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, 2005

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

Richman Tax Credit Properties III L.P.
340 Pemberwick Road
Greenwich, Connecticut                                       06831
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

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

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|

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes |_|  No |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.

                                       1
<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 in accordance with 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 that 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 to investors.  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, Tax and Trade Relief
Extension Act of 1998,  Tax and Trade Relief  Extension  Act of 1999,  Community
Renewal Tax Relief Act of 2000,  Economic  Growth and Tax Relief  Reconciliation
Act of 2001, Job Creation and Worker Assistance Act of 2002, Jobs and Growth Tax
Relief  Reconciliation  Act of  2003  and  American  Jobs  Creation  Act of 2004
(collectively the "Tax Acts")

Registrant  is organized as a limited  partnership  and is a "pass  through" tax
entity that 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.

                                       2
<PAGE>

Item 2. Properties

The executive  offices of Registrant and the General  Partner are located at 340
Pemberwick Road, Greenwich,  Connecticut 06831. 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 has been 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 "Ten Year Credit  Period").  The
Ten  Year  Credit  Period  was  substantially   fully  exhausted  by  the  Local
Partnerships  as of December  31,  2003.  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.  It is the  General
Partner's  intention  to  sell  or  assign   Registrant's   interests  in  Local
Partnerships  subsequent to the expiration of the respective Compliance Periods.
It is  uncertain as to the amount,  if any,  that  Registrant  will receive with
respect  to each  specific  Property  from such sales and  assignments.  Through
December  31, 2004,  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,  own a
99% Local Partnership Interest in the following Local Partnerships:


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


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.  Since  October 1997,  the United States  Department of
Housing and Urban Development  ("HUD") has issued a series of directives related
to  project  based  Section  8  contracts  that  define   owners'   notification
responsibilities,  advise  owners of project  based Section 8 properties of what
their options are regarding the renewal of Section 8 contracts, provide guidance
and procedures to owners,  management  agents,  contract  administrators and HUD
staff concerning renewal of Section 8 contracts, provide policies and procedures
on setting renewal rents and handling  renewal rent  adjustments and provide the
requirements  and  procedures  for  opting-out  of a  Section  8  project  based
contract.  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 before debt service and debt structure of
any or all Local  Partnerships  currently  receiving  such  subsidy  or  similar
subsidies.  One Local Partnership's Section 8 contracts are currently subject to
renewal under applicable HUD guidelines.

                                       3
<PAGE>

Item 2. Properties (continued)

<TABLE>
<CAPTION>
                                                                                            Mortgage
Name of Local Partnership                        Number                                loans payable as of        Subsidy
Name of apartment complex                      of rental            Capital               December 31,             (see
Apartment complex location                       units            contribution                2004               footnotes)
--------------------------                       -----            ------------                ----               ----------
<S>                                                <C>            <C>                      <C>                     <C>
April Gardens Apartments II
  Limited Partnership
April Gardens Apartments
Las Piedras, Puerto Rico                           48             $   485,581              $ 1,966,069             (1b&d

Ashland Park Apartments, L.P.
Ashland Park Apartments
Ashland, Nebraska                                  24                 235,732                1,021,302             (1b&d)

Auburn Family, L.P.
Auburn Apartments
Louisville, Mississippi                            16                  95,412                  456,347             (1b&d)

Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi                            48                 239,716 (2)            1,419,819               (1b)

Bay Springs Elderly, L.P.
Bay Springs Manor
Bay Springs, Mississippi                           24                 208,820                  666,111             (1b&d)

Brisas del Mar Apartments
  Limited Partnership
Brisas del Mar Apartments
Hatillo, Puerto Rico                               66                 668,172                2,609,564             (1b&d)

Bruce Housing Associates, L.P.
Bruce Family Apartments
Bruce, Mississippi                                 40                 183,155 (2)            1,087,973             (1b&d)

Carrington Limited Dividend
  Housing Association Limited
  Partnership
Carrington Place
Farmington Hills, Michigan                        100               2,174,720 (2)            3,227,672               (1c)

Chestnut Park Associates, L.P.
Chestnut Park Apartments
East Orange, New Jersey                            59               4,204,576                4,772,026               (1a)

Chowan Senior Manor Associates
  Limited Partnership
Azalea Garden Senior Manor
  Apartments
Murfreesboro, North Carolina                       33                 278,405                1,228,746             (1b&d)

Christian Street Commons
  Associates
Christian Street Commons
  Apartments
Philadelphia, Pennsylvania                         18                 581,645                  571,021              (1a&b)

</TABLE>

                                       4
<PAGE>

Item 2.  Properties (continued)

<TABLE>
<CAPTION>
                                                                                            Mortgage
Name of Local Partnership                        Number                                loans payable as of        Subsidy
Name of apartment complex                      of rental            Capital               December 31,             (see
Apartment complex location                       units            contribution                2004               footnotes)
--------------------------                       -----            ------------                ----               ----------
<S>                                                <C>            <C>                      <C>                     <C>
Country View Apartments
Country View Apartments
Pembroke, Maine                                    16             $   279,183              $   922,768             (1b&d)

Desarrollos de Belen Limited
  Partnership
Vista de Jagueyes II Apartments
Aguas Buenas, Puerto Rico                          41                 422,929                1,850,743             (1b&d)

Desarrollos de Emaus Limited
  Partnership
Hucares II Apartments
Naguabo, Puerto Rico                               72                 631,404                3,144,915             (1b&d)

Ellinwood Heights Apartments, L.P.
Ellinwood Heights Apartments
Ellinwood, Kansas                                  24                 156,261                  677,438             (1b&d)

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

Hayes Run Limited Partnership
Mashburn Gap Apartments
Marshall, North Carolina                           34                 322,074                1,404,148             (1b&d)

Howard L. Miller Sallisaw
  Apartments II, L.P.
Sallisaw II Apartments
Sallisaw, Oklahoma                                 24                 130,158                  606,846             (1b&d)

Hurlock Meadow Limited
  Partnership
Hurlock Meadow Apartments
Hurlock, Maryland                                  30                 284,218                1,249,691             (1b&d)

Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi                            32                 135,528 (2)              765,777             (1b&d)

Justin Associates
Locust Tower Apartments
Philadelphia, Pennsylvania                         40               1,809,723                2,222,874             (1b&e)

LaBelle Commons, Ltd.
LaBelle Commons
LaBelle, Florida                                   32                 253,580                  997,116             (1b&d)

Lawrence Road Properties, Ltd.
Hillcrest Apartments
Newton, Mississippi                                24                                          747,337             (1b&d)
                                                                      123,799 (2)
</TABLE>

                                       5
<PAGE>

Item 2.  Properties (continued)

<TABLE>
<CAPTION>
                                                                                            Mortgage
Name of Local Partnership                        Number                                loans payable as of        Subsidy
Name of apartment complex                      of rental            Capital               December 31,             (see
Apartment complex location                       units            contribution                2004               footnotes)
--------------------------                       -----            ------------                ----               ----------
<S>                                                <C>            <C>                      <C>                     <C>
Loma Del Norte Limited
  Partnership
Loma Del Norte Apartments
Anthony, New Mexico                                40             $   314,865              $ 1,416,640             (1b&d)

Long Reach Associates Limited
  Partnership
Oak Ridge Apartments
Bath, Maine                                        30                 448,922                1,457,002             (1b&d)

Mirador del Toa Limited
  Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico                              48                 284,847 (2)            1,850,088             (1b&d)

Moore Haven Commons, Ltd.
Moore Haven Commons
Moore Haven, Florida                               28                 213,402                  913,852             (1b&d)

NP-89 Limited Dividend Housing
  Association Limited Partnership
Newport Apartments
Clinton Township, Michigan                        168               2,372,292                3,617,394           (1a,b&g)

Nash Hill Associates, Limited
  Partnership
Nash Hill Place
Williamsburg, Massachusetts                        28                 302,575                1,446,521           (1b,d&f)

North Calhoun City, L.P.
North Calhoun City Apartments
Calhoun City, Mississippi                          18                 146,565                  470,584             (1b&d)

Orange City Plaza, Limited
  Partnership
Orange City Plaza Apartments
Orange City, Iowa                                  32                 456,090                  409,846               (1a)

Puerta del Mar Limited Partnership
Puerta del Mar Apartments
Hatillo, Puerto Rico                               66                 630,570                2,483,146             (1b&d)

Purvis Heights Properties, L.P.
Pineview Apartments
Purvis, Mississippi                                40                 191,512 (2)            1,131,600               (1b)

Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania                         29                 597,050 (2)            1,524,745             (1b&e)

Somerset Manor, Ltd.
Somerset Manor
Central City, Pennsylvania                         24                 208,465                  884,599             (1b&d)

Sugar Cane Villas, Ltd.
Sugar Cane Villas
Pahokee, Florida                                   87                 751,560                3,259,238             (1b&d)

</TABLE>

                                       6
<PAGE>

Item 2.  Properties (continued)

<TABLE>
<CAPTION>
                                                                                            Mortgage
Name of Local Partnership                        Number                                loans payable as of        Subsidy
Name of apartment complex                      of rental            Capital               December 31,             (see
Apartment complex location                       units            contribution                2004               footnotes)
--------------------------                       -----            ------------                ----               ----------
<S>                                                <C>            <C>                      <C>                     <C>
Summerfield Apartments Limited
  Partnership
Summerfield Apartments
Charlotte, North Carolina                          52             $ 1,088,667              $ 1,610,169                (1b)

Sydney Engel Associates L.P.
(formerly known as Sydney Engel
  Associates) The Castle
New York, New York                                224               3,201,874               16,052,928               (1b)

Union Valley Associates Limited
  Partnership
Union Valley Apartments
Union Township, Pennsylvania                       36                 371,589                1,425,898               (1b)

Walnut Grove Family, L.P.
Walnut Grove Apartments
Walnut Grove, Mississippi                          24                 191,695                  835,644             (1b&d)

Waynesboro Apartments Limited
  Partnership
Waynesboro Apartments
Waynesboro, Pennsylvania                           36                 360,859                1,460,104               (1b)

West Calhoun City, L.P.
West Calhoun City Apartments
Calhoun City, Mississippi                          28                 230,212                  725,123             (1b&d)

Westminster Apartments Limited
  Partnership
Westminster Apartments
Philadelphia, Pennsylvania                         42               1,047,993                1,607,972             (1b&e)
                                                                  -----------              -----------
                                                                  $29,264,476              $82,069,326
                                                                  ===========              ===========
</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)   The Local  Partnership's  Section 8  contracts  are  currently
                  subject to renewal under applicable HUD guidelines.

      (2)   Reflects amount attributable to Registrant only.

                                       7
<PAGE>

Item 3. Legal Proceedings

Registrant is not aware of any 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.

                                       8
<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 31,  2005 was
approximately 1,500, 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,  whose estimated  values are based on financial and other  information
available to them. 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.  Unit holders may not
realize such estimated values upon the liquidation of Registrant.

Distributions

Registrant owns a limited  partnership  interest in Local  Partnerships that are
the owners of Properties that 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   cash
distributions to its partners.  There were no cash distributions to the partners
during the years ended March 30, 2005 and 2004.

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, 2004 and 2003 and the  cumulative  Low-income  Tax
Credits allocated from inception through December 31, 2004 are as follows:

                                                     Low-income
                                                    Tax Credits
                                                    -----------
Tax year ended December 31, 2004                     $     .07
Tax year ended December 31, 2003                     $    3.67

Cumulative totals                                    $1,558.96

Registrant generated total Tax Credits from investments in Local Partnerships of
approximately $1,559 per Unit through December 31, 2004,  notwithstanding future
circumstances  which may give rise to recapture or loss of future  benefits (see
Part I, Item 2 - Properties,  herein). The Ten Year Credit Period for all of the
Properties was substantially fully exhausted as of December 31, 2003.

                                       9
<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,
                                                           ---------------------
                                      2005           2004           2003           2002           2001
                                      ----           ----           ----           ----           ----

<S>                               <C>            <C>            <C>            <C>            <C>
Interest and other revenue        $   176,110    $   193,706    $   224,254    $   215,927    $   235,418
                                  ===========    ===========    ===========    ===========    ===========

Equity in loss of investment in
   local partnerships             $  (247,207)   $  (215,731)   $  (536,158)   $(1,193,807)   $(1,228,135)
                                  ===========    ===========    ===========    ===========    ===========

Net loss                          $  (640,259)   $  (611,662)   $  (875,199)   $(1,509,355)   $(1,519,430)
                                  ===========    ===========    ===========    ===========    ===========

Net loss per unit of limited
   partnership interest           $    (17.66)   $    (16.88)   $    (24.15)   $    (41.64)   $    (41.92)
                                  ===========    ===========    ===========    ===========    ===========

                                                              As of March 30,
                                                              ---------------
                                     2005            2004           2003           2002           2001
                                     ----            ----           ----           ----           ----
Total assets                      $ 2,747,749    $ 3,766,895    $ 4,153,964    $ 4,744,278    $ 6,512,494
                                  ===========    ===========    ===========    ===========    ===========
</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")  that  own  low-income  multifamily  residential  complexes  (the
"Property"  or  "Properties")  that  qualify  for the  low-income  tax credit in
accordance  with Section 42 of the Internal  Revenue Code (the  "Low-income  Tax
Credit"). The Net Proceeds were utilized in acquiring an interest in forty-three
Local Partnerships.

As of March 30, 2005,  Registrant has cash and cash  equivalents and investments
in bonds  totaling  $1,994,475,  which is available  for  operating  expenses of
Registrant  and  circumstances  which  may  arise in  connection  with the Local
Partnerships.  As of March 30, 2005, Registrant's investments in bonds represent
corporate bonds of $306,681 and U.S. Treasury debt securities of $1,629,793 with
various  maturity  dates  ranging from 2007 to 2008.  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 to be primarily from interest earned on working capital and limited
cash distributions from Local Partnerships.

During the year ended March 30, 2005,  Registrant  received  cash from  interest
revenue,  maturities/redemptions and sales of bonds and distributions from Local
Partnerships and utilized cash for operating expenses. Cash and cash equivalents
and investments in bonds decreased,  in the aggregate, by approximately $744,000
during the year ended March 30, 2005 (which  includes a net  unrealized  loss on
investments in bonds of approximately  $168,000, the amortization of net premium
on investments in bonds of approximately $5,000 and the accretion of zero coupon
bonds of approximately $86,000). 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,  2005,  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, 2004 of $247,207 and cash distributions received
from  Local  Partnerships  of $10,000  (exclusive  of  distributions  from Local
Partnerships of $34,544 classified as other income).  Payable to general partner
and affiliates in the accompanying balance sheet as of March 30, 2005 represents
deferred management and administration fees.

                                       10
<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.  Accordingly, the investment
is  carried  at cost,  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.  In  addition,  the  book  value  of
Registrant's  investment  in each  Local  Partnership  (the  "Local  Partnership
Carrying  Value")  may be reduced  if the Local  Partnership  Carrying  Value is
considered to exceed the estimated  value  derived by  management.  Accordingly,
cumulative  losses  and cash  distributions  in excess of the  investment  or an
adjustment  to  a  Local  Partnership's   Carrying  Value  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,  2005,  2004,  and 2003
resulted in net losses of $640,259,  $611,662 and  $875,199,  respectively.  The
decrease in net loss from fiscal 2003 to fiscal 2004 is  primarily  attributable
to a  decrease  in  equity  in loss  of  investment  in  local  partnerships  of
approximately  $320,000,  partially  offset by a decrease in interest revenue of
approximately  $42,000  resulting  from the maturity of certain  investments  in
bonds at higher than  current  interest  rates and a reduction  in money  market
rates.  Equity  in loss of  investment  in  local  partnerships  is  subject  to
fluctuation  as a result  of (i)  Registrant  adjusting  the  Local  Partnership
Carrying Value in connection with its investments in certain Local  Partnerships
and changes in the nonrecognition of losses in accordance with the equity method
of  accounting  and (ii)  changes in the net  operating  results of those  Local
Partnerships in which Registrant continues to have an investment balance.

The Local Partnerships' net loss of approximately  $3,334,000 for the year ended
December  31,  2004   includes   depreciation   and   amortization   expense  of
approximately  $4,050,000 and interest on  non-mandatory  debt of  approximately
$355,000,  and  does  not  include  required  principal  payments  on  permanent
mortgages  of  approximately  $932,000.  The  Local  Partnerships'  net  loss of
approximately   $2,933,000  for  the  year  ended  December  31,  2003  includes
depreciation and amortization  expense of approximately  $4,045,000 and interest
on non-mandatory debt of approximately  $377,000, and does not include principal
payments  on  permanent   mortgages  of   approximately   $818,000.   The  Local
Partnerships'  net loss of approximately  $3,253,000 for the year ended December
31,  2002  includes  depreciation  and  amortization  expense  of  approximately
$4,100,000 and interest on  non-mandatory  debt of approximately  $361,000,  and
does not include  principal  payments on permanent  mortgages  of  approximately
$754,000. The results of operations of the Local Partnerships for the year ended
December  31, 2004 are not  necessarily  indicative  of the results  that may be
expected in future periods.

Local Partnership Matters

Registrant's  primary  objective has been 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 "Ten Year Credit  Period").  The
Ten  Year  Credit  Period  was  substantially   fully  exhausted  by  the  Local
Partnerships  as of December  31,  2003.  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

                                       11
<PAGE>

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

compliance  with the Low-income Tax Credit  Requirements.  Through  December 31,
2004,  none of the Local  Partnerships  have  suffered an event of  recapture of
Low-income Tax Credits.  It is the General Partner's intention to sell or assign
Registrant's interests in Local Partnerships subsequent to the expiration of the
respective  Compliance  Periods.  It is uncertain as to the amount, if any, that
Registrant  will receive with respect to each specific  Property from such sales
and assignments.

The Properties are principally  comprised of subsidized and leveraged low-income
multifamily  residential  complexes  located  throughout  the United  States and
Puerto Rico.  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"). The subsidy  agreements expire at various
times during and after the Compliance Periods of the Local  Partnerships.  Since
October  1997,  the United States  Department  of Housing and Urban  Development
("HUD") has issued a series of  directives  related to project  based  Section 8
contracts that define owners'  notification  responsibilities,  advise owners of
project  based  Section 8 properties  of what their  options are  regarding  the
renewal of Section 8  contracts,  provide  guidance  and  procedures  to owners,
management agents,  contract  administrators and HUD staff concerning renewal of
Section 8 contracts,  provide  policies and procedures on setting  renewal rents
and  handling   renewal  rent  adjustments  and  provide  the  requirements  and
procedures  for  opting-out  of a Section 8 project based  contract.  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 before debt service and debt structure of any or all Local
Partnerships  currently  receiving such subsidy or similar subsidies.  One Local
Partnership's  Section 8  contracts  are  currently  subject  to  renewal  under
applicable HUD guidelines.

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 the Local  Partnerships (the "Local General Partners") are obligated
to provide advances to cover deficits for a certain period of time up to certain
amounts (the "Deficit  Guarantee").  A Local General  Partner's  funding of such
Deficit  Guarantee  is  dependent  on its  liquidity  or  ability  to borrow the
required funds. During the year ended December 31, 2004, revenue from operations
of the Local  Partnerships  has generally  been  sufficient  to cover  operating
expenses and Mandatory Debt Service. Substantially all of the Local Partnerships
are effectively operating at or above 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 an operating deficit
after  taking into  account  their  mortgage  and  financing  structure  and any
required deferral of property management fees.

The  terms  of the  partnership  agreement  of  Westminster  Apartments  Limited
Partnership  ("Westminster")  require the Local General Partner to advance funds
to cover operating  deficits through the Compliance  Period.  As of December 31,
2004, Westminster was in default under the terms of its first mortgage; payments
of principal,  interest and replacement  reserve deposits are over five years in
arrears,  resulting in a cumulative  arrearage of  approximately  $607,000.  The
lender has indicated a willingness to  restructure  the debt,  whereby  payments
will be required only to the extent that Westminster  generates available annual
cash flow; in addition,  the lender would receive all residual proceeds upon the
sale of Westminster.  There can be no assurance that the issues will be resolved
and the  mortgage  remains in default  without a formal  forbearance  as of June
2005. Westminster incurred an operating deficit of approximately $77,000 for the
year ended December 31, 2004,  which amount includes a provision for replacement
reserve  deposits  of $1,184 per month and debt  service  payments of $6,245 per
month.  Registrant's investment balance in Westminster,  after cumulative equity
losses, became zero during the year ended March 30, 1999.  Westminster generated
approximately  $63.2 per Unit to the limited partners upon the expiration of its
Low-income Tax Credit allocation in 2003.

The terms of the partnership  agreement of Sydney Engel Associates L.P. ("Sydney
Engel")  require the Local  General  Partners to cause the  management  agent to
defer property  management  fees in order to avoid a default under the mortgage.
Sydney Engel  incurred an operating  deficit of  approximately  $281,000 for the
year ended  December  31,  2004,  which  includes  property  management  fees of
approximately  $118,000.  The Local General Partners report that payments on the
mortgage  are  current  and the  Property  does not  incur  real  estate  taxes.
Registrant's investment balance in Sydney Engel, after cumulative equity losses,
became zero  during the year ended  March 30,  1997.  The  Compliance  Period in
connection with Sydney Engel expires on December 31, 2005.

                                       12
<PAGE>

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

Fulton  Street Houses  Limited  Partnership  ("Fulton  Street") has an escrow of
approximately  $320,000 as of December 31, 2004 to cover operating  deficits and
there are no  Mandatory  Debt  Service  payments or real estate  taxes  required
during the Compliance  Period.  Fulton Street  incurred an operating  deficit of
approximately  $41,000  for the  year  ended  December  31,  2004.  Registrant's
investment balance in Fulton Street, after cumulative equity losses, became zero
during the year ended March 30,  2002.  Fulton  Street  generated  approximately
$116.8 per Unit to the limited  partners upon the  expiration of its  Low-income
Tax Credit allocation in 2001.

The terms of the partnership  agreement of Orange City Plaza Limited Partnership
("Orange  City") require the Local General Partner to advance funds to cover all
operating  deficits  through the  Compliance  Period and to cause the management
agent to defer  property  management  fees in order to avoid a default under the
mortgage. Orange City incurred an operating deficit of approximately $29,000 for
the year ended December 31, 2004,  which includes  property  management  fees of
approximately  $5,000. The Local General Partner represents that payments on the
mortgage and real estate taxes are current.  Registrant's  investment balance in
Orange City, after cumulative  equity losses,  became zero during the year ended
March  30,  2002.  Orange  City  generated  approximately  $24.8 per Unit to the
limited partners upon the expiration of its Low-income Tax Credit  allocation in
2002.

The terms of the partnership  agreement of Christian  Street Commons  Associates
("Christian Street") require the Local General Partner to advance funds to cover
all operating deficits through the Compliance Period and to cause the management
agent to defer  property  management  fees in order to avoid a default under the
mortgage.  Christian  Street  incurred  an  operating  deficit of  approximately
$13,000 for the year ended December 31, 2004, which includes property management
fees of approximately $5,000. As of December 31, 2004, the Local General Partner
has advanced  approximately  $120,000 under its Deficit Guarantee obligation and
it  represents  that payments on the mortgage and real estate taxes are current.
Registrant's  investment  balance in Christian  Street,  after cumulative equity
losses,  became  zero  during the year ended March 30,  1998.  Christian  Street
generated  approximately  $32.1  per  Unit  to the  limited  partners  upon  the
expiration of its Low-income Tax Credit allocation in 2002.

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.

Contractual Obligations

As of March 30,  2005,  Registrant  has the  following  contractual  obligations
(payments due by period):

<TABLE>
<CAPTION>
                                          Total       < 1 year       1 - 3 years  3 - 5 years     > 5 years
                                          -----       --------       -----------  -----------     ---------
<S>                                   <C>            <C>              <C>          <C>              <C>
Other Long Term Liabilities:
Accounts Payable and
 Accrued Expenses (1)                 $   556,673    $   116,000      $ 440,673    $        --      $      --

Payable to General Partner
 and Affiliates (2)                     1,973,908        316,000      1,657,908             --             --

                                      $ 2,530,581    $   432,000    $ 2,098,581    $        --      $      --
                                      ===========    ===========    ===========    ===========    ===========
</TABLE>

(1)   Represents  Administration  Fees payable to a third-party  former  service
      provider. Of such amount, $116,000 is due in fiscal 2006 and the remainder
      is payable from available  reserves or sale or  refinancing  proceeds from
      the Local Partnerships to the extent such amounts are available.

(2)   Represents  Administration  and Management Fees payable to an affiliate of
      the General  Partner.  Of such amount,  $316,000 is due in fiscal 2006 and
      the remainder is payable from  available  reserves or sale or  refinancing
      proceeds  from the Local  Partnerships  to the  extent  such  amounts  are
      available.

                                       13
<PAGE>

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

Off - Balance Sheet Arrangements

None

Recent Accounting Pronouncements

As of March 31, 2004 Registrant  adopted  Financial  Accounting  Standards Board
Interpretation No. 46 - Revised ("FIN 46R"), "Consolidation of Variable Interest
Entities."  FIN 46R  provides  guidance  on when an entity  should  include  the
assets, liabilities, and activities of a variable interest entity ("VIE") in its
financial   statements  and  when  it  should  disclose  information  about  its
relationship  with a VIE. A VIE is considered a legal  structure used to conduct
activities or hold assets,  which must be consolidated by an entity if it is the
primary  beneficiary  because  it absorbs  the  majority  of the VIE's  expected
losses, the majority of the expected residual returns, or both.

Based on the guidance of FIN 46R,  the Local  Partnerships  in which  Registrant
invested meet the definition of a VIE. However,  Registrant does not consolidate
the  accounts and  activities  of the Local  Partnerships  under FIN 46R because
Registrant  is not  considered  the primary  beneficiary.  Registrant  currently
records the amount of its  investment in local  partnerships  as an asset in the
balance sheets,  recognizes its share of income or loss from such investments in
the statements of operations,  discloses how it accounts for such investments in
the financial  statements and presents the Local Partnerships'  combined balance
sheets and statements of operations in the notes to the financial statements.

Registrant's  balance  in  investment  in local  partnerships,  plus the risk of
recapture of tax credits previously recognized on these investments,  represents
its  limited  partners'  maximum  exposure  to loss.  Such  exposure  to loss is
mitigated  by  the  condition  and  financial   performance  of  the  underlying
Properties, the financial capacity and managerial expertise of the Local General
Partners and their  guarantees  against  Low-income Tax Credit recapture and the
expiration  of the  Ten  Year  Credit  Periods  and  Compliance  Periods  of the
Properties.

Critical Accounting Policies and Estimates

The financial  statements are prepared in accordance with accounting  principles
generally accepted in the United States of America, which requires Registrant to
make certain  estimates and  assumptions.  A summary of  significant  accounting
policies  is  provided  in Note 1 to the  financial  statements.  The  following
section is a summary of certain  aspects of those  accounting  policies that may
require  subjective or complex judgments and are most important to the portrayal
of  Registrant's  financial  condition  and  results of  operations.  Registrant
believes that there is a low probability that the use of different  estimates or
assumptions  in making  these  judgments  would result in  materially  different
amounts being reported in the financial statements.

      o     Registrant  accounts for its  investment  in local  partnerships  in
            accordance  with the equity  method of accounting  since  Registrant
            does not control the operations of a Local Partnership.

      o     If the book value of Registrant's  investment in a Local Partnership
            exceeds  the  estimated  value  derived  by  management,  Registrant
            reduces its  investment in any such Local  Partnership  and includes
            such   reduction   in  equity  in  loss  of   investment   in  local
            partnerships.   A  loss  in  value  of  an  investment  in  a  Local
            Partnership  other than a temporary  decline would be recorded as an
            impairment loss.  Impairment is measured by comparing the investment
            carrying  amount to the sum of the total amount of the remaining tax
            credits to be allocated to  Registrant  and the  estimated  residual
            value of the investment.

      o     Registrant  does not  consolidate the accounts and activities of the
            Local Partnerships, which are considered VIEs under FIN 46R, because
            Registrant is not considered the primary beneficiary.

Item 7a. Quantitative and Qualitative Disclosure About Market Risk

Registrant has invested a significant portion of its working capital reserves in
corporate  bonds  and  U.S.  Treasury  instruments.  The  market  value  of such
investments  is subject to  fluctuation  based upon  changes in  interest  rates
relative to each  investment's  maturity  date and the  associated  bond rating.
Since  Registrant's  investments  in bonds have various  maturity  dates through
2008, the value of such investments may be adversely  impacted in an environment
of rising interest rates in the event  Registrant  decides to liquidate any such
investment  prior to its maturity.  Although  Registrant may utilize reserves to
pay for its operating  expenses and/or assist an under performing  Property,  it
otherwise  intends  to hold such  investments  to their  respective  maturities.
Therefore,  Registrant  does not  anticipate  any  material  adverse  impact  in
connection with such investments.

                                       14
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.

Item 8.  Financial Statements and Supplementary Data


                            Table of Contents                     Page
                            -----------------                     ----

Report of Independent Registered Public Accounting Firm............16

Balance Sheets.....................................................17

Statements of Operations...........................................18

Statements of Changes in Partners' Equity (Deficit)................19

Statements of Cash Flows...........................................20

Notes to Financial Statements......................................22

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.

                                       15
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2005 and 2004, 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, 2005.  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.  For the
year ended March 30, 2005, we did not audit the financial  statements of certain
investee  partnerships which investments  represent $751,675 in total assets and
$247,207  of total  losses as of and for the year ended  March 30,  2005.  Those
statements  were audited by other  auditors whose reports have been furnished to
us, and our opinion,  insofar as it relates to those investee  partnerships,  is
based solely on the reports of the other auditors.

      We conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements are free of material  misstatement.  The  Partnership  has
determined  that it is not required to have, nor were we engaged to perform,  an
audit of its  internal  control over  financial  reporting.  Our audit  included
consideration  of  internal  control  over  financial  reporting  as a basis for
designing audit  procedures that are appropriate in the  circumstances,  but not
for  the  purpose  of  expressing  an  opinion  on  the   effectiveness  of  the
Partnership's internal control over financial reporting. Accordingly, we express
no  such  opinion.  An  audit  includes  examining,  on a test  basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation. We believe that our audits, and the reports of the other auditors,
provide a reasonable basis for our opinion.

      In our opinion, based on our audits and the reports of the other auditors,
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,  2005 and 2004,  and the  results  of its  operations,  changes  in
partners' equity (deficit) and its cash flows for each of the three years in the
period ended March 30, 2005, in conformity with accounting  principles generally
accepted in the United States of America.


/s/ Reznick Group, P.C.

Bethesda, Maryland
July 22, 2005

                                       16
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 BALANCE SHEETS
                             MARCH 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                        Notes      2005            2004
                                                        -----      ----            ----
ASSETS
<S>                                                      <C>   <C>            <C>
Cash and cash equivalents                                3,9   $    58,001    $   103,242
Investments in bonds                                     4,9     1,936,474      2,635,158
Investment in local partnerships                         5,8       751,675      1,008,882
Interest receivable                                       9          1,599         19,613
                                                               -----------   -----------

                                                               $ 2,747,749   $ 3,766,895
                                                               ===========   ===========

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

   Accounts payable and accrued expenses                  8    $   622,126    $   862,952
   Payable to general partner and affiliates             6,8     1,973,908      1,944,316
                                                               -----------   -----------
                                                                 2,596,034     2,807,268
                                                               -----------   -----------

Commitments and contingencies                             8

Partners' equity (deficit)                               2,4

   General partner                                                (314,335)      (307,932)
   Limited partners (35,883 units of limited
     partnership interest outstanding)                             410,557      1,044,413
   Accumulated other comprehensive income, net                      55,493       223,146
                                                               -----------   -----------

                                                                   151,715       959,627
                                                               -----------   -----------

                                                               $ 2,747,749   $ 3,766,895
                                                               ===========   ===========
</TABLE>

                       See Notes to Financial Statements.

                                       17
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 30, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                 Notes    2005         2004          2003
                                                                 -----    ----         ----          ----

REVENUE
<S>                                                               <C>   <C>          <C>          <C>
Interest                                                                $ 141,566    $ 160,346    $ 202,541
Other income from local partnerships                                       34,544       33,360       21,713
                                                                        ---------    ---------    ---------

TOTAL REVENUE                                                             176,110      193,706      224,254
                                                                        ---------    ---------    ---------

EXPENSES

Administration fees - affiliate                                   6,8     230,571      230,571      230,571
Management fees - affiliate                                       6,8     230,571      230,571      230,571
Professional fees                                                          68,253       82,681       53,730
State of New Jersey filing fees                                            20,145       21,428       30,000
Printing, postage and other                                                19,622       24,386       18,423
                                                                        ---------    ---------    ---------

TOTAL EXPENSES                                                            569,162      589,637      563,295
                                                                        ---------    ---------    ---------

                                                                         (393,052)    (395,931)    (339,041)

Equity in loss of investment in local partnerships                  5    (247,207)    (215,731)    (536,158)
                                                                        ---------    ---------    ---------

NET LOSS                                                                 (640,259)    (611,662)    (875,199)

Other comprehensive income (loss), net                              4    (167,653)     (34,514)     225,741
                                                                        ---------    ---------    ---------

COMPREHENSIVE LOSS                                                      $(807,912)   $(646,176)   $(649,458)
                                                                        =========    =========    =========
NET LOSS ATTRIBUTABLE TO                                            2

   General partner                                                      $  (6,403)   $  (6,117)   $  (8,752)
   Limited partners                                                      (633,856)    (605,545)    (866,447)
                                                                        ---------    ---------    ---------

                                                                        $(640,259)   $(611,662)   $(875,199)
                                                                        =========    =========    =========

NET LOSS per unit of limited partnership
   Interest (35,883 units of limited partnership
   interest)                                                            $  (17.66)   $  (16.88)   $  (24.15)
                                                                        =========    =========    =========
</TABLE>

                       See Notes to Financial Statements.

                                       18
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
               STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
                    YEARS ENDED MARCH 30, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                  Accumulated Other
                                                  General          Limited          Comprehensive
                                                  Partner          Partners       Income (Loss), Net     Total
                                                  -------          --------       ------------------     -----
<S>                                             <C>               <C>               <C>               <C>
Partners' equity (deficit), March 30, 2002      $  (293,063)      $ 2,516,405       $    31,919       $ 2,255,261

Net loss                                             (8,752)         (866,447)
                                                                                                         (875,199)

Other comprehensive income, net                                                         225,741           225,741
                                                -----------       -----------       -----------       -----------

Partners' equity (deficit), March 30, 2003         (301,815)        1,649,958           257,660         1,605,803

Net loss                                             (6,117)         (605,545)                           (611,662)

Other comprehensive loss, net                                                           (34,514)          (34,514)
                                                -----------       -----------       -----------       -----------

Partners' equity (deficit), March 30, 2004         (307,932)        1,044,413           223,146           959,627

Net loss                                             (6,403)         (633,856)                           (640,259)


Other comprehensive loss, net                                                          (167,653)         (167,653)
                                                -----------       -----------       -----------       -----------

Partners' equity (deficit), March 30, 2005      $  (314,335)      $   410,557       $    55,493       $   151,715
                                                ===========       ===========       ===========       ===========

</TABLE>

                       See Notes to Financial Statements.

                                       19
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF CASH FLOWS
                    YEARS ENDED MARCH 30, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                          2005         2004         2003
                                                          ----         ----         ----

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                    <C>          <C>          <C>
Interest received                                      $  60,168    $  75,402    $ 105,058
Cash paid for
     administration fees - affiliate                    (301,769)     (16,353)    (132,195)
     management fees - affiliate                        (361,781)    (183,663)    (299,800)
     professional fees                                   (70,779)     (66,380)     (53,730)
     State of New Jersey filing fees                     (24,445)     (38,634)
     printing, postage and other expenses                (21,622)     (25,500)     (18,426)
                                                       ---------    ---------    ---------

Net cash used in operating activities                   (720,228)    (255,128)    (399,093)
                                                       ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES

Cash distributions from local partnerships                44,544       44,320       37,352
Maturities/redemptions and sales of bonds                630,443      204,500      419,395
                                                       ---------    ---------    ---------

Net cash provided by investing activities                674,987      248,820      456,747
                                                       ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents     (45,241)      (6,308)      57,654

Cash and cash equivalents at beginning of year           103,242      109,550       51,896
                                                       ---------    ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR               $  58,001    $ 103,242    $ 109,550
                                                       =========    =========    =========

SIGNIFICANT NON-CASH INVESTING ACTIVITIES

Unrealized gain (loss) on investments in bonds, net    $(167,653)   $ (34,514)   $ 225,741
                                                       =========    =========    =========
</TABLE>

================================================================================
See reconciliation of net loss to net cash used in operating  activities on page
21.

                       See Notes to Financial Statements.

                                       20
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                     STATEMENTS OF CASH FLOWS - (Continued)
                    YEARS ENDED MARCH 30, 2005, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                           2005         2004         2003
                                                                           ----         ----         ----

RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
<S>                                                                     <C>          <C>          <C>
Net loss                                                                $(640,259)   $(611,662)   $(875,199)
                                                                        ---------    ---------    ---------
Adjustments to reconcile net loss to net cash used in
   operating activities

     Equity in loss of investment in local partnerships                   247,207      215,731      536,158
     Distributions from local partnerships classified as other income     (34,544)     (33,360)     (21,713)
     Gain on redemptions and sales of bonds                               (17,753)      (4,792)     (19,434)
     Amortization of net premium on investments in bonds                    4,832        3,669        2,986
     Accretion of zero coupon bonds                                       (86,491)     (86,491)     (86,491)
     Decrease in interest receivable                                       18,014        2,670        5,456
     Increase in payable to general partner and affiliates                 29,592      261,126      145,147
     Decrease in accounts payable and accrued expenses                   (240,826)      (2,019)     (86,003)
                                                                        ---------    ---------    ---------

NET CASH USED IN OPERATING ACTIVITIES                                   $(720,228)   $(255,128)   $(399,093)
                                                                        =========    =========    =========

</TABLE>

                       See Notes to Financial Statements.

                                       21
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                          NOTES TO FINANCIAL STATEMENTS
                          MARCH 30, 2005, 2004 AND 2003

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 in  accordance  with  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.

Investment in Local Partnerships

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 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 or additional  investment is made by the 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 the carrying  value of its  investments in
local  partnerships.  If  the  carrying  value  of  an  investment  in  a  Local
Partnership  exceeds the estimated value derived by management,  the Partnership
reduces its investment in any such Local Partnership and includes such reduction
in equity in loss of  investment  in local  partnerships.  A loss in value of an
investment  in a Local  Partnership  other  than a  temporary  decline  would be
recorded  as an  impairment  loss.  Impairment  is  measured  by  comparing  the
investment  carrying  amount to the sum of the total amount of the remaining tax
credits to be allocated to the Partnership  and the estimated  residual value of
the investment.

The  Partnership  does not  consolidate the accounts and activities of the Local
Partnerships,  which are considered  Variable  Interest Entities (see discussion
below under Recent  Accounting  Pronouncements),  because the Partnership is not
considered the primary beneficiary

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities as of 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.

Cash and Cash Equivalents

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.

                                       22
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

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

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 Statement of Financial  Accounting Standard ("SFAS")
No. 109,  "Accounting  for Income Taxes," the Partnership has included in Note 7
disclosures related to differences in the book and tax bases of accounting.

Investments in Bonds

Investments  in  bonds  are  classified  as  available-for-sale   and  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  would
be based on various factors,  including  significant movements in interest rates
and liquidity  needs.  Investments  in bonds are carried at estimated fair value
and  unrealized  gains or losses are included as items of  comprehensive  income
(loss) and are reported as a separate component of partners' equity (deficit).

Premiums and discounts on  investments in bonds are amortized  (accreted)  using
the effective yield 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 redemptions or sales
of investments in bonds are included in, or offset against,  interest revenue on
the basis of the adjusted cost of each specific investment redeemed or sold.

Reclassifications

Certain  prior year balances  have been  reclassified  to conform to the current
year presentation.

Recent Accounting Pronouncements

As of March 31, 2004 the  Partnership  adopted  Financial  Accounting  Standards
Board  Interpretation  No. 46 - Revised ("FIN 46R"),  "Consolidation of Variable
Interest  Entities." FIN 46R provides  guidance on when an entity should include
the assets, liabilities, and activities of a variable interest entity ("VIE") in
its  financial  statements  and when it should  disclose  information  about its
relationship  with a VIE. A VIE is considered a legal  structure used to conduct
activities or hold assets,  which must be consolidated by an entity if it is the
primary  beneficiary  because  it absorbs  the  majority  of the VIE's  expected
losses, the majority of the expected residual returns, or both.

Based  on the  guidance  of  FIN  46R,  the  Local  Partnerships  in  which  the
Partnership invested meet the definition of a VIE. However, the Partnership does
not consolidate the accounts and activities of the Local  Partnerships under FIN
46R because the  Partnership  is not  considered  the primary  beneficiary.  The
Partnership currently records the amount of its investment in local partnerships
as an asset in the balance  sheets,  recognizes its share of income or loss from
such investments in the statements of operations,  and discloses how it accounts
for  such  investments  in the  financial  statements  and  presents  the  Local
Partnerships'  combined balance sheets and statements of operations in the notes
to the financial statements.

The Partnership's balance in investment in local partnerships,  plus the risk of
recapture of tax credits previously recognized on these investments,  represents
its  limited  partners'  maximum  exposure  to loss.  Such  exposure  to loss is
mitigated  by  the  condition  and  financial   performance  of  the  underlying
Properties, the financial capacity and managerial expertise of the Local General
Partners and their  guarantees  against  Low-income Tax Credit recapture and the
expiration  of the  ten  year  credit  periods  and  compliance  periods  of the
Properties (see Note 5).

                                       23
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

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.

3. Cash and Cash Equivalents

As of March 30, 2005, the Partnership  has cash and cash  equivalents of $58,001
that are deposited in interest  bearing accounts with an institution that is not
insured by the Federal Deposit Insurance Corporation.

4. Investments in Bonds

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  the  providing  of  operating  advances
resulting  from  circumstances  that may  arise  in  connection  with the  Local
Partnerships.  Investments  in bonds are reflected in the  accompanying  balance
sheets at estimated fair value.

As of March 30, 2005, certain information  concerning investments in bonds 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 five years   $   292,251   $    14,776    $      (346)   $   306,681

U.S. Treasury debt securities
   After one year through five years     1,588,730        41,063             --      1,629,793
                                       -----------   -----------    -----------    -----------

                                       $ 1,880,981   $    55,839    $      (346)   $ 1,936,474
                                       ===========   ===========    ===========    ===========
</TABLE>

                                       24
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003


4. Investments in Bonds (continued)

As of March 30, 2004, certain information  concerning investments in bonds 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
   Within one year                     $  399,999   $    7,189   $       --   $  407,188
   After one year through five years      504,756       66,929           --      571,685
                                       ----------   ----------   ----------   ----------

                                          904,755       74,118           --      978,873
                                       ----------   ----------   ----------   ----------

U.S. Treasury debt securities
   After one year through five years    1,507,257      149,028           --    1,656,285
                                       ----------   ----------   ----------   ----------

                                       $2,412,012   $  223,146   $       --   $2,635,158
                                       ==========   ==========   ==========   ==========
</TABLE>

                                       25
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5. Investment in Local Partnerships

As of March 30, 2005, 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;
      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)*;
      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 ("Westminster").

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

                                       26
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003


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, own a 99% Local Partnership Interest in
the following Local Partnerships:

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


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
committed  to make  capital  contribution  payments in the  aggregate  amount of
$29,264,476,  all of which has been paid.  As of December  31,  2004,  the Local
Partnerships  have  outstanding  mortgage loans payable  totaling  approximately
$82,069,000  and accrued  interest  payable on such loans  totaling  $4,511,000,
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
$2,726,948,  $2,462,019,  and  $2,586,565 for the years ended December 31, 2004,
2003  and  2002,  respectively,  as  reflected  in the  combined  statements  of
operations of the Local Partnerships reflected herein Note 5.

As  of  December   31,  2004,   Westminster   Apartments   Limited   Partnership
("Westminster")  was in default under the terms of its first mortgage;  payments
of principal,  interest and replacement  reserve deposits are over five years in
arrears,  resulting in a cumulative  arrearage of  approximately  $607,000.  The
lender has indicated a willingness to  restructure  the debt,  whereby  payments
will be required only to the extent that Westminster  generates available annual
cash flow; in addition,  the lender would receive all residual proceeds upon the
sale of Westminster.  There can be no assurance that the issues will be resolved
and the  mortgage  remains in default  without a formal  forbearance  as of June
2005.

As a result of  management's  assessment of the carrying value of the investment
in local partnerships under applicable  accounting  guidelines (see Note 1), the
Partnership reduced its investment in certain Local Partnerships by $103,063 for
the year ended March 30, 2003. Such losses are included in the equity in loss of
investment in local partnerships in the accompanying statements of operations of
the Partnership for the year ended March 30, 2003.

The combined  balance sheets of the Local  Partnerships  as of December 31, 2004
and 2003 and the combined statements of operations of the Local Partnerships for
the years ended  December 31, 2004,  2003 and 2002 are reflected on pages 28 and
29, respectively.

                                       27
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5. Investment in Local Partnerships (continued)

The combined  balance sheets of the Local  Partnerships  as of December 31, 2004
and 2003 are as follows:

<TABLE>
<CAPTION>
                                                                     2004             2003
                                                                     ----             ----
ASSETS
<S>                                                              <C>             <C>
Cash and cash equivalents                                        $  1,420,670    $  1,204,402
Rents receivable                                                      431,307         420,753
Escrow deposits and reserves                                        5,491,520       5,673,980
Land                                                                3,910,215       3,910,215
Buildings and improvements (net of accumulated depreciation of
  $55,018,504 and $51,152,480)                                     60,312,727      63,830,791
Intangible assets (net of accumulated amortization of
  $594,230 and $527,467)                                              488,609         525,341
Other assets                                                        1,131,804       1,236,568
                                                                 ------------    ------------
                                                                 $ 73,186,852    $ 76,802,050
                                                                 ============    ============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

  Accounts payable and accrued expenses                          $  1,520,547    $  1,113,199
  Due to related parties                                            5,281,845       5,292,379
  Mortgage loans                                                   82,069,326      82,968,250
  Accrued interest                                                  4,510,931       4,414,472
  Other liabilities                                                   886,655         696,805
                                                                 ------------    ------------

                                                                   94,269,304      94,485,105
                                                                 ------------    ------------
Partners' equity (deficit)

  American Tax Credit Properties III L.P.
     Capital contributions, net of distributions                   28,769,504      28,812,656
     Cumulative loss                                              (26,627,828)    (26,380,621)
                                                                 ------------    ------------

                                                                    2,141,676       2,432,035
                                                                 ------------    ------------

  General partners and other limited partners
     Capital contributions, net of distributions                     (332,555)       (310,121)
     Cumulative loss                                              (22,891,573)    (19,804,969)
                                                                 ------------    ------------

                                                                  (23,224,128)    (20,115,090)
                                                                 ------------    ------------

                                                                  (21,082,452)    (17,683,055)
                                                                 ------------    ------------

                                                                 $ 73,186,852    $ 76,802,050
                                                                 ============    ============
</TABLE>

                                       28
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003


5. Investment in Local Partnerships (continued)

The combined  statements of operations of the Local  Partnerships  for the years
ended December 31, 2004, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                                    2004            2003            2002
                                                    ----            ----            ----
REVENUE
<S>                                             <C>             <C>             <C>
Rental                                          $ 11,668,579    $ 11,365,730    $ 11,188,578
Interest and other                                   336,144         278,912         343,487
                                                ------------    ------------    ------------

TOTAL REVENUE                                     12,004,723      11,644,642      11,532,065
                                                ------------    ------------    ------------

EXPENSES

Administrative                                     2,898,828       2,678,068       2,643,523
Utilities                                          1,380,506       1,261,598       1,184,078
Operating and maintenance                          3,033,442       2,543,295       2,671,075
Taxes and insurance                                1,267,542       1,201,623       1,113,985
Financial                                          2,708,549       2,848,664       3,072,036
Depreciation and amortization                      4,049,667       4,044,810       4,100,221
                                                ------------    ------------    ------------

TOTAL EXPENSES                                    15,338,534      14,578,058      14,784,918
                                                ------------    ------------    ------------

NET LOSS                                        $ (3,333,811)   $ (2,933,416)   $ (3,252,853)
                                                ============    ============    ============

NET LOSS ATTRIBUTABLE TO

   American Tax Credit Properties III L.P.      $   (247,207)   $   (215,731)   $   (433,095)
   General partners and other limited
     partners, which  includes $2,726,948,
     $2,462,019 and $2,586,565 of Partnership
     loss in excess of investment                 (3,086,604)     (2,717,685)     (2,819,758)
                                                ------------    ------------    ------------

                                                $ (3,333,811)   $ (2,933,416)   $ (3,252,853)
                                                ============    ============    ============
</TABLE>

                                       29
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5. Investment in Local Partnerships (continued)

Investment  activity with respect to each Local  Partnership  for the year ended
March 30, 2005 is as follows:

<TABLE>
<CAPTION>
                                                                                                           Cash
                                                                                            Cash       distributions
                                                          Partnership's                  distributions  classified
                                           Investment      equity in     Adjustment to    received       as other      Investment
                                            in Local      income (loss)  carrying value    during         income        in Local
                                          Partnership       for the       during the        the         during the     Partnership
                                          balance as of    year ended     year ended     year ended     year ended    balance as of
                                            March 30,     December 31,     March 30,      March 30,      March 30,      March 30,
Name of Local Partnership                     2004            2004           2005           2005           2005           2005
-------------------------                     ----            ----           ----           ----           ----           ----
<S>                                        <C>            <C>         <C> <C>            <C>            <C>            <C>
April Gardens Apartments II Limited
   Partnership                             $        --    $        -- (1) $        --    $      (960)   $       960    $        --
Ashland Park Apartments, L.P.                       --             -- (1)          --           (720)           720             --
Auburn Family, L.P.                                 --             -- (1)          --             --             --             --
Batesville Family, L.P.                             --             -- (1)          --             --             --             --
Bay Springs Elderly, L.P.                           --             -- (1)          --             --             --             --
Brisas del Mar Apartments Limited
   Partnership                                      --             -- (1)          --         (1,320)         1,320             --
Bruce Housing Associates, L.P.                      --             -- (1)          --             --             --             --
Carrington Limited Dividend Housing
   Association Limited Partnership             207,689       (124,616)             --             --             --         83,073
Chestnut Park Associates, L.P.                      --             -- (1)          --             --             --             --
Chowan Senior Manor Associates Limited
   Partnership                                      --             -- (1)          --             --             --             --
Christian Street Commons Associates                 --             -- (1)          --             --             --             --
Country View Apartments                             --             -- (1)          --             --             --             --
Desarrollos de Belen Limited Partnership            --             -- (1)          --         (2,000)         2,000             --
Desarrollos de Emaus Limited Partnership            --             -- (1)          --         (3,000)         3,000             --
Ellinwood Heights Apartments, L.P.              35,518          1,224              --             --             --          36,742
Fulton Street Houses Limited Partnership            --             -- (1)          --             --             --             --
Hayes Run Limited Partnership                       --             -- (1)          --         (1,785)         1,785             --
Howard L. Miller Sallisaw
   Apartments II, L.P.                              --             -- (1)          --             --             --             --
Hurlock Meadow Limited Partnership                  --             -- (1)          --         (3,176)         3,176             --
Ivy Family, L.P.                                    --             -- (1)          --             --             --             --
Justin Associates                                   --             -- (1)          --             --             --             --
Lawrence Road Properties, Ltd.                      --             -- (1)          --             --             --             --
Labelle Commons, Ltd.                               --             -- (1)          --             --             --             --
Loma Del Norte Limited Partnership                  --             -- (1)          --         (2,000)         2,000             --
Long Reach Associates Limited
   Partnership                                      --             -- (1)          --             --             --             --
Mirador del Toa Limited Partnership                 --             -- (1)          --           (572)           572             --
Moore Haven Commons, Ltd.                           --             -- (1)          --         (2,320)         2,320            --
NP-89 Limited Dividend Housing
   Association Limited Partnership             765,675       (123,815)             --        (10,000)            --         631,860
Nash Hill Associates, Limited
   Partnership                                      --             -- (1)          --         (1,819)         1,819             --
North Calhoun City, L.P.                            --             -- (1)          --             --             --             --
Orange City Plaza, Limited Partnership              --             -- (1)          --         (1,580)         1,580             --
Puerta del Mar Limited Partnership                  --             -- (1)          --         (1,320)         1,320             --
Purvis Heights Properties, L.P.                     --             -- (1)          --           (889)           889             --
Queen Lane Investors                                --             -- (1)          --             --             --             --
Somerset Manor, Ltd.                                --             -- (1)          --             --             --             --
Sugar Cane Villas, Ltd.                             --             -- (1)          --        (11,083)        11,083             --
Summerfield Apartments Limited
   Partnership                                      --             -- (1)          --             --             --             --
Sydney Engel Associates L.P.                        --             -- (1)          --             --             --             --
Union Valley Associates Limited
   Partnership                                      --             -- (1)          --             --             --             --
Walnut Grove Family, L.P.                           --             -- (1)          --             --             --             --
Waynesboro Apartments Limited
   Partnership                                      --             -- (1)          --             --             --             --
West Calhoun City, L.P.                             --             -- (1)          --             --             --             --
Westminster Apartments Limited
   Partnership                                      --             -- (1)          --             --             --             --
                                           -----------    -----------     -----------    -----------    -----------    -----------
                                           $ 1,008,882    $  (247,207)    $        --    $   (44,544)   $    34,544    $   751,675
                                           ===========    ===========     ===========    ===========    ===========    ===========
</TABLE>

(1)   Additional   equity  in  loss  of  investment  is  not  allocated  to  the
      Partnership  until equity in income is earned or additional  investment is
      made by the Partnership.

                                       30
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5. Investment in Local Partnerships (continued)

Investment activity with respect to each Local Partnership for the year ended
March 30, 2004 is as follows:

<TABLE>
<CAPTION>
                                                                                                           Cash
                                                                                            Cash       distributions
                                                          Partnership's                  distributions  classified
                                           Investment      equity in     Adjustment to    received       as other      Investment
                                            in Local      income (loss)  carrying value    during         income        in Local
                                          Partnership       for the       during the        the         during the     Partnership
                                          balance as of    year ended     year ended     year ended     year ended    balance as of
                                            March 30,     December 31,     March 30,      March 30,      March 30,      March 30,
Name of Local Partnership                     2003            2003           2004           2004           2004           2004
-------------------------                     ----            ----           ----           ----           ----           ----
<S>                                        <C>            <C>         <C> <C>            <C>            <C>            <C>
April Gardens Apartments II Limited
   Partnership                             $        --    $        -- (2) $        --    $      (960)      $    960       $     --
Ashland Park Apartments, L.P.                       --             -- (2)          --             --             --             --
Auburn Family, L.P.                                 --             -- (2)          --             --             --             --
Batesville Family, L.P.                             --             -- (2)          --             --             --             --
Bay Springs Elderly, L.P.                           --             -- (2)          --             --             --             --
Brisas del Mar Apartments Limited
   Partnership                                      --             -- (2)          --         (1,320)         1,320             --
Bruce Housing Associates, L.P.                      --             -- (2)          --             --             --             --
Carrington Limited Dividend Housing
   Association Limited Partnership             336,795       (129,106)             --             --             --        207,689
Chestnut Park Associates, L.P.                      --             -- (2)          --             --             --             --
Chowan Senior Manor Associates Limited
   Partnership                                      --             -- (2)          --             --             --             --
Christian Street Commons Associates                 --             -- (2)          --             --             --             --
Country View Apartments                             --             -- (2)          --         (1,500)         1,500             --
Desarrollos de Belen Limited Partnership            --             -- (2)          --         (2,000)         2,000             --
Desarrollos de Emaus Limited Partnership            --             -- (2)          --         (3,000)         3,000             --
Ellinwood Heights Apartments, L.P.              25,885         10,113              --           (480)            --         35,518
Fulton Street Houses Limited Partnership            --             -- (2)          --             --             --             --
Hayes Run Limited Partnership                       --             -- (2)          --         (1,785)         1,785             --
Howard L. Miller Sallisaw
   Apartments II, L.P.                           1,203           (723)(1)          --           (480)            --             --
Hurlock Meadow Limited Partnership                  --             -- (2)          --             --             --             --
Ivy Family, L.P.                                    --             -- (2)          --             --             --             --
Justin Associates                                   --             -- (2)          --             --             --             --
LaBelle Commons, Ltd.                               --             -- (2)          --         (2,320)         2,320             --
Lawrence Road Properties, Ltd.                      --             -- (2)          --             --             --             --
Loma Del Norte Limited Partnership                  --             -- (2)          --             --             --             --
Long Reach Associates Limited Partnership           --             -- (2)          --             --             --             --
Mirador del Toa Limited Partnership                 --             -- (2)          --           (572)           572             --
Moore Haven Commons, Ltd.                           --             -- (2)          --             --             --             --
NP-89 Limited Dividend Housing
   Association Limited Partnership             860,503        (84,828)             --        (10,000)            --        765,675
Nash Hill Associates, Limited Partnership        2,179         (2,179)(1)          --             --             --             --
North Calhoun City, L.P.                            --             -- (2)          --             --             --             --
Orange City Plaza, Limited Partnership              --             -- (2)          --         (2,500)         2,500             --
Puerta del Mar Limited Partnership                  --             -- (2)          --         (1,320)         1,320             --
Purvis Heights Properties, L.P.                  9,008         (9,008)(1)          --             --             --             --
Queen Lane Investors                                --             -- (2)          --             --             --             --
Somerset Manor, Ltd.                                --             -- (2)          --             --             --             --
Sugar Cane Villas, Ltd.                             --             -- (2)          --        (11,083)        11,083             --
Summerfield Apartments Limited Partnership          --             -- (2)          --         (5,000)         5,000             --
Sydney Engel Associates L.P.                        --             -- (2)          --             --             --             --
Union Valley Associates Limited
  Partnership                                       --             -- (2)          --             --             --             --
Walnut Grove Family, L.P.                           --             -- (2)          --             --             --             --
Waynesboro Apartments Limited Partnership           --             -- (2)          --             --             --             --
West Calhoun City, L.P.                             --             -- (2)          --             --             --             --
Westminster Apartments Limited Partnership          --             -- (2)          --             --             --             --
                                           -----------    -----------     -----------    -----------    -----------    -----------
                                           $ 1,235,573      $(215,731)    $        --    $   (44,320)    $   33,360    $ 1,008,882
                                           ===========      =========     ===========    ===========     ==========    ===========
</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 or additional investment is made by the
     Partnership.

                                       31
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5.   Investment in Local Partnerships (continued)

     Property information for each Local Partnership as of December 31, 2004 is
as follows:

<TABLE>
<CAPTION>
                                                      Mortgage                          Buildings and      Accumulated
Name of Local Partnership                           loans payable         Land          improvements       depreciation
-------------------------                           -------------         ----          ------------       ------------
<S>                                                 <C>               <C>               <C>                <C>
April Gardens Apartments II Limited Partnership     $   1,966,069     $      39,984     $   2,507,318      $  (1,405,156)
Ashland Park Apartments, L.P.                           1,021,302            50,160         1,250,352           (638,438)
Auburn Family, L.P.                                       456,347            20,000           588,988           (265,782)
Batesville Family, L.P.                                 1,419,819            52,000         1,843,095           (799,675)
Bay Springs Elderly, L.P.                                 666,111            38,000           852,608           (390,757)
Brisas del Mar Apartments Limited Partnership           2,609,564           100,280         3,396,314         (1,886,606)
Bruce Housing Associates, L.P.                          1,087,973            16,000         1,482,575           (766,007)
Carrington Limited Dividend Housing Association
  Limited Partnership                                   3,227,672           200,000         6,595,168         (3,493,697)
Chestnut Park Associates, L.P.                          4,772,026           781,700         8,654,778         (4,320,239)
Chowan Senior Manor Associates Limited                  1,228,746            86,101         1,530,162           (798,037)
  Partnership
Christian Street Commons Associates                       571,021                --             7,545             (1,633)
Country View Apartments                                   922,768            35,698         1,273,646           (415,604)
Desarrollos de Belen Limited Partnership                1,850,743            96,190         2,519,166         (1,039,189)
Desarrollos de Emaus Limited Partnership                3,144,915           214,000         4,046,102         (1,588,654)
Ellinwood Heights Apartments, L.P.                        677,438            10,000           970,915           (317,263)
Fulton Street Houses Limited Partnership                3,869,930                 2         5,964,514         (2,780,365)
Hayes Run Limited Partnership                           1,404,148            85,060         1,632,566           (543,889)
Howard L. Miller Sallisaw Apartments II, L.P.             606,846            39,000           728,404           (259,038)
Hurlock Meadow Limited Partnership                      1,249,691            49,525         1,605,842           (791,411)
Ivy Family, L.P.                                          765,777            11,000         1,082,310           (570,128)
Justin Associates                                       2,222,874            27,472         4,369,992         (2,070,109)
LaBelle Commons, Ltd.                                     997,116            98,947         1,184,937           (544,969)
Lawrence Road Properties, Ltd.                            747,337            50,000           962,687           (409,117)
Loma Del Norte Limited Partnership                      1,416,640            84,874         1,886,307           (669,674)
Long Reach Associates Limited Partnership               1,457,002           118,446         1,912,539           (717,968)
Mirador del Toa Limited Partnership                     1,850,088           105,000         2,346,694         (1,322,198)
Moore Haven Commons, Ltd.                                 913,852            73,645         1,197,000           (623,407)
NP-89 Limited Dividend Housing Association
  Limited Partnership                                   3,617,394           150,000         7,651,003         (3,735,280)
Nash Hill Associates, Limited Partnership               1,446,521           123,876         1,747,132           (629,964)
North Calhoun City, L.P.                                  470,584            12,000           667,464           (298,897)
Orange City Plaza, Limited Partnership                    409,846            53,904         1,051,852           (429,740)
Puerta del Mar Limited Partnership                      2,483,146           115,000         3,227,357         (1,810,328)
Purvis Heights Properties, L.P.                         1,131,600            47,000         1,538,559           (618,784)
Queen Lane Investors                                    1,524,745            60,301         2,811,636         (1,403,877)
Somerset Manor, Ltd.                                      884,599            53,383         1,118,389           (574,144)
Sugar Cane Villas, Ltd.                                 3,259,238            58,500         4,091,671         (2,110,249)
Summerfield Apartments Limited Partnership              1,610,169           195,411         2,723,225           (906,061)
Sydney Engel Associates L.P.                           16,052,928           284,305        19,443,725         (9,957,055)
Union Valley Associates Limited Partnership             1,425,898            97,800         1,758,877           (627,226)
Walnut Grove Family, L.P.                                 835,644            30,000         1,065,150           (497,980)
Waynesboro Apartments Limited Partnership               1,460,104            76,000         1,794,917           (660,565)
West Calhoun City, L.P.                                   725,123            18,000         1,071,865           (484,784)
Westminster Apartments Limited Partnership              1,607,972            51,651         1,175,886           (844,560)
                                                    -------------     -------------     -------------      -------------
                                                    $  82,069,326     $   3,910,215     $ 115,331,231      $ (55,018,504)
                                                    =============     =============     =============      =============
</TABLE>

                                       32
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5.   Investment in Local Partnerships (continued)

Property  information  for each Local  Partnership as of December 31, 2003 is as
follows:

<TABLE>
<CAPTION>
                                                      Mortgage                          Buildings and      Accumulated
Name of Local Partnership                           loans payable         Land          improvements       depreciation
-------------------------                           -------------         ----          ------------       ------------
<S>                                                 <C>               <C>               <C>                <C>
April Gardens Apartments II Limited Partnership     $   1,973,815     $      39,984     $   2,491,962      $  (1,303,642)
Ashland Park Apartments, L.P.                           1,025,226            50,160         1,246,492           (592,754)
Auburn Family, L.P.                                       458,699            20,000           580,872           (252,444)
Batesville Family, L.P.                                 1,423,964            52,000         1,843,095           (752,388)
Bay Springs Elderly, L.P.                                 668,431            38,000           852,608           (373,554)
Brisas del Mar Apartments Limited Partnership           2,620,029           100,280         3,372,029         (1,754,661)
Bruce Housing Associates, L.P.                          1,092,492            16,000         1,482,081           (720,761)
Carrington Limited Dividend Housing Association
  Limited Partnership                                   3,272,459           200,000         6,590,677         (3,243,210)
Chestnut Park Associates, L.P.                          4,858,207           781,700         8,654,778         (4,006,230)
Chowan Senior Manor Associates Limited                  1,235,772            86,101         1,530,162           (737,455)
  Partnership
Christian Street Commons Associates                       581,261                --             7,545             (1,359)
Country View Apartments                                   926,215            35,698         1,240,915           (381,875)
Desarrollos de Belen Limited Partnership                1,857,433            96,190         2,532,279           (961,575)
Desarrollos de Emaus Limited Partnership                3,157,278           214,000         4,050,973         (1,456,740)
Ellinwood Heights Apartments, L.P.                        679,943            10,000           952,966           (296,761)
Fulton Street Houses Limited Partnership                3,869,930                 2         6,036,470         (2,628,521)
Hayes Run Limited Partnership                           1,409,261            85,060         1,627,418           (520,875)
Howard L. Miller Sallisaw Apartments II, L.P.             608,937            39,000           728,036           (245,795)
Hurlock Meadow Limited Partnership                      1,254,600            49,525         1,594,074           (731,586)
Ivy Family, L.P.                                          772,383            11,000         1,076,150           (535,782)
Justin Associates                                       2,270,290            27,472         4,374,667         (1,910,828)
LaBelle Commons, Ltd.                                   1,000,922            98,947         1,184,937           (501,946)
Lawrence Road Properties, Ltd.                            750,067            50,000           959,446           (383,812)
Loma Del Norte Limited Partnership                      1,421,608            84,874         1,853,991           (617,901)
Long Reach Associates Limited Partnership               1,462,159           118,446         1,914,965           (670,896)
Mirador del Toa Limited Partnership                     1,857,814           105,000         2,343,423         (1,241,742)
Moore Haven Commons, Ltd.                                 917,231            73,645         1,197,000           (581,421)
NP-89 Limited Dividend Housing Association
  Limited Partnership                                   3,767,077           150,000         7,573,732         (3,429,706)
Nash Hill Associates, Limited Partnership               1,451,870           123,876         1,696,415           (587,562)
North Calhoun City, L.P.                                  475,003            12,000           663,302           (284,365)
Orange City Plaza, Limited Partnership                    417,935            53,904         1,051,852           (405,494)
Puerta del Mar Limited Partnership                      2,493,105           115,000         3,212,170         (1,680,289)
Purvis Heights Properties, L.P.                         1,135,775            47,000         1,507,912           (580,547)
Queen Lane Investors                                    1,524,745            60,301         2,781,755         (1,294,242)
Somerset Manor, Ltd.                                      887,724            53,383         1,117,435           (532,469)
Sugar Cane Villas, Ltd.                                 3,270,912            58,500         4,088,461         (1,964,750)
Summerfield Apartments Limited Partnership              1,644,932           195,411         2,710,360           (838,625)
Sydney Engel Associates L.P.                           16,394,250           284,305        19,443,725         (9,249,275)
Union Valley Associates Limited Partnership             1,430,974            97,800         1,758,877           (583,772)
Walnut Grove Family, L.P.                                 838,360            30,000         1,053,700           (471,254)
Waynesboro Apartments Limited Partnership               1,465,594            76,000         1,792,999           (613,786)
West Calhoun City, L.P.                                   735,596            18,000         1,066,765           (459,494)
Westminster Apartments Limited Partnership              1,607,972            51,651         1,143,800           (770,336)
                                                    -------------     -------------     -------------      -------------
                                                    $  82,968,250     $   3,910,215     $ 114,983,271      $ (51,152,480)
                                                    =============     =============     =============      =============
</TABLE>

                                       33
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

5. Investment in Local Partnerships (continued)

The summary of property  activity  during the year ended December 31, 2004 is as
follows:

<TABLE>
<CAPTION>
                                                                        Net change
                                                                     during the year
                                            Balance as of                 ended                Balance as of
                                          December 31, 2003         December 31, 2004        December 31, 2004
                                          -----------------         -----------------        -----------------
<S>                                       <C>                       <C>                     <C>
Land                                      $      3,910,215          $            --         $      3,910,215
Buildings and improvements                     114,983,271                  347,960              115,331,231
                                               118,893,486                  347,960              119,241,446
Accumulated depreciation                       (51,152,480)              (3,866,024)             (55,018,504)
                                          $     67,741,006          $    (3,518,064)        $     64,222,942
</TABLE>


6. Transactions with General Partner and Affiliates

For the years ended March 30, 2005,  2004 and 2003 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>
                                             2005                      2004                      2003
                                             ----                      ----                      ----
                                       Paid       Incurred       Paid       Incurred       Paid        Incurred
                                       ----       --------       ----       --------       ----        --------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>
Management fees (see Note 8)         $361,781     $230,571     $183,663     $230,571     $299,800     $230,571

Administration fees (see Note 8)       69,769      230,571      230,571       16,195      230,571       16,353

</TABLE>

For the years ended  December 31, 2004,  2003 and 2002,  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>

                                             2005                      2004                      2003
                                             ----                      ----                      ----
                                       Paid       Incurred       Paid       Incurred       Paid        Incurred
                                       ----       --------       ----       --------       ----        --------
<S>                                  <C>          <C>          <C>          <C>          <C>          <C>
Property management fees              $35,211      $40,010      $43,159      $38,873      $32,851      $37,800

Insurance premiums and other
  services                                 --       17,040       37,269       35,870       35,297       34,231

</TABLE>

                                       34
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003


7. Taxable Loss

A reconciliation of the financial  statement net loss of the Partnership for the
years  ended  March 30,  2005,  2004 and 2003 to the tax return net loss for the
years ended December 31, 2004, 2003 and 2002 is as follows:

<TABLE>
<CAPTION>
                                                             2005             2004             2003
                                                             ----             ----             ----
Financial  statement  net loss for the  years  ended
<S>                                                      <C>              <C>              <C>
   March 30, 2005, 2004, and 2003                        $  (640,259)     $  (611,662)     $  (875,199)

Add (less) net transactions occurring between
   January 1, 2002 and March 30, 2002                             --               --          (72,489)
   January 1, 2003 and March 30, 2003                             --          (59,193)          59,193
   January 1, 2004 and March 30, 2004                        (95,397)          95,397               --
   January 1, 2005 and March 30, 2005                         90,683               --               --
                                                         -----------      -----------      -----------

Adjusted financial statement net loss for the years
   ended December 31, 2004, 2003 and 2002                   (644,973)        (575,458)        (888,495)

Adjustment to management and administration
   fees pursuant to Internal Revenue Code
   Section 267                                               139,961          146,259          145,147

Differences arising from equity in loss of
   investment in local partnerships                       (3,438,649)      (2,720,797)      (2,773,921)

Other income from local partnerships                         (41,205)         (33,286)         (13,537)

Other differences                                                127           (5,904)          (9,961)
                                                         -----------      -----------      -----------

Tax return net loss for the years ended
   December 31, 2004, 2003 and 2002                      $(3,894,739)     $(3,189,186)     $(3,540,767)
                                                         ===========      ===========      ===========

</TABLE>

The  differences  between  the  investment  in  local  partnerships  for tax and
financial reporting purposes as of December 31, 2004 and 2003 are as follows:

                                               2004                    2003
                                               ----                    ----
Investment in local
  partnerships - financial reporting       $     751,675           $  1,008,882
Investment in local
  partnerships - tax                         (15,601,141)           (11,954,080)
                                           -------------           ------------

                                           $  16,352,816           $ 12,962,962
                                           =============           ============

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

                                       35
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003


8. Commitments and Contingencies

Pursuant  to  the  Partnership  Agreement,  the  Partnership  incurs  an  annual
management  fee  ("Management  Fee") and an  annual  additional  management  fee
("Additional Management Fee") payable to the General Partner for its services in
connection  with the  management of the affairs of the  Partnership.  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, 2005. 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,  2005.  Such  amounts are
aggregated and reflected  under the caption  management  fees - affiliate in the
accompanying  financial  statements.   Unpaid  Management  Fees  and  Additional
Management  Fees in the  cumulative  amount of  $1,125,367  and  $1,256,577  are
included  in payable to  general  partner  and  affiliates  in the  accompanying
balance sheets as of March 30, 2005 and 2004, respectively.

In  addition,   pursuant  to  the  Partnership  Agreement,  the  Partnership  is
authorized to contract for administrative  services provided to the Partnership.
From  the  inception  of  the  Partnership   through  November  23,  1999,  such
administrative  services were provided by ML Fund  Administrators Inc. ("MLFA"),
an  affiliate  of the  Selling  Agent,  pursuant to an  Administrative  Services
Agreement.  MLFA  resigned  the  performance  of its  basic  services  under the
Administrative  Services  Agreement  effective  November 23, 1999,  with certain
transitional  services  continued  through April 30, 2000.  The General  Partner
transitioned the administrative  services to an affiliate of the General Partner
without  any  changes  to the terms of the  Administrative  Services  Agreement.
Pursuant to such agreement,  the Partnership incurs an annual administration fee
("Administration Fee") and an annual additional  administration fee ("Additional
Administration  Fee") for  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, 2005. 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,  2005.  Such  amounts are
aggregated and reflected  under the caption  administration  fees - affiliate in
the accompanying financial statements. Unpaid Administration Fees and Additional
Administration  Fees  due to MLFA  in the  cumulative  amount  of  $556,673  and
$788,673  are  included  in  accounts   payable  and  accrued  expenses  in  the
accompanying balance sheets as of March 30, 2005 and 2004, respectively.  Unpaid
Administration  Fees and Additional  Administration  Fees due to an affiliate of
the General  Partner in the  cumulative  amount of  $848,541  and  $687,739  are
included in due to general  partner and affiliates in the  accompanying  balance
sheets as of March 30, 2005 and 2004, 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.
Since  October  1997,  the  United  States   Department  of  Housing  and  Urban
Development  ("HUD") has issued a series of directives  related to project based
Section 8 contracts that define owners'  notification  responsibilities,  advise
owners of project based Section 8 properties of what their options are regarding
the renewal of Section 8 contracts,  provide  guidance and procedures to owners,
management agents,  contract  administrators and HUD staff concerning renewal of
Section 8 contracts,  provide  policies and procedures on setting  renewal rents
and  handling   renewal  rent  adjustments  and  provide  the  requirements  and
procedures for opting-out of a Section 8 project based contract. 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 before debt service and debt structure of any or all Local
Partnerships  currently  receiving such subsidy or similar subsidies.  One Local
Partnership's  Section 8  contracts  are  currently  subject  to  renewal  under
applicable HUD guidelines.


                                       36
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

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

The carrying amount approximates fair value.

Investments in Bonds

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.

The estimated fair value of the Partnership's  financial instruments as of March
30, 2005 and 2004 are disclosed elsewhere in the financial statements.

10. Quarterly Financial Information - Unaudited

The  following  is a  summary  of  results  of  operations  for each of the four
quarters for the years indicated:

<TABLE>
<CAPTION>
                                     First          Second          Third        Fourth
                                    Quarter         Quarter        Quarter       Quarter
                                    -------         -------        -------       -------
2005
<S>                                <C>            <C>            <C>            <C>
Total revenue                      $  41,486      $  50,841      $  37,166      $  46,617

Total expenses                      (142,864)      (146,959)      (142,039)      (137,300)

Equity in loss of investment
  in local partnerships              (55,008)      (150,147)       (34,410)        (7,642)

Net loss                            (156,386)      (246,265)      (139,283)       (98,325)

Net loss per unit of
  limited partnership interest         (4.31)         (6.80)         (3.84)         (2.71)

2004

Total revenue                      $  44,897      $  58,432      $  46,115      $  44,262

Total expenses                      (138,989)      (149,436)      (161,553)      (139,659)

Equity in loss of investment
  in local partnerships              (61,546)       (25,744)       (38,902)       (89,539)

Net loss                            (155,638)      (116,748)      (154,340)      (184,936)

Net loss per unit of
  limited partnership interest         (4.29)         (3.23)         (4.25)         (5.11)

</TABLE>

                                       37
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2005, 2004 AND 2003

10. Quarterly Financial Information - Unaudited (continued)

<TABLE>
<CAPTION>
                                     First          Second          Third        Fourth
                                    Quarter         Quarter        Quarter       Quarter
                                    -------         -------        -------       -------
2003

<S>                                <C>            <C>            <C>            <C>
Total revenue                      $  57,556      $  48,609      $  48,056      $  70,033

Total expenses                      (140,916)      (127,719)      (135,434)      (159,226)

Equity in loss of investment
  in local partnerships             (103,853)      (138,879)      (135,450)      (157,976)

Net loss                            (187,213)      (217,989)      (222,828)      (247,169)

Net loss per unit of
  limited partnership interest         (5.17)         (6.01)         (6.15)         (6.82)

</TABLE>

                                       38
<PAGE>

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

None

Item 9A. Controls and Procedures

As of March 30, 2005,  under the  direction of the Chief  Executive  Officer and
Chief  Financial  Officer,   Registrant   evaluated  the  effectiveness  of  its
disclosure   controls  and  procedures  and  internal  controls  over  financial
reporting and concluded that (i) Registrant's disclosure controls and procedures
were  effective as of March 30, 2005,  and (ii) no changes  occurred  during the
quarter ended March 30, 2005, that materially affected, or are reasonably likely
to materially affect, such internal controls.

Item 9B. Other Information

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 director of
Richman Housing are:

                      Served in present
Name                  capacity since(1)   Position held
----                  -----------------   -------------

Richard Paul Richman  September 21, 1989  Director
David A. Salzman      February 1, 2001    President
Neal Ludeke           September 21, 1989  Vice President and Treasurer
Gina K. Dodge         September 21, 1989  Secretary

--------------------------------------------------------------------------------
(1)   Director  holds office until his successor is elected and  qualified.  All
      officers serve at the pleasure of the Director.

Richard  Paul  Richman,  age 57, is the sole  Director of Richman  Housing.  Mr.
Richman is the Chairman  and a  stockholder  of Richman  Group.  Mr.  Richman is
involved in the syndication, development 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.

David  A.  Salzman,  age  44,  is the  President  of  Richman  Housing  and is a
stockholder and the President of Richman Group. Mr. Salzman has been employed by
Richman  group since  October 1986 and is  responsible  for the  acquisition  of
residential real estate for syndication for Richman Group.

Neal Ludeke,  age 47, is a Vice President and the Treasurer of Richman  Housing.
Mr.  Ludeke,  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 Richman Asset
Management,  Inc.  ("RAM"),  an  affiliate  of  Richman  Housing.  Mr.  Ludeke's
responsibilities in connection with RAM include various  partnership  management
functions.

Gina K. Dodge, age 49, is the Secretary of Richman Housing.  Ms. Dodge is a Vice
President  and the  Secretary  of Richman  Group.  As the  Director  of Investor
Services, Ms. Dodge is responsible for communications with investors.

Registrant  is not aware of any family  relationship  between its  director  and
executive officers noted herein Item 10.

                                       39
<PAGE>

Registrant is not aware of the  involvement  in certain legal  proceedings  with
respect to the director and executive officers noted herein Item 10.

Mr.  Richman,  the sole  Director  of Richman  Housing,  Mr.  Ludeke and Charles
Krafnick,  Assistant Treasurer of Richman Housing, represent the audit committee
of the  Registrant.  Mr.  Richman is deemed to be an audit  committee  financial
expert and is not independent of the Registrant.

The Board of Director of Richman Housing has adopted a code of ethics for senior
financial officers of the Registrant,  applicable to the Registrant's  principal
financial officer and comptroller or principal  accounting  officer,  or persons
performing similar functions.  The Registrant will provide to any person without
charge a copy of such code of ethics upon written request to the General Partner
at 340 Pemberwick Road, Greenwich, Connecticut 06831, Attention: Secretary.

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,
2005, 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

JJJ Fund,  LLC, having the mailing  address 7463 E. Beryl,  Scottsdale,  Arizona
85258 is the owner of 2,588 Units,  representing  approximately 7.2% of all such
Units.  As of May 31, 2005, no person or entity,  other than JJJ Fund,  LLC, 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 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 net tax loss and Low-income Tax Credits  generated by Registrant  during the
year ended December 31, 2004  allocated to the General  Partner were $38,946 and
$27, respectively.  The net tax loss and Low-income Tax Credits generated by the
General  Partner during the year ended December 31, 2004 (from the allocation of
Registrant  discussed  above) and allocated to Richman  Housing were $31,479 and
$24, respectively.

Indebtedness of Management.

No officer or director of Richman  Housing or any affiliate of the foregoing was
indebted to Registrant at any time during the year ended March 30, 2005.

Item 14. Principal Accountant Fees and Services

The audit fees for  Registrant  for the years ended March 30, 2005 and 2004 were
$44,459 and $42,873, respectively, while the tax fees for Registrant for each of
the years  ended  March  30,  2005 and 2004 were  $10,000.  There  were no other
accounting fees incurred by Registrant in fiscal 2005 and fiscal 2004. The audit
committee approved all fiscal 2005 and fiscal 2004 accounting fees.

                                       40
<PAGE>

                                     PART IV

Item 15. 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 Limited Partnership              Exhibit 10.1 to Form 10-Q Report
             (A Delaware Limited Partnership) Amended and                 dated December 30, 1990
             Restated Agreement of Limited Partnership                    (File No. 33-31390)

10.2         Ashland Park Apartments, L.P. Second Amended and             Exhibit 10.2 to Form 10-K Report
             Restated Agreement of Limited Partnership                    dated March 30, 1991
                                                                          (File No. 33-31390)

10.3         Auburn Family, L.P. Amended and Restated Limited             Exhibit 10.1 to Form 10-Q Report
             Partnership Agreement and Certificate of Limited             dated December 31, 1991
             Partnership                                                  (File No. 0-19217)

10.4         Amended No. 2 to the Batesville Family, L.P.                 Exhibit 10.2 to Form 10-Q Report
             Amended and Restated Agreement of Limited                    dated December 30, 1990
             Partnership                                                  (File No. 33-31390)

10.5         Batesville Family, L.P. Amendment No. 3 to the               Exhibit 10.2 to Form 10-Q Report
             Amended and Restated Agreement of Limited                    dated December 31, 1991
             Partnership                                                  (File No. 0-19217)

10.6         Bay Springs Elderly, L.P. (A Mississippi Limited             Exhibit 10.1 to Form 10-Q Report
             Partnership) Amended and Restated Limited                    dated September 29, 1991
             Partnership Agreement and Certificate of Limited             (File No. 0-19217)
             Partnership

10.7         Brisas del Mar Apartments Limited Partnership (A             Exhibit 10.3 to Form 10-Q Report
             Delaware Limited Partnership) Amended and                    dated December 30, 1990
             Restated Agreement of Limited Partnership                    (File No. 33-31390)

10.8         Amendment No. 1 to the Bruce Housing Associates,             Exhibit 10.8 to Form 10-K Report
             L.P. Amended and Restated Agreement of Limited               dated March 30, 1992
             Partnership                                                  (File No. 33-31390)
</TABLE>

                                       41
<PAGE>

<TABLE>
<CAPTION>
                                                                              Incorporated by
                               Exhibit                                          Reference to
                               -------                                          ------------
<S>          <C>                                                          <C>
10.9         Amendment No. 2 to the Bruce Housing Associates,             Exhibit 10.4 to Form 10-Q Report
             L.P. Amended and Restated Agreement of Limited               dated December 30, 1990
             Partnership                                                  (File No. 33-31390)

10.10        Bruce Housing Associates, L.P. Amendment No. 3               Exhibit 10.3 to Form 10-Q Report
             to the Amended and Restated Agreement of Limited             dated December 31, 1991
             Partnership                                                  (File No. 0-19217)

10.11        Carrington Limited Dividend Housing Association              Exhibit 10.1 to Form 10-Q Report
             Limited Partnership Amended and Restated                     dated September 29, 1990
             Agreement of Limited Partnership                             (File No. 33-31390)

10.12        Carrington Limited Dividend Housing Association              Exhibit 10.2 to Form 10-Q Report
             Limited Partnership Second Amended and Restated              dated September 29, 1990
             Agreement of Limited Partnership                             (File No. 33-31390)

10.13        Carrington Limited Dividend Housing Association              Exhibit 10.5 to Form 10-Q Report
             Limited Partnership Amendment No. 1 to the                   dated December 30, 1990
             Second Amended and Restated Agreement of Limited             (File No. 33-31390)
             Partnership

10.14        Chestnut Park Associates, L.P. Amended and                   Exhibit 10.3 to Form 10-Q Report
             Restated Agreement of Limited Partnership                    dated September 29, 1990
                                                                          (File No. 33-31390)

10.15        Chowan Senior Manor Associates Limited                       Exhibit 10.15 to Form 10-K Report
             Partnership Amended and Restated Agreement of                dated March 30, 1992
             Limited Partnership                                          (File No. 33-31390)

10.16        Christian Street Commons Associates Amended and              Exhibit 10.16 to Form 10-K Report
             Restated Limited Partnership Agreement and                   dated March 30, 1992
             Certificate of Limited Partnership                           (File No. 33-31390)

10.17        Country View Apartments Second Amended and                   Exhibit 10.17 to Form 10-K Report
             Restated Limited Partnership Agreement and                   dated March 30, 1992
             Certificate of Limited Partnership                           (File No. 33-31390)

10.18        Desarrollos de Belen Limited Partnership Amended             Exhibit 10.18 to Form 10-K Report
             and Restated Agreement of Limited Partnership                dated March 30, 1992
                                                                          (File No. 33-31390)

10.19        Desarrollos de Emaus Limited Partnership Amended             Exhibit 10.19 to Form 10-K Report
             and Restated Agreement of Limited Partnership                dated March 30, 1992
                                                                          (File No. 33-31390)

10.20        Ellinwood Heights Apartments, L.P. Amended and               Exhibit 10.1 to Form 10-Q Report
             Restated Agreement of Limited Partnership                    dated June 29, 1991
                                                                          (File No. 0-19217)
</TABLE>

                                       42
<PAGE>
<TABLE>
<CAPTION>
                                                                              Incorporated by
                               Exhibit                                          Reference to
                               -------                                          ------------
<S>          <C>                                                          <C>
10.21        Fulton Street Houses Limited Partnership Amended             Exhibit 10.21 to Form 10-K Report
             and Restated Agreement of Limited Partnership                dated March 30, 1992
                                                                          (File No. 33-31390)

10.22        Hayes Run Limited Partnership Amended and                    Exhibit 10.2 to Form 10-Q Report
             Restated Agreement of Limited Partnership                    dated June 29, 1991
                                                                          (File No. 0-19217)

10.23        Howard L. Miller Sallisaw Apartments II, L.P.                Exhibit 10.10 to Form 10-K Report
             Third Amended and Restated Agreement and                     dated March 30, 1991
             Certificate of Limited Partnership                           (File No. 33-31390)

10.24        Hurlock Meadow Limited Partnership Amended and               Exhibit 10.24 to Form 10-K Report
             Restated Limited Partnership Agreement                       dated March 30, 1992
                                                                          (File No. 33-31390)

10.25        Amendment No. 1 to the Ivy Family, L.P. Amended              Exhibit 10.6 to Form 10-Q Report
             and Restated Agreement of Limited Partnership                dated December 30, 1990
                                                                          (File No. 33-31390)

10.26        Ivy Family, L.P. Amendment No. 3 to the Amended              Exhibit 10.4 to Form 10-Q Report
             and Restated Agreement of Limited Partnership                dated December 31, 1991
                                                                          (File No. 0-19217)

10.27        Justin Associates Amended and Restated Agreement             Exhibit 10.7 to Form 10-Q Report
             and Certificate of Limited Partnership                       dated December 30, 1990
                                                                          (File No. 33-31390)

10.28        LaBelle Commons, Ltd. Amended and Restated                   Exhibit 10.13 to Form 10-K Report
             Agreement of Limited Partnership                             dated March 30, 1991
                                                                          (File No. 33-31390)

10.29        LaBelle Commons, Ltd. Amendment No. 1 to Amended             Exhibit 10.29 to Form 10-K Report
             and Restated Agreement of Limited Partnership                dated March 30, 1992
                                                                          (File No. 33-31390)

10.30        Amendment No. 2 to the Lawrence Road Properties,             Exhibit 10.8 to Form 10-Q Report
             Ltd. Amended and Restated Agreement of Limited               dated December 30, 1990
             Partnership                                                  (File No. 33-31390)

10.31        Lawrence Road Properties, Ltd. Amendment No. 3               Exhibit 10.5 to Form 10-Q Report
             to the Amended and Restated Agreement of Limited             dated December 31, 1991
             Partnership                                                  (File No. 0-19217)

10.32        Loma Del Norte Limited Partnership Amended and               Exhibit 10.2 to Form 10-Q Report
             Restated Limited Partnership Agreement                       dated September 29, 1991
                                                                          (File No. 0-19217)

10.33        Long Reach Associates Limited Partnership Sixth              Exhibit 10.15 to Form 10-K Report
             Amended and Restated Agreement of Limited                    dated March 30, 1991
             Partnership                                                  (File No. 33-31390)
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION>
                                                                              Incorporated by
                               Exhibit                                          Reference to
                               -------                                          ------------
<S>          <C>                                                          <C>
10.34        Mirador del Toa Limited Partnership Amended and              Exhibit 10.16 to Form 10-K Report
             Restated Agreement of Limited Partnership                    dated March 30, 1991
                                                                          (File No. 33-31390)

10.35        Amendment No. 1 to the Mirador del Toa Limited               Exhibit 10.17 to Form 10-K Report
             Partnership Amended and Restated Agreement of                dated March 30, 1991
             Limited Partnership                                          (File No. 33-31390)

10.36        Moore Haven Commons, Ltd. Amended and Restated               Exhibit 10.9 to Form 10-Q Report
             Agreement of Limited Partnership                             dated December 30, 1990
                                                                          (File No. 33-31390)

10.37        NP-89 Limited Dividend Housing Association                   Exhibit 10.3 to Form 10-Q Report
             Limited Partnership Second Restated and Amended              dated June 29, 1991
             Agreement of Limited Partnership                             (File No. 0-19217)

10.38        Nash Hill Associates, Limited Partnership                    Exhibit 10.37 to Form 10-K Report
             Amended and Restated Agreement of Limited                    dated March 30, 1992
             Partnership                                                  (File No. 33-31390)

10.39        North Calhoun City, L.P. (A Mississippi Limited              Exhibit 10.3 to Form 10-Q Report
             Partnership) Amended and Restated Limited                    dated September 29, 1991
             Partnership Agreement and Certificate of Limited             (File No. 0-19217)
             Partnership

10.40        Orange City Plaza, Limited Partnership Amended               Exhibit 10.40 to Form 10-K Report
             and Restated Partnership Agreement                           dated March 30, 1992
                                                                          (File No. 33-31390)
10.41        Puerta del Mar Limited Partnership (A Delaware               Exhibit 10.10 to Form 10-Q Report
             Limited Partnership) Amended and Restated                    dated December 30, 1990
             Agreement of Limited Partnership                             (File No. 33-31390)

10.42        Amendment No. 2 to the Purvis Heights                        Exhibit 10.11 to Form 10-Q Report
             Properties, L.P. Amended and Restated Agreement              dated December 30, 1990
             of Limited Partnership                                       (File No. 33-31390)

10.43        Purvis Heights Properties, L.P. Amendment No. 3              Exhibit 10.6 to Form 10-Q Report
             to the Amended and Restated Agreement of Limited             dated December 31, 1991
             Partnership                                                  (File No. 0-19217)

10.44        Queen Lane Investors Amendment No. 1 to Amended              Exhibit 10.12 to Form 10-Q Report
             and Restated Agreement and Certificate of                    dated December 30, 1990
             Limited Partnership                                          (File No. 33-31390)

10.45        Somerset Manor, Ltd. Amended and Restated                    Exhibit 10.13 to Form 10-Q Report
             Agreement and Certificate of Limited Partnership             dated December 30, 1990
                                                                          (File No. 33-31390)

10.46        Sugar Cane Villas, Ltd. Amended and Restated                 Exhibit 10.23 to Form 10-K Report
             Agreement of Limited Partnership                             dated March 30, 1991
                                                                          (File No. 33-31390)
</TABLE>

                                       44
<PAGE>

<TABLE>
<CAPTION>
                                                                              Incorporated by
                               Exhibit                                          Reference to
                               -------                                          ------------
<S>          <C>                                                          <C>
10.47        Summerfield Apartments Limited Partnership                   Exhibit 10.47 to Form 10-K Report
             Amended and Restated Agreement of Limited                    dated March 30, 1992
             Partnership                                                  (File No. 33-31390)

10.48        Amendment No.1 to the Summerfield Apartments                 Exhibit 10.48 to Form 10-K Report
             Limited Partnership Amended and Restated                     dated March 30, 1999
             Agreement of Limited Partnership                             (File No. 0-19217)

10.49        Sydney Engel Associates Second Amended and                   Exhibit 10.4 to Form 10-Q Report
             Restated Agreement of Limited Partnership                    dated September 29, 1990
                                                                          (File No. 33-31390)

10.50        First Amendment to Second Amended and Restated               Exhibit 10.49 to Form 10-K Report
             Agreement of Limited Partnership of Sydney Engel             dated March 30, 1997
             Associates                                                   (File No. 0-19217)

10.51        Second Amendment to Second Amended and Restated              Exhibit 10.50 to Form 10-K Report
             Agreement of Limited Partnership of Sydney Engel             dated March 30, 1997
             Associates L.P.                                              (File No. 0-19217)

10.52        Third Amendment to Second Amended and Restated               Exhibit 10.51 to Form 10-K Report
             Agreement of Limited Partnership of Sydney Engel             dated March 30, 1997
             Associates L.P.                                              (File No. 0-19217)

10.53        Fourth Amendment to Second Amended and Restated              Exhibit 10.52 to Form 10-K Report
             Agreement of Limited Partnership of Sydney Engel             dated March 30, 1997
             Associates L.P.                                              (File No. 0-19217)

10.54        Union Valley Associates Limited Partnership                  Exhibit 10.14 to Form 10-Q Report
             Amended and Restated Agreement and Certificate               dated December 30, 1990
             of Limited Partnership                                       (File No. 33-31390)

10.55        Walnut Grove Family, L.P. (A Mississippi Limited             Exhibit 10.4 to Form 10-Q Report
             Partnership) Amended and Restated Limited                    dated September 29, 1991
             Partnership Agreement and Certificate of Limited             (File No. 0-19217)
             Partnership

10.56        Waynesboro Apartments Limited Partnership                    Exhibit 10.15 to Form 10-Q Report
             Amended and Restated Agreement and Certificate               dated December 30, 1990
             of Limited Partnership                                       (File No. 33-31390)

10.57        West Calhoun City, L.P. (A Mississippi Limited               Exhibit 10.5 to Form 10-Q Report
             Partnership) Amended and Restated Limited                    dated September 29, 1991
             Partnership Agreement and Certificate of Limited             (File No. 0-19217)
             Partnership

10.58        Westminster Apartments Limited Partnership                   Exhibit 10.53 to Form 10-K Report
             Second Amended and Restated Agreement of Limited             dated March 30, 1992
             Partnership                                                  (File No. 33-31390)
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
                                                                              Incorporated by
                               Exhibit                                          Reference to
                               -------                                          ------------
<S>          <C>                                                          <C>
31.1         Rule 13a-14(a)/15d-14(a) Certification of Chief
             Executive Officer

31.2         Rule 13a-14(a)/15d-14(a) Certification of Chief
             Financial Officer.

32.1         Section 1350 Certification of Chief Executive
             Officer.

32.2         Section 1350 Certification of Chief Financial
             Officer.

99.1         Pages  20  through  31,  44  through  71  and  78            Exhibit 28.0 to Form 10-K Report
             through 80 of Prospectus  filed  pursuant to Rule            dated March 30, 1990
             424(b)(3) under Securities Act of 1933                       (File No. 33-31390)

99.2         Pages 14 through 19 of Prospectus filed pursuant             Exhibit 28.1 to Form 10-K Report
             to Rule 424(b)(3) under Securities Act of 1933               dated March 30, 1991
                                                                          (File No. 33-31390)

99.3         Supplement No. 1 dated June 6, 1990 to Prospectus            Exhibit 28.2 to Form 10-K Report
                                                                          dated March 30, 1991
                                                                          (File No. 33-31390)

99.4         Supplement No. 2 dated November 21, 1990 to                  Exhibit 28.3 to Form 10-K Report
             Prospectus                                                   dated March 30, 1991
                                                                          (File No. 33-31390)

99.5         Supplement No. 3 dated December 20, 1990 to                  Exhibit 28.4 to Form 10-K Report
             Prospectus                                                   dated March 30, 1991
                                                                          (File No. 33-31390)

99.6         Supplement No. 4 dated October 30, 1991 to                   Exhibit 28.5 to Form 10-K Report
             Prospectus                                                   dated March 30, 1992
                                                                          (File No. 33-31390)

99.7         Supplement No. 5 dated December 26, 1991 to                  Exhibit 28.6 to Form 10-K Report
             Prospectus                                                   dated March 30, 1992
                                                                          (File No. 33-31390)

99.8         Supplement No. 6 dated January 15, 1992 to                   Exhibit 28.7 to Form 10-K Report
             Prospectus                                                   dated March 30, 1990
                                                                          (File No. 33-31390)

99.9         Report of Independent Registered Public
             Accounting Firm of Carrington L.D.H.A. Limited
             Partnership

99.10        Independent Auditor's Report of Ellinwood
             Heights Apartments L.P.

99.11        Independent Auditors' Report of NP-89 Limited
             Dividend Housing Association Limited Partnership
</TABLE>

                                       46
<PAGE>

    (b) Exhibits

    See (a)(3) above.

    (c) Financial Statement Schedules

    See (a)(2) above.

                                       47
<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:  August 11, 2005       /s/ David Salzman
                              -----------------------
                              David Salzman
                              Chief Executive Officer


Dated:  August 11, 2005       /s/ Neal Ludeke
                              -----------------------

                              Neal Ludeke
                              Chief Financial Officer

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.

Signature          Title                                       Date


/s/ David Salzman  Chief Executive Officer of  the general     August 11, 2005
-----------------  partner of the General Partner
(David Salzman)

/s/ Neal Ludeke    Chief Financial Officer of the general      August 11, 2005
-----------------  partner of the General Partner
(Neal Ludeke)

                                       48