of December 31, 2007, all the Local
Partnerships had completed their Credit Periods.  However, each Local
Partnership must continue to comply with the Tax Credit requirements until the
end of the Compliance Period in order to avoid recapture of the Tax
Credits.  The Compliance Periods will continue through December 31,
2012 with respect to the Properties depending upon when the Compliance Period
commenced.  At December 31, 2008, Mansion Court Associates was
required to recapture $190,635 of low-income housing tax credits.
    - 7
-
   Tabular Disclosure of
Contractual Obligations
 The
following table summarizes the Partnership’s commitments as of March 31, 2009 to
make future payments under its debt agreements and other contractual
obligations.
  Total
            
            Less
      than
              1
      Year
            
            1 –
      3
              Years
            
            3
      -5
              Years
            
            More
      than
              5
      YearsMortgage
      notes payable (a)
            
            $
            56,945,695
            
            $
            3,022,189
            
            $
            4,529,177
            
            $
            7,444,397
            
            $
            41,949,932Loans
      payable to local general partner and affiliates (b)
            
            
            236,994
            
            
            236,994
            
            
            -
            
            
            -
            
            
            -$
            57,182,689
            
            $
            2,386,888
            
            $
            5,401,472
            
            $
            7,444,397
            
            $
            41,949,932(a)
      The mortgage notes are payable in aggregate monthly installments of
      approximately $155,000 including principal and interest at rates ranging
      from 0% to 9.05% per annum, through the year 2052.  Each
      subsidiary partnership’s mortgage note payable is collateralized by the
      land and buildings of the respective subsidiary partnership, the
      assignment of each certain subsidiary partnership’s rents and leases, and
      is without further recourse.(b) 
      See Note 8 (B) in Item 8.  Financial Statements and
      Supplementary Data.
 
  Off Balance Sheet
Arrangements
  The
Partnership has no off-balance sheet arrangements.
  Critical Accounting Policies
and Estimates
  The
preparation of consolidated financial statements requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting
period.  Actual results could differ from those estimates. The
following is a summary of certain accounting estimates considered critical by
the Partnership.
  Property and
Equipment
  Property
and equipment to be held and used are carried at cost which includes the
purchase price, acquisition fees and expenses, construction period interest and
any other costs incurred in acquiring the Properties.  The cost of
property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods.  Expenditures for repairs and
maintenance are charged to expense as incurred; major renewals and betterments
are capitalized.  At the time property and equipment are retired or
otherwise disposed of, the cost and accumulated depreciation are eliminated from
the assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. The Partnership complies with Statement of
Financial Accounting Standards No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets” (“SFAS No. 144”).  A loss on impairment
of assets is recorded when management estimates amounts recoverable through
future operations and sale of the Property on an undiscounted basis are below
depreciated cost.  At that time, Property investments themselves are
reduced to estimated fair value (generally using discounted cash flows) when the
Property is considered to be impaired and the depreciated cost exceeds estimated
fair value.
  During
the year ended March 31, 2009, the Partnership recorded approximately $463,000
as an aggregate loss on impairment of assets or reduction to estimated fair
value.  Through March 31, 2009, the Partnership has recorded
approximately $6,334,000 as an aggregate loss on impairment of
property.
  Revenue
Recognition
  Rental
income is earned primarily under standard residential operating leases and is
typically due the first day of each month, but can vary by Property due to the
terms of the tenant leases.  Rental income is recognized when earned
and charged to tenants’ accounts receivable if not received by the due
date.  Rental payments received in advance of the due date are
deferred until earned.  Rental subsidies are recognized as rental
income during the month in which it is earned.
  Other
revenues are recorded when earned and consist of the following
items:  Interest income earned on cash and cash equivalent balances
and cash held in escrow balances, income from forfeited security deposits, late
charges, laundry and vending income and other rental related items.
  Other
revenues include the following amounts at both the Partnership and Local
Partnership level:
  2009
                                
                                
                                2008Interest
                                
                                $
                                59,718
                                
                                
                                $
                                112,445Other
                                
                                
                                325,757
                                
                                
                                
                                241,091Total
      other revenue
                                
                                $
                                385,475
                                
                                
                                $
                                353,536
   
 - 8
-
   Income
Taxes
  The
Partnership is not required to provide for, or pay, any federal income taxes.
Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31.
  Recent Accounting
Pronouncements
  In April
2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. FAS 107-1
and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments”.  This FSP amends FASB Statement No. 107 to require
disclosures about fair values of financial instruments for interim reporting
periods as well as in annual financial statements.  The FSP also
amends APB Opinion No. 28 to require those disclosures in summarized financial
information at interim reporting periods.  This FSP becomes effective
for interim reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009.  The adoption of
this FSP is not expected to have a material impact on the Partnership’s
consolidated financial statements.
  In April
2009, the FASB issued FSP NO. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly”.  This FSP provides
additional guidance on determining fair value when the volume and level of
activity for the asset or liability have significantly decreased when compared
with normal market activity for the asset or liability.  A significant
decrease in the volume or level of activity for the asset of liability is an
indication that transactions or quoted prices may not be determinative of fair
value because transactions may not be orderly.  In that circumstance,
further analysis of transactions or quoted prices is needed, and an adjustment
to the transactions or quoted prices may be necessary to estimate fair
value.  This FSP becomes effective for interim reporting periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009.  The adoption of this FSP is not expected to
have a material impact on the Partnership’s consolidated financial
statements.
  Results of
Operations
  The
following is a summary of the results of operations of the Partnership for the
years ended March 31, 2009 and 2008 (the 2008 and 2007 Fiscal Years,
respectively).
  The net
loss for the 2008 and 2007 Fiscal Years totaled $5,241,348 and $4,941,817,
respectively.
  The
Partnership and BACs holders began to recognize Tax Credits with respect to a
Property when the Credit Period for such Property commenced. Because of the time
required for the acquisition, completion and rent-up of Properties, the amount
of Tax Credits per BAC gradually increased over the first three years of the
Partnership.  Tax Credits not recognized in the first three years were
recognized in the 11th through 13th years.  As of December 31, 2007,
Credit Periods had expired for all properties.
  2008 vs.
2007
  The
Partnership’s results of operations for the 2008 and 2007 Fiscal Years consisted
primarily of the results of the Partnership’s investment in fifteen consolidated
Local Partnerships. The majority of Local Partnership income continues to be in
the form of rental income with the corresponding expenses being divided among
operations, depreciation and mortgage interest.
  Rental
income increased approximately 4% for the 2008 Fiscal Year as compared to the
2007 Fiscal Year, primarily due to an increase in rental subsidy income and a
decrease in vacancies at three Local Partnerships and rental increases and
vacancy decreases at several other Local Partnerships, partially offset by an
increase in vacancies at two other Local Partnerships.
  Repairs
and maintenance increased approximately $267,000 for the 2008 Fiscal Year as
compared to the 2007 Fiscal Year, primarily due to an increase in security costs
at one Local Partnership, an increase in common area maintenance and
exterminating contracts at a second Local Partnership, an increase in deck,
balcony and roof repairs at a third Local Partnership, an increase in repair
contracts at a fourth Local Partnership and an increase in maintenance and cable
contracts and carpet replacements at a fifth Local Partnership.
  Results of Operations of
Certain Local Partnerships
  Creative Choice Homes VI
Ltd. (“Creative Choice”)
 The
financial statements for Creative Choice have been prepared assuming that
Creative Choice will continue as a going concern.  Creative Choice
incurred a net loss of $278,712 and negative cash flow from operations of
$64,733 during the year ended December 31, 2008.  During 2008, the
Local General Partner funded $142,095 to cover operating costs.  Also,
Creative Choice is in default of one of its subordinate notes.  These
factors create an uncertainty about Creative Choice’s ability to continue as a
going concern.  The ability of Creative Choice to continue as a going
concern is dependent on the Local General Partner’s ability to increase revenues
and reduce operating expenses to return to profitable operations and the Local
General Partner’s ability to fund operating losses.  The financial
statements do not include any adjustments that might be necessary if Creative
Choice is unable to continue as a going concern.
  During
the year ended December 31, 2005, the property incurred hurricane
damage.  The total cost to bring the units back into service was
approximately $1,800,000.  Creative Choice has contracted with
Naimisha Construction, a related party, for $1,600,000 to complete the repairs
and renovations of the buildings damaged.  During 2005, emergency
insurance proceeds had been received by Creative Choice to offset the cost of
immediate repair work.  In 2006, Washington Mutual, the mortgage
holder, received the remaining balance of the insurance proceeds and acted as
trustee of the funds.  Creative Choice was reimbursed by insurance
proceeds in the amount of $1,433,817.  As of December 31, 2008, all
hurricane repairs and renovations had been completed and a balance of $634,550
remains payable to Naimisha Construction.
  Creative
Choice also suffered fire damage on June 20, 2006 affecting nine of its
units.  At the time of the fire, the units were out of service due to
the damage caused by the hurricane.  These nine units are in service
at December 31, 2008.  As of December 31, 2008, $567,370 of insurance
proceeds had been received to cover the cost of immediate repair work and
securing the location.  Naimisha Construction, a related party, has
been contracted to complete the repairs for $673,889 and $206,519 remains
payable as of December 31, 2008 to Naimisha Construction.
    - 9
-
   The
Partnership’s investment in Creative Choice at March 31, 2009 and 2008 was
reduced to zero as a result of prior years’ losses and the minority interest
balance was $0 at each date.  Creative Choice’s net loss after
minority interest amounted to approximately $279,000 and $225,000 for the 2008
and 2007 Fiscal Years.
  Mansion Court Associates
(“Mansion Court”)
 The
financial statements for Mansion Court have been prepared assuming that Mansion
Court will continue as a going concern.  Mansion Court had losses of
$587,171 (including loss on impairment of $463,402) and $103,323 for the 2008
and 2007 Fiscal Years, respectively.  In prior years and in 2008,
Mansion Court has sustained operating losses and has not generated sufficient
cash flow from operations to meet its obligations, particularly related party
payables.  The Local General Partner has provided funding in the past
years; however there is no obligation to do so.  The property also has
experienced a high number of vacancies due to deteriorating conditions in the
area.  As of December 31, 2008, the project had 22 vacant
units.  Vacancies continue to increase due to declining conditions in
the surrounding neighborhood, and the expenditure of funds at this time to make
improvements would not benefit the project.  The Local General Partner
is exploring options to mitigate increased crime and deteriorating neighborhood
conditions.  These options include assistance from local government
housing agencies and could include transfer of ownership.
  The
Partnership’s investment in Mansion Court at March 31, 2009 and 2008 was reduced
to zero as a result of prior years’ losses and the minority interest balance was
$0 at each date.  Mansion Court’s net loss after minority interest
amounted to approximately $587,000 and $103,000 for the 2008 and 2007 Fiscal
Years.  The financial statements of Mansion Court do not include any
adjustments that might result from the outcome of this uncertainty other than
from the recognition of an impairment of the rental property in 2008 and 2006 as
described below.
  During
the year ended March 31, 2009, in accordance with SFAS No. 144, the Partnership
deemed the building of Mansion Court further impaired and in addition to an
earlier writedown of approximately $1,342,000, wrote it down to its new reduced
fair value of approximately $338,000, which resulted in a further loss on
impairment of approximately $463,000.  Fair value was obtained from an
assessment made by the management after indications that the carrying value of
the assets were not recoverable, evidenced by a history of net operating losses
over the past few years as discussed above.  In addition, at December
31, 2008, Mansion Court was contingently liable in an open letter of credit
issued in favor of the PHFA in the amount of $24,000.
  Other
  The
Partnership’s investment as a limited partner in the Local Partnerships is
subject to the risks of potential losses arising from management and ownership
of improved real estate. The Partnership’s investments also could be adversely
affected by poor economic conditions generally, which could increase vacancy
levels and rental payment defaults and by increased operating expenses, any or
all of which could threaten the financing viability of one or more of the Local
Partnerships.
  There
also are substantial risks associated with the operation of Apartment Complexes
receiving government assistance. These include governmental regulations
concerning tenant eligibility, which may make it more difficult to rent
apartments in the Apartment Complexes; difficulties in obtaining government
approval for rent increases; limitations on the percentage of income which low
and moderate-income tenants may pay as rent; the possibility that Congress may
not appropriate funds to enable HUD to make the rental assistance payments it
has contracted to make; and that when the rental assistance contracts expire,
there may not be market demand for apartments at full market rents in a Local
Partnership’s Apartment Complex.
  The Local
Partnerships are impacted by inflation in several ways. Inflation allows for
increases in rental rates generally to reflect the impact of higher operating
and replacement costs. Furthermore, inflation generally does not impact the
fixed long-term financing under which real property investments were purchased.
Inflation also affects the Local Partnerships adversely by increasing operating
costs as, for example, for such items as fuel, utilities and labor.
  Item
7A.  Quantitative and Qualitative Disclosures about Market
Risk
  Mortgage
notes are payable in aggregate monthly installments including principal and
interest at rates varying from 0% to 9.05% per annum.  The Partnership
does not believe there is a material risk associated with the various interest
rates associated with the mortgage notes as the majority of the Local
Partnership mortgage notes have fixed rates.  The Partnership
currently discloses in Item 8, Note 3 to the financial statements the fair value
of the mortgage notes payable.  The Partnership does not have any
other market risk sensitive instruments.
   - 10
-
  
 Item
      8.
            Financial
      Statements and Supplementary DataSequential
              Page(a)
      1.
            Consolidated
      Financial StatementsReport
      of Independent Registered Public Accounting Firm
            
            12Consolidated
      Balance Sheets at March 31, 2009 and 2008
            
            33Consolidated
      Statements of Operations for the Years Ended March 31, 2009 and
      2008
            
            34Consolidated
      Statements of Changes in Partners’ (Deficit) Capital for the Years EndedMarch
      31, 2009 and 2008
            
            35Consolidated
      Statements of Cash Flows for the Years Ended March 31, 2009 and
      2008
            
            36Notes
      to Consolidated Financial Statements
            
            37
 
 
  - 11
-
  
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
   To the
Partners of
 Independence
Tax Credit Plus L.P. II and Subsidiaries
 (A
Delaware Limited Partnership)
  We have
audited the consolidated balance sheets of Independence Tax Credit Plus L.P. II
and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2009 and 2008,
and the related consolidated statements of operations, changes in partners’
capital (deficit), and cash flows for the years ended March 31, 2009 and 2008
(the 2008 and 2007 Fiscal Years, respectively).  These financial
statements are the responsibility of the Partnership’s
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.  We did not audit the
financial statements for fourteen (Fiscal 2008 and 2007) subsidiary partnerships
whose losses aggregated $4,120,828 and $3,889,304 for the 2008 and 2007 Fiscal
Years, respectively, and whose assets constituted 91% and 90% of the
Partnership’s assets at March 31, 2009 and 2008, respectively, presented in the
accompanying consolidated financial statements.  The financial
statements of these subsidiary partnerships were audited by other auditors whose
reports thereon have been furnished to us and our opinion expressed herein,
insofar as it relates to the amounts included for these subsidiary partnerships,
is based solely upon the reports of the other auditors.
  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 audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
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, based upon our audits, and the reports of the other auditors, the
accompanying consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Independence Tax Credit Plus
L.P. II and Subsidiaries at March 31, 2009 and 2008, and the results of their
operations and their cash flows for the years ended March 31, 2009 and 2008, in
conformity with U.S. generally accepted accounting principles.
  As
discussed in Note 11(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
uncertainties.  The financial statements of these subsidiary
partnerships were prepared assuming that they will continue as going
concerns.  These subsidiary partnership’s net losses aggregated
$841,207 (2008 Fiscal year) and $328,608 (2007 Fiscal year), and their assets
aggregated $4,748,430 and $5,546,949 at March 31, 2009 and 2008,
respectively.  Management’s plan in regard to this matter is also
described in Note 11(a).  The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
  /s/ TRIEN
ROSENBERG ROSENBERG
 WEINBERG
CIULLO & FAZZARI LLP
  New York,
New York
 June 17, 2009
 
   - 12
-
  
  [Letterhead
of REZNICK GROUP, P.C.]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Partners
 Lincoln
Renaissance
 
 We have
audited the accompanying balance sheets of Lincoln Renaissance as of December
31, 2008 and 2007, and the related statements of profit and loss, changes in
partners’ equity (deficit) and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership's management.  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) and the standards applicable to
financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the 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 has determined that it is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting.  Our audits 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 also 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 Lincoln Renaissance as of December
31, 2008 and 2007, and the results of its operations, the changes in partners’
equity (deficit) and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government Auditing Standards, we have also issued our
report dated March 19, 2009 on our consideration of the Lincoln Renaissance’s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements
and other matters.  The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and on
compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance.  That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
 
 Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The 2008 supplemental
information on pages 25 through 29 is presented for purposes of additional
analysis and is not a required part of the basic financial
statements.  Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
 
 
 
 /s/
Reznick Group, P.C.
 Baltimore,
Maryland
 March 19,
2009
 
 Lead
Auditor: Michael A. Cumming, CPA
 E-mail
Address: mike.cumming@reznickgroup.com
  - 13
-
  
 [Letterhead
of WIELAND & COMPANY, INC.]
 
 INDEPENDENT
AUDITOR'S REPORT
 
 To the
Partners
 United -
Germano - Millgate Limited Partnership
 Chicago,
Illinois
 
 We have
audited the accompanying balance sheets of United - Germano - Millgate Limited
Partnership as of December 31, 2008 and 2007, and the related statements of
operations, partners' equity, and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership’s management.  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), and the standards applicable to
financial audits contained in Government Auditing Standards
issued by the Comptroller General of the 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.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes 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 United - Germano - Millgate Limited
Partnership as of December 31, 2008 and 2007, and the results of its operations,
changes in partners' equity, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government
Auditing Standards, we have also issued our report dated February 25,
2009, on our consideration of the internal control of United - Germano -
Millgate Limited Partnership, and on our tests of its compliance with certain
provisions of laws, regulations, contracts, grants, agreements and other
matters.  The purpose of those reports is to describe the scope of our
testing of internal control over financial reporting and compliance and the
results of that testing and not to provide an opinion on the internal control
over reporting or on compliance.  Those reports are an integral part
of an audit performed in accordance with Government Auditing Standards
and should be read in conjunction with this report in considering the results of
our audit.
 
 
 Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The accompanying supplementary
information in Schedule I on page nine is presented for purposes of additional
analysis and is not a required part of the basic financial statements of United
- Germano - Millgate Limited Partnership.  Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
 
 
 /s/
Wieland & Company, Inc.
 February
25, 2009
 Batavia,
Illinois
 
  - 14
-
  
 [Letterhead
of REZNICK GROUP, P.C.]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Partners
 Mansion
Court Associates
 
 We have
audited the accompanying balance sheets of Mansion Court Associates as of
December 31, 2008 and 2007, and the related statements of profit and loss,
changes in partners’ equity (deficit) and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership's management.  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) and the standards applicable to
financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the 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 has determined that it is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting.  Our audits 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 also 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 evaluations 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 Mansion Court Associates as of
December 31, 2008 and 2007, and the results of its operations, the changes in
partners’ equity (deficit) and cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern.  The project has
sustained operating losses over the years and has not generated sufficient cash
flow from operations to meet its obligations.  Furthermore, the
Partnership has a net deficiency in partners’ equity.  Those
conditions raise substantial doubt about its ability to continue as a going
concern.  Management’s plans in regard to these matters are also
described in note 10.
 
 In
accordance with Government Auditing Standards, we have also issued a
report dated April 4, 2009 on our consideration of the Mansion Court Associates’
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements
and other matters.  The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal
control over reporting or on compliance.  That report is an integral
part of an audit performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
 
 Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The 2008 supplemental
information on pages 24 through 27 is presented for purposes of additional
analysis and is not a required part of the basic financial
statements.  Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
 
 
 
 /s/
Reznick Group, P.C.
 Baltimore,
Maryland
 April 4,
2009
 
 Lead
Auditor: Michael A. Cumming, CPA
 E-mail
Address: mike.cumming@reznickgroup.com
  - 15
-
  [Letterhead
of WALL, EINHORN & CHERNITZER, P.C.]
 
 INDEPENDENT
AUDITOR'S REPORT
 
 
 To the
Partners
 Derby
Run Associates, L.P.
 (A
Virginia Limited Partnership)
 Virginia
Beach, Virginia
 
 
 We have
audited the accompanying balance sheets of Derby Run Associates, L.P.(A
Virginia Limited Partnership) as of December 31, 2008 and 2007, and the related
statements of income, changes in partners' deficit, and cash flows for the years
then ended.  These financial statements are the responsibility of the
Partnership’s management.  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 audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Partnership has determined that it 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.  An audit also includes 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 Derby Run Associates, L.P.as
of December 31, 2008 and 2007, and the results of its operations, changes in
partners' deficit and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States and
America.
 
 Our
audits were made for the purpose of forming an opinion on the basic financial
statements referred to above.  The Partnership's management has
elected to disclose certain information relating to the low-income housing tax
credits allocated to the Partnership as described in Note 6 to the financial
statements which are not required to be disclosed in accordance with accounting
principles generally accepted in the United States of America.  Such
disclosures have not been subjected to the auditing procedures applied in the
audits of the financial statements, and accordingly, we express no opinion on
them.
 
 
 /s/ Wall,
Einhorn & Chernitzer, P.C.
 Norfolk,
Virginia
 February
27, 2009
  - 16
-
  
 [REZNICK
GROUP, P.C. LETTERHEAD]
 
 INDEPENDENT
AUDITORS’ REPORT
 
 To the
Partners
 Renaissance
Plaza 93 Associates, L.P.
 
 We have
audited the accompanying balance sheet of Renaissance Plaza 93 Associates, L.P.
as of December 31, 2008, and the related statements of operations, partners'
equity (deficit) and cash flows for year then ended.  These financial
statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and the standards applicable to
financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the 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 has determined that it is not required to have, nor we were 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.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides 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 Renaissance Plaza 93 Associates,
L.P. as of December 31, 2008, and the results of its operations, changes in
partners’ equity (deficit), and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government Auditing Standards, we have
also issued a report dated February 27, 2009, on our consideration of
Renaissance Plaza 93 Associates, L.P.’s internal control over financial
reporting.  The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and the results of that
testing and not to provide an opinion on the internal control over financial
reporting.  In accordance with Government Auditing Standards, we have
also issued an opinion dated February 27, 2009, on Renaissance Plaza 93
Associates, L.P.’s compliance with certain provisions of laws, regulations,
contracts, and grant agreements, and other matters that applicable to
DHCD-assisted program.  Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
 
 Our audit
was conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The accompanying supplementary
information on pages 24 through 35 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership.  Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
 
 /s/
Reznick Group, P.C.
 Taxpayer
Identification Number:
 52-1088612
 Bethesda,
Maryland
 February
27, 2009
 
 Lead
Auditor:  Nelson D. Gomez
 
  - 17
-
  [REZNICK
GROUP, P.C. LETTERHEAD]
 
 INDEPENDENT
AUDITORS’ REPORT
 
 To the
Partners
 Renaissance
Plaza 93 Associates, L.P.
 
 We have
audited the accompanying balance sheet of Renaissance Plaza 93 Associates, L.P.
as of December 31, 2007, and the related statements of operations, partners'
equity (deficit) and cash flows for year then ended.  These financial
statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and the standards applicable to
financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the 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 has determined that it is not required to have, nor we were 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.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides 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 Renaissance Plaza 93 Associates,
L.P. as of December 31, 2007, and the results of its operations, changes in
partners’ equity (deficit), and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government Auditing Standards, we have
also issued a report dated February 29, 2008, on our consideration of
Renaissance Plaza 93 Associates, L.P.’s internal control over financial
reporting.  The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and the results of that
testing and not to provide an opinion on the internal control over financial
reporting.  In accordance with Government Auditing Standards, we have
also issued an opinion dated February 29, 2008, on Renaissance Plaza 93
Associates, L.P.’s compliance with certain provisions of laws, regulations,
contracts, and grant agreements, and other matters that applicable to
DHCD-assisted program.  Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
 
 Our audit
was conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The accompanying supplementary
information on pages 24 through 34 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership.  Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
 
 /s/
Reznick Group, P.C.
 Taxpayer
Identification Number:
 52-1088612
 Bethesda,
Maryland
 February
29, 2008
 
 Lead
Auditor:  Nelson D. Gomez
 
  - 18
-
  
 [REZNICK
GROUP, P.C. LETTERHEAD]
 
 INDEPENDENT
AUDITORS’ REPORT
 
 To the
Partners
 Tasker
Village Associates
 
 We have
audited the accompanying balance sheets of Tasker Village Associates as of
December 31, 2008 and 2007, and the related statements of profit and loss,
partners' equity (deficit) and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership's management.  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) and the standards applicable to
financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the 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 has determined that it 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 audit provides 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 Tasker Village Associates as of
December 31, 2008 and 2007, and the results of its operations, changes in
partners’ equity (deficit), and cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government Auditing Standards, we have
also issued our report dated March 19, 2009, on our consideration of Tasker
Village Associates’ internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters.  The purpose of that report is to
describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on
the internal control over financial reporting or on compliance.  That
report is an integral part of an audit performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audits.
 
 Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The 2008 supplemental
information on pages 25 through 28 is presented for purposes of additional
analysis and is not a required part of the basic financial
statements.  Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
 
 /s/
Reznick Group, P.C.
 Baltimore,
Maryland
 March 19,
2009
 
 Lead
Auditor:  Michael A. Cumming, CPA
 Email
id:  mike.cumming@reznickgroup.com
 
  - 19
-
  [Letterhead
of CLIFFORD R. BENN, CPA]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 General
Partner
 Martha
Bryant Manor, L.P.
 Los
Angeles, California
 
 I have
audited the balance sheet of Martha Bryant Manor, L.P. at December 31, 2008 and
the related statements of loss, changes in partners' capital, and cash flow for
the year then ended.  These financial statements are the
responsibility of Martha Bryant Manor, L.P.'s management.  My
responsibility is to express an opinion on these financial statements based on
my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board, used in the United States of
America.  Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements.  An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  I believe
that my audit provides a reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Martha Bryant Manor, L.P. at
December 31, 2008 and the results of its operations and its cash flow for the
year then ended in conformity with generally accepted accounting principles used
in the United States of America.
 
 I also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board, the effectiveness of Martha Bryant Manor, L.P.’s internal
control over financial reporting as of December 31, 2008, based on Public
Company Accounting Oversight Board Standards and my report dated February 19,
2009, expressed a disclaimer of a opinion.
 
 /s/
Clifford R. Benn, CPA
 February
19, 2009
 Carson,
California
 
  - 20
-
  [Letterhead
of CLIFFORD R. BENN, CPA]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 General
Partner
 Martha
Bryant Manor, L.P.
 Los
Angeles, California
 
 I have
audited the balance sheet of Martha Bryant Manor, L.P. at December 31, 2007 and
the related statements of loss, changes in partners' capital, and cash flow for
the year then ended.  These financial statements are the
responsibility of Martha Bryant Manor, L.P.'s management.  My
responsibility is to express an opinion on these financial statements based on
my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board, used in the United States of
America.  Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  I believe
that my audit provides a reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Martha Bryant Manor, L.P. at
December 31, 2007 and the results of its operations and its cash flow for the
year then ended in conformity with generally accepted accounting principles used
in the United States of America.
 
 I also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board, the effectiveness of Martha Bryant Manor, L.P.’s internal
control over financial reporting as  of December 31, 2007, based on
Public Company Accounting Oversight Board Standards and my report dated February
8, 2008, expressed a disclaimer of a opinion.
 
 /s/
Clifford R. Benn, CPA
 February
8, 2008
 Carson,
California
 
  - 21
-
  
 [Letterhead
of MARVIN D. MASON]
 
 To the
Partners of
 Colden
Oaks, A California Limited Partnership
 Los
Angeles, California
 
 I have
audited the accompanying balance sheets of Colden Oaks, a California Limited
Partnership, as of December 31, 2008 and 2007, and the related statements of
operations, changes in partners' equity and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership's management.  My responsibility is to express an opinion
on these financial statements based on my audits.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Partnership has determined that it is not required to have, nor was I engaged to
perform, an audit of its internal control over financial
reporting.  My 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, I express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by the management, as well as
evaluating the overall financial statement presentation.  I believe
that my audit provides a reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in the
material respects, the financial position of Colden Oaks, a California Limited
Partnership, as of December 31, 2008 and 2007, and the results of its
operations, changes in partners' equity and its cash flows for the year then
ended in conformity with accounting principles general accepted in the United
States of America.
 
 
 /s/
Marvin Mason
 Tarzana,
California
 March 9,
2009
 
  - 22
-
  [Letterhead
of CLIFFORD R. BENN, CPA]
 
 INDEPENDENT
AUDITOR'S REPORT
 
 General
Partner
 Brynview
Terrace, Limited Partnership
 Los
Angeles, California
 
 I have
audited the balance sheet of Brynview Terrace, Limited Partnership, at December
31, 2007 and 2008, and the related statements of loss, changes in partners'
capital, and cash-flow for the years then ended.  These financial
statements are the responsibility of Brynview Terrace, Limited Partnership's
management.  My responsibility is to express an opinion on these
financial statements based on my audit.
 
 I
conducted my audits in accordance with standards of the Public Company
Accounting Oversight Board, used in the United States of
America.  Those standards require that I plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatements.  An audit includes examining on a test
basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the over all financial statement presentation.  I believe
that my audits provide a reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Brynview Terrace Limited
Partnership on December 31, 2007 and 2008, and the results of its operations and
its cash-flow for the years then ended in conformity with generally accepted
accounting principles used in the United States of America.
 
 I also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board, the effectiveness of Brynview Terrace Limited Partnership’s
internal control over financial reporting as of December 31, 2007 and 2008,
based on Public Company Accounting Oversight Board Standards and my report dated
February 19, 2009, expressed a disclaimer of an opinion.
 
 My audits
were made for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The accompanying supplementary
information is presented for purposes of additional analysis and is not a
required part of the financial statements.  Such information has been
subjected to the procedures applied in the audits of the basic financial
statements and, in my opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
 
 
 /s/
Clifford R. Benn, CPA
 February
19, 2009
 Carson,
California
 
  - 23
-
  
 [Letterhead
of MARVIN D. MASON]
 
 Independent
Auditor's Report
 
 To the
Partners of
 NLEDC,
L.P., A California Limited Partnership
 Los
Angeles, California
 
 I have
audited the accompanying balance sheets of NLEDC, L.P., a California Limited
Partnership, as of December 31, 2008 and 2007, and the related statements of
operations, changes in partners' equity and cash flows for the years then
ended.  These financial statements are the responsibility of the
Partnership's management.  My responsibility is to express an opinion
on these financial statements based on my audits.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Partnership has determined that it is not required to have, nor was I engaged to
perform, an audit of its internal control over financial
reporting.  My 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, I express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  I believe that my audit provides a
reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NLEDC, L.P., a California Limited
Partnership, at December 31, 2008 and 2007, and the results of its operations,
changes in partners’ equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles in the United States of
America.
 
 /s/
Marvin Mason
 Tarzana,
California
 March 16,
2009
  - 24
-
  
 [Letterhead
of ROBERT G CLAPHAM ACCOUNTANCY CORPORATION]
 
 Independent
Auditor's Report
 
 To the
Partners of
 P & P
Home for the Elderly, L.P.
 Los
Angeles, California
 
 We have
audited the accompanying statements of financial position of P & P Home for
the Elderly, L.P., as of December 31, 2008, and the related statements of income
and changes in capital and cash flows for the year then ended.  The
financial statements are the responsibility of the project’s
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.
 
 We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and with auditing standards generally accepted in
the United States of America and Government Auditing Standards
issued by the Comptroller General of the 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.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides 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 P & P Home for the Elderly,
L.P., at December 31, 2008, and the results of its operations and its cash flows
for the year then ended, in conformity with generally accepted accounting
principles as applied in the United States of America.
 
 The
financial statements for the year ended December 31, 2007, were audited by
another independent accountant, who expressed an unqualified opinion on the
statements on February 18, 2008.
 
 Our audit
were conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The supporting information included in
the report are presented for the purposes of additional analysis and are not a
required part of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
 
 
 /s/
Robert G. Clapham, President
 Robert G.
Clapham Accountancy Corporation
 Altadena,
California
 February
12, 2009
 
  - 25
-
  [Letterhead
of BERT D. SAMUELS CPA]
 
 Independent
Auditor's Report
 
 The
Partners
 P & P
Home For The Elderly, L.P.
 Los
Angeles, California
 
 I have
audited the accompanying balance sheet of P & P Home For The Elderly, L.P.
as of December 31, 2007, and the related statements of income, changes in
partners' equity and cash flows for the year then ended.  The
financial statements are the responsibility of the Partnership's
management.  My responsibility is to express an opinion on these
financial statements based on my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Partnership has determined that it is not required to have, nor am I engaged to
perform, an audit of its internal control over financial
reporting.  My 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, I express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  I believe
that my audit provides a reasonable basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of P & P Home For The Elderly,
L.P. as of December 31, 2007, and the results of its operations and cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
 
 
 /s/ Bert
D. Samuels CPA
 Tarzana,
California
 February
18, 2008
 
  - 26
-
  
 [Letterhead
of REZNICK GROUP, P.C.]
 
 REPORT of
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Partners
 Clear
Horizons Limited Partnership
 Shreveport,
Louisiana
 
 We have
audited the accompanying balance sheet of Clear Horizons Limited Partnership,
HUD Project No. LA48E000007, as of December 31, 2008, and the related statements
of income, partners’ capital and cash flows for the year then
ended.  These financial statements are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion
on these financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and the standards applicable to
financial audits contained in Government Auditing Standards issued by
the Comptroller General of the 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 has determined that it 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 also 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 audit provides 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 Clear Horizons Limited Partnership,
at December 31, 2008, and the results of its operations, changes in partners’
capital, and cash flows for the year then ended, in conformity with accounting
principles generally accepted in the United States of America.
 
 In
accordance with Government Auditing Standards, we have
also issued a report, dated March 23, 2009 on our consideration of Clear
Horizons Limited Partnership's internal control over financial
reporting.  The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and the results of that
testing and not to provide an opinion on the internal control over financial
reporting.  In accordance with Government Auditing Standards, we have
also issued an opinion dated March 23, 2009, on Clear Horizons Limited
Partnership’s compliance with certain provisions of laws, regulations,
contracts, and grant agreements, and other matters that could have a direct and
material effect on a major HUD-assisted program.  Those reports are an
integral part of an audit performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
 
 Our audit
was conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The accompanying supplemental
information on pages 22 through 34 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership.  Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
 
 /s/
Reznick Group, P.C.
 Taxpayer
Identification Number:
 52-1088612
 Baltimore,
Maryland
 March 23,
2009
 
 Lead
Auditor:  Scott H. Szeliga, CPA
 
 
  - 27
-
  [Letterhead
of REZNICK GROUP, P.C.]
 
 INDEPENDENT
AUDITORS' REPORT
 
 To the
Partners
 Clear
Horizons Limited Partnership
 Shreveport,
Louisiana
 
 We have
audited the accompanying balance sheet of Clear Horizons Limited Partnership,
HUD Project No. LA48E000007, as of December 31, 2007, and the related statements
of income, partners’ equity (deficit) and cash flows for the year then
ended.  These financial statements are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion
on these financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and the standards applicable to
financial audits contained in Government Auditing Standards issued by
the Comptroller General of the 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 has determined that it 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 also 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 audit provides 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 Clear Horizons Limited Partnership,
at December 31, 2007, and the results of its operations, changes in partners’
equity (deficit), and cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
 
 In
accordance with Government Auditing Standards, we have
also issued a report, dated April 10, 2008 on our consideration of Clear
Horizons Limited Partnership's internal control over financial
reporting.  The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and the results of that
testing and not to provide an opinion on the internal control over financial
reporting.  In accordance with Government Auditing Standards, we have
also issued an opinion dated April 10, 2008, on Clear Horizons Limited
Partnership’s compliance with certain provisions of laws, regulations,
contracts, and grant agreements, and other matters that could have a direct and
material effect on a major HUD-assisted program.  Those reports are an
integral part of an audit performed in accordance with Government Auditing Standards and should
be read considered in assessing the results of our audit.
 
 Our audit
was conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The accompanying supplemental
information on pages 24 through 37 is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership.  Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
 
 /s/
Reznick Group, P.C.
 Taxpayer
Identification Number:
 52-1088612
 Atlanta,
Georgia
 April 10,
2008
 
 Lead
Auditor:  Mary E. Norwood, CPA
 
 
  - 28
-
  
 [REZNICK
GROUP, P.C. LETTERHEAD]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Partners
 Neptune
Venture, L.P.
 
 We have
audited the accompanying balance sheet of Neptune Venture, L.P. as of December
31, 2008, and the related statements of operations, partners' equity (deficit)
and cash flows for the year then ended.  These financial statements
are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit 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 has determined that it is not required to have, nor we 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 also 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 audit provides 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 Neptune Venture, L.P. as of
December 31, 2008 and the results of its operations, the changes in partners’
equity (deficit) and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
 
 /s/
Reznick Group, P.C.
 Baltimore,
Maryland
 March 18,
2009
  - 29
-
  [REZNICK
GROUP, P.C. LETTERHEAD]
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Partners
 Neptune
Venture, L.P.
 
 We have
audited the accompanying balance sheet of Neptune Venture, L.P. as of December
31, 2007, and the related statements of operations, partners' equity (deficit)
and cash flows for the year then ended.  These financial statements
are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
 We
conducted our audit 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 has determined that it is not required to have, nor we 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 also 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 audit provides 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 Neptune Venture, L.P. as of
December 31, 2007 and the results of its operations, the changes in partners’
equity (deficit) and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
 
 /s/
Reznick Group, P.C.
 Baltimore,
Maryland
 March 25,
2008
  - 30
-
  
 [Letterhead
of LAWLOR & O'BRIEN, CPA]
 
 INDEPENDENT
AUDITORS' REPORT
 
 To the
Partners
 Affordable
Green Associates, L.P.
 
 We have
audited the accompanying balance sheet of Affordable Green Associates, L.P. as
of December 31, 2008 and the related statements of operations, changes in
partners' (deficit), and cash flows for the year then ended.  These
financial statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 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 has determined that it 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.  An audit also includes 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 Affordable Green Associates, L.P.
as of December 31, 2008 and the results of its operations, changes in partners'
(deficit), and its cash flows for the year then ended in conformity with
generally accepted accounting principles in the United States of
America.
 
 
 /s/
Lawlor & O’Brien
 Totowa,
New Jersey
 February
15, 2009
 
  - 31
-
  
 [Letterhead
of LAWLOR & O'BRIEN, CPA]
 
 INDEPENDENT
AUDITORS' REPORT
 
 To the
Partners
 Affordable
Green Associates, L.P.
 
 We have
audited the accompanying balance sheet of Affordable Green Associates, L.P. as
of December 31, 2007 and the related statements of operations, changes in
partners' (deficit), and cash flows for the year then ended.  These
financial statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit 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 has determined that it 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.  An audit also includes 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 Affordable Green Associates, L.P.
as of December 31, 2007 and the results of its operations, changes in partners'
(deficit), and its cash flows for the year then ended in conformity with
generally accepted accounting principles in the United States of
America.
 
 
 /s/
Lawlor & O’Brien
 Totowa,
New Jersey
 February
27, 2008
 
  - 32
-
  
 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 
 
 
 
 ASSETS
 
 
 March
      31,2009
            
            
            2008Property
      and equipment net, less accumulated depreciation (Notes 2, 4 and
      7)
            
            $
            62,427,780
            
            
            $
            66,026,856Cash
      and cash equivalents (Notes 2, 3 and 11)
            
            
            1,300,092
            
            
            
            1,085,780Cash
      held in escrow (Notes 3 and 5)
            
            
            2,970,379
            
            
            
            3,227,451Deferred
      costs, less accumulated amortization (Notes 2 and 6)
            
            
            213,461
            
            
            
            244,387Other
      assets
            
            
            397,259
            
            
            
            416,162$
            67,308,971
            
            
            $
            71,000,636LIABILITIES
      AND PARTNERS’ DEFICITLiabilities:Mortgage
      notes payable (Note 7)
            
            $
            56,945,695
            
            
            $
            57,570,483Accounts
      payable
            
            
            747,108
            
            
            
            788,866Security
      deposits payable
            
            
            457,037
            
            
            
            438,516Accrued
      interest
            
            
            22,239,687
            
            
            
            20,403,716Due
      to local general partners and affiliates (Note 8)
            
            
            2,545,330
            
            
            
            2,618,806Due
      to general partner and affiliates (Note 8)
            
            
            6,108,050
            
            
            
            5,515,11889,042,907
            
            
            
            87,335,505Minority
      interest
            
            
            (1,639,819
            )
            
            
            (1,482,100
            )Commitments
      and contingencies (Notes 7, 8 and 11)Partners’
      deficit:Limited
      partners (58,928 BACs issued and outstanding)
            
            
            (19,369,227
            )
            
            
            (14,180,292
            )General
      partner
            
            
            (724,890
            )
            
            
            (672,477
            )Total
      partners’ deficit
            
            
            (20,094,117
            )
            
            
            (14,852,769
            )Total
      liabilities and partners’ deficit
            
            $
            67,308,971
            
            
            $
            71,000,636See
      accompanying notes to consolidated financial
  statements.
 
  - 33
-
   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 
 
 
 Years
      Ended March 31,2009
            
            2008RevenuesRental
      income
            
            $
            10,879,637
            
            $
            10,416,979Other
      income
            
            
            385,475
            
            
            353,53611,265,112
            
            
            10,770,515ExpensesGeneral
      and administrative
            
            
            2,744,276
            
            
            2,650,292General
      and administrative-related parties (Note 8)
            
            
            1,247,679
            
            
            1,354,051Repairs
      and maintenance
            
            
            2,870,745
            
            
            2,604,092Operating
            
            
            1,585,261
            
            
            1,492,298Taxes
            
            
            767,796
            
            
            816,115Insurance
            
            
            645,384
            
            
            662,675Financial,
      principally interest
            
            
            2,751,684
            
            
            2,763,329Depreciation
      and amortization
            
            
            3,441,141
            
            
            3,381,681Loss
      on impairment of property (Note 4)
            
            
            463,402
            
            
            0Total
      expenses
            
            
            16,517,368
            
            
            15,724,533Loss
      before minority interest
            
            
            (5,252,256
            )
            
            (4,954,018
            )Minority
      interest in loss of subsidiary partnerships
            
            
            10,908
            
            
            12,201Net
      loss
            
            $
            (5,241,348
            )
            $
            (4,941,817
            )Net
      loss - limited partners
            
            $
            (5,188,935
            )
            $
            (4,892,399
            )Number
      of BACs outstanding
            
            
            58,928
            
            
            58,928Net
      loss per BAC
            
            $
            (88.05
            )
            $
            (83.02
            )
 
 
 See
      accompanying notes to consolidated financial
  statements.
 
 
  - 34
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CHANGES IN PARTNERS’ DEFICIT
 
 
 
 
 Total
                  
                  
                  Limited
                    Partners
                  
                  
                  General
                    PartnersPartners
      deficit – April 1, 2007
                  
                  $
                  (9,910,952
                  )
                  
                  $
                  (9,287,893
                  )
                  
                  $
                  (623,059
                  )Net
      loss
                  
                  
                  (4,941,817
                  )
                  
                  
                  (4,892,399
                  )
                  
                  
                  (49,418
                  )Partners
      deficit – March 31, 2008
                  
                  
                  (14,852,769
                  )
                  
                  
                  (14,180,292
                  )
                  
                  
                  (672,477
                  )Net
      loss
                  
                  
                  (5,241,348
                  )
                  
                  
                  (5,188,935
                  )
                  
                  
                  (52,413
                  )Partners
      deficit – March 31, 2009
                  
                  $
                  (20,094,117
                  )
                  
                  $
                  (19,369,227
                  )
                  
                  $
                  (724,890
                  )See
      accompanying notes to consolidated financial
  statements.
 
  - 35
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
 
 
 Years
      Ended March 31,2009
            
            2008Cash
      flows from operating activities:Net
      loss
            
            $
            (5,241,348
            )
            $
            (4,941,817
            )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
      and amortization
            
            
            3,441,141
            
            
            3,381,681Loss
      on impairment of property
            
            
            463,402
            
            
            0Minority
      interest in loss of subsidiary partnerships
            
            
            (10,908
            )
            
            (12,201
            )(Increase)
      decrease in assets:Cash
      held in escrow
            
            
            (55,603
            )
            
            201,835Other
      assets
            
            
            18,903
            
            
            45,481Increase
      (decrease) in liabilities:Accounts
      payable
            
            
            (41,758
            )
            
            (78,287
            )Security
      deposit payable
            
            
            18,521
            
            
            13,924Accrued
      interest
            
            
            1,835,971
            
            
            1,754,363Due
      to local general partners and affiliates
            
            
            (41,208
            )
            
            (206,519)Due
      to general partner and affiliates
            
            
            592,932
            
            
            752,489Total
      adjustments
            
            
            6,221,393
            
            
            5,852,766Net
      cash provided by operating activities
            
            
            980,045
            
            
            901,949Cash
      flows from investing activities:Improvements
      to property and equipment
            
            
            (274,541
            )
            
            (359,311
            )Decrease
      (increase) in cash held in escrow
            
            
            312,675
            
            
            456,251Decrease
      in due to local general partners and affiliates
            
            
            (215,464
            )
            
            (481,023
            )Insurance
      proceeds
            
            
            0
            
            
            0Net
      cash used in investing activities
            
            
            (177,330
            )
            
            (384,083
            )Cash
      flows from financing activities:Principal
      payments of mortgage notes
            
            
            (624,788
            )
            
            (1,055,918
            )Proceeds
      from mortgage notes
            
            
            0
            
            
            600,000Increase
      in deferred costs
            
            
            0
            
            
            (45,189
            )Increase
      in due to local general partners and affiliates
            
            
            300,056
            
            
            294,439Decrease
      in due to local general partners and affiliates
            
            
            (116,860
            )
            
            (1,813
            )Decrease
      in capitalization of consolidated subsidiaries attributable to minority
      interest
            
            
            (146,811
            )
            
            (208,462
            )Net
      cash used in financing activities
            
            
            (588,403
            )
            
            (416,943
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            214,312
            
            
            109,923Cash
      and cash equivalents at beginning of year
            
            
            1,085,780
            
            
            975,857Cash
      and cash equivalents at end of year
            
            $
            1,300,092
            
            $
            1,085,780Supplemental
      disclosure of cash flows information:Cash
      paid during the year for interest
            
            $
            1,159,845
            
            $
            1,361,222
 
 
 See
      accompanying notes to consolidated financial
  statements.
 
  - 36
-
   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
   NOTE 1 –
General
  Independence
Tax Credit Plus L.P. II (a Delaware limited partnership) (the “Partnership”) was
organized on February 11, 1992 and commenced its public offering on January 19,
1993. The general partner of the Partnership is Related Independence Associates
L.P., a Delaware limited partnership (the “General Partner”). The general
partner of the General Partner is Related Independence Associates Inc., a
Delaware Corporation (“RIAI”).  The ultimate parent of the General
Partner is Centerline Holding Company (“Centerline”).
  The
Partnership’s business is primarily to invest in other partnerships (“Local
Partnerships,” “subsidiaries” or “subsidiary partnerships”) owning leveraged
apartment complexes that are eligible for the low-income housing tax credit
(“Tax Credit”) enacted in the Tax Reform Act of 1986, some of which may also be
eligible for the historic rehabilitation tax credit.
  The
Partnership owns interests in fifteen subsidiary partnerships as of March 31,
2009.
  The
Partnership was authorized to issue a total of 100,000 ($100,000,000) Beneficial
Assignment Certificates (“BACs”) which were registered with the Securities and
Exchange Commission for sale to the public. Each BAC represents all of the
economic and virtually all of the ownership rights attributable to a limited
partnership interest. The Partnership raised a total of $58,928,000 representing
58,928 BACs. The offering was terminated on April 7, 1994.
  The terms
of the Partnership’s Amended and Restated Agreement of Limited Partnership (the
“Partnership Agreement”) provide, among other things, that net profits or losses
and distributions of cash flow are, in general, allocated 99% to the limited
partners and BACs holders and 1% to the general partner.
  NOTE 2 –
Summary of Significant Accounting Policies
  a)  Basis
of Accounting
  For
financial reporting purposes the Partnership’s fiscal year ends on March
31.  All subsidiaries have fiscal years ending December 31. Accounts
of the subsidiaries have been adjusted for intercompany transactions from
January 1 through March 31. The Partnership’s fiscal year ends March 31 in order
to allow adequate time for the subsidiaries’ financial statements to be prepared
and consolidated. The books and records of the Partnership are maintained on the
accrual basis of accounting, in accordance with U.S. generally accepted
accounting principles (“GAAP”).
  b)  Basis
of Consolidation
  The
consolidated financial statements include the accounts of the Partnership and
fifteen subsidiary partnerships in which the Partnership is the principal
limited partner, with an ownership interest of 98.99%.  Through the
rights of the Partnership and/or an affiliate of the General Partner, which
affiliate has a contractual obligation to act on behalf of the Partnership, to
remove the general partners of the subsidiary local partnerships (“Local General
Partners”) and to approve certain major operating and financial decisions, the
Partnership has a controlling financial interest in the subsidiary local
partnerships. All intercompany accounts and transactions with the subsidiary
partnerships have been eliminated in consolidation.
  Increases
(decreases) in the capitalization of consolidated subsidiaries attributable to
minority interest arise from cash contributions and cash distributions to the
minority interest partners.
  The
Partnership’s investment in each subsidiary is equal to the respective
subsidiary’s partners’ equity less minority interest capital, if any. Losses
attributable to minority interest which exceed the minority interests’
investment in a subsidiary partnership have been charged to the Partnership.
Such losses aggregated approximately $34,000 and $30,000 for the years ended
March 31, 2009 and 2008 (the 2008 and 2007 Fiscal Years),
respectively.  In consolidation, all subsidiary partnership losses are
included in the Partnership’s capital account except for losses allocated to
minority interest capital.  As of March 31, 2009, distributions to
several minority interests have exceeded their investments.
  c)  Cash
and Cash Equivalents
  Cash and
cash equivalents include cash on hand, cash in banks, and investments in
short-term highly liquid instruments purchased with original maturities of three
months or less. Cash held in escrow has various use restrictions and is not
considered a cash equivalent.
  d)  Property
and Equipment
  Property
and equipment to be held and used are carried at cost which includes the
purchase price, acquisition fees and expenses, construction period interest and
any other costs incurred in acquiring the properties.  The cost of
property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized.  At the time property and equipment are retired or
otherwise disposed of, the cost and accumulated depreciation are eliminated from
the assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings.  The Partnership complies with
Statement of Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" (“SFAS No. 144”).  A loss
on impairment of assets is recorded when management estimates that amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost.  At that time, property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the property is considered to be impaired and the
depreciated cost exceeds estimated fair value.
    - 37
-
 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
  e)  Revenue
Recognition
  Rental
income is earned primarily under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases.  Rental income is recognized when earned
and charged to tenants’ accounts receivable if not received by the due
date.  Rental payments received in advance of the due date are
deferred until earned.  Rental subsidies are recognized as rental
income during the month in which it is earned.
  Other
revenues are recorded when earned and consist of the following
items:  Interest income earned on cash and cash equivalent balances
and cash held in escrow balances, income from forfeited security deposits, late
charges, laundry and vending income and other rental related items.
  Other
revenues include the following amounts at both the Partnership and Local
Partnership level:
  Years
      Ended March 31,2009
                                    
                                    
                                    2008Interest
                                    
                                    $
                                    59,718
                                    
                                    
                                    $
                                    112,445Other
                                    
                                    
                                    325,757
                                    
                                    
                                    
                                    241,091Total
      other revenue
                                    
                                    $
                                    385,475
                                    
                                    
                                    $
                                    353,536
 
  f)  Income
Taxes
  The
Partnership is not required to provide for, or pay, any federal income
taxes.  Net income or loss generated by the Partnership is passed
through to the partners and is required to be reported by them.  The
Partnership may be subject to state and local taxes in jurisdictions in which it
operates. For income tax purposes, the Partnership has a fiscal year ending
December 31 (Note 9).
  g)  Offering
Costs
  Costs
incurred to sell BACs, including brokerage and the nonaccountable expense
allowance, are considered selling and offering expenses.  These costs
are charged directly to limited partners’ capital.
  h)  Loss
Contingencies
  The
Partnership records loss contingencies as a charge to income when information
becomes available which indicates that it is probable that an asset has been
impaired or a liability has been incurred as of the date of the financial
statements and the amount of loss can be reasonably estimated.
  i)  Use
of Estimates
  The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those
estimates.
  j)  Recent
Accounting Pronouncements
  In April
2009, the Financial Accounting Standards Board (“FASB”) issued FSP No. FAS 107-1
and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments”.  This FSP amends FASB Statement No. 107 to require
disclosures about fair values of financial instruments for interim reporting
periods as well as in annual financial statements.  The FSP also
amends APB Opinion No. 28 to require those disclosures in summarized financial
information at interim reporting periods.  This FSP becomes effective
for interim reporting periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009.  The adoption of
this FSP is not expected to have a material impact on the Partnership’s
consolidated financial statements.
  In April
2009, the FASB issued FSP NO. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly”.  This FSP provides
additional guidance on determining fair value when the volume and level of
activity for the asset or liability have significantly decreased when compared
with normal market activity for the asset or liability.  A significant
decrease in the volume or level of activity for the asset of liability is an
indication that transactions or quoted prices may not be determinative of fair
value because transactions may not be orderly.  In that circumstance,
further analysis of transactions or quoted prices is needed, and an adjustment
to the transactions or quoted prices may be necessary to estimate fair
value.  This FSP becomes effective for interim reporting periods
ending after June 15, 2009, with early adoption permitted for periods ending
after March 15, 2009.  The adoption of this FSP is not expected to
have a material impact on the Partnership’s consolidated financial
statements.
    - 38
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   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
    NOTE 3 –
Fair Value of Financial Instruments
  The
following methods and assumptions were used to estimate the fair value of each
class of financial instruments (all of which are held for nontrading purposes)
for which it is practicable to estimate that value:
  Cash and Cash Equivalents
and Cash Held in Escrow
 The
carrying amount approximates fair value.
  Mortgage Notes
Payable
 During
the first quarter of 2008, we adopted the provisions required by SFAS No. 157
relating to financial assets and liabilities.  SFAS No. 157 defines
fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements.  SFAS No. 157 applies to
reported balances that are required or permitted to be measured at fair value
under existing accounting pronouncements; accordingly, the standard does not
require any new fair value measurements of reported balances.
  As
permitted, we chose not to elect the fair value option as prescribed by FASB
SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” – Including an
Amendment of FASB Statement No. 115, for our financial assets and liabilities
that had not been previously carried at fair value.  Therefore, we did
not elect to fair value any additional items under SFAS No. 159.
  The
estimated fair value of financial instruments has been determined using
available market information or other appropriate valuation
methodologies.  However, considerable judgment is required in
interpreting market data to develop estimates of fair
value.  Consequently, the estimates are not necessarily indicative of
the amounts that could be realized or would be paid in a current market
exchange.  The following are financial instruments for which the
Partnership’s estimate of fair value differs from the carrying
amounts:
  At
      March 31, 2009
              
              At
      March 31, 2008Carrying
      Amount
              
              Fair
      Estimated Value
              
              Carrying
      Amount
              
              Fair
      Estimated ValueLIABILITIES:Mortgage
      notes
              
              $
              56,945,695
              
              $
              59,517,631
              
              $
              57,570,483
              
              $
              59,995,235
 
  NOTE 4 –
Property and Equipment
  The
components of property and equipment and their estimated useful lives are as
follows:
  March
      31,
              
              Estimated
                Useful
      Lives
                (Years)2009
              
              2008Land
              
              $
              6,228,836
              
              $
              6,228,836
              
              -Building
      and improvements
              
              
              100,160,871
              
              
              100,638,653
              
              10-40Furniture
      and fixtures
              
              
              1,225,363
              
              
              1,040,822
              
              5-10107,615,070
              
              
              107,908,311Less:  Accumulated
      depreciation
              
              
              (45,187,290
              )
              
              (41,881,455
              )$
              62,427,780
              
              $
              66,026,856
 
  Original
acquisition costs totaling $4,369,919, of which $3,501,977 was paid to the
General Partner, are included in the cost of property and
equipment.
  In
connection with the rehabilitation of the properties, the subsidiary
partnerships incurred developer’s fees of $9,282,042 to the Local General
Partners and their affiliates.  Such fees have been included in the
cost of property and equipment.
  Depreciation
expense for the years ended March 31, 2009 and 2008 amounted to $3,410,215 and
$3,343,359, respectively.  Additionally, $104,379 and $647,511 of
accumulated depreciation on dispositions was written-off during the years ended
March 31, 2009 and 2008, respectively.
  During
the year ended March 31, 2009, in accordance with SFAS No. 144, the Partnership
deemed the building of Mansion Court Associates further impaired and wrote it
down to its fair value which resulted in an additional loss on impairment of
approximately $463,000 (consisting of approximately $568,000 of fixed assets and
approximately $104,000 of accumulated depreciation).  In addition to
an earlier writedown of approximately $1,342,000, the property was further
written down to its fair value of approximately $338,000.  Fair value
was obtained from an assessment made by the management after indications that
the carrying value of the assets were not recoverable, evidenced by a history of
net operating losses over the past few years.
    - 39
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   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
    NOTE 5 –
Cash Held in Escrow
  Cash held
in escrow consists of the following:
  March
      31,2009
              
              
              2008Purchase
      price payments*
              
              $
              23,683
              
              
              $
              23,683Real
      estate taxes, insurance and other
              
              
              634,661
              
              
              
              603,593Reserve
      for replacements
              
              
              1,843,318
              
              
              
              2,155,993Tenant
      security deposits
              
              
              468,717
              
              
              
              444,182$
              2,970,379
              
              
              $
              3,227,451*Represents
      amounts to be paid to seller upon meeting specified rental achievement
      criteria.
 
  NOTE 6 –
Deferred Costs
  The
components of deferred costs and their periods of amortization are as
follows:
  March
      31,
              
              
              Period2009
              
              
              2008Financing
      costs
              
              $
              373,302
              
              
              $
              373,302
              
              
              *Other
              
              
              33,703
              
              
              
              33,703
              
              
              various407,005
              
              
              
              407,005Less:  Accumulated
      amortization
              
              
              (193,544
              )
              
              
              (162,618
              )$
              213,461
              
              
              $
              244,387*Over
      the life of the related mortgages.
 
  Amortization
expense for the years ended March 31, 2009 and 2008 amounted to $30,926 and
$38,322, respectively.
   NOTE 7 –
Mortgage Notes Payable
  The
mortgage notes are payable in aggregate monthly installments of approximately
$155,000 including principal and interest at rates ranging from 0% to 9.05% per
annum, through the year 2052.  Each subsidiary partnership’s mortgage
note payable is collateralized by the land and buildings of the respective
subsidiary partnership, the assignment of each certain subsidiary partnership’s
rents and leases, and is without further recourse.
  One
mortgage note with a balance of $2,586,407 and $2,933,390 at December 31, 2008
and 2007, respectively, which bears interest at 7% per annum is eligible for an
interest rate subsidy. Accordingly, the subsidiary partnership paid only that
portion of the monthly payments that would be required if the interest rate was
1%. The balance was subsidized under Section 236 of the National Housing
Act.
  Derby Run
Associate L.P.’s mortgage note payable in the original amount of $6,900,000 is
held by Centerline Finance Corporation (formerly PW Funding), an affiliate of
the General Partner.  The mortgage note balance was $6,498,388 and
$6,607,904 as of December 31, 2008 and 2007, respectively.
   - 40
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   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
    Annual
principal payment requirements for mortgage notes payable by the subsidiary
partnerships for each of the next five years and thereafter are as
follows:
  December
      31,
                    
                    Amount2009
                    
                    $
                    3,022,1892010
                    
                    
                    1,722,1852011
                    
                    
                    2,806,9922012
                    
                    
                    6,763,4312013
                    
                    
                    680,966Thereafter
                    
                    
                    41,949,932$
                    56,945,695
 
  Accrued
interest payable as of March 31, 2009 and 2008 was approximately $22,240,000 and
$20,404,000, respectively.  Interest accrues on all mortgage loans,
which include primary and secondary loans.  Certain secondary loans
have provisions such that interest is accrued but not payable until a future
date.  The Partnership anticipates the payment of accrued interest on
the secondary loans (which make up the majority of the accrued interest payable
amount which have been accumulating since the Partnership’s investment in the
respective Local Partnership) will be made from future refinancings or sales
proceeds of the respective Local Partnerships.
  The
mortgage agreements require monthly deposits to replacement reserves of
approximately $23,000 and monthly deposits to escrow accounts for real estate
taxes, hazard insurance and mortgage insurance and other (Note 5).
  Creative Choice Homes VI,
Ltd (“Creative Choice”)
 Creative
Choice’s subordinate mortgage note with Dade County, Florida is collateralized
by a third deed of trust on the rental property.  The note dated April
1995, in the original amount of $861,000, bears interest at a rate of 3.00% per
annum.  The original agreement called for quarterly interest-only
payments for the first five years.  Beginning in the sixth year,
principal and interest payments would be due quarterly based on a thirty year
amortization period.  All outstanding principal and interest payments
would be due at the end of the fifteen year period.  However, Dade
County has agreed to modifications of the note and in 2005, the outstanding
accrued interest of $11,295 was deferred and included in the balance of the note
leaving a balance of $872,295 on the note at December 31,
2005.  During 2006, only one quarter of interest was paid, leaving the
note in technical default.  Creative Choice has been in default of
this note since the second quarter of 2006.  The balance of accrued
interest at December 31, 2008 is $71,078.
  NOTE 8 –
Related Party Transactions
  An
affiliate of the General Partner has a .01% interest as a special limited
partner in each of the subsidiary partnerships. An affiliate of the General
Partner also has a minority interest in certain local partnerships.
  A)  Other
Related Party Expenses
  The costs
incurred to related parties for the years ended March 31, 2009 and 2008 were as
follows:
  Years
      Ended March 31,2009
                              
                              
                              2008Partnership
      management fees (a)
                              
                              $
                              546,000
                              
                              
                              $
                              546,000Expense
      reimbursement (b)
                              
                              
                              132,218
                              
                              
                              
                              190,264Local
      administrative fees (d)
                              
                              
                              43,500
                              
                              
                              
                              91,500Total
      general and administrative - General Partner
                              
                              
                              721,718
                              
                              
                              
                              827,764Property
      management fees incurred to affiliates of the subsidiary partnerships’
      general partners (c)
                              
                              
                              525,961
                              
                              
                              
                              526,287Total
      general and administrative - related parties
                              
                              $
                              1,247,679
                              
                              
                              $
                              1,354,051
 
  (a)
            The
      General Partner is entitled to receive a partnership management fee, after
      payment of all Partnership expenses, which together with the annual local
      administrative fees will not exceed a maximum of 0.5% per annum of
      invested assets (as defined in the Partnership Agreement), for
      administering the affairs of the Partnership. Subject to the foregoing
      limitation, the partnership management fee will be determined by the
      General Partner in its sole discretion based upon its review of the
      Partnership’s investments. Unpaid partnership management fees for any year
      will be accrued without interest and will be payable from working capital
      reserves or to the extent of available funds after the Partnership has
      made distributions to the limited partners of sale or refinancing proceeds
      equal to their original capital contributions plus a 10% priority return
      thereon (to the extent not theretofore paid out of cash flow). Partnership
      management fees owed to the General Partner amounting to approximately
      $5,393,000 and $4,847,000 were accrued and unpaid as of March 31, 2009 and
      2008, respectively.  Without the General Partner’s advances and
      continued accrual without payment of certain fees and expense
      reimbursements, the Partnership would not be in a position to meet its
      obligations.
   - 41
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   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
    (b)
            The
      Partnership reimburses the General Partner and its affiliates for actual
      Partnership operating expenses incurred by the General Partner and its
      affiliates on the Partnership’s behalf. The amount of reimbursement from
      the Partnership is limited by the provisions of the Partnership Agreement.
      Another affiliate of the General Partner performs asset monitoring for the
      Partnership. These services include site visits and evaluations of the
      subsidiary partnerships’ performance. Expense reimbursements and asset
      monitoring fees owed to the General Partner and its affiliates amounting
      to approximately $110,000 and $239,000 were accrued and unpaid as of March
      31, 2009 and 2008, respectively.
  (c)
            Property
      and incentive management fees incurred by subsidiary partnerships amounted
      to $976,604 and $928,863 for the years ended March 31, 2009 and 2008,
      respectively.  Of these fees $525,961 and $526,287 were earned
      by affiliates of the Local General Partners, which include $198,750 and
      $198,750 of incentive management fees at one Local
      Partnership.
  (d)
            Independence
      SLP L.P., a special limited partner of the subsidiary partnerships, is
      entitled to receive a local administrative fee of up to $5,000 per year
      from each subsidiary partnership.
  B)  Due
to Local General Partners and Affiliates
  Due to
local general partners and affiliates at March 31, 2009 and 2008 consists of the
following:
  March
      31,2009
                      
                      
                      2008Operating
      advances
                      
                      $
                      796,131
                      
                      
                      $
                      612,935Development
      fee payable
                      
                      
                      295,810
                      
                      
                      
                      295,810Construction
      costs payable
                      
                      
                      1,223,269
                      
                      
                      
                      1,438,733Management
      and other operating advances
                      
                      
                      (6,874
                      )
                      
                      
                      34,334Loans
      payable to local general partner and affiliates (a)
                      
                      
                      236,994
                      
                      
                      
                      236,994$
                      2,545,330
                      
                      
                      $
                      2,618,806(a) 
      Affordable Green Associates, L.P. borrowed monies from affiliates of the
      Local General Partners while the building was being constructed. Interest
      was accrued at rates from 8% to 11% during the construction period. The
      loans are now due on demand and do not accrue interest.
 
  Derby Run
Associate L.P.’s mortgage note payable in the original amount of $6,900,000 is
held by Centerline Finance Corporation (formerly PW Funding), an affiliate of
the General Partner.
   - 42
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 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
 NOTE 9 –
Taxable Net Loss
  Our
adoption of FASB interpretation (“FIN”) No. 48 did not have a material impact on
the consolidated financial statements and does not impact our financial position
at March 31, 2009.
  A
reconciliation of the financial statement net loss to the taxable net loss for
the Partnership and its consolidated subsidiaries is as follows:
  Years
      Ended March 31,2009
              
              2008Financial
      statement net loss
              
              $
              (5,241,348
              )
              $
              (4,941,817
              )Differences
      between depreciation and amortization expense records for financial
      reporting purposes and the accelerated costs recovery system utilized for
      income tax purposes
              
              
              (486,639
              )
              
              (600,503
              )Tax
      exempt interest income
              
              
              0
              
              
              (23,869
              )Differences
      resulting from parent company having a different fiscal year for income
      tax and financial reporting purposes
              
              
              13,157
              
              
              (21,685
              )Accrued
      interest not deductible for tax purposes until paid
              
              
              1,600,687
              
              
              1,194,794Non-deductible
      loss on impairment of Property
              
              
              463,402
              
              
              0Other
      expense, including related party accruals for financial reporting not
      deductible for tax purposes until paid
              
              
              130,939
              
              
              731,221Net
      loss as shown on the income tax return for the calendar year
      ended
              
              $
              (3,519,802
              )
              $
              (3,661,859
              )
    NOTE 10 –
Selected Quarterly Financial Data (Unaudited)
  The
following table summarizes the Partnership’s quarterly results of operations for
the years ended March 31, 2009 and 2008.
  OPERATIONS
              
              Quarter
      EndedJune
      30,
                2008
              
              
              September
      30,
                2008
              
              
              December
      31,
                2008
              
              
              March
      31,
                2009Revenues
              
              $
              2,764,182
              
              
              $
              2,774,390
              
              
              $
              2,855,050
              
              
              $
              2,871,490Operating
      expenses
              
              
              (4,018,342
              )
              
              
              (3,874,654
              )
              
              
              (4,030,469
              )
              
              
              (4,593,903
              )Loss
      before minority interest
              
              
              (1,254,160
              )
              
              
              (1,100,264
              )
              
              
              (1,175,419
              )
              
              
              (1,722,413
              )Minority
      interest in loss of subsidiaries
              
              
              3,438
              
              
              
              2,616
              
              
              
              2,305
              
              
              
              2,549Net
      loss
              
              $
              (1,250,722
              )
              
              $
              (1,097,648
              )
              
              $
              (1,173,114
              )
              
              $
              (1,719,864
              )Net
      loss per weighted average BAC
              
              $
              (21.01
              )
              
              $
              (18.44
              )
              
              $
              (19.71
              )
              
              $
              (28.89
              )
 
   - 43
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   INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
   
 OPERATIONS
              
              Quarter
      EndedJune
      30,
                2007
              
              
              September
      30,
                2007
              
              
              December
      31,
                2007
              
              
              March
      31,
                2008Revenues
              
              $
              2,731,404
              
              
              $
              2,676,889
              
              
              $
              2,530,961
              
              
              $
              2,831,261Operating
      expenses
              
              
              (3,867,383
              )
              
              
              (3,777,832
              )
              
              
              (4,049,166
              )
              
              
              (4,030,152
              )Loss
      before minority interest
              
              
              (1,135,979
              )
              
              
              (1,100,943
              )
              
              
              (1,518,205
              )
              
              
              (1,198,891
              )Minority
      interest in loss (income) of subsidiaries
              
              
              2,750
              
              
              
              2,018
              
              
              
              (4,252
              )
              
              
              11,685Net
      loss
              
              $
              (1,133,229
              )
              
              $
              (1,098,925
              )
              
              $
              (1,522,457
              )
              
              $
              (1,187,206
              )Net
      loss per weighted average BAC
              
              $
              (19.04
              )
              
              $
              (18.46
              )
              
              $
              (25.58
              )
              
              $
              (19.94
              )
 
  NOTE 11 -
Commitments and Contingencies
  a)  Subsidiary
Partnerships – Going Concern and Uncertainties
  Creative Choice Homes VI
Ltd. (“Creative Choice”)
 The
financial statements for Creative Choice have been prepared assuming that
Creative Choice will continue as a going concern.  Creative Choice
incurred a net loss of $278,712 and negative cash flow from operations of
$64,733 during the year ended December 31, 2008.  During 2008, the
Local General Partner funded $142,095 to cover operating costs.  Also,
Creative Choice is in default of one of its subordinate notes.  These
factors create an uncertainty about Creative Choice’s ability to continue as a
going concern.  The ability of Creative Choice to continue as a going
concern is dependent on the Local General Partner’s ability to increase revenues
and reduce operating expenses to return to profitable operations and the Local
General Partner’s ability to fund operating losses.  The financial
statements do not include any adjustments that might be necessary if Creative
Choice is unable to continue as a going concern.
  During
the year ended December 31, 2005, the property incurred hurricane
damage.  The total cost to bring the units back into service was
approximately $1,800,000.  Creative Choice has contracted with
Naimisha Construction, a related party, for $1,600,000 to complete the repairs
and renovations of the buildings damaged.  During 2005, emergency
insurance proceeds had been received by Creative Choice to offset the cost of
immediate repair work.  In 2006, Washington Mutual, the mortgage
holder, received the remaining balance of the insurance proceeds and acted as
trustee of the funds.  Creative Choice was reimbursed by insurance
proceeds in the amount of $1,433,817.  As of December 31, 2008, all
hurricane repairs and renovations had been completed and a balance of $634,550
remains payable to Naimisha Construction.
  Creative
Choice also suffered fire damage on June 20, 2006 affecting nine of its
units.  At the time of the fire, the units were out of service due to
the damage caused by the hurricane.  These nine units are in service
at December 31, 2008.  As of December 31, 2008, $567,370 of insurance
proceeds had been received to cover the cost of immediate repair work and
securing the location.  Naimisha Construction, a related party, has
been contracted to complete the repairs for $673,889 and $206,519 remains
payable as of December 31, 2008 to Naimisha Construction.
  The
Partnership’s investment in Creative Choice at March 31, 2009 and 2008 was
reduced to zero as a result of prior years’ losses and the minority interest
balance was $0 at each date.  Creative Choice’s net loss after
minority interest amounted to approximately $279,000 and $225,000 for the 2008
and 2007 Fiscal Years.
  Mansion Court Associates
(“Mansion Court”)
 The
financial statements for Mansion Court have been prepared assuming that Mansion
Court will continue as a going concern.  Mansion Court had losses of
$587,171 (including loss on impairment of $463,402) and $103,323 for the 2008
and 2007 Fiscal Years, respectively.  In prior years and in 2008,
Mansion Court has sustained operating losses and has not generated sufficient
cash flow from operations to meet its obligations, particularly related party
payables.  The Local General Partner has provided funding in the past
years; however there is no obligation to do so.  The property also has
experienced a high number of vacancies due to deteriorating conditions in the
area.  As of December 31, 2008, the project had 22 vacant
units.  Vacancies continue to increase due to declining conditions in
the surrounding neighborhood, and the expenditure of funds at this time to make
improvements would not benefit the project.  The Local General Partner
is exploring options to mitigate increased crime and deteriorating neighborhood
conditions.  These options include assistance from local government
housing agencies and could include transfer of ownership.
  The
Partnership’s investment in Mansion Court at March 31, 2009 and 2008 was reduced
to zero as a result of prior years’ losses and the minority interest balance was
$0 at each date.  Mansion Court’s net loss after minority interest
amounted to approximately $587,000 and $103,000 for the 2008 and 2007 Fiscal
Years.  The financial statements of Mansion Court do not include any
adjustments that might result from the outcome of this uncertainty other than
from the recognition of an impairment of the rental property in 2008 and 2006 as
described below.
  During
the year ended March 31, 2009, in accordance with SFAS No. 144, the Partnership
deemed the building of Mansion Court further impaired and in addition to an
earlier writedown of approximately $1,342,000, wrote it down to its new reduced
fair value of approximately $338,000, which resulted in a further loss on
impairment of approximately $463,000.  Fair value was obtained from an
assessment made by the management after indications that the carrying value of
the assets were not recoverable, evidenced by a history of net operating losses
over the past few years as discussed above.  In addition, at December
31, 2008, Mansion Court was contingently liable in an open letter of credit
issued in favor of the PHFA in the amount of $24,000.
   - 44
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 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31,
2009
 b)  Uninsured
Cash and Cash Equivalents
  The
Partnership maintains its cash and cash equivalents in various banks. The
accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation up to $250,000.  At March 31, 2009, uninsured cash and
cash equivalents approximated $196,000.
  c)  Cash
Distributions
  Cash
distributions from the Local Partnerships to the Partnership are restricted by
the provisions of the respective limited partnership agreements of the Local
Partnerships and/or HUD.  Such cash distributions are typically made
from surplus cash flow.
  d)  Other
  The
Partnership is subject to the risks incident to potential losses arising from
the management and ownership of improved real estate.  The Partnership
can also be affected by poor economic conditions generally; however, no more
than 33% of the properties are located in any single state. There are also
substantial risks associated with owning properties receiving government
assistance; for example, the possibility that Congress may not appropriate funds
to enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner’s equity contribution. The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence without HUD’s approval. Furthermore, there
may not be market demand for apartments at full market rents when the rental
assistance contracts expire.
  The
Partnership and BACs holders began to recognize Tax Credits with respect to a
property when the Credit Period for such Property (generally ten years from the
date of investment or, if later, the date the Property is leased to qualified
tenants) commenced. Because of the time required for the acquisition, completion
and rent-up of Properties, the amount of Tax Credits per BAC gradually increased
over the first three years of the Partnership.  Tax Credits not
recognized in the first three years were recognized in the 11th through 13th
years.  As of December 31, 2007, all the Local Partnerships had
completed their Credit Periods.  However, each Local Partnership must
continue to comply with the Tax Credit requirements until the end of the
Compliance Period in order to avoid recapture of the Tax Credits.  The
Compliance Periods will continue through December 31, 2012 with respect to the
Properties depending upon when the Compliance Period commenced.  At
December 31, 2008, Mansion Court was required to recapture $190,635 of
low-income housing tax credits.
    - 45
-
  
 Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
  None
  Item
9A(T).  Controls and Procedures
  (a)Evaluation of Disclosure
Controls and Procedures.The Chief Executive Officer and Chief
Financial Officer of Related Independence Associates, L.P., the general partner
of the Partnership, have evaluated the effectiveness of the Partnership’s
disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange
Act”) as of the end of the period covered by this report.  Based on
such evaluation, such officers have concluded that, as of the end of such
period, the Partnership’s disclosure controls and procedures are
effective.
 
 (b)  Management’s Annual
Report on Internal Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f).  In evaluating the Partnership’s internal control over
financial reporting, management has adopted the framework in Internal
Control-Integrated Framework issued by the Committee of Sponsoring organizations
of the Treadway Commission (the “COSO Framework”).  Under the
supervision and with the participation of our management, including the Chief
Executive Officer and Chief Financial Officer of the General Partner, the
Partnership conducted an evaluation of the effectiveness of its internal control
over financial reporting as of March 31, 2009.  The Partnership’s
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external reporting purposes in
accordance with generally accepted accounting principles.  Internal
control over financial reporting 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, and that
receipts and expenditures of the Partnership are being made only in accordance
with authorizations of management and directors of the Partnership; 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.  However, because of inherent limitations, internal
control over financial reporting may not prevent or detect
misstatements.  Also, 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.
 
 Based on
management’s evaluation under the COSO Framework, it has concluded that the
Partnership’s internal control over financial reporting, was, as of March 31,
2009, (1) effective at the Partnership level, in that they provide reasonable
assurance that information required to be disclosed by the Partnership in the
reports it files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms and (2) ineffective at the subsidiary level due to certain
deficiencies noted in the audit reports for such
subsidiaries.  Management will attempt to cause the Local General
Partner’s to remedy such deficiencies; however, the General Partner does not
have control over the internal controls at the subsidiary
level.  Management believes they have sufficient controls at the
Partnership level to mitigate these deficiencies, and such deficiencies do not
have a material impact on the consolidated financial statements.
 
 The
Partnership’s Annual Report does not include an attestation report of the
Partnership’s registered public accounting firm regarding internal control over
financial reporting.  The Partnership’s internal control over
financial reporting was not subject to attestation by the Partnership’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Partnership to provide only this
report.
 
 (c)  Changes in Internal Controls over Financial
Reporting.Except as noted in (b) above, during the year ended
March 31, 2009, there were no changes in the Partnership’s internal control over
financial reporting that have materially affected, or are reasonably likely to
materially affect, the Partnership’s internal control over financial
reporting.
  Item
9B.  Other Information
  Not
applicable
   - 46
-
  
 PART
      III
  Item
10.  Directors, Executive Officers and Corporate
Governance
  The
Partnership is a limited partnership which was formed under the laws of the
State of Delaware on February 11, 1992. The general partner of the Partnership
is Related Independence Associates L.P., a Delaware limited partnership (the
“General Partner”).  The general partner of the General Partner is
Related Independence Associates Inc., a Delaware corporation
(“RIAI”).  The Partnership has no directors or executive
officers.  The Partnership’s affairs are managed and controlled by the
General Partner.
  The
ultimate parent of the General Partner is Centerline Holding Company
(“Centerline”).  The Partnership has not adopted a separate code of
ethics because the Partnership has no directors or executive officers. However,
Centerline, which controls the General Partner, has adopted a code of ethics
(see http://www.centerline.com).
  Certain
information concerning the directors and executive officers of RIAI, is set
forth below. The General Partner is also the general partner of Independence Tax
Credit Plus L.P.
  Name
              
              PositionRobert
      L. Levy
              
              Chief
      Financial OfferAndrew
      J. Weil
              
              President
      and Chief Executive OfficerMarc
      D. Schnitzer
              
              Senior
      Vice President
 
  ROBERT L.
LEVY, 43, is the Chief Financial Officer of Centerline.  Mr. Levy is
also the Chief Financial Officer of American Mortgage Acceptance Company, a
publicly traded real estate investment trust managed by an affiliate of
Centerline (“AMAC”).  Mr. Levy is responsible for overseeing the
Corporate Finance, Capital Markets, Accounting, Budgeting, Tax and Treasury
departments.  Mr. Levy joined Centerline’s predecessor in November of
2001 as the Director of Capital Markets.  From 1998 through 2001, Mr.
Levy was a Vice President in the Real Estate Equity Research and Investment
Banking Departments at Robertson Stephens, an investment banking firm in San
Francisco.  Prior to 1998, Mr. Levy was employed by Prudential
Securities in the Real Estate Equity Research Group and at Prudential Realty
Group, the real estate investment arm of the Prudential Insurance
Company.  He received his Masters in Business Administration from the
Leonard N. Stern School of Business at New York University and his Bachelor of
Arts from Northwestern University.
  ANDREW J.
WEIL, 38, is an Executive Managing Director of Centerline, and is the Head of
Centerline’s Affordable Housing Group.  Mr. Weil is responsible for
overseeing the day to day operations of the Affordable Housing Group, including
the acquisition of properties with Low-Income Housing Tax Credits and the
origination and structuring of institutional funds.  Prior to joining
Centerline’s predecessor in January 1994, Mr. Weil was a Financial Analyst for
the Heights Management Company, where he specialized in the analysis of
potential investments and property management.  Mr. Weil received a
Bachelor of Science degree in Economics with a concentration in Finance from the
Wharton School of the University of Pennsylvania.
  MARC D.
SCHNITZER, 48, is the Chief Executive Officer of Centerline and is the Senior
Vice President of RIAI.  He is responsible both for financial
restructurings of real estate properties and directing Centerline’s acquisitions
of properties generating Tax Credits. Mr. Schnitzer received a Masters of
Business Administration from The Wharton School of the University of
Pennsylvania in December 1987 before joining Centerline in January 1988. He held
numerous positions with Centerline and its predecessors prior to being appointed
CEO in March 2006.  From 1983 to January 1986, he was a financial
analyst for the First Boston Corporation in New York. Mr. Schnitzer
graduated summa cum laude with a Bachelor of Science in Business Administration
from the School of Management at Boston University in May
1983.  Mr. Schnitzer also serves on the Board of Trustees of
Centerline and AMAC.
  Item
11.  Executive Compensation
  The
Partnership has no officers or directors. The Partnership does not pay or accrue
any fees, salaries or other forms of compensation to directors or officers of
the General Partner for their services. However, under the terms of the
Partnership Agreement, the Partnership has entered into certain arrangements
with the General Partner and its affiliates, which provide for compensation to
be paid to the General Partner and its affiliates. Such arrangements include
(but are not limited to) agreements to pay nonrecurring Acquisition Fees, a
nonaccountable Acquisition Expense allowance and an accountable expense
reimbursement. In addition, the General Partner is entitled to a subordinated
interest in Cash from Sales or Financings and a 1% interest in Net Income, Net
Loss, Distributions of Adjusted Cash from Operations and Cash from Sales or
Financings. Certain directors and officers of the General Partner receive
compensation from the General Partner and its affiliates for services performed
for various affiliated entities which may include services performed for the
Partnership. The maximum annual partnership management fee paid to the General
Partner is 0.5% of invested assets.  See Note 8 in Item 8 above, which
is incorporated herein by reference.
  Tabular
information concerning salaries, bonuses and other types of compensation payable
to executive officers has not been included in this annual report. As noted
above, the Partnership has no executive officers. The levels of compensation
payable to the General Partner and/or its affiliates is limited by the terms of
the Partnership Agreement and may not be increased therefrom on a discretionary
basis.  See Note 8 in Item 8 above, which is incorporated herein by
reference.
   - 47
-
   Item
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
  Title
      of Class
              
              Name
      and Address of
                Beneficial
      Ownership
              
              Amount
      and Nature of
                Beneficial
      Ownership
              
              Percentage
                of
      ClassGeneral
      Partnership Interest in the Partnership
              
              Related
      Independence
                Associates
      L.P.
                625
      Madison Avenue
                New
      York, NY 10022
              
              $1,000
      capital contribution –
                directly
      owned
              
              100%
 
  Independence
SLP L.P., a limited partnership whose general partner is the general partner of
the General Partner of the Partnership and which acts as the special limited
partner of each Local Partnership, holds a .01% limited partnership interest in
each Local Partnership. See Note 8 in Item 8 above, which information is
incorporated herein by reference thereto.
  Except as
set forth below, no person is known by the Partnership to be the beneficial
owner of more than 5% of the Limited Partnership Interests and neither the
General Partner nor any executive officer of the General Partner owns any
Limited Partnership Interests. The following table sets forth the number of BACs
beneficially owned, as of May 28, 2009, by (i) each BACs holder known to the
Partnership to be a beneficial owner of more than 5% of the BACs, (ii) each
director and executive officer of the general partner of the General Partner and
(iii) the directors and executive officers of the general partner of the General
Partner as a group. Unless otherwise noted, all BACs are owned directly with
sole voting and dispositive powers.
  Name
      of Beneficial Owner (1)
              
              Amount
      and Nature of
                Beneficial
      Ownership
              
              Percentage
      of ClassLehigh
      Tax Credit Partners, Inc.
              
              4,453.20
              (2)
      (3)
              
              7.6
              %J.
      Michael Fried
              
              4,453.20
              (2)
      (3)
              
              7.6
              %Alan
      P. Hirmes
              
              4,453.20
              (2)
      (3)
              
              7.6
              %Stuart
      J. Boesky
              
              4,453.20
              (2)
      (3)
              
              7.6
              %Marc
      D. Schnitzer
              
              4,453.20
              (2)
      (3)
              
              7.6
              %Denise
      L. Kiley
              
              4,453.20
              (2)
      (3)
              
              7.6
              %Robert
      L. Levy
              
              -
              
              
              -Andrew
      J. Weil
              
              -
              
              
              -All
      executive officers of the general partner of the RelatedGeneral
      Partner as a group (four persons)
              
              4,453.20
              (2)
      (3)
              
              7.6
              %
 
  (1)
            The
      address for each of the persons in the table is 625 Madison Avenue, New
      York, New York 10022.
  (2)
            Information
      derived from Schedule 13D filed by Lehigh Tax Credit Partners L.L.C.
      (“Lehigh I”) and Lehigh Tax Credit Partners, Inc., (the “Managing Member”)
      on June 10, 1997 with the Securities and Exchange Commission (the
      “Commission”).  All of such BACs represent BACs owned directly
      by Lehigh I and Lehigh Tax Credit Partners II, L.L.C. (“Lehigh II”), for
      which the Managing Member serves as managing member. As of May 28, 2009,
      Lehigh I held 2,213.60 BACs and Lehigh II held 2,239.60
    BACs.
  (3)
            Only
      Mr. Schnitzer serves as an executive officer of the Managing Member and
      owns an equity interest therein;  J. Michael Fried, Denise L.
      Kiley, Stuart J. Boesky and Alan P. Hirmes own only an economic
      interest.
  Item
13.  Certain Relationships and Related Transactions, and Director
Independence
  The
Partnership has and will continue to have certain relationships with the General
Partner and its affiliates, as discussed in Item 11 and also Note 8 in Item 8
above, which are incorporated herein by reference thereto. However, there have
been no direct financial transactions between the Partnership and the directors
and officers of the General Partner.
  Item
14.  Principal Accountant Fees and Services
  Audit
Fees
 The
aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and Fazzari
LLP and its affiliates for professional services rendered for the audit of the
Partnership’s annual financial statements for the years ended March 31, 2009 and
2008 and for the reviews of the financial statements included in the
Partnership’s quarterly reports on Form 10-Q for those years were $57,000 and
$56,000, respectively, for each year.
  Audit – Related
Fees
 None
   - 48
-
  Tax Fees
 The
aggregate fees billed by Weiser LLP and its affiliates for professional services
rendered for the preparation of the Partnership’s annual tax returns were
$11,500 for each of the years ended December 31, 2008 and 2007.
  All Other
Fees
 None
  The
Partnership is not required to have, and does not have, a stand-alone audit
committee.
   - 49
-
  PART
IV
 
 
 Item
      15.
                  Exhibits,
      Financial Statement SchedulesSequential
                    Page(a)
      1.
                  Consolidated Financial
      StatementsReport
      of Independent Registered Public Accounting Firm
                  
                  12Consolidated
      Balance Sheets at March 31, 2009 and 2008
                  
                  33Consolidated
      Statements of Operations for the Years Ended March 31, 2009 and
      2008
                  
                  34Consolidated
      Statements of Changes in Partners’ Capital (Deficit) for the Years Ended
      March 31, 2009 and 2008
                  
                  35Consolidated
      Statements of Cash Flows for the Years Ended March 31, 2009 and
      2008
                  
                  36Notes
      to Consolidated Financial Statements
                  
                  37(a)
      2.
                  Consolidated Financial Statement
      SchedulesReport
      of Independent Registered Public Accounting Firm
                  
                  54Schedule
      I - Condensed Financial Information of Registrant
                  
                  55Schedule
      III - Real Estate and Accumulated Depreciation
                  
                  58All
      other schedules have been omitted because they are not required or because
      the required information is contained in the financial statements or notes
      thereto.(a)
      3.
                  Exhibits(3A)
                  Agreement
      of Limited Partnership of Independence Tax Credit Plus L.P. II as adopted
      on February 11, 1992*(3B)
                  Form
      of Amended and Restated Agreement of Limited Partnership of Independence
      Tax Credit Plus L.P. II, attached to the Prospectus as Exhibit
      A**(3C)
                  Certificate
      of Limited Partnership of Independence Tax Credit Plus L.P. II as filed on
      February 11, 1992*(10A)
                  Form
      of Subscription Agreement attached to the Prospectus as Exhibit
      B**(10B)
                  Escrow
      Agreement between Independence Tax Credit Plus L.P. II and Bankers Trust
      Company*(10C)
                  Form
      of Purchase and Sales Agreement pertaining to the Partnership’s
      acquisition of Local Partnership Interests*(10D)
                  Form
      of Amended and Restated Agreement of Limited Partnership of Local
      Partnerships*(21)
                  Subsidiaries
      of the Registrant
                  
                  51(31.1)
                  Certification Pursuant to Rule 13a-14(a) or Rule
      15d-14(a)(31.2)
                  Certification Pursuant to Rule 13a-14(a) or Rule
      15d-14(a)(32.1)
                  Certification Pursuant to Rule 13a-14(b) or Rule
      15d-14(b) and Section 1350 of Title 18 of the United States Code (18
      U.S.C. 1350)*Incorporated
      herein as an exhibit by reference to exhibits filed with Post-Effective
      Amendment No. 4 to the Registration Statement on Form S-11 (Registration
      No. 33-37704)**Incorporated
      herein as an exhibit by reference to exhibits filed with Post-Effective
      Amendment No. 8 to the Registration Statement on Form S-11 (Registration
      No. 33-37704)
  - 50
-
  Item
      15.
                  Exhibits,
      Financial Statement Schedules
 
 Subsidiaries of the Registrant (Exhibit
      21)
            
            Jurisdiction
              of
      OrganizationLincoln
      Renaissance
            
            PAUnited
      Germano – Millgate Limited Partnership
            
            ILMansion
      Court Associates
            
            PADerby
      Run Associates, L.P.
            
            VARenaissance
      Plaza ‘93 Associates, L.P.
            
            MDTasker
      Village Associates
            
            PAMartha
      Bryant Manor, L.P.
            
            CAColden
      Oaks Limited Partnership
            
            CABrynview
      Terrace, L.P.
            
            CANLEDC,
      L.P.
            
            CACreative
      Choice Homes VI, Ltd.
            
            FLP
      & P Homes for the Elderly, L.P.
            
            CAClear
      Horizons Limited Partnership
            
            LANeptune
      Venture, L.P.
            
            NJAffordable
      Green Associates L.P.
            
            NY
 
  - 51
-
   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.
  INDEPENDENCE TAX CREDIT PLUS
L.P. II
 (Registrant)
  By:
            RELATED
      INDEPENDENCE ASSOCIATES L.P.,General
      PartnerBy:
            INDEPENDENCE
      ASSOCIATES GP LLC,General
      PartnerDate:
            June 19, 2009
            
            
            
            By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer, Principal Accounting Officer and
              DirectorDate:
            June 19, 2009
            
            
            
            By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident
      and Chief Executive Officer
 
 
  - 52
-
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below
 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:
  Signature
            
            Title
            
            Date/s/ Robert L. Levy
            
            Chief
      Financial Officer, Principal Accounting Officer and Director of
      Independence Associates GP LLC.
            
            June 19, 2009Robert
      L. Levy/s/ Andrew J. Weil
            
            President
      and Chief Executive Officer ofIndependence
      Associates GP LLC.
            
            June 19, 2009Andrew
      J. Weil
 
 
 
  - 53
-
   REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
  To the
Partners of
 Independence
Tax Credit Plus L.P. II and Subsidiaries
 (A
Delaware Limited Partnership)
 
 In
connection with our audits of the consolidated financial statements of
Independence Tax Credit Plus L.P. II and Subsidiaries (A Delaware Limited
Partnership) included in this Form 10-K as presented in our opinion dated June
17, 2009 on page 12, and based on the reports of other auditors, we have also
audited supporting Schedule I for the 2008 and 2007 Fiscal Years and Schedule
III at March 31, 2009.  In our opinion, and based on the reports of
the other auditors, these consolidated schedules present fairly, when read in
conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.
  As
discussed in Note 11(a), the consolidated financial statements include the
financial statements of two subsidiary partnerships with significant
uncertainties.  The financial statements of these subsidiary
partnerships were prepared assuming that they will continue as going
concerns.  These subsidiary partnership’s net losses aggregated
$841,207 (2008 Fiscal Year) and $328,608 (2007 Fiscal Year), and their assets
aggregated $4,748,430 and $5,546,949 at March 31, 2009 and 2008,
respectively.  Management’s plan in regard to this matter is also
described in Note 11(a).  The accompanying consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
   /s/ TRIEN
ROSENBERG ROSENBERG
 WEINBERG
CIULLO & FAZZARI LLP
  New York,
New York
 June 17,
2009
  - 54
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 SCHEDULE
I
 CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
 (NOT
INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)
 
 
 CONDENSED
BALANCE SHEETS
 
 
 
 
 ASSETS
 
 
 March
      31,2009
                    
                    2008Cash
      and cash equivalents
                    
                    $
                    553,781
                    
                    $
                    620,890Cash
      held in escrow
                    
                    
                    23,683
                    
                    
                    23,683Investment
      in subsidiary partnerships
                    
                    
                    10,570,517
                    
                    
                    11,001,638Other
      assets
                    
                    
                    34,015
                    
                    
                    35,695Total
      assets
                    
                    $
                    11,181,996
                    
                    $
                    11,681,906LIABILITIES
      AND PARTNERS' CAPITALDue
      to general partner and affiliates
                    
                    $
                    5,686,050
                    
                    $
                    5,128,618Total
      liabilities
                    
                    
                    5,686,050
                    
                    
                    5,128,618Partners’
      capital
                    
                    
                    5,495,946
                    
                    
                    6,553,288Total
      liabilities and partners’ capital
                    
                    $
                    11,181,996
                    
                    $
                    11,681,906
 
 Investments
in Subsidiary Partnerships are recorded in accordance with the equity method of
accounting, wherein the investments are not reduced below zero. Accordingly,
partners’ capital on the consolidated balance sheet will differ from partners’
capital shown above.
 
  - 55
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 SCHEDULE
I
 CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
 (NOT
INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)
 
 
 CONDENSED
STATEMENTS OF OPERATIONS
 
 
 
 
 Years
      Ended March 31,2009
            
            2008RevenuesOther
      income
            
            $
            7,667
            
            $
            26,446ExpensesAdministrative
      and management
            
            
            94,708
            
            
            99,628Administrative
      and management-related parties
            
            
            678,218
            
            
            736,264Total
      expenses
            
            
            772,926
            
            
            835,892Loss
      from operations
            
            
            (765,259
            )
            
            (809,446
            )Equity
      in loss of subsidiary partnerships
            
            
            (292,083
            )
            
            (346,111
            )Net
      loss
            
            $
            (1,057,342
            )
            $
            (1,155,557
            )
  - 56
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 SCHEDULE
I
 CONDENSED
FINANCIAL INFORMATION OF REGISTRANT
 INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
 (NOT
INCLUDING CONSOLIDATED SUBSIDIARY PARTNERSHIPS)
 
 
 CONDENSED
STATEMENTS OF CASH FLOWS
 
 
 
 
 Years
      Ended March 31,2009
            
            2008Cash
      flows from operating activities:Net
      loss
            
            $
            (1,057,342
            )
            $
            (1,155,557
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Equity
      in loss of subsidiary partnerships
            
            
            292,083
            
            
            346,111(Increase)
      decrease in assets:Other
      assets
            
            
            1,680
            
            
            232Increase
      (decrease) in liabilities:Due
      to general partners and affiliates
            
            
            557,432
            
            
            706,989Other
      liabilities
            
            
            0
            
            
            (15,745
            )Total
      adjustments
            
            
            851,195
            
            
            1,037,587Net
      cash used in operating activities
            
            
            (206,147
            )
            
            (117,970
            )Net
      cash from financing activities:Distributions
      from subsidiary partnerships
            
            
            139,038
            
            
            200,287Net
      cash provided by financing activities
            
            
            139,038
            
            
            200,287Net
      (decrease) increase in cash and cash equivalents
            
            
            (67,109
            )
            
            82,317Cash
      and cash equivalents, beginning of year
            
            
            620,890
            
            
            538,573Cash
      and cash equivalents, end of year
            
            $
            553,781
            
            $
            620,890
 
  - 57
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 SCHEDULE
III
 REAL
ESTATE AND ACCUMULATED DEPRECIATION
 Partnership
Property Pledged as Collateral
 MARCH 31,
2009
 
 
 
 Description
            
            Encumbrances
            
            Initial
      Cost to Partnership
            
            Cost
              Capitalized
              Subsequent
      to
              Acquisition:
              Improvements
            
            Gross
      Amount at which Carried at Close of Period
            
            Accumulated
              Depreciation
            
            Year
      of
              Construction/
              Renovation
            
            Date
              Acquired
            
            Life
      on which
              Depreciation
      in
              Latest
      Income
              Statements
      is
              Computed(a)(b)Land
            
            Buildings
      and
              Improvements
            Land
            
            Buildings
      and
              Improvements
            
            TotalApartment
      ComplexesUnited
      Germano Millgate Limited PartnershipChicago,
      IL
            
            $
            7,699,519
            
            $
            580,000
            
            $
            6,070,477
            
            $
            11,259,954
            
            $
            585,374
            
            $
            17,325,057
            
            $
            17,910,431
            
            $
            11,308,470
            
            1993-94
            
            Oct.
      1993
            
            10-25Lincoln
      RenaissanceReading,
      PA
            
            
            2,553,000
            
            
            0
            
            
            5,240,173
            
            
            267,727
            
            
            5,373
            
            
            5,502,527
            
            
            5,507,900
            
            
            2,102,361
            
            1993-94
            
            Apr.
      1993
            
            20-40Mansion
      Court AssociatesPhiladelphia,
      PA
            
            
            1,505,862
            
            
            19,072
            
            
            3,224,984
            
            
            (2,778,518
            )
            
            25,095
            
            
            471,471
            
            
            496,566
            
            
            81,912
            
            1993-94
            
            Nov.
      1993
            
            20-40Derby
      Run Associates L.P.Hampton,
      VA
            
            
            6,498,388
            
            
            407,410
            
            
            3,069,628
            
            
            5,029,133
            
            
            409,771
            
            
            8,096,400
            
            
            8,506,171
            
            
            2,910,927
            
            1994-95
            
            Feb.
      1994
            
            27.5-40Renaissance
      Plaza Assoc.Baltimore,
      MD
            
            
            6,613,631
            
            
            684,255
            
            
            9,840,170
            
            
            4,445,748
            
            
            686,616
            
            
            14,283,557
            
            
            14,970,173
            
            
            5,021,668
            
            1994-95
            
            Feb.
      1994
            
            27.5Tasker
      VillagePhiladelphia,
      PA
            
            
            1,784,881
            
            
            18,235
            
            
            0
            
            
            3,994,309
            
            
            20,596
            
            
            3,991,948
            
            
            4,012,544
            
            
            1,441,118
            
            1994-95
            
            May
      1994
            
            40Martha
      Bryant Manor, L.P.Los
      Angeles, CA
            
            
            7,493,879
            
            
            966,577
            
            
            0
            
            
            10,865,029
            
            
            968,938
            
            
            10,862,668
            
            
            11,831,606
            
            
            4,947,052
            
            1994-95
            
            Sept.
      1994
            
            15-27.5Colden
      Oaks Limited PartnershipLos
      Angeles, CA
            
            
            5,319,874
            
            
            922,790
            
            
            0
            
            
            2,094,111
            
            
            925,151
            
            
            2,091,750
            
            
            3,016,901
            
            
            1,339,658
            
            1994-95
            
            Sept.
      1994
            
            31Brynview
      Terrace Limited PartnershipLos
      Angeles, CA
            
            
            980,559
            
            
            175,943
            
            
            0
            
            
            1,452,282
            
            
            178,304
            
            
            1,449,921
            
            
            1,628,225
            
            
            665,079
            
            1994-95
            
            Sept.
      1994
            
            15-27.5NLEDC,
      L.P.Los
      Angeles, CA
            
            
            4,185,146
            
            
            624,000
            
            
            0
            
            
            5,884,672
            
            
            626,361
            
            
            5,882,311
            
            
            6,508,672
            
            
            2,733,548
            
            1994-95
            
            Sept.
      1994
            
            27.5Creative
      Choice Homes VI Ltd.Miami,
      FL
            
            
            3,418,796
            
            
            650,072
            
            
            13,134
            
            
            5,628,792
            
            
            652,433
            
            
            5,639,565
            
            
            6,291,998
            
            
            2,490,949
            
            1994-95
            
            Sept.
      1994
            
            40P&P
      Homes for the Elderly, L.P.Los
      Angeles, CA
            
            
            6,177,396
            
            
            0
            
            
            0
            
            
            10,034,207
            
            
            642,360
            
            
            9,391,847
            
            
            10,034,207
            
            
            3,676,372
            
            1994-95
            
            Sept.
      1994
            
            30Clear
      Horizons Limited PartnershipShreveport,
      LA
            
            
            591,404
            
            
            15,304
            
            
            2,058,729
            
            
            349,721
            
            
            17,665
            
            
            2,406,089
            
            
            2,423,754
            
            
            1,300,802
            
            1994-95
            
            Dec.
      1994
            
            27.5Neptune
      Venture L.P.Neptune
      Township, NJ
            
            
            0
            
            
            460,631
            
            
            10,151,873
            
            
            242,997
            
            
            462,465
            
            
            10,393,036
            
            
            10,855,501
            
            
            3,406,306
            
            1995-96
            
            Apr.
      1995
            
            40Affordable
      Green Associates L.P.New
      York, NY
            
            
            2,123,360
            
            
            20,500
            
            
            3,506,961
            
            
            92,960
            
            
            22,334
            
            
            3,598,087
            
            
            3,620,421
            
            
            1,761,068
            
            1995-96
            
            May
      1995
            
            27$
            56,945,695
            
            $
            5,544,789
            
            $
            43,176,129
            
            $
            58,863,124
            
            $
            6,228,836
            
            $
            101,386,234
            
            $
            107,615,070
            
            $
            45,187,290(a)  
      Depreciation is computed using primarily the straight-line method over the
      estimated useful lives determined by the Partnership date of
      acquisition.
              (b)  
      Personal property is depreciated primarily by the straight-line method
      over the estimated useful lives ranging from 5 to 10
  years.
 
  - 58
-
  
 INDEPENDENCE
TAX CREDIT PLUS L.P. II
 AND
SUBSIDIARIES
 SCHEDULE
III
 REAL
ESTATE AND ACCUMULATED DEPRECIATION
 Partnership
Property Pledged as Collateral
 MARCH 31,
2009
 (continued)
 
 
 
 
 Cost
      of Property and Equipment
                    
                    Accumulated
      DepreciationYears
      Ended March 31,2009
                    
                    2008
                    
                    2009
                    
                    2008Balance
      at beginning of period
                    
                    $
                    107,908,311
                    
                    $
                    108,196,511
                    
                    $
                    41,881,455
                    
                    $
                    39,185,607Additions
      during period:Improvements
                    
                    
                    274,541
                    
                    
                    359,311Depreciation
      expense
                    
                    
                    
                    
                    
                    
                    
                    
                    3,410,215
                    
                    
                    3,343,359Deductions
      during period:Dispositions
      and impairments
                    
                    
                    (567,782
                    )
                    
                    (647,511
                    )
                    
                    (104,380
                    )
                    
                    (647,511
                    )Balance
      at close of period
                    
                    $
                    107,615,070
                    
                    $
                    107,908,311
                    
                    $
                    45,187,290
                    
                    $
                    41,881,455
 
  At the
time the Local Partnerships were acquired by Independence Tax Credit Plus II
Limited Partnership, the entire purchase price paid by Independence Tax Credit
Plus II Limited Partnership was pushed down to the Local Partnerships as
property and equipment with an offsetting credit to capital. Since the projects
were in the construction phase at the time of acquisition, the capital accounts
were insignificant at the time of purchase. Therefore, there are no material
differences between the original cost basis for tax and GAAP.
   - 59
-