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 June 15, 2008
 
 OR
 
 [  ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 
 Commission
File Number 0-17015
 
 
 
 LIBERTY
TAX CREDIT PLUS L.P.
 (Exact
name of Registrant as specified in its charter)
 
 
 
 Delaware
            
            13-3446500(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)625
      Madison Avenue, New York, New York
            
            10022(Address
      of principal executive offices)
            
            (Zip
      Code)
 
 
 Registrant’s
telephone number, including area code (212) 317-5700
 
 
 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  xNo  [  ]
 
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definition of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.  (Check one):
 
 
 Large
      accelerated filer  [  ]
            
            Accelerated
      filer  [  ]Non-accelerated
      filer [  ]   (Do not check if a smaller reporting
      company)
            
            Smaller
      reporting company x
 
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes  [  ]   No  x
   
 
 
 
 PART I -
Financial Information
 
 Item 1.
Financial Statements
 
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Consolidated
Balance Sheets
 
 
 June
      15,
            
            
            March
      15,2008
            
            
            2008(Unaudited)
            
            
            (Audited)ASSETSOperating
      assetsProperty
      and equipment, at cost, net of accumulated depreciation of$0
      and $29,193,600, respectively
            
            $
            0
            
            
            $
            16,109,674Cash
      and cash equivalents
            
            
            4,066,010
            
            
            
            7,007,120Cash
      held in escrow
            
            
            0
            
            
            
            2,325,637Accounts
      receivable - tenants
            
            
            0
            
            
            
            116,669Deferred
      costs, net of accumulated amortization of $0 and$126,560,
      respectively
            
            
            0
            
            
            
            553,851Other
      assets
            
            
            4,232
            
            
            
            595,986Total
      operating assets
            
            
            4,070,242
            
            
            
            26,708,937Assets
      from discontinued operations (Note 5)Property
      and equipment held for sale, net of accumulated depreciationof
      $34,093,819 and $18,141,851, respectively
            
            
            18,444,334
            
            
            
            10,588,776Net
      assets held for sale
            
            
            4,978,021
            
            
            
            1,837,456Total
      assets from discontinued operations
            
            
            23,422,355
            
            
            
            12,426,232Total
      assets
            
            $
            27,492,597
            
            
            $
            39,135,169LIABILITIES
      AND PARTNERS’ (DEFICIT) CAPITALOperating
      liabilitiesMortgage
      notes payable
            
            $
            0
            
            
            $
            23,188,688Accounts
      payable
            
            
            31,416
            
            
            
            3,988,892Accrued
      interest payable
            
            
            0
            
            
            
            1,312,357Security
      deposits payable
            
            
            0
            
            
            
            114,270Due
      to local general partners and affiliates
            
            
            0
            
            
            
            15,546,224Due
      to general partners and affiliates
            
            
            2,296,076
            
            
            
            2,355,472Total
      operating liabilities
            
            
            2,327,492
            
            
            
            46,505,903Liabilities
      from discontinued operations (Note 5)Mortgage
      notes payable of assets held for sale
            
            
            26,139,175
            
            
            
            17,314,761Net
      liabilities held for sale (including minority interest)
            
            
            19,564,488
            
            
            
            4,959,349Total
      liabilities from discontinued operations
            
            
            45,703,663
            
            
            
            22,274,110Total
      liabilities
            
            
            48,031,155
            
            
            
            68,780,013Minority
      interests
            
            
            0
            
            
            
            (579,276
            )Commitments
      and contingencies (Note 6)Partners’
      (deficit) capitalLimited
      partners (15,987.5 BACs issued and outstanding)
            
            
            (25,238,758
            )
            
            
            (33,680,498
            )General
      partners
            
            
            4,700,200
            
            
            
            4,614,930Total
      partners’ (deficit) capital
            
            
            (20,538,558
            )
            
            
            (29,065,568
            )Total
      liabilities and partners’ (deficit) capital
            
            $
            27,492,597
            
            
            $
            39,135,169See
      accompanying notes to consolidated financial
  statements.
    - 2
-
  LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Consolidated
Statements of Operations
 (Unaudited)
 
 
 
 
 Three
      Months Ended
              June
      15,2008
            
            
            2007*Operations:RevenuesOther
            
            $
            32,219
            
            
            $
            48,992Total
      revenues
            
            
            32,219
            
            
            
            48,992ExpensesGeneral
      and administrative
            
            
            99,269
            
            
            
            67,589General
      and administrative – related parties (Note 2)
            
            
            40,626
            
            
            
            156,884Total
      expenses from operations
            
            
            139,895
            
            
            
            224,473Loss
      from operations
            
            
            (107,676
            )
            
            
            (175,481
            )Discontinued
      Operations:Income
      (loss) from discontinued operations (including minority interest gain
      (loss) on sale of properties) (Note 5)
            
            
            8,634,686
            
            
            
            (1,460,952
            )Net
      income (loss)
            
            $
            8,527,010
            
            
            $
            (1,636,433
            )Loss
      from operations – limited partners
            
            $
            (106,599
            )
            
            $
            (173,726
            )Income
      (loss) from discontinued operations (including minority interest gain
      (loss) on sale of properties) – limited partners
            
            
            8,548,339
            
            
            
            (1,446,343
            )Net
      income (loss) – limited partners
            
            $
            8,441,740
            
            
            $
            (1,620,069
            )Number
      of BACs outstanding
            
            
            15,987.5
            
            
            
            15,987.5Loss
      from operations per BAC
            
            $
            (6.67
            )
            
            $
            (10.87
            )Income
      (loss) from discontinued operations (including minority interest gain
      (loss) on sale of properties) per BAC
            
            
            534.69
            
            
            
            (90.46
            )Net
      income (loss) per BAC
            
            $
            528.02
            
            
            $
            (101.33
            )*  Reclassified
      for comparative purposesSee
      accompanying notes to consolidated financial
  statements.
   - 3
-
 
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Consolidated
Statement of Changes in Partners’ (Deficit) Capital
 (Unaudited)
 
 
 
 
 Total
            
            
            Limited
              Partners
            
            
            General
              PartnerPartners’
      (deficit) capital – March 16, 2008
            
            $
            (29,065,568
            )
            
            $
            (33,680,498
            )
            
            $
            4,614,930Net
      income
            
            
            8,527,010
            
            
            
            8,441,740
            
            
            
            85,270Partners’
      (deficit) capital – June 15, 2008
            
            $
            (20,538,558
            )
            
            $
            (25,238,758
            )
            
            $
            4,700,200See
      accompanying notes to consolidated financial
  statements
 
   - 4
-
 
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Consolidated
Statements of Cash Flows
 Increase
(decrease) in Cash and Cash Equivalents
 (Unaudited)
 
 
 Three
      Months EndedJune 15,2008
            
            
            2007Net
      income (loss)
            
            $
            8,527,010
            
            
            $
            (1,636,433
            )Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:(Gain)
      loss on sale of properties
            
            
            (8,238,274
            )
            
            
            23,644Depreciation
      and amortization
            
            
            503,130
            
            
            
            697,248Minority
      interest in (income) loss of subsidiaries
            
            
            (1,172,695
            )
            
            
            279,790Increase
      in accounts receivable – tenants
            
            
            (440,122
            )
            
            
            (104,996
            )Decrease
      in other assets
            
            
            152,891
            
            
            
            21,897Increase
      in accounts payable
            
            
            309,380
            
            
            
            475,399(Decrease)
      increase in accrued interest payable
            
            
            (46,229
            )
            
            
            19,933Increase
      (decrease) in security deposits payable
            
            
            1,282
            
            
            
            (5
            )(Decrease)
      increase in due to general partners and affiliates
            
            
            (5,646
            )
            
            
            118,106Increase
      in cash held in escrow
            
            
            (26,029
            )
            
            
            (413,925
            )Net
      cash used in operating activities
            
            
            (435,302
            )
            
            
            (519,342
            )Cash
      flows from investing activities:Decrease
      in cash held in escrow
            
            
            38,065
            
            
            
            171,595Proceeds
      from sale of investments
            
            
            8,359,177
            
            
            
            3,435,000Costs
      paid relating to sale of properties
            
            
            (420,168
            )
            
            
            (458,750
            )Improvements
      to property and equipment
            
            
            0
            
            
            
            (38,565
            )Net
      cash provided by investing activities
            
            
            7,977,074
            
            
            
            3,109,280Cash
      flows from financing activities:Repayments
      of mortgage notes
            
            
            (7,462,866
            )
            
            
            (91,765
            )Increase
      in due to local general partners and affiliates
            
            
            119,902
            
            
            
            302,376Decrease
      in due to local general partners and affiliates
            
            
            (76,484
            )
            
            
            (6,902
            )Increase
      in deferred cost
            
            
            0
            
            
            
            (3,834
            )Decrease
      in capitalization of consolidated subsidiaries attributable
              to
      minority interest
            
            
            0
            
            
            
            (180,331
            )Distributions
            
            
            (2,828,217
            )
            
            
            (2,777,970
            )Net
      cash used in financing activities
            
            
            (10,247,665
            )
            
            
            (2,758,426
            )Net
      decrease in cash and cash equivalents
            
            
            (2,705,893
            )
            
            
            (168,488
            )Cash
      and cash equivalents at beginning of period
            
            
            7,258,111
            
            
            
            6,390,501Cash
      and cash equivalents at end of period*
            
            $
            4,552,218
            
            
            $
            6,222,013Summarized
      below are the components of the (gain) loss on sale of
      properties:Proceeds
      from sale of investments – net
            
            $
            (7,939,009
            )
            
            $
            (2,976,250
            )Decrease
      in property and equipment, net of accumulated depreciation
            
            
            7,759,303
            
            
            
            2,605,211Decrease
      in deferred costs
            
            
            170,237
            
            
            
            0Decrease
      in cash held in escrow
            
            
            653,356
            
            
            
            265,163Decrease
      in rents receivable
            
            
            63,165
            
            
            
            4,393Decrease
      in other assets
            
            
            62,684
            
            
            
            14,085(Decrease)
      increase in accounts payable
            
            
            (1,280,075
            )
            
            
            130,538Decrease
      in security deposits payable
            
            
            (38,503
            )
            
            
            (19,496
            )Decrease
      in accrued interest payable
            
            
            (679,595
            )
            
            
            0Decrease
      in mortgage notes payable
            
            
            (6,901,408
            )
            
            
            0Decrease
      in due to local general partners and affiliates
            
            
            (83,431
            )
            
            
            0Decrease
      in due to general partners and affiliates
            
            
            (24,998
            )
            
            
            0* 
      Cash and cash equivalents, end of period, includes cash and cash
      equivalents from discontinued operations of $486,208 and $502,003,respectively.See
      accompanying notes to consolidated financial statements
 
  - 5
-
  LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 
 NOTE 1 -
General
 
 The
consolidated financial statements for the three months ended June 15, 2008 and
2007, include the accounts of Liberty Tax Credit Plus L.P. (the “Partnership”)
and seven and nine subsidiary partnerships (each a “subsidiary partnership” or
“Local Partnership”), respectively, in which the Partnership is a limited
partner. Through the rights of the Partnership and/or a general partner of the
Partnership (a “General Partner”), which General Partner has a contractual
obligation to act on behalf of the Partnership, to remove the general partners
of each subsidiary partnership (the “Local General Partners”) and to approve
certain major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary partnerships.  All
intercompany accounts and transactions with the subsidiary partnerships have
been eliminated in consolidation.
 
 For
financial reporting purposes, the Partnership’s fiscal quarter ends on June
15.  All subsidiary partnerships have fiscal quarters ending March
31.  Accounts of the subsidiary partnerships have been adjusted for
intercompany transactions from April 1 through June 15.  The
Partnership’s quarter ends on June 15 in order to allow adequate time for the
subsidiary partnerships’ financial statements to be prepared and
consolidated.  The books and records of the Partnership are maintained
on the accrual basis of accounting, in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).
 
 In the
opinion of the General Partners, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position of the Partnership as of June
15, 2008 and March 15, 2008, the results of operations and cash flows for the
three months ended June 15, 2008 and 2007.  However, the operating
results and cash flows for the three months ended June 15, 2008 may not be
indicative of the results for the year.
 
 Certain
information and note disclosures which are normally included in financial
statements prepared in accordance with GAAP have been omitted or condensed.
These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Partnership’s Annual
Report on Form 10-K for the period ended March 15, 2008.
 
 Increases
(decreases) in the capitalization of consolidated subsidiaries attributable to
minority interest arise from cash contributions and cash distributions to the
minority interest partners.
 
 The
Partnership’s investment in each subsidiary partnership is equal to the
respective subsidiary partnership’s partners’ equity less minority interest
capital, if any. Losses attributable to minority interests which exceed the
minority interests’ investments in the subsidiary partnerships have been charged
to the Partnership.  There were no such losses for the three months
ended June 15, 2008 and 2007.  In consolidation, all subsidiary
partnership losses are included in the Partnership’s capital account except for
losses allocated to minority interest capital.
 
 Recent Accounting
Pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which established a framework for measuring the fair value of assets and
liabilities as required by numerous other accounting pronouncements, and expands
disclosure requirements of the fair values of certain assets and
liabilities.  This statement is effective for the Partnership’s year
ending March 31, 2009.  The provisions of this statement will not have
a material impact on the consolidated financial statements.
 
 In
February 2007 the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities.  This statement was issued
with the intent to provide an alternative measurement treatment for certain
financial assets and liabilities.  The alternative measurement would
permit fair value to be used for both initial and subsequent measurement, with
changes in fair value recognized in earnings as those changes occur. This "Fair
Value Option" would be available on a contract by contract
basis.  This statement is effective for the Partnership’s year ending
March 31, 2009.  The provisions of this statement will not have a
material impact on the consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements. This statement was issued with the
intent to improve the relevance, comparability, and transparency of the
financial information that a reporting entity provides in its consolidated
financial statements for those entities that have outstanding noncontrolling
interest in one or more subsidiaries.  The effective date for this
provision is for fiscal year-ends beginning after December 15,
2008.  The Partnership is currently evaluating the impact of the
provisions of this statement on the consolidated financial
statements.
 
 
 NOTE 2 -
Related Party Transactions
 
 An
affiliate of the General Partners has a 1% interest, as a special limited
partner, in each of the subsidiary partnerships. An affiliate of the General
Partners also has a minority interest in certain subsidiary
partnerships.
   - 6
-
  LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 The costs
incurred to related parties from operations for the three months ended June 15,
2008 and 2007 were as follows:
 
 Three
      Months Ended
              June
      15,2008
            
            
            2007*Partnership
      management fees (a)
            
            $
            25,679
            
            
            $
            119,625Expense
      reimbursement (b)
            
            
            14,947
            
            
            
            37,259Total
      general and administrative-related parties
            
            $
            40,626
            
            
            $
            156,884*   Reclassified
      for comparative purpose.
 
 
 The costs
incurred to related parties from discontinued operations for the three months
ended June 15, 2008 and 2007 were as follows:
 
 Three
      Months Ended
              June
      15,2008
            
            
            2007*Local
      administrative fee (d)
            
            $
            6,930
            
            
            $
            3,125Total
      general and administrative-General Partners
            
            
            6,930
            
            
            
            3,125Property
      management fees incurred to affiliates of the Local General Partners
      (c)
            
            
            115,054
            
            
            
            173,695Total
      general and administrative-related parties
            
            $
            121,984
            
            
            $
            176,820*  
       Reclassified for comparative purposes.
 
 
 (a)  The
General Partners are entitled to receive a partnership management fee, after
payment of all Partnership expenses, which together with the local annual
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership’s Amended and Restated Agreement of
Limited Partnership (“Partnership Agreement”)), for administering the affairs of
the Partnership. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership’s investments.  Unpaid
partnership management fees for any year will be accrued without interest and
will be payable from working capital reserves or to the extent of available
funds after the Partnership has made distributions to the limited partners and
BACs holders of sale or refinancing proceeds equal to their original capital
contributions plus a 10% priority return thereon (to the extent not theretofore
paid out of cash flow).  Partnership management fees owed to the
General Partners amounting to approximately $2,198,000 and $2,172,000 were
accrued and unpaid as of June 15, 2008 and March 15, 2008,
respectively.
 
 (b)  The
Partnership reimburses the General Partners and their affiliates for actual
Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership’s behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the
Partnership.  These services include site visits and evaluations of
the subsidiary partnerships’ performance.  Expense reimbursements and
asset monitoring fees owed to affiliates of the General Partners amounting to
approximately $98,000 and $84,000 were accrued and unpaid as of June 15, 2008
and March 15, 2008, respectively.
 
 (c)  Property
management fees incurred by the subsidiary partnerships in operations amounted
to $181,407 and $237,509 for the three months ended June 15, 2008 and 2007,
respectively.  Of these fees, $115,054 and $173,695 were incurred to
affiliates of the Local General Partners, all of which related to discontinued
operations.
 
 (d)  Liberty
Associates III L.P., a General Partner and the special limited partner of the
subsidiary partnerships, is entitled to receive a local administrative fee of up
to $2,500 per year from each subsidiary partnership.
 
 
 NOTE3 – Sale of
Properties
 
 The
Partnership is currently in the process of disposing all of its
investments.  It is anticipated that this process will be completed
within one year.  As of June 15, 2008, the Partnership has sold its
limited partnership interest in nine Local Partnerships, the property and the
related assets and liabilities of eighteen Local Partnerships and has
transferred the deed to the property and the related assets and liabilities of
one Local Partnership.  In addition, as of June 15, 2008, the
Partnership has entered into agreements to sell its limited partnership interest
in two Local Partnerships and one Local Partnership entered into an agreement to
sell its property and the related assets and liabilities (see Note
4).  There can be no assurance as to when the Partnership will dispose
of its remaining four investments or the amount of proceeds which may be
received.  However, based on the historical operating results of the
Local Partnerships and the current economic conditions, including changes in tax
laws, it is unlikely that the proceeds from such sales received by the
Partnership will be sufficient to return to the limited partners their original
investment.
 
 - 7
-
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 On
February 6, 2008, the property and the related assets and liabilities of Quality
Hill Historic District – Phase II – A, L.P. (“Quality Hill”) were sold to an
unaffiliated third party purchaser for a sales price of
$3,275,000.  The Partnership received $375,000 as a distribution from
this sale after the repayment of other liabilities and closing cost of
approximately $2,900,000.  The sale resulted in a gain of
approximately $1,587,000, resulting from the write-off of the deficit basis in
property at the date of sale.
 
 On
January 29, 2008, the property and the related assets and liabilities of
Greenleaf Associates, L.P. (“Greenleaf”) were sold to an unaffiliated third
party purchaser for a sales price of $5,084,177.  The Partnership
received $169,291 as a distribution from this sale after the repayment of other
liabilities, closing cost and distribution to minority interest of approximately
$4,915,000.  The sale resulted in a gain of approximately $1,412,000,
resulting from the write-off of the deficit basis in property at the date of
sale.
 
 On May
11, 2007, the property and the related assets and liabilities of Charles Drew
Court Associates, L.P. (“Charles Drew”) were sold to an unaffiliated third party
purchaser for a sales price of $3,435,000.  The Partnership received
$3,144,463 as a distribution from this sale after the repayment of other
liabilities, closing costs and distributions to minority interest of
approximately $291,000.  The sale resulted in a loss of approximately
$24,000, resulting from the write-off of the basis in the property at the date
of the sale, which was recorded during the quarter ended June 15,
2007.  An adjustment of approximately $853,000 in gain was recorded
during the quarter ended March 15, 2008, resulting in overall gain of
approximately $830,000.
 
 
 NOTE 4 –
Assets Held for Sale
 
 On April
29, 2008, State Street 86 Associates, L.P. (“State Street”) entered into a
purchase and sale agreement to sell the property and the related assets and
liabilities to an unaffiliated third party purchaser for a sales price of
$1,500,000 plus the assumption of the mortgage debt.  The sales
documents have been executed and the initial deposit funds are being held in
escrow.  The closing is expected to occur in the fourth quarter of
2008.  No assurance can be given that the sale will actually
occur.  As of March 31, 2008, State Street had property and equipment,
at cost, of approximately $13,923,000, accumulated depreciation of approximately
$10,353,000 and mortgage debt of approximately $5,332,000.
 
 On April
11, 2008, the Partnership entered into an assignment and assumption agreement to
sell its limited partnership interest in Grove Parc Associates, L.P. (“Grove
Parc”) to an affiliate of the Local General Partner for a sales price of
$10,000.  The sales documents have been executed and the initial
deposit funds are being held in escrow.  The sale requires HUD
approval.  At this time, the Partnership cannot determine when or if
HUD will grant its approval.  As of March 31, 2008, Grove Parc had
property and equipment, at cost, of approximately $21,965,000, accumulated
depreciation of approximately $13,179,000 and mortgage debt of approximately
$11,363,000.
 
 On April
10, 2008, the Partnership entered into an assignment and assumption agreement to
sell its limited partnership interest in B & C Housing Associates, L.P. (“B
& C Housing”) to an affiliate of the Local General Partner for a sales price
of $75,000.  The sales documents have been executed and the initial
deposit funds are being held in escrow.  The sale requires HUD
approval.  At this time, the Partnership cannot determine when or if
HUD will grant its approval.  As of March 31, 2008, B & C Housing
had property and equipment, at cost, of approximately $9,272,000, accumulated
depreciation of approximately $6,006,000 and mortgage debt of approximately
$6,487,000.
 
 On April
26, 2007, the Partnership entered into an agreement to sell its limited
partnership interest in West Kinney Associates, L.P. (“West Kinney”) to an
affiliate of the Local General Partner for a sales price of $600,000 and the
assumption of the outstanding mortgages and related accrued interest, which
amounted to approximately $4,475,000 on September 30, 2007.  This
contract has currently expired and management is vigorously searching the market
for a potential buyer.  West Kinney has been classified as an asset
held for sale as of the quarter ended June 15, 2007.  As of March 31,
2008, West Kinney had property and equipment, at cost, of approximately
$7,187,000, accumulated depreciation of approximately $4,465,000 and mortgage
debt of approximately $2,957,000.
 
 
 NOTE5 – Discontinued
Operations
 
 The
following table summarizes the financial position of the Local Partnerships that
are classified as discontinued operations because the respective Local
Partnerships were classified as assets held for sale.  As of June 15,
2008, Grove Parc, B & C Housing, State Street and West Kinney, were
classified as discontinued operations on the consolidated balance
sheets.  As of March 15, 2008, Magnolia, Greenleaf, Quality Hill and
West Kinney were classified as discontinued operations on the consolidated
balance sheets.
 
 - 8
-
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 June
      15,
              2008
            
            
            March
      15,
              2008AssetsProperty
      and equipment, net of accumulated depreciation of $34,093,819 and
      $18,141,851, respectively
            
            $
            18,444,334
            
            
            $
            10,588,776Cash
      and cash equivalents
            
            
            486,208
            
            
            
            250,991Cash
      held in escrow
            
            
            2,920,831
            
            
            
            1,260,586Deferred
      costs, net of accumulated amortization of $131,597 and $324,585,
      respectively
            
            
            548,814
            
            
            
            173,516Other
      assets
            
            
            1,022,168
            
            
            
            152,363Total
      assets
            
            $
            23,422,355
            
            
            $
            12,426,232LiabilitiesMortgage
      notes payable
            
            $
            26,139,175
            
            
            $
            17,314,761Accounts
      payable and other liabilities
            
            
            4,506,465
            
            
            
            3,684,320Due
      to local general partners and affiliates
            
            
            15,589,642
            
            
            
            83,431Due
      to general partners and affiliates
            
            
            53,750
            
            
            
            24,998Minority
      interest
            
            
            (585,369
            )
            
            
            1,166,600Total
      liabilities
            
            $
            45,703,663
            
            
            $
            22,274,110
 
 
 The
following table summarizes the results of operations of the Local Partnerships
that are classified as discontinued operations.  For the three months
ended June 15, 2008, Greenleaf, Quality Hill and Magnolia, which were sold
during the current quarter, and Grove Parc, B&C Housing, State Street and
West Kinney, which were classified as assets held for sale, were all classified
as discontinued operations on the consolidated financial
statements.  For the three months ended June 15, 2007, Charles Drew,
which was sold during the three months ended June 15, 2007, Sartain School
Venture, L.P., which was sold during the year ended March 31, 2008, Greenleaf
and West Kinney, which were classified as assets held for sale at June 15, 2007,
and, in order to present comparable results for the three months ended June 15,
2008, Grove Parc, B&C Housing, State Street, Quality Hill and Magnolia were
all classified as discontinued operations on the consolidated financial
statements.
 
 - 9
-
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 Three
      Months Ended
              June
      15,2008
            
            
            2007*Revenues:Rental
      income
            
            $
            2,577,230
            
            
            $
            3,258,484Other
            
            
            320,490
            
            
            
            118,782Gain
      (loss) on sale of properties
            
            
            8,238,274
            
            
            
            (23,644
            )Total
      revenue
            
            
            11,135,994
            
            
            
            3,353,622Expenses:General
      and administrative
            
            
            536,243
            
            
            
            622,659General
      and administrative-related parties (Note 2)
            
            
            121,984
            
            
            
            176,820Repairs
      and maintenance
            
            
            894,948
            
            
            
            896,811Operating
            
            
            572,630
            
            
            
            795,892Taxes
            
            
            182,736
            
            
            
            174,693Insurance
            
            
            171,176
            
            
            
            183,547Interest
            
            
            691,155
            
            
            
            987,115Depreciation
      and amortization
            
            
            503,131
            
            
            
            697,247Total
      expenses
            
            
            3,674,003
            
            
            
            4,534,784Income
      (loss) before minority interest
            
            
            7,461,991
            
            
            
            (1,181,162
            )Minority
      interest in loss (income) of subsidiaries from discontinued
      operations
            
            
            1,172,695
            
            
            
            (279,790
            )Net
      income (loss) from discontinued operations (including gain (loss) on sale
      of properties)
            
            $
            8,634,686
            
            
            $
            (1,460,952
            )Income
      (loss) – limited partners from discontinued operations (including gain
      (loss) on sale of properties)
            
            $
            8,548,339
            
            
            $
            (1,446,343
            )Number
      of BACs outstanding
            
            
            15,987.5
            
            
            
            15,987.5Income
      (loss) from discontinued operations (including gain (loss) on sale ofproperties)
      per BAC
            
            $
            534.69
            
            
            $
            (90.46
            )
 
 Cash
flows from Discontinued Operations:
 
 Three
      Months Ended
              June
      15,2008
            
            
            2007*Net
      cash provided by (used in) operating activities
            
            $
            1,931,548
            
            
            $
            (471,146
            )Net
      cash provided by investing activities
            
            $
            7,902,866
            
            
            $
            3,196,669Net
      cash used in financing activities
            
            $
            (7,419,448
            )
            
            $
            (2,574,261
            )
 
 *
            Reclassified
      for comparative purposes.
 
 
 NOTE 6 –
Commitments and Contingencies
 
 a)  Lease
Commitment
 
 None
 
 - 10
-
 LIBERTY
TAX CREDIT PLUS L.P.
 AND
SUBSIDIARIES
 Notes to
Consolidated Financial Statements
 June 15,
2008
 (Unaudited)
 
 The
Partnership maintains its cash and cash equivalents in various banks. Accounts
at each bank are guaranteed by the Federal Deposit Insurance Corporation (FDIC)
up to $100,000.
 
 c)  Cash
Distributions
 
 Cash
distributions from the Local Partnerships to the Partnership are restricted by
the provisions of the respective Local Partnership agreements and/or
HUD.  Such cash distributions are typically made from surplus cash
flow.
 
 d)  Tax
Credits
 
 A portion
of the Tax Credits could be subject to recapture in future years if (i) a Local
Partnership ceases to meet qualification requirements, (ii) there is a decrease
in the qualified basis of the Local Partnership property or (iii) there is a
reduction in the Local Partnership interest in the property at any time during
the 15-year period (the “Compliance Period”) that began with the first tax year
of the period of the Partnership’s entitlement to claim Tax Credits (for each
property, ten years from the date of investment or, if later, the date the
property is placed in service is referred to herein as the “Tax Credit
Period”).  As of December 31, 2003, the Tax Credit Period for each
Local Partnership had expired.  The Compliance Periods continue
through December 31, 2008 with respect to the properties depending upon when the
Tax Credit Periods commenced.
 e)  Other
 
 Greenleaf Associates, L.P.
(“Greenleaf”)
 A former
tenant brought suit against Greenleaf’s on-site manager for damages of
$100,000.  An amended complaint does not specify an amount of
damages.  The former tenant claims violation of the 14th
Amendment, false arrest, obstruction of justice and civil
conspiracy.  On March 26, 2008, Greenleaf’s motion to dismiss the case
was granted by the court.  Greenleaf was sold on January 29, 2008 (see
Note 3).
 
 State Street 86 Associates,
L.P. (“State Street”)
 The
Camden Redevelopment Agency has designated the Cramer Hill Waterfront
Redevelopment Agency as a possible future redevelopment project.  This
area includes Centennial Village, a 200-unit apartment project that State Street
owns and operates.  There have been various lawsuits involving this
redevelopment at this time.  On April 29, 2008, State Street entered
into a purchase and sale agreement to sell its property and related assets and
liabilities (see Note 4).
 
 Grove Parc Associates, L.P.
(“Grove Parc”)
 Grove
Parc has experienced significant cash flow difficulties.  Grove Parc
withdrew $431,716 from the replacement reserve of which $303,081 was used to pay
operating expenses incurred by the Property.  Grove Parc has taken
measures to improve the operations.  If these measures are not
successful and the reserves are further depleted and the Local General Partner
does not fund the operating deficits, Grove Parc may face foreclosure action
which could result in the recapture of Tax Credits.   The
mortgage was in technical default and on March 11, 2008 the mortgagee assigned
the mortgage to HUD pursuant to the applicable FHA insurance.Grove Parc is
in the process of selling the property with HUD approval.  On April
11, 2008, the Partnership entered into an agreement to sell its limited
partnership interest in Grove Parc (see Note 4).  As of the filing
date of this report, the transaction is still in the process of obtaining HUD
approval for a transfer of physical assets.
 
 The
Partnership is subject to the risks incident to potential losses arising from
the management and ownership of improved real estate. The Partnership can also
be affected by poor economic conditions generally, and due to the fact that the
Partnership is in the final stages of liquidating its portfolio, the portfolio
is no longer geographically diverse.  There are also substantial risks
associated with owning properties receiving government assistance, for example
the possibility that Congress may not appropriate funds to enable HUD to make
rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owners’ equity
contribution.  As of June 15, 2008, there are three Local Partnerships
subsidized by HUD.  The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence, without HUD’s approval. Furthermore, there
may not be market demand for apartments at full market rents when the rental
assistance contracts expire.
 
 - 11
-
 
  Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 Liquidity and Capital
Resources
 
 The
Partnership’s capital was originally invested in thirty-one Local
Partnerships.  As of June 15, 2008, the Partnership has sold its
limited partnership interest in nine Local Partnerships, the properties and the
related assets and liabilities of eighteen Local Partnerships and has
transferred the deed to the property and the related assets and liabilities of
one Local Partnership. For a discussion of these sales of the Local Partnerships
see Note 3.  In addition, as of June 15, 2008, the Partnership has
entered into agreements to sell its limited partnership interest in two Local
Partnerships and one Local Partnership has entered into an agreement to sell its
property and the related assets and liabilities (see Note 4).
 
 Short-Term
 
 The
Partnership’s primary sources of funds included:  (i) working capital
reserves; (ii) interest earned on the working capital reserves; (iii) cash
distributions from operations of the Local Partnerships; and (iv) sales proceeds
and distributions.  Such funds are available to meet the obligations
of the Partnership.  During the three months ended June 15, 2008 and
2007, distributions from operations of the Local Partnerships amounted to
approximately $0 and $60,000, respectively.  Additionally, during the
three months ended June 15, 2008 and 2007, the Partnership received
approximately $0 and $2,765,000 distributions of proceeds from sales,
respectively.
 
 For the
three months ended June 15, 2008, cash and cash equivalents of the Partnership
and its consolidated Local Partnerships decreased approximately
$2,706,000.  This decrease is attributable to net cash used in
operating activities ($435,000), costs paid relating to sale of properties
($420,000), repayments of mortgage notes ($7,463,000) and distributions
($2,828,000), which exceeded a decrease in cash held in escrow relating to
investing activities ($38,000), proceeds from sale of investments ($8,359,000)
and a net increase in due to local general partners and affiliates relating to
finance activities ($43,000).  Included in the adjustments to
reconcile net income to net cash used in operating activities are depreciation
and amortization of approximately ($503,000) and a gain on sale of properties
($8,238,000).
 
 Accounts
payable as of June 15, 2008 and March 15, 2008, were $31,416 and $3,988,892,
respectively.  Accounts payable are short term liabilities which are
expected to be paid from operating cash flows, working capital balances at the
Local Partnership level, Local General Partner advances and in certain
circumstances advances from the Partnership.  The Partnership believes
it (and the applicable Local Partnerships) has sufficient liquidity and ability
to generate cash and to meet existing and known or reasonably likely future cash
requirements over both the short and long term.  In addition, accounts
payable from discontinued operations, as of June 15, 2008 and March 15, 2008,
totaled $1,168,037 and $1,095,701, respectively.
 
 Accrued
interest payable as of June 15, 2008 and March 15, 2008 was $0 and $1,312,357,
respectively.  Accrued interest payable represents the accrued
interest on all mortgage loans, which include primary and secondary loans.
Certain secondary loans have provisions such that interest is accrued but not
payable until a future date.  The Partnership anticipates the payment
of accrued interest on the secondary loans (which make up the majority of the
accrued interest payable amount and which have been accumulating since the
Partnership’s investment in the respective Local Partnership) will be made from
future refinancings or sales proceeds of the respective Local
Partnerships.  Furthermore, each Local Partnership’s mortgage notes
are collateralized by the land and buildings of the respective Local
Partnership, and are without further recourse to the Partnership.  In
addition, accrued interest payable from discontinued operations, as of June 15,
2008 and March 15, 2008, totaled $3,104,346 and $2,517,813,
respectively.
 
 A working
capital reserve at the Partnership level of approximately $4,066,000 remained
unused at June 15, 2008.
 
 The
Partnership is not expected to have access to additional sources of
financing.
 
 Partnership
management fees owed to the General Partners amounting to approximately
$2,198,000 and $2,172,000 were accrued and unpaid as of June 15, 2008 and March
15, 2008, respectively.  Unpaid partnership management fees for any
year will be accrued without interest and will be payable from working capital
reserves or to the extent of available funds after the Partnership has made
distributions to the limited partners and BACs holders of sale or refinancing
proceeds equal to their original capital contributions plus a 10% priority
return thereon (to the extent not theretofore paid out of cash
flow).
 
 For a
discussion of contingencies affecting certain Local Partnerships, see Item 1,
Note 6 to the financial statements. Since the maximum loss the Partnership would
be liable for is its net investment in the respective Local Partnerships, the
resolution of the existing con­tingencies is not anticipated to impact
future results of operations, liquidity or financial condition in a material
way. However, the Partnership’s loss of its investment in a Local Partnership
may result in recapture of Tax Credits if the investment is lost before the
expiration of the applicable Compliance Period, during which the properties
owned by the Local  Partnerships must comply with various rent and
other restrictions.  The Compliance Periods continue through December
31, 2008 with respect to such properties depending upon when the Tax Credit
Periods commenced.
 
 The Local
Partnerships are impacted by inflation in several ways.  Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs, such as fuel, utilities, and labor.  Since revenues
from the sales of assets are driven by market conditions, inflation has little
impact.
 
 Except as
described above, management is not aware of any trends or events, commitments or
uncertainties which have not otherwise been disclosed that will, or are likely
to impact liquidity in a material way. Management believes the only impact would
be from laws that have not yet been adopted. The Partnership is in the final
stages of liquidating its portfolio, and as such, the portfolio is no longer
geographically diverse.
 
 Off-Balance Sheet
Arrangements
 The
Partnership has no off-balance sheet arrangements.
 - 12
-
  Tabular Disclosure of
Contractual Obligations
 The
Partnership disclosed in Item 7 to the financial statements in the Partnership’s
Annual Report on Form 10-K for the year ended March 15, 2008, the Partnership’s
commitments to make future payments under its debt agreements and other
contractual obligations.  There are no material changes to such
disclosure or amounts as of June 15, 2008.
 
 Critical Accounting Policies
and Estimates
 
 In
preparing the consolidated financial statements, management has made estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. Set forth below is a summary of the accounting policies that
management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Partnership’s accounting policies included in Item 8,
Note 2 to the consolidated financial statements in the Partnership’s Annual
Report on Form 10-K for the year ended March 15, 2008.
 Property and
Equipment
 
 Property
and equipment to be held and used are carried at cost which includes the
purchase price, acquisition fees and expenses, and any other costs incurred in
acquiring the properties. The cost of property and equipment is depreciated over
their estimated useful lives using accelerated and straight-line methods.
Expenditures for repairs and maintenance are charged to expense as incurred;
major renewals and betterments are capitalized. At the time property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are eliminated from the assets and accumulated depreciation
accounts and the profit or loss on such disposition is reflected in
earnings.
 
 In
accordance with Statement of Financial Accounting Standards No. 144, “Accounting
for the Impairment or Disposal of Long-Lived Assets”, the results of
discontinued operations are reported as a separate component of income before
extraordinary items on the consolidated statements of
operations.  Discontinued operations include the results of operations
and any gain or loss recognized for Local Partnerships that have been disposed
of or are held for sale.  A gain or loss recognized on the disposal is
disclosed in the notes to the financial statements.  Adjustments to
amounts previously reported in operations that are directly related to the
disposal of a Local Partnership are reclassified in the current period as
discontinued operations for comparability purposes.  Assets and
liabilities of a Local Partnership that are classified as held for sale are
presented separately in the asset and liability sections, respectively, of the
consolidated balance sheets.
 
 A loss on
impairment of assets is recorded when management estimates amounts recoverable
through future operations and sale of the property on an undiscounted basis are
below depreciated cost. At that time property investments themselves are reduced
to estimated fair value (generally using discounted cash flows).
 
 During
the three months ended June 15, 2008, the Partnership has not recorded any loss
on impairment of assets or reduction to estimated fair value.  Through
June 15, 2008, the Partnership has recorded approximately $3,760,000 as an
aggregate loss on impairment of assets or reduction to estimated fair
value.
 
 At the
time management commits to a plan to dispose of assets, said assets are adjusted
to the lower of carrying amount or fair value less costs to sell. These assets
are classified as property and equipment-held for sale and are not
depreciated.  As of June 15, 2008 and March 15, 2008, the Partnership
has recorded property and equipment net of accumulated depreciation of
$18,444,334 and $10,588,776, respectively, as held for sale.
 
 Revenue
Recognition
 
 Rental
income is earned primarily under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases. Rental income is recognized when earned and as rents
become due and charged to tenants’ accounts receivable if not received by the
due date.   Rental payments received in advance of the due date
are deferred until earned. Rental subsidies are recognized as rental income
during the month in which it is earned.
 
 Other
revenues are recorded when earned and consist of the following
items:  Interest income earned on cash and cash equivalent balances
and cash held in escrow balances, income from forfeited security deposits, late
charges, laundry and vending income, and other rental related
items.
 
 Income
Taxes
 
 The
Partnership is not required to provide for, or pay, any federal income taxes.
Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31.
 
 Results of
Operations
 
 The
General Partners are currently in the process of liquidating the Partnership and
all of its remaining assets are classified as assets held for
sale.  Therefore, all operations have been discontinued.
 
 Item
3.  Quantitative and Qualitative Disclosures about Market
Risk
 
 The
Partnership has mortgage notes that are payable in aggregate monthly
installments including principal and interest at rates varying from 1% to 12%
per annum.  The Partnership does not believe there is a material risk
associated with the various interest rates associated with the mortgage notes as
the majority of the Local Partnership mortgage notes have fixed
rates.  The Partnership disclosed in Item 8, Note 3 to the financial
statements in the Partnership’s Annual Report on Form 10-K for the year ended
March 15, 2008, the fair value of the mortgage notes payable.
 
 The
Partnership does not have any other market risk sensitive
instruments.
 
 - 13
-
  Item
4.  Controls and Procedures
 
 (a) Evaluation of Disclosure Controls
and Procedures. The Principal Executive Officer and Principal Financial
Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the
general partners of the Partnership, have evaluated the effectiveness of the
Partnership’s disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (“Exchange Act”)) as of the end of the period covered by this report.
Based on such evaluation, such officers have concluded that, as of the end of
such period, the Partnership’s disclosure controls and procedures are
effective.
 
 (b) Changes in Internal Control over Financial
Reporting.There have not been any changes in the Partnership’s internal
control over financial reporting during the fiscal quarter to which this report
relates that have materially affected, or are reasonably likely to materially
affect, the Partnership’s internal control over financial
reporting.
  
 - 14
-
  PART II.
OTHER INFORMATION
 
 
 
 Item
1.           Legal
Proceedings – None
 
 Item
1A.        Risk Factors – No
changes
 
 Item
2.           Unregistered
Sales of Equity Securities and Use of Proceeds – None
 
 Item
3.           Defaults
upon Senior Securities – None
 
 Item
4.           Submission
of Matters to a Vote of Security Holders – None
 
 Item
5.           Other
Information – None
 
 Item
6.           Exhibits
 
 (31.1)
            Certification Pursuant to Rule 13a-14(a) or Rule
      15d-14(a)
 (31.2)
            Certification Pursuant to Rule 13a-14(a) or Rule
      15d-14(a)
 (32.1)
            Certification Pursuant to Rule 13a-14(b) or Rule
      15d-14(b) and Section 1350 of Title 18 of the United States Code (18
      U.S.C. 1350)
 
  - 15
-
 
 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.
 
 
 LIBERTY TAX CREDIT PLUS
L.P.
 (Registrant)
 
 
 By:
            RELATED
      CREDIT PROPERTIES L.P.,a
      General PartnerBy:
            Credit
      Properties GP LLC,its
      General PartnerDate:
            July 29, 2008By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer,
              Principal
      Accounting Officer and DirectorDate:
            July 29, 2008By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident
      and Chief Executive OfficerBy:
            LIBERTY
      ASSOCIATES III, L.P.,a
      General PartnerBy:
            Related
      Credit Properties L.P.,its
      General PartnerBy:
            Credit
      Properties GP LLCits
      General PartnerDate:
            July 29, 2008By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer,
              Principal
      Accounting Officer and DirectorDate:
            July 29, 2008By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident
      and Chief Executive Officer
 
  - 16
-