----

|   | [ X ]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | [   ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                         Boston Financial Qualified Housing Tax Credits L.P. III                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|                    Delaware                                                                        04-3032106                           |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       (State or other jurisdiction of                                           (I.R.S. Employer Identification No.)                                                                                                                                                                                                                                                                                                                                                                        |
|        incorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

| Title of each class | Name of each exchange on which registered |
|---------------------|-------------------------------------------|
| None                | None                                      |

| UNITS OF LIMITED PARTNERSHIP INTEREST(Title of Class)  |
|-------------------------------------------------------------|

----

----

| PART I                                                                                                Page No.        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Item 1   Business                                                                                     K-4                                                          |
| Item 2   Propertie                                                                                     K-7                                                         |
| Item 3   Legal Proceedings                                                                    K-10                                                                                                                                                 |
| Item 4   Submission of Matters to a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                  Vote of Security Holders                                                      K-11                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| PART II                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Item 5   Market for the Registrant's Units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                  and Related Security Holder Matters                                  K-11                                                                                                                                                                                                                                                             |
| Item 7    Management's Discussion and Analysis of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                   Financial Condition and Results of Operations                K-11                                                                                                                                                                                                                                                                                                                                                         |
| Item 8    Financial Statements and Supplementary Data                    K-16                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Item 9    Changes in and Disagreements with                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                   Accountants on Accounting and Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                   Disclosure                                                                                K-16 |
| Item 9A Controls and Procedures                                                          K-16                                                                                                                                                                                                                       |
| Item 9B Other Information                                                                       K-17                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| PART III                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Item 10   Directors and Executive Officers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                     of the Registrant                                                                    K-17                                                      |
| Item 11    Management Remuneration                                                    K-18                                                                                                                                                                                                                                    |
| Item 12    Security Ownership of Certain Beneficial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                     Owners and Management                                                    K-18                                                                                                                                                  |
| Item 13    Certain Relationships and Related                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                     Transactions                                                                          K-18                       |
| Item 14    Principal Accountant Fees and Services                              K-20                                                                                                                                                                                                                                                                                                                                                         |
| Item 15    Exhibits, Financial Statement Schedules, and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                     Director Independence                                                         K-20                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| SIGNATURES                                                                                            K-21                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| CERTIFICATIONS                                                                                   K-22                                                                                       |

----

----

|                           |              | Date     |
|--------------------------------|-------------------|----------|
| Properties owned by            |              | Interest |
| Local Limited Partnerships     | Location          | Acquired |
|                           |              |     |
| West Dade (1)                  | Miami, FL         | 12/31/88 |
| West Dade II (1)               | Miami, FL         | 12/31/88 |
| Regency Square (1)             | Dayton, OH        | 03/13/89 |
| Westwood Manor (1)             | Flint, MI         | 02/21/89 |
| Rolling Hills (1)              | Dayton, OH        | 03/13/89 |
| Boulevard Commons II (1)       | Chicago, IL       | 04/04/89 |
| Boulevard Commons IIA (1)      | Chicago, IL       | 04/04/89 |
| Fox Run Housing  (1) | Victoria, TX      | 04/07/89 |
| Waterfront                     | Buffalo, NY       | 04/28/89 |
| Shoreline (1)                  | Buffalo, NY       | 04/28/89 |
| Colony Apartments (1)          | Columbia, SC      | 05/19/89 |
| Admiral Court (1)              | Philadelphia, PA  | 06/07/89 |
| Crestwood (1)                  | Bridgeport, TX    | 06/05/89 |
| Elmwood Delmar (1)             | Aurora, CO        | 05/16/89 |
| El Jardin (1)                  | Davie, FL         | 06/14/89 |
| Ashley Place (1)               | Orlando, FL       | 06/23/89 |
| Willowick (1)                  | Gainesville, TX   | 06/30/89 |
| Kirkendall Heights (1)         | Ellsworth, KS     | 07/19/89 |
| Bentley Hill (1)               | Syracuse, KS      | 06/30/89 |
| Columbia Townhouses (1)        | Burlington, IA    | 07/28/89 |
| Quartermill (1)                | Richmond, VA      | 08/02/89 |
| Ponca Manor (1)                | Satanta, KS       | 07/28/89 |
| Pearl Place (1)                | Rossville, KS     | 07/28/89 |
| Crown Point (1)                | Venus, TX         | 08/22/89 |
| Godley Arms (1)                | Godley, TX        | 08/25/89 |
| Pilot Point (1)                | Pilot Point, TX   | 08/22/89 |
| Sherwood Arms (1)              | Keene, TX         | 08/22/89 |
| South Holyoke (1)              | Holyoke, MA       | 08/29/89 |
| Walker Woods (1)               | Dover, DE         | 08/30/89 |
| Lakeway Colony (1)             | Lake Dallas, TX   | 08/30/89 |
| One Main Place (1)             | Little Elm, TX    | 08/22/89 |
| Eaglewood (1)                  | Covington, TN     | 09/06/89 |
| Harbour View (1)               | Staten Island, NY | 09/29/89 |
| Georgetown II (1)              | Georgetown, DE    | 09/28/89 |
| Granite V (1)                  | Boston, MA        | 09/29/89 |
| Garden Plain (1)               | Garden Plain, KS  | 08/09/89 |
| Fulton (1)                     | Fulton, KY        | 10/05/89 |
| Lone Oak (1)                   | Graham, TX        | 10/06/89 |
| Hallet West (1)                | Hallettsville, TX | 11/20/89 |
| Glenbrook (1)                  | St. Jo, TX        | 10/06/89 |
| Eagles Nest (1)                | Decatur, TN       | 10/06/89 |
| Billings Family (1)            | Billings, MO      | 08/09/89 |

----

|                       |               | Date     |
|----------------------------|--------------------|----------|
| Properties owned by        |               | Interest |
| Local Limited Partnerships | Location           | Acquired |
|                       |               |     |
| Brownsville (1)            | Brownsville, TN    | 08/09/89 |
| Sunnyhill Villa (1)        | Wayne, NE          | 08/09/89 |
| Longview (1)               | Humboldt, KS       | 10/13/89 |
| Horseshoe Bend (1)         | Horseshoe Bend, AR | 08/09/89 |
| Briarwood II (1)           | Lake Havasua, AZ   | 10/04/89 |
| Quail Run (1)              | Iowa Park, TX      | 10/06/89 |
| Smithville (1)             | Smithville, MO     | 08/09/89 |
| Aurora East Apartments (1) | Denver, CO         | 11/06/89 |
| Elver Park II (1)          | Madison, WI        | 11/09/89 |
| Elver Park III (1)         | Madison, WI        | 11/09/89 |
| Tucson Trails I (1)        | Madison, WI        | 11/22/89 |
| Tucson Trails II (1)       | Madison, WI        | 11/23/89 |
| Pleasant Plaza (1)         | Malden, MA         | 12/01/89 |
| 241 Pine Street (1)        | Manchester, NH     | 12/04/89 |
| Heather Oaks (1)           | Oak Grove, MO      | 11/24/89 |
| Riverfront (1)             | Sunbury, PA        | 12/26/89 |
| Susquehanna View (1)       | Camp Hill, PA      | 12/26/89 |
| Breckenridge (1)           | Duluth, GA         | 12/19/89 |
| Wood Creek (1)             | Calcium, NY        | 12/15/89 |
| Willow Lake (1)            | Kansas City, MO    | 12/20/89 |
| Ashton Heights (1)         | Bolivar, MO        | 12/15/89 |
| Fouche Valley (1)          | Perryville, AR     | 05/01/90 |
| Altheimer (1)              | Altheimer, AR      | 04/18/90 |
| Kyle Hotel (1)             | Temple, TX         | 06/12/90 |
| Diversey Square (1)        | Chicago, IL        | 12/01/90 |
| Poplar Village (1)         | Cumberland, KY     | 12/30/90 |
| Lexington (1)              | Lexington, TN      | 12/29/90 |
|                       |               |     |

|   | (1)   The Partnership no longer has an interest in the Local Limited Partnership which owns this Property. |
|--------|---------------------------------------------------------------------------------------------------------------------------|

----

----

|                           |   |       | Capital Contributions |   |           |   |      |
|--------------------------------|--------|------------|-----------------------|--------|----------------|--------|-----------|
| Local Limited Partnership      |   |       |                  |   | Total          |   |      | Paid |   |   | Mtge. Loans |   |   |   | Occupancy at |   |
| Property Name                  |   | Number of  |                  |   | Committed at   |   |      | Through |   |   | Payable at |   | Type of |   | March 31, |   |
| Property Location              |   | Apt. Units |                  |   | March 31, 2010 |   |      | March 31, 2010 |   |   | December 31, 2009 |   | Subsidy |   | 2010 |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |
| Waterfront Limited Partnership |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |
| Waterfront                     |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |
| Buffalo, NY                    |   |       | 472                   |   |           | $      | 3,597,307 |   |   | $ | 3,597,307 |   |   | $ | 32,950,984 |   | None |   |   | 60 | % |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |       |                  |   |           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| -  On November 29, 2007, QH4 and its general partners were sued in Superior Court for the County of Los Angeles, California by a Limited Partner named Danford Baker and companies named Everest Housing Investors 2, LP and Everest Management, LLC with which Mr. Baker is affiliated (collectively, “Everest”).  Everest dismissed this lawsuit without prejudice on April 17, 2008. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                          |

| -  On or about, May 6, 2008, the same Everest parties referenced above in the 1st California lawsuit filed a nearly identical Complaint against QH4 and its general partners in the same Superior Court for the County of Los Angeles, California.  Everest dismissed this 2nd California lawsuit without prejudice on November 11, 2008 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -  On January 22, 2008, QH4 and its general partners were sued in the District Court of Johnson County, Kansas by a Limited Partner named McDowell Investments, L.P. (“McDowell”). |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                           |

| -  On January 29, 2008, QH4 and its general partners filed suit against McDowell in the Superior Court for Suffolk County, Massachusetts |
|------------------------------------------------------------------------------------------------------------------------------------------|

| -  On April 22, 2008, QH4 and its general partners filed suit in the Superior Court for Suffolk County, Massachusetts against the following defendants:  Everest Housing Investors 2, L.P.; Everest Management LLC; Everest Properties, Inc.; Everest Properties, LLC; McDowell Investments, L.P.; MGM Holdings, LLC; Park G.P., Inc., Bond Purchase, L.L.C.; Anise L.L.C.; Paco Development, L.L.C.; Maxus Realty Trust, Inc.; David L. Johnson; W. Robert Kohorst; Danford M. Baker; Monte G. McDowell; and Kevan D. Acord. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

----

----

----

----

----

----

| Name                                        Position |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                         |
| Kenneth J. Cutillo                     Chief Executive Officer                                                                                           |

----

|          |                                                 | Amount        |             |
|---------------|------------------------------------------------------|---------------|------------------|
| Title of      | Name and Address of                                  | Beneficially  |             |
| Class         | Beneficial Owner                                     | Owned         | Percent of Class |
|          |                                                 |          |             |
| Limited       | Paco Development, LLC                                | 5,315.5 Units | 5.32%            |
| Partner       | P.O. Box 34729                                       |          |             |
|          | N. Kansas City                                       |          |             |
|          |        MO 64116   |          |             |
|          |                                                 |          |             |
| Limited       | Everest Management, LLC                              | 10,005 Units  | 10.01%           |
|  Partner | 155 North Lake Avenue                                |          |             |
|          |        Suite 1000 |          |             |
|          | Pasadena, CA  91101                        |          |             |

----

|                  |   | 2010   |   |   | 2009   |   |
|-----------------------|--------|--------|--------|--------|--------|--------|
|                  |   |   |   |   |   |   |
| Asset management fees |   | $      | 29,477 |   |   | $      | 56,523 |   |

|                                         |   | 2010   |   |   | 2009   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |
| Salaries and benefits expense reimbursements |   | $      | 24,682 |   |   | $      | 49,390 |   |

----

|       |   | 2010   |   |   | 2009   |   |
|------------|--------|--------|--------|--------|--------|--------|
|       |   |   |   |   |   |   |
| Audit fees |   | $      | 50,131 |   |   | $      | 59,786 |   |
| Tax fees   |   | $      | 2,500  |   |   | $      | 2,500 |   |

| 31.1  Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2  Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1  Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2  Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----

|               By:: /:s/Kenneth J. Cutillo                                 Date:    June 29, 2010 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          Kenneth J. Cutillo                                                                                                                                                                                        |
|                          President                                                                                                                                                                                                 |
|                          Arch Street III, Inc                                                                                                                                                                                      |
|                        (Chief Executive Officer)                                                                                                                                                                                             |

|               By::  /s/Kenneth J. Cutillo                                 Date:    June 29, 2010 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          Kenneth J. Cutillo                                                                                                                                                                                        |
|                          President                                                                                                                                                                                                 |
|                          Arch Street III, Inc                                                                                                                                                                                      |
|                         (Chief Financial Officer)                                                                                                                                                                                       |

|              By:   /s/Kenneth J. Cutillo                                    Date:    June 29, 2010 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         Kenneth J. Cutillo                                                                                                                                                                                                                    |
|                         President                                                                                                                                                                                                                             |
|                        Arch Street III, Inc                                                                                                                                                                                                                        |
|                       (Chief Accounting Officer)                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                  |

----

----

----

|                                                         |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Assets                                                       |   |   |    |   |   |   |
|                                                         |   |   |    |   |   |   |
| Cash and cash equivalents                                    |   | $      | 381,970 |   |   | $      | 3,014,508 |   |
| Investments in Local Limited Partnerships (Note 4)           |   |   | -       |   |   |   | - |   |
| Other assets                                                 |   |   | 38      |   |   |   | - |   |
| Total Assets                                                 |   | $      | 382,008 |   |   | $      | 3,014,508 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Liabilities and Partners' Equity                             |   |   |    |   |   |   |   |   |
|                                                         |   |   |    |   |   |   |   |   |
| Due to affiliate (Note 5)                                    |   | $      | 2,325   |   |   | $      | 34,248 |   |
| Accrued expenses                                             |   |   | 43,785  |   |   |   | 49,019 |   |
| Total Liabilities                                            |   |   | 46,110  |   |   |   | 83,267 |   |
|                                                         |   |   |    |   |   |   |   |   |
| General, Initial and Investor Limited Partners’ Equity |   |   | 335,898 |   |   |   | 2,931,241 |   |
| Total Liabilities and Partners' Equity                       |   | $      | 382,008 |   |   | $      | 3,014,508 |   |
|                                                         |   |   |    |   |   |   |   |   |
|                                                         |   |   |    |   |   |   |   |   |

----

|                                                                       |   | 2010   |     |   | 2009   |   |
|----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Revenue:                                                                   |   |   |     |   |   |   |
| Investment                                                                 |   | $      | 10,218   |   |   | $      | 36,381 |   |
| Cash distribution income                                                   |   |   | 4        |   |   |   | - |   |
| Total Revenue                                                              |   |   | 10,222   |   |   |   | 36,381 |   |
|                                                                       |   |   |     |   |   |   |   |   |
| Expense:                                                                   |   |   |     |   |   |   |   |   |
| Asset management fees, affiliate  (Note 5)                       |   |   | 29,477   |   |   |   | 56,523 |   |
| General and administrative (includes reimbursements                        |   |   |     |   |   |   |   |   |
| to an affiliate in the amount of  $24,682                        |   |   |     |   |   |   |   |   |
| and  $49,390  in 2010 and 2009, respectively) (Note 5) |   |   | 149,465  |   |   |   | 167,195 |   |
| Total Expenses                                                             |   |   | 178,942  |   |   |   | 223,718 |   |
|                                                                       |   |   |     |   |   |   |   |   |
| Loss before equity in income of Local Limited                              |   |   |     |   |   |   |   |   |
|     Partnerships and gain on sale of investments in    |   |   |     |   |   |   |   |   |
| Local Limited Partnerships                                                 |   |   | (168,720 | )      |   |   | (187,337 | ) |
|                                                                       |   |   |     |   |   |   |   |   |
| Equity in income of Local Limited                                          |   |   |     |   |   |   |   |   |
|     Partnerships (Note 4)                              |   |   | -        |   |   |   | 901,803 |   |
|                                                                       |   |   |     |   |   |   |   |   |
| Gain on sale of investments in Local Limited Partnerships (Note 4)         |   |   | 200,000  |   |   |   | 824,673 |   |
|                                                                       |   |   |     |   |   |   |   |   |
| Net Income                                                                 |   | $      | 31,280   |   |   | $      | 1,539,139 |   |
|                                                                       |   |   |     |   |   |   |   |   |
| Net Income allocated:                                                      |   |   |     |   |   |   |   |   |
| General Partners                                                           |   | $      | 313      |   |   | $      | 15,391 |   |
| Limited Partners                                                           |   |   | 30,967   |   |   |   | 1,523,748 |   |
|                                                                       |   | $      | 31,280   |   |   | $      | 1,539,139 |   |
| Net Income per Limited Partner Unit                                        |   |   |     |   |   |   |   |   |
| (100,000 Units)                                                            |   | $      | .31      |   |   | $      | 15.24 |   |
|                                                                       |   |   |     |   |   |   |   |   |
|                                                                       |   |   |     |   |   |   |   |   |
|                                                                       |   |   |     |   |   |   |   |   |

----

|                      |   |     |    |   | Initial  |   |   | Investor |   |   |       |   |
|---------------------------|--------|----------|---------|--------|----------|--------|--------|----------|--------|--------|------------|--------|
|                      |   | General  |    |   | Limited  |   |   | Limited  |   |   |       |   |
|                      |   | Partners |    |   | Partners |   |   | Partners |   |   | Total      |   |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |
| Balance at March 31, 2008 |   | $        | 13,855  |   |     | $      | 5,000  |     |   | $      | 1,373,247  |   |   | $ | 1,392,102 |   |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |   |   |   |   |
| Net Income                |   |     | 15,391  |   |     |   | -      |     |   |   | 1,523,748  |   |   |   | 1,539,139 |   |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |   |   |   |   |
| Balance at March 31, 2009 |   |     | 29,246  |   |     |   | 5,000  |     |   |   | 2,896,995  |   |   |   | 2,931,241 |   |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |   |   |   |   |
| Cash distributions        |   |     | (26,273 | )      |     |   | -      |     |   |   | (2,600,350 | )      |   |   | (2,626,623 | ) |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |   |   |   |   |
| Net Income                |   |     | 313     |   |     |   | -      |     |   |   | 30,967     |   |   |   | 31,280 |   |
|                      |   |     |    |   |     |   |   |     |   |   |       |   |   |   |   |   |
| Balance at March 31, 2010 |   | $        | 3,286   |   |     | $      | 5,000  |     |   | $      | 327,612    |   |   | $ | 335,898 |   |

----

|                                                      |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash flows from operating activities:                     |   |   |       |   |   |   |
| Net Income                                                |   | $      | 31,280     |   |   | $      | 1,539,139 |   |
| Adjustments to reconcile net income to net cash           |   |   |       |   |   |   |   |   |
| used for operating activities:                            |   |   |       |   |   |   |   |   |
| Equity in income of Local Limited Partnerships            |   |   | -          |   |   |   | (901,803 | ) |
| Gain on sale of investments in Local Limited Partnerships |   |   | (200,000   | )      |   |   | (824,673 | ) |
| Increase (decrease) in cash arising from changes          |   |   |       |   |   |   |   |   |
| in operating assets and liabilities:                      |   |   |       |   |   |   |   |   |
| Other assets                                              |   |   | (38        | )      |   |   | - |   |
| Due from affiliate                                        |   |   | -          |   |   |   | 5,000 |   |
| Due to affiliate                                          |   |   | (31,923    | )      |   |   | (74,628 | ) |
| Accrued expenses                                          |   |   | (5,234     | )      |   |   | 3,632 |   |
| Net cash used for operating activities                    |   |   | (205,915   | )      |   |   | (253,333 | ) |
|                                                      |   |   |       |   |   |   |   |   |
| Cash flows from investing activities:                     |   |   |       |   |   |   |   |   |
| Proceeds received from sale of investments in Local       |   |   |       |   |   |   |   |   |
| Limited Partnerships                                      |   |   | 200,000    |   |   |   | 1,842,904 |   |
| Net cash provided by investing activities                 |   |   | 200,000    |   |   |   | 1,842,904 |   |
|                                                      |   |   |       |   |   |   |   |   |
| Cash flows from financing activities:                     |   |   |       |   |   |   |   |   |
| Cash distribution                                         |   |   | (2,626,623 | )      |   |   | - |   |
| Net cash used for financing activities                    |   |   | (2,626,623 | )      |   |   | - |   |
|                                                      |   |   |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents      |   |   | (2,632,538 | )      |   |   | 1,589,571 |   |
|                                                      |   |   |       |   |   |   |   |   |
| Cash and cash equivalents, beginning                      |   |   | 3,014,508  |   |   |   | 1,424,937 |   |
|                                                      |   |   |       |   |   |   |   |   |
| Cash and cash equivalents, ending                         |   | $      | 381,970    |   |   | $      | 3,014,508 |   |
|                                                      |   |   |       |   |   |   |   |   |
|                                                      |   |   |       |   |   |   |   |   |
|                                                      |   |   |       |   |   |   |   |   |
|                                                      |   |   |       |   |   |   |   |   |

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|                                                                            |   | 2010   |       |   | 2009   |   |
|---------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Capital contributions paid to Local Limited Partnerships and purchase           |   |   |       |   |   |   |
| price paid to withdrawing partners of Local Limited Partnerships                |   | $      | 3,597,307  |   |   | $      | 8,855,847 |   |
|                                                                            |   |   |       |   |   |   |   |   |
| Cumulative equity in losses of Local Limited Partnerships                       |   |   |       |   |   |   |   |   |
|   (excluding  cumulative unrecognized losses of $43,275,556 |   |   |       |   |   |   |   |   |
|   and $58,573,097 at March 31, 2010 and 2009, respectively)           |   |   | (3,664,427 | )      |   |   | (6,655,895 | ) |
|                                                                            |   |   |       |   |   |   |   |   |
| Cumulative cash distributions received from Local Limited Partnerships          |   |   | -          |   |   |   | (954,292 | ) |
|                                                                            |   |   |       |   |   |   |   |   |
| Investments in Local Limited Partnerships before adjustments                    |   |   | (67,120    | )      |   |   | 1,245,660 |   |
|                                                                            |   |   |       |   |   |   |   |   |
| Excess investment costs over the underlying assets acquired:                    |   |   |       |   |   |   |   |   |
|                                                                            |   |   |       |   |   |   |   |   |
| Acquisition fees and expenses                                                   |   |   | 75,142     |   |   |   | 189,984 |   |
|                                                                            |   |   |       |   |   |   |   |   |
| Cumulative amortization of acquisition fees and expenses                        |   |   | (8,022     | )      |   |   | (54,168 | ) |
|                                                                            |   |   |       |   |   |   |   |   |
| Investments in Local Limited Partnerships before valuation allowance            |   |   | -          |   |   |   | 1,381,476 |   |
|                                                                            |   |   |       |   |   |   |   |   |
| Valuation allowance on investments in Local Limited Partnerships                |   |   | -          |   |   |   | (1,381,476 | ) |
|                                                                            |   |   |       |   |   |   |   |   |
| Investments in Local Limited Partnerships                                       |   | $      | -          |   |   | $      | - |   |

----

|                                       |   | 2009   |        |   | 2008   |   |
|--------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Assets:                                    |   |   |        |   |   |   |
| Investment property, net                   |   | $      | 202,452     |   |   | $      | 13,584,238 |   |
| Other assets                               |   |   | 184,860     |   |   |   | 2,760,691 |   |
| Total Assets                               |   | $      | 387,312     |   |   | $      | 16,344,929 |   |
|                                       |   |   |        |   |   |   |   |   |
| Liabilities and Partners' Deficiency:      |   |   |        |   |   |   |   |   |
| Mortgage notes payable                     |   | $      | 32,950,984  |   |   | $      | 55,103,902 |   |
| Other liabilities                          |   |   | 10,855,348  |   |   |   | 18,835,142 |   |
| Total Liabilities                          |   |   | 43,806,332  |   |   |   | 73,939,044 |   |
|                                       |   |   |        |   |   |   |   |   |
| Partnership's deficiency                   |   |   | (43,394,877 | )      |   |   | (57,398,504 | ) |
| Other partners' deficiency                 |   |   | (24,143     | )      |   |   | (195,611 | ) |
| Total Partners' Deficiency                 |   |   | (43,419,020 | )      |   |   | (57,594,115 | ) |
| Total Liabilities and Partners' Deficiency |   | $      | 387,312     |   |   | $      | 16,344,929 |   |

|                                       |   | 2009   |       |   | 2008   |   |
|--------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                       |   |   |       |   |   |   |
| Rental and other income                    |   | $      | 15,722,263 |   |   | $      | 8,258,265 |   |
|                                       |   |   |       |   |   |   |   |   |
| Expenses:                                  |   |   |       |   |   |   |   |   |
| Operating                                  |   |   | 2,076,890  |   |   |   | 5,373,724 |   |
| Interest                                   |   |   | 2,919,395  |   |   |   | 3,394,292 |   |
| Depreciation and amortization              |   |   | 902,663    |   |   |   | 1,149,544 |   |
| Total Expenses                             |   |   | 5,898,948  |   |   |   | 9,917,560 |   |
|                                       |   |   |       |   |   |   |   |   |
| Net Income (Loss)                          |   | $      | 9,823,315  |   |   | $      | (1,659,295 | ) |
|                                       |   |   |       |   |   |   |   |   |
| Partnership's share of Net Income (Loss)   |   | $      | 9,842,590  |   |   | $      | (1,816,529 | ) |
| Other partners' share of Net Income (Loss) |   | $      | (19,275    | )      |   | $      | 157,234 |   |

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|                                                                     |   | 2010   |        |   | 2009   |   |
|--------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                                     |   |   |        |   |   |   |
| Net Income per financial statements                                      |   | $      | 31,280      |   |   | $      | 1,539,139 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Equity in income/losses of Local Limited Partnerships for                |   |   |        |   |   |   |   |   |
| financial reporting purposes in excess of equity in losses for           |   |   |        |   |   |   |   |   |
|     tax purposes                                     |   |   | (12,071,244 | )      |   |   | 56,240 |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Recognition of previously unrecognized equity in losses of Local Limited |   |   |        |   |   |   |   |   |
| Partnerships recognized for financial reporting purposes,                |   |   |        |   |   |   |   |   |
|    net of current year unrecognized losses                |   |   | 9,842,590   |   |   |   | - |   |
|                                                                     |   |   |        |   |   |   |   |   |
| Equity in Losses of Local Limited Partnerships not recognized            |   |   |        |   |   |   |   |   |
| for financials reporting purposes, net of current year                   |   |   |        |   |   |   |   |   |
|     recognition of previously unrecognized losses    |   |   | -           |   |   |   | (2,718,332 | ) |
|                                                                     |   |   |        |   |   |   |   |   |
| Adjustment to reflect March 31 fiscal year end to December 31            |   |   |        |   |   |   |   |   |
| taxable year end                                                         |   |   | (12,001     | )      |   |   | (21,715 | ) |
|                                                                     |   |   |        |   |   |   |   |   |
| Gain on sale of investments in Local Limited Partnerships for            |   |   |        |   |   |   |   |   |
| financial reporting purposes in excess of gain/loss on sale for          |   |   |        |   |   |   |   |   |
| tax purposes                                                             |   |   | 15,331,118  |   |   |   | (941,043 | ) |
|                                                                     |   |   |        |   |   |   |   |   |
| Net Income (Loss)  per tax return                              |   | $      | 13,121,743  |   |   | $      | (2,085,711 | ) |
|                                                                     |   |   |        |   |   |   |   |   |
|                                                                     |   |   |        |   |   |   |   |   |

|                                      |   | Financial |    |   |     |   |        |        |   |
|-------------------------------------------|--------|-----------|---------|--------|----------|--------|-------------|-------------|--------|
|                                      |   | Reporting |    |   | Tax      |   |        |        |   |
|                                      |   | Purposes  |    |   | Purposes |   |        | Differences |   |
|                                      |   |      |    |   |     |   |        |        |   |
| Investments in Local Limited Partnerships |   | $         | -       |   |     | $      | (39,123,531 | )           |   | $ | 39,123,531 |   |
| Other assets                              |   | $         | 382,008 |   |     | $      | 12,278,081  |        |   | $ | (11,896,073 | ) |
| Liabilities                               |   | $         | 46,110  |   |     | $      | 50,745      |        |   | $ | (4,635 | ) |

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|                                      |   | Financial |      |   |     |   |        |        |   |
|-------------------------------------------|--------|-----------|-----------|--------|----------|--------|-------------|-------------|--------|
|                                      |   | Reporting |      |   | Tax      |   |        |        |   |
|                                      |   | Purposes  |      |   | Purposes |   |        | Differences |   |
|                                      |   |      |      |   |     |   |        |        |   |
| Investments in Local Limited Partnerships |   | $         | -         |   |     | $      | (52,221,180 | )           |   | $ | 52,221,180 |   |
| Other assets                              |   | $         | 3,014,508 |   |     | $      | 14,880,889  |        |   | $ | (11,866,381 | ) |
| Liabilities                               |   | $         | 83,267    |   |     | $      | 77,297      |        |   | $ | 5,970 |   |

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