UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 
 [X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the quarterly period ended December 31, 2010
 
 OR
 
 [ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the transition period from ________ to ___________
 
 Commission file number: 0-21895
 
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 
 California
33-6163848(State or other jurisdiction of
(I.R.S. Employerincorporation or organization)
Identification No.)17782 Sky Park CircleIrvine, CA
92614-6404(Address of principal executive offices)
(Zip Code)
 
 (714) 662-5565
 (Telephone number)
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
 Yes X No _______
 
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
 Yes  No X
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
  Large accelerated filer___ Accelerated filer___  Non-accelerated filer___X__Smaller reporting company___
 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 Yes ___No _X__


WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 INDEX TO FORM 10 – Q
 
 For the Quarterly Period Ended December 31, 2010




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

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

20Item 4T.
Controls and Procedures

20PART II. OTHER INFORMATIONItem 1.
Legal Proceedings

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

21Item 3.
Defaults Upon Senior Securities

21Item 4.
(Removed and Reserved)

21Item 5.
Other Information

21Item 6.
Exhibits

21Signatures


22


2
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 CONDENSED BALANCE SHEETS
 (Unaudited)




December 31, 2010

March 31, 2010ASSETSCash
$
21,253
$
12,762Investments in Local Limited Partnerships, net (Notes 2 and 3)

-

-Other assets

4,857

-Total Assets
$
26,110
$
12,762LIABILITIES AND PARTNERS' EQUITY (DEFICIT)Liabilities:Accrued fees and expenses due toGeneral Partner and affiliates (Note 3)
$
714,234
$
707,256Total Liabilities

714,234

707,256Partners’ Equity (Deficit):General Partner

2,844,375

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

(3,532,499)

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

(688,124)

(694,494)Total Liabilities and Partners’ Equity (Deficit)
$
26,110
$
12,762
  See accompanying notes to condensed financial statements
 3
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 CONDENSED STATEMENTS OF OPERATIONS
 
 For the Three and Nine Months Ended December 31, 2010 and 2009
 (Unaudited)


2010

2009Three Months

Nine Months

Three Months

Nine MonthsReporting fees
$
-
$
43,489
$
5,000
$
14,799Distribution income

-

-

-

34,031Miscellaneous income

-

-

3

3Total operating income

-

43,489

5,003

48,833Operating expenses:Asset management fees (Note 3)

12,375

37,125

12,375

37,125Legal and accounting fees

-

29,487

45,539

58,854Appraisal expenses

-

-

-

4,000Write off of advances to Local

Limited  Partnerships

240,254

240,254

63,170

97,553Other

2,780

6,910

1,421

6,449Total operating expenses

255,409

313,776

122,505

203,981Loss from operations

(255,409)

(270,287)

(117,502)

(155,148)Gain on sale of investment in Local Limited Partnerships

-

-

1

1Interest income

1

2

-

3Net loss
$
(255,408)
$
(270,285)
$
(117,501)
$
(155,144)Net loss allocated to:General Partner
$
(2,554)
$
(2,703)
$
(1,175)
$
(1,551)Limited Partners
$
(252,854)
$
(267,582)
$
(116,326)
$
(153,593)Net loss per Partnership Unit
$
(14)
$
(15)
$
(7)
$
(9)Outstanding weighted

Partnership Units

18,000

18,000

18,000

18,000


See accompanying notes to condensed financial statements
 4
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 CONDENSED STATEMENT OF PARTNERS’ EQUITY (DEFICIT)
 
 For the Nine Months Ended December 31, 2010
 (Unaudited)





General

LimitedPartner

Partners

TotalPartners’ equity (deficit) at March 31, 2010
$
2,570,423
$
(3,264,917)
$
(694,494)Contributions (Note 5)

276,655

-

276,655Net loss

(2,703)

(267,582)

(270,285)Partners’ equity (deficit) at December 31, 2010
$
2,844,375
$
(3,532,499)
$
(688,124)


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


2010

2009Cash flows from operating activities:Net loss
$
(270,285)
$
(155,144)Adjustments to reconcile net loss to netcash provided by (used in) operating activities:Increase in other assets

(4,857)

-Decrease in accrued expenses

-

(4,000)Increase in accrued fees and expenses due toGeneral Partner and affiliates

283,633

152,619Gain on sale of investment in Local

Limited Partnership

-

(1)Net cash provided by (used in) operating activities

8,491

(6,526)Cash flows from investing activities:Proceeds from sale of investment in Local Limited                     Partnerships

-

1Advances to Local Limited Partnerships

(240,254)

(97,553)Write off of advances to Local Limited Partnerships

240,254

97,553Net cash provided by investing activities

-

1Net increase  (decrease) in cash

8,491

(6,525)Cash, beginning of period

12,762

9,498Cash, end of period
$
21,253
$
2,973SUPPLEMENTAL DISCLOSURE OF

CASH FLOW INFORMATIONTaxes paid
$
-
$
-NON-CASH INVESTING AND FINANCING ACTIVITIESGeneral Partner equity balance was increased and

accrued fees and expenses due to the General Partner

was decreased as a result of forgiveness of debt by the

General Partner.
$
276,655
$
153,084





See accompanying notes to condensed financial statements
 6
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





General





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





Organization





WNC Housing Tax Credit Fund V, L.P., Series 3 (the "Partnership"), is a California Limited Partnership formed under the laws of the State of California on March 28, 1995.  The Partnership was formed to invest in other limited partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).  The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).





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





The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the partnership agreement or law.





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





The Partnership Agreement authorized the sale of up to 25,000 units of limited partnership interests (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units concluded in January 1996, at which time 18,000 Partnership Units representing subscriptions in the amount of $17,558,985, net of $441,015 of discounts for volume purchases, had been accepted.  The General Partner has a 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors (the “Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments.


7
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





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





Risks and Uncertainties





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





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





The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives.  Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or a non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations.  Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar Housing Complexes, and neighborhood conditions, among others.  8
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





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





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





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





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





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





Exit Strategy





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





Upon the sale of a Local Limited Partnership interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met.





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


9
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership as Low Income Housing Tax Credits are no longer available.Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of December 31, 2010. As of December 31, 2010, two of the Housing Complexes had completed their Compliance Period.





Upon management of the Partnership identifying a Local Limited Partnership for disposition, costs incurred by the Partnership in preparation for the disposition are deferred. Upon the sale of the Local Limited Partnership interest, the Partnership nets the costs that had been deferred against the proceeds from the sale in determining the gain or loss on sale of the Local Limited Partnership. Deferred disposition costs are included in other assets on the balance sheets.





Prior to the quarter ended December 31, 2010, the Partnership sold the Housing Complex of three Local Limited Partnerships, Cascade Pines II, L.P. (“Cascade Pines”), Evergreen Apartments I Limited Partnership, (“Evergreen”) and Raymond S, King Apartments L.P. (“Raymond S. King”). The Partnership has identified one Local Limited Partnership, Patten Towers, L.P. II for disposition.





Method of Accounting for Investments in Local Limited Partnerships





The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership.   If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership.  The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and were being amortized over 27.5 years (see Note 2).





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


10
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.





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





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





Use of Estimates





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





Cash and Cash Equivalents





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





Reporting Comprehensive Income





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


11
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued





Income Taxes





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





Net Loss Per Partnership Unit





Net loss per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding during the period.  Calculation of diluted net loss per


Partnership Unit is not required.





Revenue Recognition





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


12
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS





As of December 31, 2010 and March 31, 2010, the Partnership owns Local Limited Partnership interests in fifteen Local Limited Partnerships. All of these Local Limited Partnership’s own one Housing Complex consisting of an aggregate of 721 apartment units. The respective Local General Partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 99%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships, except for one of the investments in which it is entitled to 49.49% of such amount.





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





COMBINED CONDENSED STATEMENTS OF OPERATIONS2010

2009Revenues
$
3,434,000
$
3,373,000ExpensesInterest expense

566,000

587,000Depreciation and amortization

968,000

979,000Operating expenses

2,432,000

3,018,000Total expenses

3,966,000

4,584,000Net loss


(532,000)

(1,211,000)Net loss allocable to the Partnership
$
(549,000)
$
(1,189,000)Net loss recorded by the Partnership
$
-
$
-





Certain Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies.  In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership may be required to sustain operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership's investments in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.  13
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued





Troubled Housing Complexes





After receiving a passing inspection score from HUD in January 2009, one Local Limited Partnership, Patten Towers L.P. II (“Patten Towers”), has not yet had its annual HUD inspection for 2010 due to major improvements that are being made. The HUD inspection for 2010 was rescheduled for February 3, 2011.  The property is currently in good standing with HUD at this point, but is subject to an annual HUD inspection. HUD has the authority to revoke their housing assistance program (“HAP”) with Patten Towers and thereby suspend all rental assistance for the tenants of Patten Towers if an acceptable inspection score is not received. If HUD were to revoke the HAP contract then most of the current tenants would be unable to make their rental payments thereby denying Patten Towers the necessary monthly revenue it needs to pay all costs and expenses. The property was listed for sale with a national brokerage firm from July of 2008 thru September 2009. No acceptable offers were presented therefore when the listing contract expired it was not renewed. The Partnership continues to review its options and the property is still not listed but a potential buyer has approached the Partnership and there have been ongoing conversations with this potential buyer.  No contracts have been drafted as of the report date and the conversations are still in the beginning phase.  The Partnership does not anticipate proceeds from the sale. Any sale transaction contemplated would require that the property maintain compliance with the Section 42 tax credit provisions, thereby avoiding recapture of any previously claimed tax credits. As of December 31, 2010, the Partnership’s investment balance in Patten Towers was $0. The tax credit compliance period for this property ends December 31, 2011.





The Partnership has a 99% limited partnership investment in Heritage Apartments, L.P. (“Heritage”). Heritage is a defendant in several wrongful death lawsuits and related injury lawsuits. Heritage carries general liability and extended liability insurance. Discovery for these lawsuits is ongoing, but the management of Heritage and WNC are unable to determine the outcome of these lawsuits at this time or their impact, if any, on the Partnership’s financial statements. Should Heritage be unsuccessful in its defense and the insurer denies coverage or the insurance coverage proves to be inadequate, the Partnership may be required to sell its investment or may otherwise lose its investment in Heritage, which was $0 at December 31, 2010. Loss of the Heritage investment could result in the cessation and recapture of tax credits and certain prior tax deductions. As of December 31, 2010, no losses have been recognized and management does not expect losses to occur.  The tax credit compliance period for this property ends December 31, 2011.


14
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 3 - RELATED PARTY TRANSACTIONS





Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates the following fees:





(a)
An annual asset management fee equal to the greater amount of (i) $2,000 for each Housing complex, or (ii) 0.275% of gross proceeds.  In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index.  However, in no event will the maximum amount exceed 0.2% of the invested assets of the Local Limited Partnerships, as defined.  “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnership interests and the Partnership’s allocable share of mortgage loans on, and other debts related to, the Housing Complexes owned by such Local Limited Partnerships.  Asset management fees of $37,125 were incurred during each of the nine months ended December 31, 2010 and 2009. The Partnership paid the General Partner and or its affiliates $0 of those fees during each of the nine months ended December 31, 2010 and 2009.





(b)
The Partnership reimburses the General Partner or its affiliates for operating expenses incurred by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements were $35,000 and $0 during the nine months ended December 31, 2010 and 2009, respectively.





(c)
A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold.  Payment of this fee is subordinated to the limited partners receiving a preferred return of 14% through December 31, 2006 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort.  No such fees were incurred for all periods presented.





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





December 31, 2010

March 31, 2010Expenses paid by the General Partner or affiliates

on behalf of the Partnership
$
112,692
$
214,631Advance made to the Partnership from the General

Partner or affiliates

91,792

20,000Asset management fee payable

509,750

472,625Total
$
714,234
$
707,256





NOTE 4 –ADVANCES TO LOCAL LIMITED PARTNERSHIPS





During the nine months ended December 31, 2010, the Partnership voluntarily advanced $240,254 to one Local Limited Partnership that has been experiencing operational issues.  As of December 31, 2010 total advances made to Local Limited Partnerships were $1,955,679 all of which was reserved.  The Partnership determined the recoverability of these advances to be improbable and, accordingly, a reserve has been recorded.


15
 WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
 (A California Limited Partnership)
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
 
 For the Quarterly Period Ended December 31, 2010
 (Unaudited)


NOTE 5 –CAPITAL CONTRIBUTION BY GENERAL PARTNER





During the nine months ended December 31, 2010, the Partnership was relieved of debt owed to the General Partner totaling $276,655.   The Partnership had received $168,462 in cash advances from the General Partner, which were in turn advanced by the Partnership to certain Local Limited Partnerships to help aid the Local Limited Partnerships with their operational issues.  The advances were deemed to be uncollectible by the General Partner, and as such, the debt was forgiven. The remaining $108,193 of debt that was relieved was for operating expenses that were paid by the General Partner or an affiliate on the Partnership’s behalf.  Due to the continuous low cash balances in the Partnership, the General Partner deemed the amount to be uncollectible, therefore the debt was forgiven. The cancellation of debt was recorded by the Partnership as a capital contribution from the General Partner.


16


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





Forward-Looking Statements





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





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





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





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





Financial Condition





The Partnership’s assets at December 31, 2010 consisted of $21,000 in cash and $5,000 in other assets.  Liabilities at December 31, 2010 consisted of $714,000 of accrued fees and expenses due to the General Partner and its affiliates.





Results of Operations


Three Months Ended December 31, 2010 Compared to the Three Months Ended December 31, 2009.  The Partnership’s net loss for the three months ended December 31, 2010 was $(255,000), reflecting an increase of approximately $(137,000) from the $(118,000) net loss experienced for the three months ended December 31, 2009.  The increase in net loss is largely due to the $(177,000) increase in write off of advances to Local Limited Partnerships.  During the three months ended December 31, 2010 advances of $(240,000) were made to one Local Limited Partnership and reserved for in full as of December 31, 2010 compared to $(63,000) of advances made and reserved for during the three months ended December 31, 2009.  The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships.  Additionally, there was a decrease of $46,000 in legal and accounting fees for the three months ended December 31, 2010 due to the timing of the accounting work being performed.  Reporting fees decreased by approximately ($5,000) for the three months ended December 31, 2010.  Reporting fees can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.


17


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





Nine Months Ended December 31, 2010 Compared to the Nine Months Ended December 31, 2009.The Partnership’s net loss for the nine months ended December 31, 2010 was $(270,000), reflecting an increase of approximately $(115,000) from the $(155,000) net loss experienced for the nine months ended December 31, 2009.  The increase was primarily due to a $(142,000) increase in write off of advances to Local Limited Partnerships.  During the nine months ended December 31, 2010 advances of $(240,000) were made to Local Limited Partnerships compared to $(98,000) of advances made and reserved for during the nine months ended December 31, 2009.  The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. Additionally, there was a decrease of $29,000 in legal and accounting fees due to the timing of the accounting work being performed.  The distribution income and reporting fees increased (decreased) by approximately $34,000 and $(29,000), respectively for the nine months ended December 31, 2010.  Distribution income and reporting fees can fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.





Liquidity and Capital Resources





Nine Months Ended December 31, 2010 Compared to Nine Months Ended December 31, 2009.  The net increase in cash during the nine months ended December 31, 2010 was $8,000 compared to a net decrease in cash for the nine months ended December 31, 2009 of $(7,000).  There was a $(142,000) increase in advances made to Local Limited Partnerships for the nine months ended December 31, 2010 as compared to the nine months ended December 31, 2009 as discussed above.  Additionally, the Partnership paid the General Partner or an affiliate $(35,000) in reimbursement of operating expenses during the nine months ended December 31, 2010 while no payments were made during the nine months ended December 31, 2009.   The Partnership also accrued $5,000 in prepaid expenses during the nine months ended December 31, 2010 relating to expenses paid on behalf of the Local Limited Partnership that has been identified for sale compared to no prepaid expenses during the nine months ended December 31, 2009. Total operating income decreased by $(5,000) during the nine months ended December 31, 2010. Reporting fees and distribution income fluctuate from year to year due to the fact that Local Limited Partnerships pay those fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.





During the nine months ended December 31, 2010, accrued payables, which consist primarily of related party management fees and advances due to the General Partner, increased by $7,000.  The General Partner does not anticipate that the balance of the accrued fees and advances will be paid until such time as capital reserves are in excess of foreseeable working capital requirements of the Partnership.





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





Recent Accounting Changes





In September 2006, the Financial Accounting Standards Board (the "FASB") issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions. In February 2008, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted U.S. generally accepted accounting principles ("GAAP") for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.  18


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





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





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





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





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


19


Item 3. Quantitative and Qualitative Disclosures About Market Risks





NOT APPLICABLE





Item 4T. Controls and Procedures





(a)           Disclosure controls and procedures





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





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





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





(b)           Changes in internal controls





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


20





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





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





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





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





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


21





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





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





By:  WNC & ASSOCIATES, INC.  General Partner











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





Wilfred N. Cooper, Jr.


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





Date:  February 14, 2011











By:  /s/ Melanie R. Wenk





Melanie R. Wenk


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





Date:  February 14, 2011


22