UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

                                    FORM 10-K
                  (Mark One)
               [X]ANNUAL  REPORT   PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
                  SECURITIES  EXCHANGE  ACT OF 1934 For the  fiscal  year  ended
                  March 30, 1998

                                        OR

               [  ]  TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 For the transition period from
                  ______ to ____________

                                      0-19217
                             (Commission File Number)

                     American Tax Credit Properties III L.P.
       (Exact name of registrant as specified in its governing instruments)
                        Delaware                                 13-354500
(State or other jurisdiction of organization)
                                        (I.R.S. Employer Identification No.)

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


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


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

          None                                                             None
(Title of each Class)               (Name of each exchange on which registered)

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

                          Units of Limited Partnership Interest
-------------------------------------------------------------------------------
                                     (Title of Class)

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
requirement for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X

Registrant has no voting stock.

Documents incorporated by reference:

Part I - pages 20 through 31 and 44 through 66 of the  prospectus  dated  
February 7, 1990, as  supplemented  by Supplement No. 1,  Supplement No. 2,  
Supplement No. 3,  Supplement  No. 4,  Supplement  No. 5 and Supplement No. 6 
dated June 6, 1990, November 21, 1990,  December  20,  1990,  October 30, 1991,
December 26, 1991 and January  15,  1992,  respectively,  filed  pursuant  to
Rule  424(b)(3)  under the Securities Act of 1933.


<PAGE>


-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

                                          PART I

Item 1.     Business

Formation

American  Tax Credit  Properties  III L.P.  ("Registrant"),  a Delaware  limited
partnership,  was formed on September 21, 1989 to invest  primarily in leveraged
low-income  multifamily  residential  complexes (the "Property" or "Properties")
which qualify for the  low-income  tax credit  established  by Section 42 of the
Internal Revenue Code (the "Low-income Tax Credit"),  through the acquisition of
limited partnership equity interests in partnerships (the "Local Partnership" or
"Local  Partnerships")  that  are  the  owners  of  the  Properties.  Registrant
considers its activity to constitute a single industry segment.

Richman Tax Credit Properties III L.P. (the "General  Partner"),  a Delaware 
limited partnership,  was formed on  September  21,  1989 to act as the  general
partner of Registrant.  The general  partner of the General  Partner is Richman
Housing Credits Inc. ("Richman  Housing"),  a Delaware  corporation which is 
wholly-owned by Richard Paul Richman.  Richman Housing is an affiliate of The 
Richman Group, Inc.  ("Richman Group"), a Delaware corporation founded by 
Richard Paul Richman in 1988.

The  Amendment No. 2 to the  Registration  Statement on Form S-11 was filed 
with the Securities and Exchange  Commission (the  "Commission") on February 1, 
1990 pursuant to the Securities  Act of 1933 under  Registration  Statement 
File No.  33-31390 and was  declared  effective on February 2, 1990.  Reference
is made to the  prospectus dated  February 7, 1990, as  supplemented  by 
Supplement  No. 1,  Supplement  No. 2, Supplement  No. 3,  Supplement  No. 4,  
Supplement  No. 5 and Supplement No. 6 dated June 6, 1990,  November 21, 1990,  
December 20, 1990, October 30, 1991, December 26, 1991 and January 15, 1992, 
respectively,  filed with the Commission pursuant to Rule 424(b)(3)  under the  
Securities  Act of 1933 (the  "Prospectus").  Pursuant to Rule 12b-23 of the  
Commission's  General  Rules and  Regulations  promulgated  under the Securities
Exchange Act of 1934, as amended (the "Exchange  Act"),  the description
of  Registrant's  business set forth under the heading  "Investment  Objectives
and Policies"  at pages 44  through  66 of the  Prospectus  is  incorporated  
herein  by reference.

On March 12, 1990, Registrant commenced, through Merrill Lynch, Pierce, Fenner &
Smith  Incorporated  ("Merrill  Lynch"),  the offering of up to 150,000 units of
limited  partnership  interest  ("Unit") at $1,000 per Unit.  On June 13,  1990,
December  27,  1990,  December  31, 1991 and January 23, 1992 the  closings  for
19,730,  9,622, 5,227 and 1,304 Units,  respectively,  took place,  amounting to
aggregate limited partners' capital contributions of $35,883,000.

Competition

Pursuant  to Rule  12b-23 of the  Commission's  General  Rules  and  Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors"  at pages 20 through 31 of the  Prospectus  is  incorporated  herein by
reference.

Employees

Registrant  employs no personnel  and incurs no payroll  costs.  All  management
activities of Registrant are conducted by the General  Partner.  An affiliate of
the General Partner employs individuals who perform the management activities of
Registrant.  This entity also performs  similar services for other affiliates of
the General Partner.

Tax  Reform Act of 1986,  Revenue  Act of 1987,  Technical  and  Miscellaneous
Revenue Act of 1988, Omnibus Budget  Reconciliation Act of 1989, Omnibus Budget
Reconciliation  Act  of  1990,  Tax  Extension  Act of  1991,  Omnibus  Budget
Reconciliation  Act of 1993,  Uruguay Round  Agreements Act and Taxpayer Relief
Act of 1997 (collectively the "Tax Acts")

Registrant  is organized as a limited  partnership  and is a "pass  through" tax
entity which does not, itself, pay Federal income tax. However,  the partners of
Registrant  who are  subject to Federal  income tax may be  affected  by the Tax
Acts.  Registrant will consider the effect of certain aspects of the Tax Acts on
the partners when making decisions  regarding its  investments.  Registrant does
not anticipate  that the Tax Acts will currently have a material  adverse impact
on Registrant's business operations, capital resources and plans or liquidity.



<PAGE>



Item 2.     Properties

The executive  offices of Registrant and the General  Partner are located at 599
West Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not
own or lease any  properties.  Registrant  pays no rent;  all charges for leased
space are borne by an affiliate of the General Partner.

Registrant's  primary objective is to provide  Low-income Tax Credits to limited
partners  generally over a ten year period. The relevant state tax credit agency
has allocated each of  Registrant's  Local  Partnerships an amount of Low-income
Tax Credits,  which are generally  available for a ten year period from the year
the Property is placed in service. The required holding period of each Property,
in order to avoid  Low-income  Tax Credit  recapture,  is fifteen years from the
year in which the  Low-income  Tax Credits  commence on the last building of the
Property  (the  "Compliance  Period").   In  addition,   certain  of  the  Local
Partnerships  have entered into  agreements  with the relevant  state tax credit
agencies whereby the Local  Partnerships  must maintain the low-income nature of
the Properties for a period which exceeds the Compliance  Period,  regardless of
any sale of the  Properties  by the  Local  Partnerships  after  the  Compliance
Period.  The  Properties  must  satisfy  various  requirements   including  rent
restrictions   and  tenant  income   limitations  (the  "Low-income  Tax  Credit
Requirements")  in order to  maintain  eligibility  for the  recognition  of the
Low-income  Tax Credit at all times during the Compliance  Period.  Once a Local
Partnership has become eligible for the Low-income Tax Credit,  it may lose such
eligibility  and suffer an event of recapture if its Property fails to remain in
compliance  with the Low-income Tax Credit  Requirements.  Through  December 31,
1997,  none of the Local  Partnerships  have  suffered an event of  recapture of
Low-income Tax Credits.

Although  Registrant  generally owns a 98.9%-99%  limited  partnership  interest
("Local  Partnership  Interest")  in  the  Local  Partnerships,  Registrant  and
American  Tax  Credit  Properties  II  L.P.  ("ATCP  II"),  a  Delaware  limited
partnership and an affiliate of Registrant, together, in the aggregate, acquired
a 99% Local Partnership Interest in certain Local Partnerships as follows:
<TABLE>
<CAPTION>
                                                Registrant                ATCP
                                                                II
        <S>                           <C>                   <C>
            Batesville Family, L.P.          61.75%                 37.25%
            Bruce Housing                    61.75                  37.25
              Associates, L.P.
            Carrington Limited
            Dividend Housing                 65.95                  33.05
              Association Limited
              Partnership
            Ivy Family, L.P.                 61.75                  37.25
            Lawrence Road                    61.75                  37.25
              Properties, Ltd.
            Mirador del Toa Limited          59.06                  39.94
              Partnership
            Purvis Heights                   61.75                  37.25
              Properties, L.P.
            Queen Lane Investors             48.50                  50.50
</TABLE>

Many of the  Local  Partnerships  receive  rental  subsidy  payments,  including
payments  under Section 8 of Title II of the Housing and  Community  Development
Act of 1974 ("Section 8") (see descriptions of subsidies on page 7). The subsidy
agreements  expire at various times during and after the  Compliance  Periods of
the Local  Partnerships.  In  October  1997,  Congress  passed  the  Multifamily
Assisted  Housing and Reform and  Affordability  Act  whereby the United  States
Department of Housing and Urban Development  ("HUD") has been given authority to
renew certain  project based  Section 8 contracts  expiring  during HUD's fiscal
year  1998,  where  requested  by an  owner,  for an  additional  one year  term
generally at or below current rent levels,  subject to certain  guidelines.  HUD
has additional  programs  which,  in general,  provide for  restructuring  rents
and/or mortgages where rents may be adjusted to market levels and mortgage terms
may be adjusted based on the reduction in rents, although there may be instances
in which only rents,  but not mortgages,  are  restructured.  Registrant  cannot
reasonably predict legislative initiatives and governmental budget negotiations,
the outcome of which  could  result in a reduction  in funds  available  for the
various federal and state administered  housing programs including the Section 8
program. Such changes could adversely affect the future net operating income and
debt structure of any or all Local Partnerships currently receiving such subsidy
or similar subsidies.  One Local Partnership's Section 8 contract,  which covers
certain rental units, is scheduled to expire in October 1998.



<PAGE>


<TABLE>
<CAPTION>
Item 2.     Properties (continued)

                              Capital contribution
                                    obligation                Mortgage
Name of Local Partnership    Number    Total        Paid       loans     
                                      as of        through    payable   Subsidy
Name of apartment complex     of     March 30,     March 30,   as of      (see
                            rental                          December 31,   foot-
Apartment complex            units      1998         1998       1997      notes)
------------------         --------------------- ------------------------------
location
--------
<S>                        <C>      <C>          <C>           <C>          <C>

April Gardens Apartments
II
  Limited Partnership
April Gardens Apartments    48    $485,581  $485,581   $ 2,004,455     (1b&d)
Las Piedras, Puerto Rico

Ashland Park Apartments,
L.P.
Ashland Park Apartments     24     235,732   235,732     1,042,772     (1b&d)
Ashland, Nebraska

Auburn Family, L.P.
Auburn Apartments
Louisville, Mississippi     16      95,412    95,412        472,356     (1b&d)

Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi     48    239,716(2)   239,716(2)   1,443,783       (1b)

Bay Springs Elderly, L.P.
Bay Springs Manor
Bay Springs, Mississippi    24     208,820    208,820        678,794     (1b&d)

Brisas del Mar Apartments
  Limited Partnership
Brisas del Mar Apartments
Hatillo, Puerto Rico        66     668,172   668,172       2,664,848     (1b&d)

Bruce Housing Associates,
L.P.
Bruce Family Apartments     40   183,155(2)  183,155(2)    1,112,700    (1b&d)
Bruce, Mississippi

Carrington Limited
Dividend
  Housing Association
Limited
  Partnership              100  2,174,720(2)   2,174,720(2)  3,464,852      (1c)
Carrington Place
Farmington Hills, Michigan

Chestnut Park Associates,
L.P.
Chestnut Park Apartments    59   4,204,576    4,204,576     5,239,113       (1a)
East Orange, New Jersey

Chowan Senior Manor
Associates
  Limited Partnership
Azalea Garden Senior Manor
  Apartments                33     278,405     278,405     1,267,699     (1b&d)
Murfreesboro, North
Carolina

Christian Street Commons
  Associates
Christian Street Commons
  Apartments
Philadelphia, Pennsylvania  18     581,645      581,645       627,335    (1a&b)

</TABLE>


<PAGE>


<TABLE>
<CAPTION>
Item 2.     Properties (continued)

                              Capital contribution
                                   obligation                 Mortgage
Name of Local Partnership   Number  Total as of       Paid    loans  
                                                   through    payable  Subsidy 
Name of apartment complex      of     March 30,     March 30,  December    (see
                            rental                               31,    foot-
Apartment complex            units      1998         1998      1997     notes)
------------------         --------------------- -----------------------------
location
--------
<S>                        <C>      <C>          <C>           <C>          <C>

Country View Apartments
Country View Apartments
Pembroke, Maine             16   $ 279,183  $ 279,183   $   941,880     (1b&d)

Desarrollos de Belen
Limited
  Partnership
Vista de Jagueyes II        41     422,929    422,929     1,889,550     (1b&d)
Apartments
Aguas Buenas, Puerto Rico

Desarrollos de Emaus
Limited
  Partnership
Hucares II Apartments       72     631,404     631,404     3,211,920     (1b&d)
Naguabo, Puerto Rico

Ellinwood Heights
Apartments, L.P.
Ellinwood Heights           24     156,261      156,261      691,142     (1b&d)
Apartments
Ellinwood, Kansas

Fulton Street Houses
Limited
  Partnership
Fulton Street Townhouse
  Apartments                35   1,948,081    1,948,081     3,869,930     (1a&b)
New York, New York

Hayes Run Limited
Partnership
Mashburn Gap Apartments     34    322,074      322,074     1,431,884     (1b&d)
Marshall, North Carolina

Howard L. Miller Sallisaw
  Apartments II, L.P.
Sallisaw II Apartments
Sallisaw, Oklahoma          24    130,158      130,158       618,138     (1b&d)

Hurlock Meadow Limited
  Partnership
Hurlock Meadow Apartments
Hurlock, Maryland           30     284,218     199,785     1,276,908     (1b&d)

Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi   32     135,528(2)    135,528(2)    801,919     (1b&d)

Justin Associates
Locust Tower Apartments
Philadelphia, Pennsylvania  40   1,809,723    1,809,723     2,483,842     (1b&e)

LaBelle Commons, Ltd.
LaBelle Commons
LaBelle, Florida            32    253,580      253,580      1,018,217     (1b&d)
Lawrence Road Properties,
Ltd.
Hillcrest Apartments        24    123,7992     123,7992      762,171     (1b&d)
Newton, Mississippi

</TABLE>


<PAGE>


<TABLE>
<CAPTION>
Item 2.     Properties (continued)
                              Capital contribution
                                                 obligation   Mortgage
Name of Local Partnership  Number Total as of  Paid through loans payable   Sub-
                                                                   as of    sidy
Name of apartment complex   of     March 30,     March 30,    December 31, (see
                          rental
Apartment complex        units     1998          1998         1997    footnotes)
------------------         --------------------- ------------------------------
location
<S>                        <C>      <C>          <C>           <C>          <C>
Loma Del Norte Limited
  Partnership
Loma Del Norte Apartments
Anthony, New Mexico            40   $   314,865  $ 314,865   $1,443,839  (1b&d)
Long Reach Associates
Limited
  Partnership
Oak Ridge Apartments           30     448,922       448,922    1,485,035 (1b&d)
Bath, Maine
Mirador del Toa Limited
  Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico          48     284,847(2)    284,847(2)  1,891,902 (1b&d)
Moore Haven Commons, Ltd.
Moore Haven Commons
Moore Haven, Florida           28     213,402       213,402     932,340  (1b&d)
NP-89 Limited Dividend
Housing
  Association Limited
Partnership                   168   2,372,292     2,372,292   4,306,098 (1a,b&g)
Newport Apartments
Clinton Township, Michigan
Nash Hill Associates,
Limited
  Partnership
Nash Hill Place                28     302,575       302,575   1,475,786 (1b,d&f)
Williamsburg, Massachusetts
North Calhoun City, L.P.
North Calhoun City
Apartments                     18     146,565       146,565    495,462  (1b&d)
Calhoun City, Mississippi
Orange City Plaza, Limited
  Partnership
Orange City Plaza Apartments
Orange City, Iowa              32     456,090       456,090    529,837     (1a)
Puerta del Mar Limited
Partnership
Puerta del Mar Apartments      66     630,570       630,570    2,537,277  (1b&d)
Hatillo, Puerto Rico
Purvis Heights Properties,
L.P.
Pineview Apartments            40     191,512(2)    191,512(2)  1,153,999 (1b)
Purvis, Mississippi
Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania     29     597,050(2)    597,050(2) 1,580,073  (1b&e)
Somerset Manor, Ltd.
Somerset Manor
Central City, Pennsylvania     24     208,465       208,465     901,698   (1b&d)
Sugar Cane Villas, Ltd.
Sugar Cane Villas
Pahokee, Florida               87        751,560      751,560  3,322,803 (1b&d)

</TABLE>


<PAGE>


<TABLE>
<CAPTION>
Item 2.     Properties (continued)
                              Capital contribution
                                                   obligation   Mortgage
Name of Local Partnership  Number Total as of Paid through  loans payable  Sub-
                                                                   as of   sidy    
Name of apartment complex  of        March 30,    March 30,  December 31,  (see
                            rental
Apartment complex            units    1998          1998       1997   footnotes)
------------------         -------------------------------------------------------------
location
<S>                        <C>      <C>          <C>           <C>          <C>
Summerfield Apartments
Limited
  Partnership
Summerfield Apartments         52   $1,088,667  $1,088,667  $1,806,784      (1b)
Charlotte, North Carolina
Sydney Engel Associates L.P.
(formerly known as Sydney
Engel
  Associates)
The Castle                    224   3,201,874    3,201,874   17,831,381    (1b)
New York, New York
Union Valley Associates
Limited
  Partnership
Union Valley Apartments        36    371,589       371,589     1,453,673   (1b)
Union Township, Pennsylvania
Walnut Grove Family, L.P.
Walnut Grove Apartments
Walnut Grove, Mississippi      24     191,695      191,695       850,407  (1b&d)
Waynesboro Apartments
Limited
  Partnership
Waynesboro Apartments          36     360,859      360,859      1,490,153   (1b)
Waynesboro, Pennsylvania
West Calhoun City, L.P.
West Calhoun City Apartments
Calhoun City, Mississippi      28     230,212     230,212       783,367   (1b&d)
Westminster Apartments
Limited
  Partnership
Westminster Apartments         42   1,047,993    1,047,993   1,631,651   (1a&b)
                                    -------------------------- -------------         
Philadelphia, Pennsylvania
                                    $ 29,264,476 $ 29,180,043  $ 86,919,773
                                    ============ ============  ============
</TABLE>
   (1)      Description of Subsidies:

      (a)Section 8 of Title II of the Housing and Community  Development  Act of
         1974 allows qualified low-income tenants to pay thirty percent of their
         monthly income as rent with the balance paid by the federal government.

      (b)The  Local   Partnership's  debt  structure  includes  a  principal  or
         interest payment subsidy.

      (c)The Michigan State Housing  Development  Authority allows tenants,  who
         would  otherwise  pay  more  than  40% of  their  income  for  rent and
         utilities, to receive rental subsidies.

      (d)The Rural Housing  Service  (formerly the Farmers Home  Administration)
         of the  United  States  Department  of  Agriculture  Rental  Assistance
         Program  allows   qualified   low-income   tenants  to  receive  rental
         subsidies.

      (e)The City of Philadelphia  Housing Authority allows qualified low-income
         tenants to receive rental certificates.

      (f)    The Commonwealth of Massachusetts  participates in a rental
         assistance program.

      (g)One of the  Local  Partnership's  Section  8  contracts,  which  covers
         certain rental units, is scheduled to expire in October 1998.
   (2)The  capital  contribution  obligation  total as of March 30, 1998 and the
      capital  contribution  obligation  paid  through  March 30,  1998  reflect
      Registrant's obligation only.


<PAGE>



Item 3.     Legal Proceedings

On  July  16,  1997,  Everest  Properties,  Inc.  ("Everest")  demanded  certain
information  with  respect to the  holders  of Units.  Everest  stated  that the
purpose of the demand was to assist  Everest in making an offer to Unit  holders
to purchase their Units and otherwise to communicate  with them  concerning such
an offer.  On July 25,  1997,  Registrant  requested  certain  information  from
Everest in order to assess the  appropriateness of the demand. On July 28, 1997,
Everest  filed a complaint  in the Court of Chancery of the State of Delaware in
and for New Castle  County  against  Registrant,  the  General  Partner  and its
general partner seeking,  among other things,  an order directing the defendants
to immediately furnish the requested  information and awarding the plaintiff any
resulting  damages.  A one day trial was held on September 29, 1997. On December
5, 1997, the Court of Chancery  issued a memorandum  opinion and order,  holding
that the  plaintiff  is entitled to the  requested  information  regarding  Unit
holders.  On  December  15,  1997,  defendants  filed a Notice  of Appeal to the
Supreme  Court of Delaware,  which appeal was heard and denied.  Registrant  has
complied with the Court of Chancery's order.

Registrant is not aware of any other material legal proceedings.

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

There were no matters  submitted to a vote of the limited partners of Registrant
during the fourth quarter of the fiscal year covered by this report.


<PAGE>


                                      PART II

Item 5.     Market for Registrant's Common Equity
      and Related Security Holder Matters

Market Information and Holders

There  is  no  established   public  trading  market  for  Registrant's   Units.
Accordingly,  accurate information as to the market value of a Unit at any given
date is not  available.  The  number of  owners of Units as of May 20,  1998 was
1,778, holding 35,883 Units.

Merrill Lynch follows  internal  guidelines  for providing  estimated  values of
limited  partnerships  and other direct  investments  reported on client account
statements.   Pursuant  to  such   guidelines,   estimated  values  for  limited
partnership  interests reported on Merrill Lynch client account statements (such
as  Registrant's  Units) are provided to Merrill Lynch by independent  valuation
services.  These estimated  values are based on financial and other  information
available to the independent services (1) on the prior August 15th for reporting
on December  year-end  and  subsequent  client  account  statements  through the
following May month-end  client  account  statements  and (2) on the prior March
31st for reporting on June through November  month-end client account statements
of the same  year.  Merrill  Lynch  clients  may  contact  their  Merrill  Lynch
Financial  Consultants or telephone the number provided to them on their account
statements  to  obtain a  general  description  of the  methodology  used by the
independent  valuation  services  to  determine  their  estimates  of value.  In
addition,  Registrant may provide an estimate of value to Unit holders from time
to time in  Registrant's  reports  to limited  partners.  The  estimated  values
provided by the independent  services and Registrant,  which may differ, are not
market  values and Unit  holders  may not be able to sell their Units or realize
either  amount upon a sale of their  Units.  In  addition,  Unit holders may not
realize such estimated  values upon the liquidation of Registrant's  assets over
its remaining life.

Distributions

Registrant owns a limited  partnership  interest in Local  Partnerships that are
the owners of Properties which are leveraged and receive  government  assistance
in various forms of rental and debt service subsidies.  The distribution of cash
flow generated by the Local  Partnerships  may be  restricted,  as determined by
each  Local  Partnership's   financing  and  subsidy  agreements.   Accordingly,
Registrant  does not  anticipate  that it will provide  significant  annual cash
distributions to its partners.  There were no cash distributions to the partners
during the years ended March 30, 1998 and 1997.

Low-income Tax Credits, which are subject to various limitations, may be used by
partners to offset  Federal income tax  liabilities.  The Low-income Tax Credits
per Unit generated by Registrant  and allocated to the limited  partners for the
tax years ended  December 31, 1997 and 1996 and the  cumulative  Low-income  Tax
Credits allocated from inception through December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                 Low-income
                                                Tax Credits
                <S>                           <C>
                Tax year ended December 31,      $ 153.74
                1997
                Tax year ended December 31,        152.73
                1996

                Cumulative totals                $ 991.02
</TABLE>
Notwithstanding future circumstances which may give rise to recapture or loss of
future benefits (see Part I, Item 2 - Properties, herein), Registrant expects to
generate total Low-income Tax Credits from investments in Local  Partnerships of
approximately $1,500 per Unit through December 31, 2003.



<PAGE>


Item 6.     Selected Financial Data

The information set forth below presents selected  financial data of Registrant.
Additional detailed financial  information is set forth in the audited financial
statements included under Part II, Item 8 herein.

 <TABLE> 
<CAPTION>
                                     Years Ended March 30,
                               1998     1997           1996      1995     1994
                             -------------------------------------------------               
<S>                    <C>          <C>          <C>          <C>           <C>
Interest and other     $      257,645  $317,065    $335,724   $326,184  $331,981
                       ========================================================
revenue

Equity in loss of
  investment in local  $ (2,358,431)$ (2,509,806)$ (3,249,195)$ (3,396,272) $ (3,295,333)
                       ============ ============ ============ ============  ============ 
  partnerships

Net loss               $ (2,649,323)$ (2,718,536)$ (3,443,977)$ (3,611,978) $ (3,522,497)
                       ============ ============ ============ ============  ============ 

Net loss per unit of
  limited partnership  $     (73.09)  $  (75.00)  $  (95.02)   $  (99.65)    $   (97.18)
                       =================================================================== 
  interest
                                                                                As of
                                                     March
                       30,
                                                       1996
                              1998         1997                      1995         1994
                        ----------------------------           -----------------------

Total assets           $12,106,269  $15,503,629  $17,832,235  $21,199,982   $23,379,674
                       ===========  ===========  ===========  ===========   ===========
</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations

Capital Resources and Liquidity

Registrant  admitted  limited  partners in four closings with aggregate  limited
partners' capital contributions of $35,883,000.  In connection with the offering
of the sale of Units,  Registrant  incurred  organization  and offering costs of
approximately   $4,419,000  and   established  a  working   capital  reserve  of
approximately   $2,153,000.   The  remaining   net  proceeds  of   approximately
$29,311,000 (the "Net Proceeds") were available to be applied to the acquisition
of  limited   partnership   interests   in  local   partnerships   (the   "Local
Partnerships")  which own  low-income  multifamily  residential  complexes  (the
"Property" or  "Properties")  which qualify for the  low-income tax credit under
Section 42 of the  Internal  Revenue Code (the  "Low-income  Tax  Credit").  Any
adjustments  to the  capital  contributions  made  by  Registrant  to the  Local
Partnerships under the terms of the Local Partnerships'  partnership  agreements
have  resulted  in  an  adjustment  to  Registrant's  working  capital  reserve.
Registrant has utilized Net Proceeds, after making any necessary adjustments, in
acquiring an interest in forty-three Local Partnerships.  Restricted cash in the
balance  sheet  as  of  March  30,  1998   represents  an  outstanding   capital
contribution  payable  upon one Local  Partnership's  satisfaction  of specified
conditions related to operations.

As of March 30, 1998,  Registrant has unrestricted cash and cash equivalents and
investments  in bonds  totaling  $3,484,813,  which is available  for  operating
expenses of Registrant and circumstances  which may arise in connection with the
Local  Partnerships.  As of March 30, 1998,  Registrant's  investments  in bonds
represent  corporate bonds of $1,916,994,  U.S. Treasury bonds of $1,026,069 and
U.S.  government  agency bonds of $122,378 with various  maturity  dates ranging
from  1999 to 2023.  Registrant  acquired  such  investments  in bonds  with the
intention of utilizing proceeds generated by such investments to meet its annual
obligations.  Future  sources of Registrant  funds are expected  primarily  from
interest  earned on working  capital and limited cash  distributions  from Local
Partnerships.

During the year ended March 30, 1998,  Registrant  received  cash from  interest
revenue,  maturity  of a bond and  distributions  from  Local  Partnerships  and
utilized  cash for  operating  expenses and making a capital  contribution  to a
Local   Partnership.   Cash  and  cash  equivalents  and  investments  in  bonds
available-for-sale increased, in the aggregate, by approximately $221,000 during
the  year  ended  March  30,  1998  (which  included  a net  unrealized  gain on
investments in bonds of approximately  $215,000, the amortization of net premium
on  investments  in bonds of  approximately  $15,000 and the  accretion  of zero
coupon  bonds  of  approximately  $85,000)  and  restricted  cash  decreased  by
approximately $1,225,000 as a result of a capital contribution payment made to a
Local  Partnership.  Notwithstanding  circumstances that may arise in connection
with the Properties,  Registrant does not expect to realize significant gains or
losses on its investments in bonds, if any.

During the year ended  March 30,  1998,  the  investment  in Local  Partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the year  ended  December  31,  1997 of  $2,358,431  and cash  distributions
received from Local  Partnerships of $31,519  (exclusive of  distributions  from
Local  Partnerships  of $6,672  classified as other income).  Payable to general
partner  in the  accompanying  balance  sheet as of March  30,  1998  represents
accrued management fees.


<PAGE>


Item 7.     Management's Discussion and Analysis of Financial Condition and 
            Results of Operations (continued)

Results of Operations

Registrant's  operating  results are dependent upon the operating results of the
Local  Partnerships and are  significantly  impacted by the Local  Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting.  Registrant accounts for its investment in Local Partnerships
in accordance  with the equity method of accounting,  under which the investment
is carried at cost which includes capital contributions payable, and is adjusted
for Registrant's share of each Local Partnership's  results of operations and by
cash  distributions  received.  Equity  in  loss  of each  investment  in  Local
Partnership  allocated to Registrant is recognized to the extent of Registrant's
investment  balance  in each  Local  Partnership.  Equity  in loss in  excess of
Registrant's  investment  balance in a Local  Partnership  is allocated to other
partners'  capital  in any such Local  Partnership.  As a result,  the  reported
equity in loss of  investment in Local  Partnerships  is expected to decrease as
Registrant's  investment  balances in the respective Local  Partnerships  become
zero. The combined statements of operations of the Local Partnerships  reflected
in Note 5 to Registrant's  financial statements include the operating results of
all Local Partnerships, irrespective of Registrant's investment balances.

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

Registrant's  operations  for the  years  ended  March 30,  1998,  1997 and 1996
resulted in net losses of $2,649,323,  $2,718,536 and $3,443,977,  respectively.
The  decrease  in net loss  from  1997 to 1998 is  primarily  attributable  to a
decrease in equity in loss of investment in Local  Partnerships of approximately
$151,000,  partially  offset by a decrease in interest  revenue of approximately
$66,000 and an increase  in  professional  fees of  approximately  $21,000.  The
decrease in equity in loss of investment in Local  Partnerships is primarily the
result of an increase in the  nonrecognition of losses in excess of Registrant's
investment in Local Partnerships of approximately  $1,131,000 in accordance with
the equity method of accounting,  partially offset by Registrant's  share of the
increase  in net loss of the  Local  Partnerships  of  approximately  $1,009,000
resulting  primarily from the recorded  impairment in connection  with Christian
Street  Commons  Associates  (the  "Christian  Street  Local   Partnership")  of
$1,032,653  (see Local  Partnership  Matters  below).  The  decrease in interest
revenue is primarily due to the payment of a capital  contribution which reduced
the amount of  available  investments.  The  increase  in  professional  fees is
primarily  the result of costs  incurred in connection  with an outside  party's
desire  to  purchase  Units.  The  decrease  in net  loss  from  1996 to 1997 is
primarily  attributable  to a decrease in equity in loss of  investment in Local
Partnerships of approximately  $739,000,  which is primarily attributable to (i)
an increase in the nonrecognition of losses in excess of Registrant's investment
in Local  Partnerships of  approximately  $359,000 in accordance with the equity
method of accounting and (ii) a decrease in the net operating  losses of certain
Local Partnerships.

The Local Partnerships' net loss of approximately  $4,269,000 for the year ended
December  31,  1997   includes   depreciation   and   amortization   expense  of
approximately  $4,066,000,  interest  on  non-mandatory  debt  of  approximately
$331,000  and a loss from  impairment  of  long-lived  assets  of  approximately
$1,033,000,  and does not include principal  payments on permanent  mortgages of
approximately  $432,000.  The  Local  Partnerships'  net  loss of  approximately
$3,260,000  for the year ended  December  31,  1996  includes  depreciation  and
amortization  expense of approximately  $4,218,000 and interest on non-mandatory
debt of  approximately  $299,000,  and does not  include  principal  payments on
permanent mortgages of approximately  $309,000. The Local Partnerships' net loss
of  approximately  $3,678,000  for the year ended  December  31,  1995  includes
depreciation and amortization  expense of approximately  $4,392,000 and interest
on non-mandatory debt of approximately  $278,000, and does not include principal
payments  on  permanent  mortgages  of  approximately  $261,000.  The results of
operations of the Local  Partnerships  for the year ended  December 31, 1997 are
not  necessarily  indicative  of the  results  that may be  expected  in  future
periods.

Local Partnership Matters

The Properties are principally  comprised of subsidized and leveraged low-income
multifamily  residential  complexes  located  throughout  the United  States and
Puerto Rico. The rents of the  Properties,  many of which receive rental subsidy
payments  pursuant  to  subsidy  agreements  ("HAP  Contracts")  are  subject to
specific laws,  regulations and agreements with federal and state agencies.  One
Local  Partnership's  HAP  Contract,  which  covers  certain  rental  units,  is
scheduled to expire in October 1998. In addition,  the Local  Partnerships  have
various  financing  structures  which include (i) required debt service payments
("Mandatory Debt Service") and (ii) debt service payments which are payable only
from available cash flow subject to the terms and conditions of the notes, which
may be subject to specific laws,  regulations  and agreements  with  appropriate
federal and state agencies  ("Non-Mandatory  Debt Service or Interest").  In the
event rents are not  sufficient  to cover  operating  expenses,  Mandatory  Debt
Service  requirements  and other charges,  certain  general  partners of a local
partnership (the "Local

Item 7.     Management's Discussion and Analysis of Financial Condition and 
            Results of Operations (continued)

General  Partner")  are  obligated to provide  advances to cover  deficits for a
certain period of time up to certain amounts (the "Deficit Guarantee").  A Local
General  Partner's  funding  of  such  Deficit  Guarantee  is  dependent  on its
liquidity  or  ability  to borrow  the  required  funds.  During  the year ended
December 31, 1997,  revenue from operations,  Local General Partner advances and
reserves of the Local  Partnerships  have generally been sufficient to cover the
operating  expenses and Mandatory Debt Service.  Substantially  all of the Local
Partnerships  are effectively  operating at or near break even levels,  although
certain Local Partnerships'  operating  information  reflects operating deficits
that  do not  represent  cash  deficits  due to  their  mortgage  and  financing
structure and the required  deferral of property  management fees.  However,  as
discussed below,  certain Local Partnerships'  operating  information  indicates
below  break even  operations  after  taking into  account  their  mortgage  and
financing structure and any required deferral of property management fees.

The terms of the partnership agreement of the Christian Street Local Partnership
require the Local General Partners to advance funds to cover operating  deficits
up to $150,000  through 2008 and to cause the management agent to defer property
management  fees in order to avoid a default under the  mortgage.  The Christian
Street Local Partnership incurred an operating deficit of approximately  $26,000
for the year ended December 31, 1997, which includes property management fees of
approximately $4,000.  Accordingly,  the net operating deficit was approximately
$22,000.  As of December 31, 1997,  the Local  General  Partners  have  advanced
approximately $74,000 under their Deficit Guarantee obligation.  However, due to
ongoing operating deficits and the uncertainty of future operating income, the 
Christian Street Local Partnership has determined  the  underlying  rental  
property to be permanently impaired in accordance with applicable  accounting 
practices.  Accordingly,  the Christian Street Local  Partnership  recognized 
an impairment loss of $1,032,653 as of December 31, 1997. As a result, 
Registrant recognized additional equity in loss  of  its   investment  in  the 
Christian   Street  Local Partnership of approximately  $386,000 in connection
with the  aforementioned  impairment  and Registrant's investment balance in 
the Christian Street Local Partnership, after the cumulative equity losses, 
became zero during the year ended March 30, 1998. Notwithstanding the
accounting   treatment  concerning  the  impairment  loss,Registrant has not
experienced an  interruption in the allocation of Low-income Tax Credits from
the Christian Street Local Partnership.  Of Registrant's total annual
Low-income Tax Credits,  approximately 2% is allocated from the Christian
Street Local Partnership.

Waynesboro  Apartments Limited  Partnership (the "Waynesboro Local Partnership")
incurred  an  operating  deficit  of  approximately  $6,000  for the year  ended
December 31, 1997. In addition,  although principal and interest payments on its
mortgage are current,  the  property's  replacement  reserve is  underfunded  by
approximately  $14,000 as of December 31, 1997. The Local General  Partners have
reported  that they have  submitted a workout  plan to the lender,  but that the
lender  has yet to  reply.  No  default  has been  declared  as a result  of the
underfunding of the replacement reserve. Of Registrant's total annual Low-income
Tax  Credits,   approximately   3%  is  allocated  from  the  Waynesboro   Local
Partnership.

The  terms  of the  partnership  agreement  of  Westminster  Apartments  Limited
Partnership  (the  "Westminster  Local  Partnership")  require the Local General
Partner to advance funds to cover operating  deficits  through 2009 and to cause
the  management  agent to  defer  property  management  fees in order to avoid a
default  under the  mortgage.  The  Westminster  Local  Partnership  incurred an
operating deficit of approximately $13,000 for the year ended December 31, 1997,
which includes property  management fees of approximately  $9,000.  Accordingly,
the net  operating  deficit was  approximately  $4,000.  As of January  1998 the
Westminster Local Partnership had fallen four months in arrears on its mortgage,
replacement  reserve and escrow  requirements,  at which time the lender drew on
available  collateral  of  approximately  $26,000  provided by the Local General
Partner.  As of June 15,  1998,  the  Local  General  Partner  reports  that the
mortgage is current  and no default has been  declared by the lender as a result
of  the  drawdown  on  the  collateral   although  resolution  of  the  lender's
application  of the collateral  previously  drawn is pending.  In addition,  the
Local General Partner has reported that it was successful in its real estate tax
appeal,  resulting  in  a  reduction  in  annual  real  estate  tax  expense  of
approximately  $5,000 compared to the expense  incurred in 1997. Of Registrant's
total annual  Low-income  Tax Credits,  approximately  4% is allocated  from the
Westminster Local Partnership.

Inflation

Inflation  is not  expected to have a material  adverse  impact on  Registrant's
operations during its period of ownership of the Local Partnership Interests.

Adoption of Accounting Standard

Registrant has adopted Statement of Financial  Accounting Standard ("SFAS") No. 
128, "Earnings  Per Share" and SFAS No. 129,  "Disclosure  of  Information  
About Capital Structure."  SFAS  No.  128  establishes  standards  for  
computing  and  presenting earnings  per share.  SFAS No. 129 requires  the  
disclosure  in summary form within the  financial  statements  of the  pertinent
rights and  privileges of the various securities  outstanding.  The adoption of 
SFAS Nos.  128 and 129 has not  materially impacted  Registrant's  reported  
earnings,   financial  condition,  cash  flows  or presentation of the financial
statements.


<PAGE>


Item 7.     Management's Discussion and Analysis of Financial Condition and 
          Results of Operations (continued)

Accounting Standard not yet Adopted

On March 31, 1998,  Registrant  adopted SFAS No. 130,  "Reporting  Comprehensive
Income."  SFAS No.  130  establishes  standards  for  reporting  and  display of
comprehensive income and its components (revenues,  expenses,  gains and losses)
in a full set of general-purpose financial statements.  The adoption of SFAS No.
130 is not expected to have a material impact on Registrant's financial position
and results of operations.


<PAGE>


                     AMERICAN TAX CREDIT PROPERTIES III L.P.


Item 8.     Financial Statements and Supplementary Data


                                                    Table of Contents Page

Independent Auditors' Report...............................................15

Balance Sheets as of March 30, 1998 and 1997................................16

Statements of Operations for the years ended March 30, 1998, 1997 and 1996...17

Statements of Changes in Partners' Equity (Deficit) for the years ended
  March 30, 1998, 1997 and 1996.............................................18

Statements of Cash Flows for the years ended March 30, 1998, 1997 and 1996..19

Notes to Financial Statements as of March 30, 1998, 1997 and 1996.........21



No financial  statement  schedules  are  included  because of the absence of the
conditions  under which they are required or because the information is included
in the financial statements or the notes thereto.



<PAGE>




                            INDEPENDENT AUDITORS' REPORT


To the Partners
American Tax Credit Properties III L.P.

We  have  audited  the  accompanying  balance  sheets  of  American  Tax  Credit
Properties III L.P. as of March 30, 1998 and 1997, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for each of the
three years in the period ended March 30, 1998.  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  generally  accepted  auditing
standards.  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  American  Tax  Credit
Properties  III L.P.  as of March 30,  1998 and  1997,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
March 30, 1998, in conformity with generally accepted accounting principles.


/s/ Reznick Fedder & Silverman

Bethesda, Maryland
May 11, 1998



<PAGE>


<TABLE>
<CAPTION>
                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                      BALANCE SHEETS
                                 MARCH 30, 1998 AND 1997

<S>                                           <C>          <C>
                                                 Notes           1998         1997
                                                 -----     -----------------------
ASSETS

Cash and cash equivalents                         3,9      $  419,372  $409,413
Restricted cash                                  3,5,9         84,433    1,309,208
Investments in bonds available-for-sale           4,9       3,065,441    2,854,771
Investment in local partnerships                  5,8       8,515,114   10,905,064
Interest receivable                                9           21,909    25,173
                                                           -----------------------------

                                                           $ 12,106,269 $ 15,503,629

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

  Accounts payable and accrued expenses            8       $  997,634  $ 862,114
  Payable to general partner                      6,8         930,614    800,043
  Capital contributions payable                   5,9          84,433  1,309,208
  Other                                                       16,450      21,200
                                                           ----------------------------

                                                               2,029,131    2,992,565

Commitments and contingencies                     5,8

Partners' equity (deficit)                        2,4

  General partner                                            (214,858)    (188,365)
  Limited partners (35,883 units of limited
   partnership interest outstanding)                       10,258,714   12,881,544
  Unrealized gain (loss) on investments in
   bonds available-for-sale, net                               33,282      (182,115)
                                                            ----------    ---------
                                                              10,077,138  12,511,064

                                                           $ 12,106,269 $ 15,503,629
</TABLE>













                            See Notes to Financial Statements.



<PAGE>


<TABLE>
<CAPTION>
                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 STATEMENTS OF OPERATIONS
                        YEARS ENDED MARCH 30, 1998, 1997 AND 1996



                                      Notes           1998          1997          1996
                                      -----  -----------------------------------------
<S>                                  <C>     <C>           <C>           <C>
REVENUE

Interest                                     $      250,973    $  317,065       $335,724
Other income from local partnerships                  6,672
                                             --------------      ----------     --------

TOTAL REVENUE                                       257,645        317,065        335,724
                                             ----------------    -----------   ---------


EXPENSES

Administration fees                     8       230,571       230,571        230,571
Management fees                        6,8      230,571       230,571        230,571
Professional fees                                67,118        45,849         50,757
Printing, postage and other                      20,277        18,804         15,482
Amortization                                                                   3,125
                                             --------------------------------------------

TOTAL EXPENSES                                   548,537       525,795       530,506
                                             ------------------------------------------

Loss from operations                           (290,892)     (208,730)      (194,782)

Equity in loss of investment in         5       (2,358,431)   (2,509,806)   (3,249,195)
                                             ------------- ------------- ------------- 
local partnerships

NET LOSS                                     $ (2,649,323) $ (2,718,536) $ (3,443,977)
                                             ============  ============  ============ 


NET LOSS ATTRIBUTABLE TO                2

  General partner                            $   (26,493)   $   (27,185)   $  (34,440)
  Limited partners                              (2,622,830)   (2,691,351)   (3,409,537)
                                             ------------- ------------- ------------- 

                                             $ (2,649,323) $ (2,718,536) $ (3,443,977)

NET LOSS per unit of limited
partnership
  interest (35,883 units of limited
  partnership interest)                      $  (73.09)    $  (75.00)    $   (95.02)
                                             =========================================== 
</TABLE>










                            See Notes to Financial Statements.



<PAGE>


<TABLE>
<CAPTION>
                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                   STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
                        YEARS ENDED MARCH 30, 1998, 1997 AND 1996



                                                              Unrealized
                                                            Gain (Loss) on
                                                            Investments in
                                    General    Limited     Bonds Available-
                                      Partner    Partners       For-Sale,       Total
                                                                  Net
<S>                               <C>         <C>          <C>              <C>
Partners' equity (deficit),       $ (126,740) $ 18,982,432 $     (202,799)  $ 18,652,893
  March 30, 1995

Net loss                            (34,440)  (3,409,537)                     (3,443,977)

Unrealized gain on investments
  in bonds available-for-sale,                                     107,692         107,692
                                  ----------------------------------------  --------------
  net

Partners' equity (deficit),        (161,180)  15,572,895       (95,107)     15,316,608
  March 30, 1996

Net loss                            (27,185)  (2,691,351)                   (2,718,536)

Unrealized loss on investments
  in bonds available-for-sale,                                 (87,008)        (87,008)
                                  ----------------------------------------- --------------- 
  net

Partners' equity (deficit),        (188,365)  12,881,544      (182,115)     12,511,064
  March 30, 1997

Net loss                            (26,493)  (2,622,830)                   (2,649,323)

Unrealized gain on investments in
  bonds available-for-sale, net                                 215,397         215,397
                                  ----------------------------------------  --------------

Partners' equity (deficit),       $ (214,858) $ 10,258,714    $ 33,282       $ 10,077,138
                                  ==========  ============ ===============  ============
  March 30, 1998
</TABLE>





















                            See Notes to Financial Statements.



<PAGE>


<TABLE>
<CAPTION>
                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 STATEMENTS OF CASH FLOWS
                        YEARS ENDED MARCH 30, 1998, 1997 AND 1996



                                                      1998         1997         1996
                                                  ----------------------------------
<S>                                               <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Interest received                                 $   183,964  $   248,496  $   256,741
Cash used for local partnerships for deferred         (4,750)      (4,750)      (4,750)
expenses
Cash paid for
   administration fees                              (100,000)    (100,000)    (100,000)
   management fees                                  (100,000)    (100,000)    (100,000)
   professional fees                                 (55,618)     (40,999)     (41,357)
   printing, postage and other expenses              (26,828)      (9,989)     (12,736)
                                                  ------------ ------------------------- 

Net cash used in operating activities               (103,232)       (7,242)     (2,102)
                                                  -----------  -------------------------- 


CASH FLOWS FROM INVESTING ACTIVITIES

Cash distributions and other income from local        38,191       33,605       29,682
partnerships
Maturity/redemption of bonds                          75,000      200,000
Transfer from (to) restricted cash                 1,224,775     (206,881)     300,000
Investment in local partnerships                  (1,224,775)                 (300,000)
Investments in bonds                                                          (301,554)
                                                  -------------------------------------- 

Net cash provided by (used in) investing             113,191        26,724    (271,872)
                                                  ------------ ------------------------- 
activities

Net increase (decrease) in cash and cash               9,959       19,482     (273,974)
equivalents

Cash and cash equivalents at beginning of year         409,413      389,931      663,905
                                                  ------------ ------------ ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR          $   419,372  $   409,413  $   389,931
                                                  ===========  ===========  ===========


SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized gain (loss) on investments in bonds    $   215,397  $   (87,008) $   107,692
                                                  ===========  ===========  ===========
   available-for-sale, net

Increase in capital contributions payable                      $   206,881
                                                               ===========


-----------------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating  activities on page
20.
</TABLE>









                            See Notes to Financial Statements.



<PAGE>


<TABLE>
<CAPTION>
                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                          STATEMENTS OF CASH FLOWS - (Continued)
                        YEARS ENDED MARCH 30, 1998, 1997 AND 1996



                                                       1998         1997         1996
                                                 ------------------------------------
<S>                                              <C>          <C>          <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN
   OPERATING ACTIVITIES

Net loss                                         $ (2,649,323)$ (2,718,536)$ (3,443,977)

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

   Equity in loss of investment in local         2,358,431    2,509,806    3,249,195
   partnerships
   Distributions from local partnerships            (6,672)
   classified as other income
   Amortization of organization costs                                          3,125
   Amortization of net premium on investments       14,907       16,852       18,640
   in bonds
   Accretion of zero coupon bonds                  (85,180)     (88,256)     (86,046)
   Decrease (increase) in interest receivable        3,264        2,835      (11,577)
   Increase in accounts payable and accrued        135,520      144,236      142,717
   expenses
   Increase in payable to general partner          130,571      130,571      130,571
   Decrease in other liabilities                   (4,750)       (4,750)     (4,750)
                                                 ----------------------------------------- 

NET CASH USED IN OPERATING ACTIVITIES            $ (103,232)   $ (7,242)     $(2,102)
                                                 ========================================= 
</TABLE>



























                            See Notes to Financial Statements.



<PAGE>



                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                              NOTES TO FINANCIAL STATEMENTS
                              MARCH 30, 1998, 1997 AND 1996

1.   Organization, Purpose and Summary of Significant Accounting Policies

     American Tax Credit Properties III L.P. (the  "Partnership")  was formed on
     September  21,  1989 and the  Certificate  of  Limited  Partnership  of the
     Partnership   was  filed  under  the  Delaware   Revised   Uniform  Limited
     Partnership  Act. There was no operating  activity  until  admission of the
     limited  partners on June 13, 1990.  The  Partnership  was formed to invest
     primarily in leveraged low-income  multifamily  residential  complexes (the
     "Property" or  "Properties")  which qualify for the  low-income  tax credit
     established by Section 42 of the Internal Revenue Code (the "Low-income Tax
     Credit"),  through the acquisition of limited  partnership equity interests
     (the  "Local   Partnership   Interests")   in   partnerships   (the  "Local
     Partnership"  or  "Local   Partnerships")   that  are  the  owners  of  the
     Properties.  Richman Tax Credit Properties III L.P. (the "General Partner")
     was  formed on  September  21,  1989 to act as the  general  partner of the
     Partnership.

     Basis of Accounting and Fiscal Year

     The Partnership's records are maintained on the accrual basis of accounting
     for both  financial  reporting  and tax purposes.  For financial  reporting
     purposes,  the  Partnership's  fiscal year ends March 30 and its  quarterly
     periods end June 29,  September 29 and December 30. The Local  Partnerships
     have a calendar year for financial reporting purposes.  The Partnership and
     the Local Partnerships each have a calendar year for income tax purposes.

     The  Partnership  accounts  for its  investment  in Local  Partnerships  in
     accordance with the equity method of accounting, under which the investment
     is carried at cost which includes  capital  contributions  payable,  and is
     adjusted for the Partnership's share of each Local Partnership's results of
     operations  and by  cash  distributions  received.  Equity  in loss of each
     investment in Local Partnership  allocated to the Partnership is recognized
     to the  extent  of the  Partnership's  investment  balance  in  each  Local
     Partnership.  Equity  in loss in  excess  of the  Partnership's  investment
     balance in a Local  Partnership is allocated to other partners'  capital in
     any such Local Partnership.  Previously  unrecognized equity in loss of any
     Local  Partnership  is  recognized  in the fiscal  year in which  equity in
     income  is  earned  by  such  Local  Partnership.   Distributions  received
     subsequent  to the  elimination  of an  investment  balance  for  any  such
     investment in a Local  Partnership  are recorded as other income from Local
     Partnerships.

     The Partnership  regularly  assesses its investments in Local  Partnerships
     for the existence of impairment. If an investment in a Local Partnership is
     considered  to  be  permanently  impaired,   the  Partnership  reduces  its
     investment in any such Local  Partnership  and includes  such  reduction in
     equity in loss of investment in Local Partnerships.

     Use of Estimates

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

     Adoption of Accounting Standard

     The  Partnership  has  adopted  Statement  of  Financial   Accounting  
     Standard ("SFAS")  No.  128,  "Earnings  Per Share"  and SFAS No.  129, 
     "Disclosure  of Information  about Capital  Structure." SFAS No. 128 
     establishes  standards for computing  and  presenting  earnings per share.
     SFAS No.  129  requires  the disclosure  in summary form within the  
     financial statements of the pertinent rights and privileges of the various
     securities  outstanding.  The adoption of SFAS Nos. 128 and 129 has not 
     materially  impacted the  Partnership's  reported earnings,  financial 
     condition,  cash flows or  presentation  of the financial statements.

     Accounting Standard not yet Adopted

     On March  31,  1998,  the  Partnership  adopted  SFAS No.  130,  "Reporting
     Comprehensive Income." SFAS No. 130 establishes standards for reporting and
     display of  comprehensive  income and its components  (revenues,  expenses,
     gains and losses) in a full set of  general-purpose  financial  statements.
     The adoption of SFAS No. 130 is not  expected to have a material  impact on
     the Partnership's financial position and results of operations.


<PAGE>



                      AMERICAN TAX CREDIT PROPERTIES III L.P.
                    NOTES TO FINANCIAL STATEMENTS - (Continued)
                           MARCH 30, 1998, 1997 AND 1996


1.Organization,Purpose and Summary of Significant Accounting Policies(continued)

   Cash and Cash Equivalents

   For purposes of the statements of cash flows,  the Partnership  considers all
   highly liquid investments purchased with an original maturity of three months
   or less at the  date of  acquisition  to be cash  equivalents.  Cash and cash
   equivalents are stated at cost which approximates market value.

   Restricted Cash

   Restricted  cash is set  aside to make  the  Partnership's  required  capital
   contributions to Local Partnerships (see Notes 3 and 5).

   Investments in Bonds Available-For-Sale

   Investments in bonds classified as  available-for-sale  represent investments
   that the Partnership intends to hold for an indefinite period of time but not
   necessarily  to maturity.  Any decision to sell an  investment  classified as
   available-for-sale  would be based on various factors,  including significant
   movements  in  interest  rates  and  liquidity  needs.  Investments  in bonds
   available-for-sale  are carried at estimated fair value and unrealized  gains
   or losses are reported as a separate component of partners' equity (deficit).

   Premiums  and  discounts  on  investments  in  bonds  available-for-sale  are
   amortized  (accreted)  using the  straight-line  method  over the life of the
   investment.  Amortized premiums offset interest revenue,  while the accretion
   of discounts and zero coupon bonds are included in interest revenue.

   Realized  gain  (loss)  on  redemption  or  sale  of   investments  in  bonds
   available-for-sale  are included in, or offset against,  interest  revenue on
   the basis of the adjusted cost of each specific investment redeemed or sold.

   Organization Costs

   Organization  costs were  amortized  on a  straight-line  basis over five (5)
   years;  such costs  became  fully  amortized  during the year ended March 30,
   1996.

   Income Taxes

   No provision  for income  taxes has been made because all income,  losses and
   tax credits are allocated to the partners for  inclusion in their  respective
   tax returns. In accordance with SFAS No. 109,  "Accounting for Income Taxes,"
   the  Partnership  has  included  in Note 7  certain  disclosures  related  to
   differences in the book and tax bases of accounting.

   Reclassification

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

2. Capital Contributions

   On March 12,  1990,  the  Partnership  commenced  the  offering of units (the
   "Units")  through Merrill Lynch,  Pierce,  Fenner & Smith  Incorporated  (the
   "Selling Agent").  On June 13, 1990, December 27, 1990, December 31, 1991 and
   January 23, 1992,  under the terms of the Amended and  Restated  Agreement of
   Limited  Partnership of the Partnership (the  "Partnership  Agreement"),  the
   General  Partner  admitted  limited  partners  to  the  Partnership  in  four
   closings.  At  these  closings,  subscriptions  for a total of  35,883  Units
   representing  $35,883,000 in limited  partners'  capital  contributions  were
   accepted.  In connection with the offering of Units, the Partnership incurred
   organization  and  offering  costs  of  $4,418,530,   of  which  $75,000  was
   capitalized as  organization  costs and $4,343,530 was charged to the limited
   partners'  equity as syndication  costs.  The Partnership  received a capital
   contribution of $100 from the General Partner.

   Net loss is  allocated  99% to the  limited  partners  and 1% to the  General
   Partner in accordance with the Partnership Agreement.


<PAGE>



                      AMERICAN TAX CREDIT PROPERTIES III L.P.
                    NOTES TO FINANCIAL STATEMENTS - (Continued)
                           MARCH 30, 1998, 1997 AND 1996

3.   Cash and Cash Equivalents and Restricted Cash

     As of March 30, 1998, the  Partnership  has cash and cash  equivalents  and
     restricted  cash in the  aggregate  of  $503,805  which  are  deposited  in
     interest-bearing  accounts with an institution  which is not insured by the
     Federal Deposit Insurance Corporation.

4.   Investments in Bonds Available-For-Sale

     The  Partnership  carries its  investments  in bonds as  available-for-sale
     because such investments are used to facilitate and provide flexibility for
     the Partnership's obligations,  including resolving circumstances which may
     arise in  connection  with the  Local  Partnerships.  Investments  in bonds
     available-for-sale  are  reflected in the  accompanying  balance  sheets at
     estimated fair value.

     As of March 30, 1998, certain information  concerning  investments in bonds
     available-for-sale is as follows:
<TABLE>
<CAPTION>
                                                 Gross       Gross      Estimated
                                   Amortized  unrealized  unrealized      fair
     Description and maturity           cost      gains       losses       value
     <S>                          <C>         <C>         <C>          <C>
     Corporate debt securities
       After one year through     $680,637     $13,309     $(74)     $  693,872
        five years
       After five years through    367,021       7,481     (2,467)      372,035
       ten years
       After ten years             842,237      16,400     (7,550)      851,087
                                  --------------------------------------------------

                                  1,889,895     37,190     (10,091)   1,916,994
                                  ------------------------------------ ------------
     U.S. Treasury debt
     securities
       After five years through    537,345       5,202    (1,275)       541,272
       ten years
       After ten years             479,189       5,608       --         484,797

                                  1,016,534     10,810    (1,275)     1,026,069
                                  -------------------------------------------------
     U.S. government and agency
     securities
       After ten years             125,730           -     (3,352)      122,378
                                  --------------------------------------------------

                                  $ 3,032,159 $ 48,000    $(14,718)  $3,065,441
                                  =========== ======================== ===========
     </TABLE>

     <TABLE>
     <CAPTION>

     As of March 30, 1997, certain information  concerning  investments in bonds
     available-for-sale is as follows:
                                               Gross       Gross      Estimated
                                   Amortized  unrealized  unrealized      fair
     Description and maturity           cost      gains       losses      value
    --------------------------     ----------   -------      --------    ------
     <S>                            <C>         <C>         <C>             <C>
     Corporate debt securities
       Within one year            $ 76,647    $  --        $ (873)    $  75,774
       After one year through      486,202        77       (4,059)     482,220
        five years
       After five years through    401,902       --       (18,362)      383,540
       ten years
       After ten years            1,009,978      --       (53,824)      956,154
                                  ---------------------------------------------

                                     1,974,729    77      (77,118)    1,897,688
                                  ---------------------------------------------
     U.S. Treasury debt
     securities
       After ten years              936,320       --      (88,427)    847,896
                                  --------------------------------------------

     U.S. government and agency
     securities
       After ten years              125,834        --      (16,647)     109,187
                                  ---------------------------------------------
                                  $ 3,036,886 $   77     $(182,192) $ 2,854,771
                                  =========== ========    ========== ===========
</TABLE>





                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                       NOTES TO FINANCIAL STATEMENTS - (Continued)
                              MARCH 30, 1998, 1997 AND 1996


5.   Investment in Local Partnerships

     As of March 30, 1998, the Partnership owns a limited  partnership  interest
     in the following Local Partnerships:

        1. April Gardens Apartments II Limited Partnership;
        2. Ashland Park Apartments, L.P.;
        3. Auburn Family, L.P.;
        4. Batesville Family, L.P.;
        5. Bay Springs Elderly, L.P.;
        6. Brisas del Mar Apartments Limited Partnership;
        7. Bruce Housing Associates, L.P.;
        8. Carrington Limited Dividend Housing Association Limited Partnership;
        9. Chestnut Park Associates, L.P.*;
       10. Chowan Senior Manor Associates Limited Partnership;
       11. Christian Street Commons Associates (the "Christian Street Local 
            Partnership");
       12. Country View Apartments;
       13. Desarrollos de Belen Limited Partnership;
       14. Desarrollos de Emaus Limited Partnership;
       15. Ellinwood Heights Apartments, L.P.;
       16. Fulton Street Houses Limited Partnership;
       17. Hayes Run Limited Partnership;
       18. Howard L. Miller Sallisaw Apartments II, L.P.;
       19. Hurlock Meadow Limited Partnership;
       20. Ivy Family, L.P.;
       21. Justin Associates;
       22. LaBelle Commons, Ltd.;
       23. Lawrence Road Properties, Ltd.;
       24. Loma Del Norte Limited Partnership;
       25. Long Reach Associates Limited Partnership;
       26. Mirador del Toa Limited Partnership;
       27. Moore Haven Commons, Ltd.;
       28. NP-89 Limited Dividend Housing Association Limited Partnership;
       29. Nash Hill Associates, Limited Partnership;
       30. North Calhoun City, L.P.;
       31. Orange City Plaza, Limited Partnership;
       32. Puerta del Mar Limited Partnership;
       33. Purvis Heights Properties, L.P.;
       34. Queen Lane Investors;
       35. Somerset Manor, Ltd.;
       36. Sugar Cane Villas, Ltd.;
       37. Summerfield Apartments Limited Partnership;
       38. Sydney Engel  Associates  L.P.  (formerly  known as Sydney Engel  
            Associates)  (the"Sydney Engel Local Partnership")*;
       39. Union Valley Associates Limited Partnership;
       40. Walnut Grove Family, L.P.;
       41. Waynesboro Apartments Limited Partnership;
       42. West Calhoun City, L.P.; and
       43. Westminster Apartments Limited Partnership.

       * An  affiliate  of the  General  Partner is a general  partner of and/or
provides services to the Local Partnership.



<PAGE>


     AMERICAN TAX CREDIT PROPERTIES III L.P.
                       NOTES TO FINANCIAL STATEMENTS - (Continued)
                              MARCH 30, 1998, 1997 AND 1996

5.  Investment in Local Partnerships (continued)

   Although  the  Partnership  generally  owns a 98.9%-99%  limited  partnership
   interest in the Local  Partnerships,  the Partnership and American Tax Credit
   Properties  II L.P.  ("ATCP  II"),  a  Delaware  limited  partnership  and an
   affiliate of the  Partnership,  together,  in the  aggregate,  acquired a 99%
   Local Partnership Interest in certain Local Partnerships as follows:
<TABLE>
<CAPTION>

                                                       
                                           The
                                        Partnership    ATCP II
            <S>                             <C>           <C>       
            Batesville Family, L.P.        61.75%         37.25%
            Bruce Housing Associates,      61.75          37.25
            L.P.
            Carrington Limited Dividend
            Housing                        65.95          33.05
              Association Limited
            Partnership
            Ivy Family, L.P.               61.75          37.25
            Lawrence Road Properties,      61.75          37.25
            Ltd.
            Mirador del Toa Limited        59.06          39.94
            Partnership
            Purvis Heights Properties,     61.75          37.25
            L.P.
            Queen Lane Investors           48.50          50.50
 </TABLE>

   The  Properties  are  principally   comprised  of  subsidized  and  leveraged
   low-income  multifamily  residential  complexes located throughout the United
   States and Puerto Rico.  The required  holding  period of each  Property,  in
   order to avoid  Low-income  Tax Credit  recapture,  is fifteen years from the
   year in which the Low-income Tax Credits commence on the last building of the
   Property  (the  "Compliance  Period").   The  rents  of  the  Properties  are
   controlled  by federal and state  agencies  pursuant to  applicable  laws and
   regulations.  Under the terms of each of the Local Partnership's  partnership
   agreements,  the  Partnership  has  committed  to make  capital  contribution
   payments in the aggregate  amount of $29,264,476 of which the Partnership has
   paid  $29,180,043  and  $84,433  is  outstanding.   Restricted  cash  in  the
   accompanying  balance sheet as of March 30, 1998 represents such  outstanding
   capital   contribution,   which  is  payable  upon  one  Local  Partnership's
   satisfaction of specified  conditions  related to operations.  As of December
   31, 1997,  the Local  Partnerships  have  outstanding  mortgage loans payable
   totaling approximately $86,920,000 and accrued interest payable on such loans
   totaling  approximately  $2,110,000,  which are secured by security interests
   and liens common to mortgage loans on the Local  Partnerships'  real property
   and other assets.

   Equity  in loss  of  investment  in  Local  Partnerships  is  limited  to the
   Partnership's  investment balance in each Local Partnership;  any such excess
   is applied to other partners' capital in any such Local Partnership (see Note
   1). The amount of such excess losses applied to other  partners'  capital was
   $1,665,224, $534,104 and $175,282 for the years ended December 31, 1997, 1996
   and 1995, respectively, as reflected in the combined statements of operations
   of the Local Partnerships reflected herein Note 5.

   The combined balance sheets of the Local Partnerships as of December 31, 1997
   and 1996 and the combined  statements of operations of the Local Partnerships
   for the years ended  December 31, 1997,  1996 and 1995 are reflected on pages
   26 and 27, respectively.



<PAGE>



                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                       NOTES TO FINANCIAL STATEMENTS - (Continued)
                              MARCH 30, 1998, 1997 AND 1996

5.   Investment in Local Partnerships (continued)

     The combined  balance sheets of the Local  Partnerships  as of December 31,
     1997 and 1996 are as follows:
     <TABLE>
     <CAPTION>
                                                          1997           1996
                                                   --------------------------
     ASSETS
     <S>                                               <C>            <C>
     Cash and other investments                    $   863,259   $   1,340,942
     Rents receivable                                  456,077         354,108
     Capital contributions receivable                   84,433       1,309,208
     Escrow deposits and reserves                    4,403,622       3,763,306
     Land                                            3,910,215       3,964,692
     Buildings and improvements (net of
       accumulated depreciation of $27,045,787      87,586,072      92,443,378
       and $23,212,364)
     Intangible assets (net of accumulated
       amortization of $584,504 and $1,039,889)        762,749         748,879
     Other                                           1,401,766          772,465
                                                   --------------------------------

                                                   $  99,468,193  $ 104,696,978
                                                   =============  =============
     LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

     Liabilities

       Accounts payable and accrued expenses       $   442,564   $    512,801
       Due to related parties                        5,247,688       5,127,931
       Mortgage and construction loans              86,919,773      87,351,443
       Notes payable                                    62,111          70,804
       Accrued interest                              2,109,721       1,782,695
       Other                                           580,863        557,856
                                                   --------------------------------

                                                      95,362,720     95,403,530
     Partners' equity (deficit)

       American Tax Credit Properties III L.P.
        Capital contributions, net of
          distributions (includes receivable of     29,048,449      29,079,605
          $84,433 and $1,309,208)
        Cumulative loss                             (20,522,876)   (18,164,445)
                                                   -------------- -------------- 

                                                      8,525,573     10,915,160

       General partners and other limited
        partners, including ATCP II
        Capital contributions, net of                 (123,346)        764,757
        distributions
        Cumulative loss                             (4,296,754)     (2,386,469)
                                                   ------------------------------ 

                                                      (4,420,100)    (1,621,712)

                                                       4,105,473      9,293,448

                                                   $  99,468,193  $ 104,696,978
                                                   =============  =============
</TABLE>


<PAGE>



                         AMERICAN TAX CREDIT PROPERTIES III L.P.
                       NOTES TO FINANCIAL STATEMENTS - (Continued)
                              MARCH 30, 1998, 1997 AND 1996



5.   Investment in Local Partnerships (continued)

     The combined  statements of operations  of the Local  Partnerships  for the
     years ended December 31, 1997, 1996 and 1995 are as follows:
     <TABLE>
     <CAPTION>
                                          1997             1996             1995
                                     ---------------  ---------------  ---------
     <S>                             <C>              <C>              <C>
     REVENUE

     Rental                          $ 10,466,426     $ 10,325,782     $ 10,245,866
     Interest and other                   365,948          437,813          377,903
                                     --------------   --------------   --------------

     TOTAL REVENUE                     10,832,374       10,763,595       10,623,769
                                     ------------     ------------     ------------

     EXPENSES

     Administrative                     2,049,122        2,121,842        2,158,197
     Utilities                          1,013,167        1,018,174          966,013
     Operating, maintenance and         2,253,753        1,987,209        2,150,242
       other
     Taxes and insurance                1,270,567        1,249,956        1,149,897
     Interest (including
       amortization of $48,430,         3,464,203        3,534,807        3,677,468
       $105,969 and $192,541)
     Depreciation                       4,017,625        4,111,594        4,199,670
     Loss from impairment of            1,032,653
       long-lived assets             --------------     -------------   -----------
       

     TOTAL EXPENSES                     15,101,090       14,023,582       14,301,487
                                     -------------    -------------    -------------

     NET LOSS                        $  (4,268,716)   $  (3,259,987)   $  (3,677,718)
                                     =============    =============    ============= 

     NET LOSS ATTRIBUTABLE TO

       American Tax Credit           $  (2,358,431)   $  (2,509,806)   $  (3,249,195)
       Properties III L.P.
       General partners and other
        limited partners,  including 
        ATCP II, which includes 
        specially allocated items of 
        revenue (expense) to certain 
        general partners of $0, ($828) 
        and $14,573, and
        $1,665,224, $534,104 and      
        $175,282 of American Tax
        Credit Properties III L.P.
        loss in excess of
        investment                   (1,910,285)         (750,181)        (428,523)
                                     ------------     -------------    ------------- 
                                     $ (4,268,716)    $ (3,259,987)    $ (3,677,718)
                                     ============     ============     ============ 
     </TABLE>


<PAGE>


----------------------------------------------------------------------------
                        AMERICAN TAX CREDIT PROPERTIES III L.P.
--------------------------------------------------------------------------
                      NOTES TO FINANCIAL STATEMENTS - (Continued)
                             MARCH 30, 1998, 1997 AND 1996

5.                       Investment in Local Partnerships (continued)

Investment  and  capital  contribution  activity  with  respect  to  each  Local
Partnership for the year ended March 30, 1998 is as follows:
<TABLE>
<CAPTION>
                                                    Cash      Cash
                        Investment Partnership's distrib-    distrib-      Investment
                           in Local   equity in  tion      tion classi-   in Local        Capital
                         Partnership  loss for   received    fied as      Partnership   contribution
                           balance       the    during the   other income   balance       payable
                            as of   year ended    year      during the      as of         as of
Name of Local Partnership  March      December   ended      year ended       March         March
                             30,     31, 1997   March        March 30,      30, 1998        30,
                            1997                30, 1998     1998                           1998
-------------------------------------------------------------------------------------------
<S>                         <C>       <C>         <C>       <C>         <C>       <C>
April Gardens Apartments
  II Limited Partnership    $         $       (2)    $(960)     $960       $ --    $ --
Ashland Park Apartments,      56,021  (51,802)     --         --          4,219   --
  L.P.
Auburn Family, L.P.           50,541  (10,791)     --         --         39,750   --
Batesville Family, L.P.       --      --     (2)   --         --         --       --
Bay Springs Elderly, L.P.     93,455  (20,374)     --         --         73,081   --
Brisas del Mar Apartments     --      --     (2)  (1,320)     1,320      --       --
  Limited Partnership
Bruce Housing Associates,     46,518  (16,029)     --         --         30,489   --
  L.P.
Carrington Limited
  Dividend Housing          1,126,050 (115,198)    --         --        1,010,852 --
  Association Limited
  Partnership
Chestnut Park Associates,   1,346,249 (487,017)    --         --        859,232   --
  L.P.
Chowan Senior Manor
  Associates Limited          62,319  (54,389)     --         --          7,930   --
  Partnership
Christian Street Commons     400,233  (400,233) (1)--         --          --       --
  Associates
Country View Apartments      185,611  (28,719)      (750)     --        156,142   --
Desarrollos de Belen         160,973  (58,452)     --         --        102,521   --
  Limited Partnership
Desarrollos de Emaus         242,640  (78,082)     --         --        164,558   --
  Limited Partnership
Ellinwood Heights             40,017  (25,785)     --         --         14,232   --
  Apartments, L.P.
Fulton Street Houses         850,560  (280,887)    --         --        569,673   --
  Limited Partnership
Hayes Run Limited             --      --     (2)   --         --         --       --
  Partnership
Howard L. Miller Sallisaw     36,263  (5,856)      --         --         30,407   --
  Apartments II, L.P.
Hurlock Meadow Limited         8,747  (7,247)(1) (1,500)     --         --       84,433
  Partnership
Ivy Family, L.P.              34,473  (17,102)     --         --         17,371   --
Justin Associates           1,131,016 (130,723)    --         --        1,000,293 --
LaBelle Commons, Ltd.        104,805  (27,055)    (2,500)     --         75,250   --
Lawrence Road Properties,      3,327  (3,327) (1)  --         --         --       --
  Ltd.
Loma Del Norte Limited       149,057  (26,623)    (2,000)     --        120,434   --
  Partnership
Long Reach Associates        220,147  (48,059)     --         --        172,088   --
  Limited Partnership
Mirador del Toa Limited       --      --     (2)    (572)       572      --       --
  Partnership
Moore Haven Commons, Ltd.     --      --     (2)   --         --         --       --
NP-89 Limited Dividend
  Housing Association       1,644,687 (136,116)   (10,000)    --        1,498,571 --
  Limited Partnership
Nash Hill Associates,        192,666  (18,780)    (3,637)     --        170,249   --
  Limited Partnership
North Calhoun City, L.P.      82,162  (6,224)      --         --         75,938   --
Orange City Plaza, Limited   391,105  (15,551)     --         --        375,554   --
  Partnership
Puerta del Mar Limited        --      --     (2)  (1,320)     1,320      --       --
  Partnership
Purvis Heights Properties,    71,362  (22,933)     --         --         48,429   --
  L.P.
Queen Lane Investors         268,117  (58,615)    (3,632)     --        205,870   --
Somerset Manor, Ltd.          --      --     (2)   --         --         --       --
Sugar Cane Villas, Ltd.       --      --     (2)   --         --         --       --
Summerfield Apartments       716,388  (43,007)    (5,000)     --        668,381   --
  Limited Partnership
Sydney Engel Associates       --      --     (2)  (2,500)     2,500      --       --
  L.P.
Union Valley Associates      118,570  (40,993)    (1,250)     --         76,327   --
  Limited Partnership
Walnut Grove Family, L.P.     39,568  (23,742)     --         --         15,826   --
Waynesboro Apartments         96,977  (40,712)    (1,250)     --         55,015   --
  Limited Partnership
West Calhoun City, L.P.      119,943  (14,560)     --         --        105,383   --
Westminster Apartments       814,497  (43,448)     --         --        771,049   --
                            ------------------------------------------------------------------
  Limited Partnership
                        $ 10,905,064 $(2,358,431) $(38,191)  $6,672   $ 8,515,114 $84,433
                            =========================================   ====================
</TABLE>
(1)  The Partnership's equity in loss of an investment in a Local Partnership is
     limited to the remaining investment balance.
(2)  Additional  equity  in  loss  of  investment  is not  allocated  to the
   Partnership until equity in income is earned.


<PAGE>


--------------------------------------------------------------------------------
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
--------------------------------------------------------------------------------
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 1998, 1997 AND 1996

5.                                  Investment in Local Partnerships (continued)

Investment  and  capital  contribution  activity  with  respect  to  each  Local
Partnership for the year ended March 30, 1997 is as follows:
<TABLE>
<CAPTION>
                                                              Cash
                        Investment            Partnership's  distribution   Investment
                        in Local    Investment  equity in     received       in Local     Capital
                       Partnership   during      loss for      during      Partnership  contributions
                        balance     the year       the         year         balance        payable
                         as of       ended     year ended      ended        as of          as of
Name of Local Partnership   March    March      December      March        March         March 30,
                             30,    30, 1997    31, 1996     30, 1997     30, 1997         1997
                           1996
-------------------------------------------------------------------------------------------
<S>                         <C>       <C>       <C>         <C>       <C>       <C>
April Gardens Apartments
  II Limited Partnership    $ 12,149  $--     $ (12,149)(1) $--         $ --    $ --
Ashland Park Apartments,      78,159  --        (22,138)     --         56,021    --
  L.P.
Auburn Family, L.P.           64,880  --        (14,339)     --         50,541    --
Batesville Family, L.P.       30,768  --        (30,768) (1) --         --        --
Bay Springs Elderly, L.P.    116,684  --        (23,229)     --         93,455    --
Brisas del Mar Apartments     88,088  --        (88,088) (1) --         --        --
  Limited Partnership
Bruce Housing Associates,     69,671  --        (23,153)     --         46,518    --
  L.P.
Carrington Limited
  Dividend Housing          1,292,293 --        (166,243)    --       1,126,050   --
  Association Limited
  Partnership
Chestnut Park Associates,   1,820,198 --        (473,949)    --       1,346,249   --
  L.P.
Chowan Senior Manor
  Associates Limited         122,700  --        (58,785)    (1,596)     62,319    --
  Partnership
Christian Street Commons     452,959  --        (52,726)     --        400,233    --
  Associates
Country View Apartments      212,279  --        (26,668)     --        185,611    --
Desarrollos de Belen         219,370  --        (58,397)     --        160,973    --
  Limited Partnership
Desarrollos de Emaus         326,694  --        (84,054)     --        242,640    --
  Limited Partnership
Ellinwood Heights             64,847  --        (24,830)     --         40,017    --
  Apartments, L.P.
Fulton Street Houses        1,068,793 --        (218,233)    --        850,560    --
  Limited Partnership
Hayes Run Limited              --     --        --     (2)   --         --        --
  Partnership
Howard L. Miller Sallisaw     56,318  --        (20,055)     --         36,263    --
  Apartments II, L.P.
Hurlock Meadow Limited        44,006  --        (33,759)    (1,500)      8,747    84,433
  Partnership
Ivy Family, L.P.              50,887  --        (16,414)     --         34,473    --
Justin Associates           1,276,798 --        (145,782)    --       1,131,016   --
LaBelle Commons, Ltd.        131,459  --        (26,654)     --        104,805    --
Lawrence Road Properties,     11,618  --        (8,291)      --          3,327    --
  Ltd.
Loma Del Norte Limited       187,621  --        (34,564)    (4,000)    149,057    --
  Partnership
Long Reach Associates        257,434  --        (37,287)     --        220,147    --
  Limited Partnership
Mirador del Toa Limited       36,843  --        (36,843) (1) --         --        --
  Partnership
Moore Haven Commons, Ltd.      --     --        --     (2)   --         --        --
NP-89 Limited Dividend
  Housing Association       1,752,636 --        (97,949)    (10,000)  1,644,687   --
  Limited Partnership
Nash Hill Associates,        217,456  --        (24,790)     --        192,666    --
  Limited Partnership
North Calhoun City, L.P.      96,558  --        (14,396)     --         82,162    --
Orange City Plaza, Limited   400,715  --        (7,036)     (2,574)    391,105    --
  Partnership
Puerta del Mar Limited        75,079  --        (75,079) (1) --         --        --
  Partnership
Purvis Heights Properties,    77,168  --        (5,806)      --         71,362    --
  L.P.
Queen Lane Investors         327,426  --        (53,661)    (5,648)    268,117    --
Somerset Manor, Ltd.          25,927  --        (25,927) (1) --         --        --
Sugar Cane Villas, Ltd.       81,185  --        (77,898) (1)(3,287)     --        --
Summerfield Apartments       776,800  --        (55,412)    (5,000)    716,388    --
  Limited Partnership
Sydney Engel Associates        --    206,881   (206,881) (1)  --         --     1,224,775
  L.P.
Union Valley Associates     145,809   --        (27,239)     --        118,570    --
  Limited Partnership
Walnut Grove Family, L.P.     65,309  --        (25,741)     --         39,568    --
Waynesboro Apartments        114,774  --        (17,797)     --         96,977    --
  Limited Partnership
West Calhoun City, L.P.      142,592  --        (22,649)     --        119,943    --
Westminster Apartments       848,644   --        (34,147)   --         814,497    --
                            -------------------------------------------------------------------
  Limited Partnership
                       $13,241,594 $206,881 $(2,509,806) $(33,605) $10,905,064  $1,309,208
                            ===============================================================
</TABLE>
(1) The Partnership's  equity in loss of an investment in a Local Partnership is
limited to the remaining  investment  balance.  (2) Additional equity in loss of
investment is not allocated to the Partnership until equity in income is earned.


<PAGE>


-----------------------------------------------------------------------------
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
----------------------------------------------------------------------------
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 1998, 1997 AND 1996

5.   Investment in Local Partnerships (continued)

     Property  information for each Local Partnership as of December 31, 1997 is
     as follows:
<TABLE>
<CAPTION>
                                       Mortgage             Buildings      Accumulated
       Name of Local Partnership      loans         Land    and            depreciation
                                       payable              improvements
     -----------------------------------------------------------------------------
     <S>                                <C>       <C>       <C>         <C>
     April Gardens Apartments II      $2,004,455  $39,984  $2,469,537  $(706,940)
       Limited Partnership
     Ashland Park Apartments, L.P.    1,042,772    50,160   1,247,739  (321,176)
     Auburn Family, L.P.               472,356     20,000     557,595  (135,833)
     Batesville Family, L.P.          1,443,783    52,000   1,806,202  (474,324)
     Bay Springs Elderly, L.P.         678,794     38,000     841,698  (200,630)
     Brisas del Mar Apartments        2,664,848   100,280   3,227,091  (946,001)
       Limited Partnership
     Bruce Housing Associates, L.P.   1,112,700    16,000   1,418,598  (408,466)
     Carrington Limited Dividend
       Housing Association Limited    3,464,852   200,000   6,364,620  (1,803,962)
       Partnership
     Chestnut Park Associates, L.P.   5,239,113   781,700   8,654,778  (2,121,750)
     Chowan Senior Manor Associates   1,267,699    86,101   1,495,884  (374,073)
       Limited Partnership
     Christian Street Commons          627,335      -           -          -
       Associates
     Country View Apartments           941,880     35,698   1,213,947  (182,517)
     Desarrollos de Belen Limited     1,889,550    96,190   2,490,637  (430,785)
       Partnership
     Desarrollos de Emaus Limited     3,211,920   214,000   4,031,061  (634,977)
       Partnership
     Ellinwood Heights Apartments,     691,142     10,000     864,075  (199,073)
       L.P.
     Fulton Street Houses Limited     3,869,930         2   5,959,123  (1,258,635)
       Partnership
     Hayes Run Limited Partnership    1,431,884    85,060   1,481,235  (273,151)
     Howard L. Miller Sallisaw         618,138     39,000     725,785  (175,072)
       Apartments II, L.P.
     Hurlock Meadow Limited           1,276,908    49,525   1,559,298  (381,270)
       Partnership
     Ivy Family, L.P.                  801,919     11,000   1,035,459  (304,284)
     Justin Associates                2,483,842    27,472   4,344,154  (943,253)
     LaBelle Commons, Ltd.            1,018,217    98,947   1,184,937  (243,375)
     Lawrence Road Properties, Ltd.    762,171     50,000     928,273  (238,923)
     Loma Del Norte Limited           1,443,839    84,874   1,769,702  (310,772)
       Partnership
     Long Reach Associates Limited    1,485,035   118,446   1,868,040  (360,604)
       Partnership
     Mirador del Toa Limited          1,891,902   105,000   2,327,341  (682,219)
       Partnership
     Moore Haven Commons, Ltd.         932,340     73,645   1,197,000  (327,540)
     NP-89 Limited Dividend Housing
       Association Limited            4,306,098   150,000   7,333,401  (1,728,582)
       Partnership
     Nash Hill Associates, Limited    1,475,786   123,876   1,676,137  (310,390)
       Partnership
     North Calhoun City, L.P.          495,462     12,000     631,120  (152,679)
     Orange City Plaza, Limited        529,837     53,904   1,041,636  (205,726)
       Partnership
     Puerta del Mar Limited           2,537,277   115,000   3,046,045  (905,213)
       Partnership
     Purvis Heights Properties, L.P.  1,153,999    47,000   1,443,465  (367,819)
     Queen Lane Investors             1,580,073    60,301   2,735,277  (670,274)
     Somerset Manor, Ltd.              901,698     53,383   1,097,281  (284,763)
     Sugar Cane Villas, Ltd.          3,322,803    58,500   4,059,461  (1,080,291)
     Summerfield Apartments Limited   1,806,784   195,411   2,683,173  (416,913)
       Partnership
     Sydney Engel Associates L.P.     17,831,381  284,305   19,436,525 (4,991,233)
     Union Valley Associates Limited  1,453,673    97,800   1,745,528  (319,584)
       Partnership
     Walnut Grove Family, L.P.         850,407     30,000   1,011,054  (243,598)
     Waynesboro Apartments Limited    1,490,153    76,000   1,786,404  (353,765)
       Partnership
     West Calhoun City, L.P.           783,367     18,000   1,012,925  (237,939)
     Westminster Apartments Limited  1,631,651     51,651   2,828,618  (337,413)
       Partnership
                                  $ 86,919,773 $3,910,215 $114,631,859 $(27,045,787)
</TABLE>


<PAGE>


-------------------------------------------------------------------------------
                     AMERICAN TAX CREDIT PROPERTIES III L.P.
----------------------------------------------------------------------------
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 1998, 1997 AND 1996

5.   Investment in Local Partnerships (continued)

     Property  information for each Local Partnership as of December 31, 1996 is
     as follows:
<TABLE>
<CAPTION>
                                      Mortgage
                                      &                     Buildings    Accumulated
     Name of Local Partnership        construction  Land    and          depreciation
                                      loans                 improvements
                                       payable
     ------------------------------------------------------------------------------
     <S>                              <C>        <C>        <C>        <C>
     April Gardens Apartments II     $2,008,084   $39,984 $ 2,469,537 $ (603,482)
       Limited Partnership
     Ashland Park Apartments, L.P.    1,044,903    50,160   1,247,739   (275,608)
     Auburn Family, L.P.               474,003     20,000    557,595    (114,723)
     Batesville Family, L.P.          1,446,124    52,000   1,792,091   (430,084)
     Bay Springs Elderly, L.P.         680,053     38,000    841,698    (168,886)
     Brisas del Mar Apartments        2,670,432   100,280   3,227,091   (809,838)
       Limited Partnership
     Bruce Housing Associates, L.P.   1,115,155    16,000   1,418,598   (354,315)
     Carrington Limited Dividend
       Housing Association Limited    3,487,158   200,000   6,359,188  (1,571,765)
       Partnership
     Chestnut Park Associates, L.P.   5,284,761   781,700   8,654,778  (1,806,605)
     Chowan Senior Manor Associates   1,271,652    86,101   1,495,884   (312,327)
       Limited Partnership
     Christian Street Commons          633,184     54,477   1,159,293   (181,117)
       Associates
     Country View Apartments           943,663     35,698   1,213,947   (148,618)
     Desarrollos de Belen Limited     1,892,733    96,190   2,494,877   (349,038)
       Partnership
     Desarrollos de Emaus Limited     3,217,134   214,000   4,030,443   (498,543)
       Partnership
     Ellinwood Heights Apartments,     692,502     10,000    848,072    (183,547)
       L.P.
     Fulton Street Houses Limited     3,869,930         2   5,945,597  (1,040,785)
       Partnership
     Hayes Run Limited Partnership    1,434,682    85,060   1,474,537   (235,260)
     Howard L. Miller Sallisaw         619,235     39,000    719,572    (162,101)
       Apartments II, L.P.
     Hurlock Meadow Limited           1,279,669    49,525   1,559,298   (321,304)
       Partnership
     Ivy Family, L.P.                  805,507     11,000   1,034,698   (264,504)
     Justin Associates                2,511,407    27,472   4,342,929   (784,957)
     LaBelle Commons, Ltd.            1,020,357    98,947   1,184,937   (200,178)
     Lawrence Road Properties, Ltd.    763,628     50,000    928,273    (214,369)
     Loma Del Norte Limited           1,446,530    84,874   1,757,151   (259,644)
       Partnership
     Long Reach Associates Limited    1,487,788   118,446   1,868,040   (308,488)
       Partnership
     Mirador del Toa Limited          1,896,098   105,000   2,327,341   (586,192)
       Partnership
     Moore Haven Commons, Ltd.         934,175     73,645   1,197,000   (281,595)
     NP-89 Limited Dividend Housing
       Association Limited            4,375,085   150,000   7,303,939  (1,458,692)
       Partnership
     Nash Hill Associates, Limited    1,478,728   123,876   1,676,137   (263,530)
       Partnership
     North Calhoun City, L.P.          498,050     12,000    624,675    (128,202)
     Orange City Plaza, Limited        549,795     53,904   1,039,150   (172,506)
       Partnership
     Puerta del Mar Limited           2,542,593   115,000   3,046,045   (775,703)
       Partnership
     Purvis Heights Properties, L.P.  1,156,152    47,000   1,439,927   (329,168)
     Queen Lane Investors             1,587,345    60,301   2,731,943   (570,265)
     Somerset Manor, Ltd.              903,396     53,383   1,085,401   (240,659)
     Sugar Cane Villas, Ltd.          3,329,461    58,500   4,059,461   (930,713)
     Summerfield Apartments Limited   1,827,382   195,411   2,683,173   (345,735)
       Partnership
     Sydney Engel Associates L.P.     17,939,501  284,305   19,436,525 (4,281,622)
     Union Valley Associates Limited  1,456,431    97,800   1,745,528   (272,610)
       Partnership
     Walnut Grove Family, L.P.         851,857     30,000   1,006,847   (204,670)
     Waynesboro Apartments Limited    1,493,131    76,000   1,785,244   (304,922)
       Partnership
     West Calhoun City, L.P.           789,306     18,000   1,012,925   (198,963)
     Westminster Apartments Limited  1,642,683     51,651   2,828,618   (266,531)
       Partnership
                                  $ 87,351,443 $3,964,692 $115,655,742 $(23,212,364)
</TABLE>


<PAGE>



                AMERICAN TAX CREDIT PROPERTIES III L.P.
              NOTES TO FINANCIAL STATEMENTS - (Continued)
                     MARCH 30, 1998, 1997 AND 1996

5.              Investment in Local Partnerships (continued)

   The summary of property  activity  during the year ended December 31, 1997 is
     as follows:
   <TABLE>
   <CAPTION>
                                           Net change
                          Balance as of   during the year    Balance as of
                        December 31, 1996      ended       December 31, 1997
                                              December 31,
                                              1997
      <S>               <C>               <C>              <C>
      Land              $        3,964,692   $     (54,477)   $     3,910,215
      Buildings and            115,655,742       (1,023,883)       114,631,859
                        -----------------------------------------------------
      improvements
                              119,620,434       (1,078,360)      118,542,074
      Accumulated             (23,212,36)       (3,833,423)      (27,045,787)
                        ------------------------------------------------------ 
      depreciation
                        $       96,408,070     $ 4,911,783     $   91,496,287
                        =====================================================
   </TABLE>

   On April 18, 1997 the Sydney Engel Local Partnership  closed on its permanent
   mortgages with the City of New York. Upon closing,  the Partnership  paid the
   Sydney  Engel Local  Partnership  its  outstanding  capital  contribution  of
   $1,224,775,  which included an additional  capital  contribution of $206,881,
   resulting  from the  delay in  closing  the  mortgages,  which  was paid from
   reserves.

   Due to ongoing  operating  deficits and the  uncertainty of future  operating
   income,  the Christian  Street Local  Partnership  determined  the underlying
   rental  property to be permanently  impaired and has recognized an impairment
   loss of $1,032,653 as of December 31, 1997.

6. Transactions with General Partner and Affiliates

   For the years ended  March 30,  1998,  1997 and 1996,  the  Partnership  paid
   and/or  incurred  the  following   amounts  to  the  General  Partner  and/or
   affiliates in connection with services provided to the Partnership:

   <TABLE>
   <CAPTION>


                                  1998              1997              1996
                           -----------------------------------------------
                            Paid  Incurred    Paid  Incurred    Paid  Incurred
      <S>                  <C>      <C>      <C>      <C>      <C>      <C>
      Management fees      $100,000 $230,571 $100,000 $230,571 $100,000 $230,571
       (see Note 8)

   </TABLE>


   For the years ended December 31, 1997, 1996 and 1995, the Local  Partnerships
   paid and/or  incurred the  following  amounts to the General  Partner  and/or
   affiliates in connection  with services  provided to the Local  Partnerships:
<TABLE> 
<CAPTION>



                                       1997         1996                    1995
                          -----------------------------------  -----------------

                              Paid  Incurred  Paid  Incurred   Paid   Incurred
                                                        
      <S>                  <C>      <C>      <C>      <C>      <C>      <C>
      Property            $ 112,083  $127,518  $3,599 $35,787  $35,817 $35,884
        management fees

      Insurance             22,079    22,079   35,943  34,316   37,140   34,779

      Property                 --       --        --       --   150,000     --
        development fees
   </TABLE>

   The property development fees were capitalized by the Local Partnerships.


<PAGE>


                AMERICAN TAX CREDIT PROPERTIES III L.P.
              NOTES TO FINANCIAL STATEMENTS - (Continued)
                     MARCH 30, 1998, 1997 AND 1996


7. Taxable Loss

   A reconciliation  of the financial  statement net loss of the Partnership for
   the years ended March 30, 1998,  1997 and 1996 to the tax return net loss for
   the years ended December 31, 1997, 1996 and 1995 is as follows:

   <TABLE>
   <CAPTION>

                                                1998            1997             1996
                                         --------------------------------------------
     <S>                                 <C>             <C>              <C>
     Financial  statement  net  loss for
       the years ended  March 30,  1998, $ (2,649,323)   $ (2,718,536)    $ (3,443,977)
       1997 and 1996

     Add (less) net transactions
     occurring between
       January 1, 1995 and March 30,         --               --              (52,556)
       1995
       January 1, 1996 and March 30,         --              (49,819)          49,819
       1996
       January 1, 1997 and March 30,        (58,090)           58,090               --
       1997
       January 1, 1998 and March 30,            76,012            --               --
                                         -------------   -----------------   -----------
       1998

     Adjusted financial statement net
       loss for the years ended December (2,631,401)      (2,710,265)      (3,446,714)
       31, 1997, 1996 and 1995

     Adjustment to management fees
       pursuant to Internal Revenue         130,571          130,571          130,571
       Code Section 267

     Differences arising from equity
       in loss of investment in            (718,329)        (514,969)        (200,215)
       Local Partnerships

     Interest revenue                      (208,732)          --               --

     Other differences                      (5,367)            (107)        (14,250)
                                         --------------- ---------------- --------------- 

     Tax return net loss for the
       years ended December 31,          $ (3,433,258)   $ (3,094,770)    $ (3,530,608)
                                         ============    ============     ============ 
       1997, 1996 and 1995
   </TABLE>

     The differences  between the equity in the investment in Local Partnerships
     for tax return and financial reporting purposes as of December 31, 1997 and
     1996 are as follows:
   <TABLE>
   <CAPTION>
                                                   1997            1996
                                             --------------------------
     <S>                                     <C>             <C>
     Investment in Local Partnerships -      $  8,525,573    $ 10,915,160
     financial reporting
     Investment in Local Partnerships - tax     7,473,246      10,581,161
                                             ------------   ---------------
                                             $  1,052,327    $   333,999
                                             ============    ==============
   </TABLE>

     Payable to general partner in the  accompanying  balance sheets  represents
     accrued  management  fees  not  deductible  for tax  purposes  pursuant  to
     Internal Revenue Code Section 267.


<PAGE>


                AMERICAN TAX CREDIT PROPERTIES III L.P.
              NOTES TO FINANCIAL STATEMENTS - (Continued)
                     MARCH 30, 1998, 1997 AND 1996


8.   Commitments and Contingencies

     Pursuant to the Partnership  Agreement,  the Partnership is required to pay
     the General  Partner an annual  management  fee  ("Management  Fee") and an
     annual  additional  management fee  ("Additional  Management  Fee") for its
     services  in  connection   with  the  management  of  the  affairs  of  the
     Partnership,  subject to certain  provisions of the Partnership  Agreement.
     The annual  Management  Fee is equal to .14% of all proceeds as of December
     31 of any year,  invested or committed for investment in Local Partnerships
     plus  all  debts  of the  Local  Partnerships  related  to  the  Properties
     ("Invested Assets").  The Partnership incurred a Management Fee of $161,400
     for each of the three  years ended March 30,  1998.  The annual  Additional
     Management  Fee is  equal  to  .06% of  Invested  Assets.  The  Partnership
     incurred  an  Additional  Management  Fee of $69,171  for each of the three
     years ended March 30, 1998. Such amounts are aggregated and reflected under
     the  caption  management  fees in the  accompanying  financial  statements.
     Unpaid  Management Fees in the amount of $930,614 and $800,043 are recorded
     as payable to general  partner  in the  accompanying  balance  sheets as of
     March 30, 1998 and 1997, respectively.

     In addition,  pursuant to the  Partnership  Agreement,  the  Partnership is
     required to pay ML Fund  Administrators  Inc.,  an affiliate of the Selling
     Agent, an annual  administration fee  ("Administration  Fee") and an annual
     additional  administration  fee ("Additional  Administration  Fee") for its
     administrative   services   provided   to  the   Partnership.   The  annual
     Administration  Fee is equal to .14% of Invested  Assets.  The  Partnership
     incurred  an  Administration  Fee of  $161,400  for each of the three years
     ended March 30, 1998. The annual Additional  Administration  Fee is subject
     to certain provisions of the Partnership  Agreement and is equal to .06% of
     Invested Assets. The Partnership incurred an Additional  Administration Fee
     of $69,171 for each of the three years ended March 30,  1998.  Such amounts
     are aggregated and reflected under the caption  administration  fees in the
     accompanying financial statements. Unpaid Administration Fees in the amount
     of $930,625  and  $800,054  are  included  in accounts  payable and accrued
     expenses in the accompanying  balance sheets as of March 30, 1998 and 1997,
     respectively.

     The rents of the Properties, many of which receive rental subsidy payments,
     including payments under Section 8 of Title II of the Housing and Community
     Development  Act of 1974  ("Section  8"),  are  subject to  specific  laws,
     regulations  and agreements  with federal and state  agencies.  The subsidy
     agreements expire at various times during and after the Compliance  Periods
     of the Local Partnerships. In October 1997, Congress passed the Multifamily
     Assisted Housing and Reform and Affordability Act whereby the United States
     Department  of  Housing  and  Urban  Development  ("HUD")  has  been  given
     authority  to renew  certain  project  based  Section 8 contracts  expiring
     during  HUD's  fiscal  year  1998,  where  requested  by an  owner,  for an
     additional one year term generally at or below current rent levels, subject
     to certain  guidelines.  HUD has  additional  programs  which,  in general,
     provide  for  restructuring  rents  and/or  mortgages  where  rents  may be
     adjusted to market levels and mortgage  terms may be adjusted  based on the
     reduction  in rents,  although  there may be instances in which only rents,
     but not mortgages,  are  restructured.  The Partnership  cannot  reasonably
     predict legislative  initiatives and governmental budget negotiations,  the
     outcome of which could  result in a reduction  in funds  available  for the
     various  federal and state  administered  housing  programs  including  the
     Section 8  program.  Such  changes  could  adversely  affect the future net
     operating  income  and  debt  structure  of any or all  Local  Partnerships
     currently   receiving  such  subsidy  or  similar   subsidies.   One  Local
     Partnership's  Section 8 contract,  which covers certain  rental units,  is
     scheduled to expire in October 1998.

     On July 16, 1997, the Partnership received a demand for certain information
     with  respect to the holders of Units,  the stated  purpose of which was to
     assist  such  party in making an offer to Unit  holders to  purchase  their
     Units and  otherwise to  communicate  with them  concerning  such an offer.
     Subsequently, the Partnership requested certain information from such party
     in order to assess the  appropriateness  of the demand. On July 28, 1997, a
     complaint  was filed in the Court of  Chancery  of the State of Delaware in
     and for New Castle County against the Partnership,  the General Partner and
     its general  partner  seeking,  among other things,  an order directing the
     defendants to immediately  furnish the requested  information  and awarding
     the plaintiff any resulting  damages. A one day trial was held on September
     29, 1997.  On December 5, 1997,  the Court of Chancery  issued a memorandum
     opinion and order,  holding that the plaintiff is entitled to the requested
     information  regarding Unit holders. On December 15, 1997, defendants filed
     a Notice of Appeal to the Supreme Court of Delaware, which appeal was heard
     and denied.  The  Partnership  has  complied  with the Court of  Chancery's
     order.


<PAGE>


                AMERICAN TAX CREDIT PROPERTIES III L.P.
              NOTES TO FINANCIAL STATEMENTS - (Continued)
                     MARCH 30, 1998, 1997 AND 1996


9. Fair Value of Financial Instruments

   The following disclosure of the estimated fair value of financial instruments
   is made in accordance  with the  requirements  of SFAS No. 107,  "Disclosures
   about Fair Value of Financial  Instruments." The estimated fair value amounts
   have  been  determined  using  available  market  information,   assumptions,
   estimates and valuation
   methodologies.

   Cash and Cash Equivalents and Restricted Cash

   The carrying amounts approximate fair value.

   Investments in Bonds Available-For-Sale

   Fair value is estimated  based on market  quotes  provided by an  independent
   service as of the balance sheet dates.

   Interest Receivable

   The  carrying  amount  approximates  fair  value  due  to  the  terms  of the
   underlying investments.

   Capital Contributions Payable

   The carrying  amount  approximates  fair value in  accordance  with the Local
   Partnerships' partnership agreements.

   The estimated  fair value of the  Partnership's  financial  instruments as of
   March 30, 1998 and 1997 are disclosed elsewhere in the financial statements.



<PAGE>




Item 9.     Changes in and Disagreements with Accountants
       on Accounting and Financial Disclosure

       None

                                PART III

Item 10.    Directors and Executive Officers of the Registrant

Registrant  has  no  officers  or  directors.   The  General   Partner   manages
Registrant's affairs and has general responsibility and authority in all matters
affecting  its  business.  The  responsibilities  of  the  General  Partner  are
currently carried out by Richman Housing.  The executive  officers and directors
of Richman Housing are:
<TABLE>
<CAPTION>
 <S>                          <C>                      <C>                    
                           Served in present
Name                       capacity since 1          Position held

Richard Paul Richman       September 21, 1989        President and Director
Eric P. Richelson          September 21, 1989        Vice President
Neal Ludeke                September 21, 1989        Vice President and
                                                     Treasurer
David A. Salzman           September 21, 1989        Vice President
Gina S. Scotti             September 21, 1989        Secretary
</TABLE>
------------------------------------------------------------------------
1Director  holds  office until his  successor is elected and  qualified.
All officers serve at the pleasure of the Director.

Richard Paul  Richman,  age 50, is the sole  Director  and  President of Richman
Housing. Mr. Richman is the President and sole stockholder of Richman Group. Mr.
Richman is involved in the syndication  and management of residential  property.
Mr. Richman is also a director of Wilder Richman  Resources  Corp., an affiliate
of Richman Housing and the general partner of Secured Income L.P., a director of
Wilder Richman  Historic  Corporation,  an affiliate of Richman  Housing and the
general  partner of Wilder Richman  Historic  Properties II, L.P., a director of
Richman Tax Credit  Properties  Inc.,  an affiliate  of Richman  Housing and the
general partner of the general partner of American Tax Credit Properties L.P., a
director of Richman Tax Credits  Inc.,  an affiliate of Richman  Housing and the
general partner of the general partner of American Tax Credit Properties II L.P.
and a director of Richman American Credit Corp., an affiliate of Richman Housing
and the manager of American  Tax Credit  Trust,  a Delaware  statutory  business
trust.

Eric P. Richelson,  age 46, is a Vice President of Richman Housing.  Mr.
Richelson is  President  of Wilder  Richman  Management  Corporation,  a
property   management  company  affiliated  with  Richman  Housing.   In
addition,   Mr.   Richelson  is  a  Vice   President  of  Richman  Asset
Management,   LLC  ("RAM")  an   affiliate  of  Richman   Housing.   Mr.
Richelson's  responsibilities  in connection  with RAM include  advisory
services provided to a small business investment company.

Neal Ludeke,  age 40, is a Vice  President  and the Treasurer of Richman
Housing.  Mr.  Ludeke,  a Vice  President  and the  Treasurer of Richman
Group, is engaged  primarily in the  syndication,  asset  management and
finance  operations of Richman Group. In addition,  Mr. Ludeke is a Vice
President and the  Treasurer of RAM. Mr.  Ludeke's  responsibilities  in
connection  with  RAM  include  advisory  services  provided  to a small
business   investment   company  and  various   partnership   management
functions.

David A. Salzman,  age 37, is a Vice President of Richman  Housing.  Mr.
Salzman  is  responsible   for  the   acquisition   and  development  of
residential   real  estate  for  syndication  as  a  Vice  President  of
acquisitions of Richman Group.

Gina S.  Scotti,  age 42,  is the  Secretary  of  Richman  Housing.  Ms.
Scotti is a Vice  President and the Secretary of Richman  Group.  As the
Director  of  Investor   Services,   Ms.  Scotti  is   responsible   for
communications with investors.


<PAGE>



Item 11.    Executive Compensation

Registrant has no officers or directors. Registrant does not pay the officers or
director of Richman  Housing any  remuneration.  During the year ended March 30,
1998, Richman Housing did not pay any remuneration to any of its officers or its
director.

Item 12.    Security   Ownership  of  Certain  Beneficial  Owners  and
       Management

As of May 20, 1998,  no person or entity was known by  Registrant  to be
the  beneficial  owner of more than five  percent of the Units.  Richman
Housing is wholly-owned by Richard Paul Richman.

Item 13.    Certain Relationships and Related Transactions

The  General  Partner  and  certain of its  affiliates  are  entitled to receive
certain   compensation,   fees,   and   reimbursement   of  expenses   and  have
received/earned fees for services provided to Registrant as described in Notes 6
and 8 to the  audited  financial  statements  included  in  Item 8 -  "Financial
Statements and Supplementary Data" herein.

Transactions with General Partner and Affiliates

The tax losses and  Low-income  Tax Credits  generated by Registrant  during the
year ended December 31, 1997  allocated to the General  Partner were $34,333 and
$55,780,  respectively.  The tax losses and Low-income Tax Credits  generated by
the General Partner during the year ended December 31, 1997 (from the allocation
of Registrant discussed above) and allocated to Richman Housing were $27,751 and
$45,088, respectively.

Indebtedness of Management.

No officer or director of the General  Partner or any affiliate of the foregoing
was indebted to Registrant at any time during the year ended March 30, 1998.



<PAGE>



                                PART IV

Item 14.    Exhibits,  Financial  Statement  Schedules,  and Reports on
       Form 8-K

   (a) Financial Statements, Financial Statement Schedules and Exhibits

        (1)  Financial Statements

        See Item 8 - "Financial Statements and Supplementary Data."

        (2)  Financial Statement Schedules

        No financial  statement schedules are included because of the absence of
        the conditions  under which they are required or because the information
        is included in the financial statements or the notes thereto.

        (3)  Exhibits
<TABLE>
<CAPTION>
                                               Incorporated by
                         Exhibit               Reference to
    <S>      <C>                               <C>
    10.1     April Gardens Apartments II       Exhibit 10.1 to Form 10-Q
             Limited Partnership (A Delaware   Report
             Limited Partnership) Amended and  dated December 30, 1990
             Restated Agreement of Limited     (File No. 33-31390)
             Partnership
    10.2     Ashland Park Apartments, L.P.     Exhibit 10.2 to Form 10-K
             Second Amended and Restated       Report
             Agreement of Limited Partnership  dated March 30, 1991
                                               (File No. 33-31390)
    10.3     Auburn Family, L.P. Amended and   Exhibit 10.1 to Form 10-Q
             Restated Limited Partnership      Report
             Agreement and Certificate of      dated December 31, 1991
             Limited Partnership               (File No. 0-19217)
    10.4     Amended No. 2 to the Batesville   Exhibit 10.2 to Form 10-Q
             Family, L.P. Amended and          Report
             Restated Agreement of Limited     dated December 30, 1990
             Partnership                       (File No. 33-31390)
    10.5     Batesville Family, L.P.           Exhibit 10.2 to Form 10-Q
             Amendment No. 3 to the Amended    Report
             and Restated Agreement of         dated December 31, 1991
             Limited Partnership               (File No. 0-19217)
    10.6     Bay Springs Elderly, L.P. (A      Exhibit 10.1 to Form 10-Q
             Mississippi Limited Partnership)  Report
             Amended and Restated Limited      dated September 29, 1991
             Partnership Agreement and         (File No. 0-19217)
             Certificate of Limited
             Partnership
    10.7     Brisas del Mar Apartments         Exhibit 10.3 to Form 10-Q
             Limited Partnership (A Delaware   Report
             Limited Partnership) Amended and  dated December 30, 1990
             Restated Agreement of Limited     (File No. 33-31390)
             Partnership
    10.8     Amendment No. 1 to the Bruce      Exhibit 10.8 to Form 10-K
             Housing Associates, L.P. Amended  Report
             and Restated Agreement of         dated March 30, 1992
             Limited Partnership               (File No. 33-31390)
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                               Incorporated by
                        Exhibit                Reference to
    <S>      <C>                               <C>
    10.9    Amendment No. 2 to the Bruce       Exhibit 10.4 to Form 10-Q
            Housing Associates, L.P. Amended   Report
            and Restated Agreement of Limited  dated December 30, 1990
            Partnership                        (File No. 33-31390)
    10.10   Bruce Housing Associates, L.P.     Exhibit 10.3 to Form 10-Q
            Amendment No. 3 to the Amended     Report
            and Restated Agreement of Limited  dated December 31, 1991
            Partnership                        (File No. 0-19217)
    10.11   Carrington Limited Dividend        Exhibit 10.1 to Form 10-Q
            Housing Association Limited        Report
            Partnership Amended and Restated   dated September 29, 1990
            Agreement of Limited Partnership   (File No. 33-31390)
    10.12   Carrington Limited Dividend        Exhibit 10.2 to Form 10-Q
            Housing Association Limited        Report
            Partnership Second Amended and     dated September 29, 1990
            Restated Agreement of Limited      (File No. 33-31390)
            Partnership
    10.13   Carrington Limited Dividend        Exhibit 10.5 to Form 10-Q
            Housing Association Limited        Report
            Partnership Amendment No. 1 to     dated December 30, 1990
            the Second Amended and Restated    (File No. 33-31390)
            Agreement of Limited Partnership
    10.14   Chestnut Park Associates, L.P.     Exhibit 10.3 to Form 10-Q
            Amended and Restated Agreement of  Report
            Limited Partnership                dated September 29, 1990
                                               (File No. 33-31390)
    10.15   Chowan Senior Manor Associates     Exhibit 10.15 to Form 10-K
            Limited Partnership Amended and    Report
            Restated Agreement of Limited      dated March 30, 1992
            Partnership                        (File No. 33-31390)
    10.16   Christian Street Commons           Exhibit 10.16 to Form 10-K
            Associates Amended and Restated    Report
            Limited Partnership Agreement and  dated March 30, 1992
            Certificate of Limited Partnership (File No. 33-31390)
    10.17   Country View Apartments Second     Exhibit 10.17 to Form 10-K
            Amended and Restated Limited       Report
            Partnership Agreement and          dated March 30, 1992
            Certificate of Limited Partnership (File No. 33-31390)
    10.18   Desarrollos de Belen Limited       Exhibit 10.18 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.19   Desarrollos de Emaus Limited       Exhibit 10.19 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.20   Ellinwood Heights Apartments,      Exhibit 10.1 to Form 10-Q
            L.P. Amended and Restated          Report
            Agreement of Limited Partnership   dated June 29, 1991
                                               (File No. 0-19217)
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                         Exhibit               Incorporated  by  Reference
                                       to
    <S>      <C>                                <C>
    10.21   Fulton Street Houses Limited       Exhibit 10.21 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.22   Hayes Run Limited Partnership      Exhibit 10.2 to Form 10-Q
            Amended and Restated Agreement of  Report
            Limited Partnership                dated June 29, 1991
                                               (File No. 0-19217)
    10.23   Howard L. Miller Sallisaw          Exhibit 10.10 to Form 10-K
            Apartments II, L.P. Third Amended  Report
            and Restated Agreement and         dated March 30, 1991
            Certificate of Limited Partnership (File No. 33-31390)
    10.24   Hurlock Meadow Limited             Exhibit 10.24 to Form 10-K
            Partnership Amended and Restated   Report
            Limited Partnership Agreement      dated March 30, 1992
                                               (File No. 33-31390)
    10.25   Amendment No. 1 to the Ivy         Exhibit 10.6 to Form 10-Q
            Family, L.P. Amended and Restated  Report
            Agreement of Limited Partnership   dated December 30, 1990
                                               (File No. 33-31390)
    10.26   Ivy Family, L.P. Amendment No. 3   Exhibit 10.4 to Form 10-Q
            to the Amended and Restated        Report
            Agreement of Limited Partnership   dated December 31, 1991
                                               (File No. 0-19217)
    10.27   Justin Associates Amended and      Exhibit 10.7 to Form 10-Q
            Restated Agreement and             Report
            Certificate of Limited Partnership dated December 30, 1990
                                               (File No. 33-31390)
    10.28   LaBelle Commons, Ltd. Amended and  Exhibit 10.13 to Form 10-K
            Restated Agreement of Limited      Report
            Partnership                        dated March 30, 1991
                                               (File No. 33-31390)
    10.29   LaBelle Commons, Ltd. Amendment    Exhibit 10.29 to Form 10-K
            No. 1 to Amended and Restated      Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.30   Amendment No. 2 to the Lawrence    Exhibit 10.8 to Form 10-Q
            Road Properties, Ltd. Amended and  Report
            Restated Agreement of Limited      dated December 30, 1990
            Partnership                        (File No. 33-31390)
    10.31   Lawrence Road Properties, Ltd.     Exhibit 10.5 to Form 10-Q
            Amendment No. 3 to the Amended     Report
            and Restated Agreement of Limited  dated December 31, 1991
            Partnership                        (File No. 0-19217)
    10.32   Loma Del Norte Limited             Exhibit 10.2 to Form 10-Q
            Partnership Amended and Restated   Report
            Limited Partnership Agreement      dated September 29, 1991
                                               (File No. 0-19217)
    10.33   Long Reach Associates Limited      Exhibit 10.15 to Form 10-K
            Partnership Sixth Amended and      Report
            Restated Agreement of Limited      dated March 30, 1991
            Partnership                        (File No. 33-31390)
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                         Exhibit               Incorporated  by  Reference
                                       to
    <S>      <C>                                <C>
    10.34   Mirador del Toa Limited            Exhibit 10.16 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1991
                                               (File No. 33-31390)
    10.35   Amendment No. 1 to the Mirador     Exhibit 10.17 to Form 10-K
            del Toa Limited Partnership        Report
            Amended and Restated Agreement of  dated March 30, 1991
            Limited Partnership                (File No. 33-31390)
    10.36   Moore Haven Commons, Ltd. Amended  Exhibit 10.9 to Form 10-Q
            and Restated Agreement of Limited  Report
            Partnership                        dated December 30, 1990
                                               (File No. 33-31390)
    10.37   NP-89 Limited Dividend Housing     Exhibit 10.3 to Form 10-Q
            Association Limited Partnership    Report
            Second Restated and Amended        dated June 29, 1991
            Agreement of Limited Partnership   (File No. 0-19217)
    10.38   Nash Hill Associates, Limited      Exhibit 10.37 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.39   North Calhoun City, L.P. (A        Exhibit 10.3 to Form 10-Q
            Mississippi Limited Partnership)   Report
            Amended and Restated Limited       dated September 29, 1991
            Partnership Agreement and          (File No. 0-19217)
            Certificate of Limited Partnership
    10.40   Orange City Plaza, Limited         Exhibit 10.40 to Form 10-K
            Partnership Amended and Restated   Report
            Partnership Agreement              dated March 30, 1992
                                               (File No. 33-31390)
    10.41   Puerta del Mar Limited             Exhibit 10.10 to Form 10-Q
            Partnership (A Delaware Limited    Report
            Partnership) Amended and Restated  dated December 30, 1990
            Agreement of Limited Partnership   (File No. 33-31390)
    10.42   Amendment No. 2 to the Purvis      Exhibit 10.11 to Form 10-Q
            Heights Properties, L.P. Amended   Report
            and Restated Agreement of Limited  dated December 30, 1990
            Partnership                        (File No. 33-31390)
    10.43   Purvis Heights Properties, L.P.    Exhibit 10.6 to Form 10-Q
            Amendment No. 3 to the Amended     Report
            and Restated Agreement of Limited  dated December 31, 1991
            Partnership                        (File No. 0-19217)
    10.44   Queen Lane Investors Amendment     Exhibit 10.12 to Form 10-Q
            No. 1 to Amended and Restated      Report
            Agreement and Certificate of       dated December 30, 1990
            Limited Partnership                (File No. 33-31390)
    10.45   Somerset Manor, Ltd. Amended and   Exhibit 10.13 to Form 10-Q
            Restated Agreement and             Report
            Certificate of Limited Partnership dated December 30, 1990
                                               (File No. 33-31390)
    10.46   Sugar Cane Villas, Ltd. Amended    Exhibit 10.23 to Form 10-K
            and Restated Agreement of Limited  Report
            Partnership                        dated March 30, 1991
                                               (File No. 33-31390)
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                    <S>                          <C> 
                                               Incorporated by
                        Exhibit                Reference to
    10.47   Summerfield Apartments Limited     Exhibit 10.47 to Form 10-K
            Partnership Amended and Restated   Report
            Agreement of Limited Partnership   dated March 30, 1992
                                               (File No. 33-31390)
    10.48   Amendment No.1 to the Summerfield
            Apartments Limited Partnership
            Amended and Restated Agreement of
            Limited Partnership
    10.49   Sydney Engel Associates Second     Exhibit 10.4 to Form 10-Q
            Amended and Restated Agreement of  Report
            Limited Partnership                dated September 29, 1990
                                               (File No. 33-31390)
    10.50   First Amendment to Second Amended  Exhibit 10.49 to Form 10-K
            and Restated Agreement of Limited  Report
            Partnership of Sydney Engel        dated March 30, 1997
            Associates                         (File No. 0-19217)
    10.51   Second Amendment to Second         Exhibit 10.50 to Form 10-K
            Amended and Restated Agreement of  Report
            Limited Partnership of Sydney      dated March 30, 1997
            Engel Associates L.P.              (File No. 0-19217)
    10.52   Third Amendment to Second Amended  Exhibit 10.51 to Form 10-K
            and Restated Agreement of Limited  Report
            Partnership of Sydney Engel        dated March 30, 1997
            Associates L.P.                    (File No. 0-19217)
    10.53   Fourth Amendment to Second         Exhibit 10.52 to Form 10-K
            Amended and Restated Agreement of  Report
            Limited Partnership of Sydney      dated March 30, 1997
            Engel Associates L.P.              (File No. 0-19217)
    10.54   Union Valley Associates Limited    Exhibit 10.14 to Form 10-Q
            Partnership Amended and Restated   Report
            Agreement and Certificate of       dated December 30, 1990
            Limited Partnership                (File No. 33-31390)
    10.55   Walnut Grove Family, L.P. (A       Exhibit 10.4 to Form 10-Q
            Mississippi Limited Partnership)   Report
            Amended and Restated Limited       dated September 29, 1991
            Partnership Agreement and          (File No. 0-19217)
            Certificate of Limited Partnership
    10.56   Waynesboro Apartments Limited      Exhibit 10.15 to Form 10-Q
            Partnership Amended and Restated   Report
            Agreement and Certificate of       dated December 30, 1990
            Limited Partnership                (File No. 33-31390)
    10.57   West Calhoun City, L.P. (A         Exhibit 10.5 to Form 10-Q
            Mississippi Limited Partnership)   Report
            Amended and Restated Limited       dated September 29, 1991
            Partnership Agreement and          (File No. 0-19217)
            Certificate of Limited Partnership
    10.58   Westminster Apartments Limited     Exhibit 10.53 to Form 10-K
            Partnership Second Amended and     Report
            Restated Agreement of Limited      dated March 30, 1992
            Partnership                        (File No. 33-31390)
    27      Financial Data Schedule
</TABLE>





<TABLE>
<CAPTION>
                       <S>                             <C>
                                               Incorporated by
                        Exhibit                Reference to
                        -------                ------------
    28.0    Pages 20  through  31, 44  through Exhibit 28.0 to Form 10-K
            71   and   78    through   80   of Report
            Prospectus  filed pursuant to Rule dated March 30, 1990
            424(b)(3) under  Securities Act of (File No. 33-31390)
            1933
    28.1    Pages 14 through 19 of  Prospectus  Exhibit  28.1 to Form 10-K filed
            pursuant to Rule 424(b)(3) Report under Securities Act of 1933 dated
            March 30, 1991
                                               (File No. 33-31390)
    28.2    Supplement No. 1 dated June 6,     Exhibit 28.2 to Form 10-K
            1990 to Prospectus                 Report
                                               dated March 30, 1991
                                               (File No. 33-31390)
    28.3    Supplement No. 2 dated November    Exhibit 28.3 to Form 10-K
            21, 1990 to Prospectus             Report
                                               dated March 30, 1991
                                               (File No. 33-31390)
    28.4    Supplement No. 3 dated December    Exhibit 28.4 to Form 10-K
            20, 1990 to Prospectus             Report
                                               dated March 30, 1991
                                               (File No. 33-31390)
    28.5    Supplement No. 4 dated October     Exhibit 28.5 to Form 10-K
            30, 1991 to Prospectus             Report
                                               dated March 30, 1992
                                               (File No. 33-31390)
    28.6    Supplement No. 5 dated December    Exhibit 28.6 to Form 10-K
            26, 1991 to Prospectus             Report
                                               dated March 30, 1992
                                               (File No. 33-31390)
    28.7    Supplement No. 6 dated January     Exhibit 28.7 to Form 10-K
            15, 1992 to Prospectus             Report
                                               dated March 30, 1990
                                               (File No. 33-31390)
</TABLE>
   (b) Reports on Form 8-K

   No reports on Form 8-K were filed by  Registrant  during the last  quarter of
   the period covered by this report.

   (c) Exhibits

   See (a)(3) above.

   (d)       Financial Statement Schedules

   See (a)(2) above.



<PAGE>


                               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.


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

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

                                    by:   Richman Housing Credits Inc.,
                                 general partner

Dated:  June 29, 1998               /s/    Richard Paul Richman
        -------------               ---------------------------
                                    by:   Richard Paul Richman
                                        President

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 in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          Signature                        Title                         Date
<S>                            <C>                           <C>
     /s/ Richard Paul Richman     President, Chief                 June 29, 1998
     ------------------------                                      -------------
                                  Executive Officer
                                  and Director of the
                                  general partner
                                  of the General Partner

     /s/ Neal Ludeke              Vice President and               June 29, 1998
     ------------------------                                      -------------
                                  Treasurer of
                                  the general partner of
                                  the General
                                  Partner (Principal
                                  Financial and
                                  Accounting Officer of
                                  Registrant)
</TABLE>