UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K/A



(Mark
One)



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



For
the fiscal year ended March 31, 2014



OR



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



For
the transition period from ___________ to _____________



Commission
file number: 0-23908



WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(Exact
name of registrant as specified in its charter)



|California                                   | 33-0531301             
|-------------------------------------------- | -----------------------
|(State
    or other jurisdiction of          | (I.R.S.
    Employer   
|incorporation
    or organization)           | Identification
    No.)
|                                             |                        
|17782
    Sky Park Circle                    |                        
|Irvine,
    CA                               | 92614-6404             
|(Address
    of principal executive offices) | (Zip
    Code)         



(714)
662-5565

(Telephone
number)



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



NONE



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



UNITS
OF LIMITED PARTNERSHIP INTEREST

(Title
of Class)



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[  ] No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes
[  ] No [X]



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes
[X] No [  ]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes
[X] No [  ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]



Indicate
by check mark whether the registrant is 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.



Large
accelerated filer  [  ]  Accelerated filer  [  ]  Non-accelerated
filer  [X]  Smaller reporting company  [  ]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes
[  ] No [X]



State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second fiscal quarter.



INAPPLICABLE



DOCUMENTS
INCORPORATED BY REFERENCE



List
hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3)
Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described
for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).



NONE




















EXPLANATORY NOTE



This Amendment is being filed
for the purpose of including disclosure in Item 3, Legal Proceedings, at internal page 19, which was inadvertently omitted from
Item 3 in the initial filing, and to refer to the legal proceeding on page 6, and F-10. Except for these corrections, there have
been no changes in any of the financial or other information contained in the report. For convenience, the entire Annual Report
on Form 10-K, as amended, is being re-filed.





2









TABLE
OF CONTENTS



|            |                                                                                                                  |    | Page
|----------- | ---------------------------------------------------------------------------------------------------------------- | -- | ----
|            |                                                                                                                  |    |     
|Part
    I 
|Item 1.     | Business                                                                                                         |    | 4   
|Item 1A.    | Risk
    Factors                                                                                                 |    | 7   
|Item 1B.    | Unresolved
    Staff Comments                                                                                    |    | 14  
|Item 2.     | Properties                                                                                                       |    | 14  
|Item 3.     | Legal
    Proceedings                                                                                            |    | 19  
|Item
    4. | Mining
    Safety Disclosure                                                                                     |    | 19  
|           
|Part II    
|Item 5.     | Market
    for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |    | 20  
|Item 6.     | Selected
    Financial Data                                                                                      |    | 20  
|Item 7.     | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations                        |    | 21  
|Item 7A.    | Quantitative
    and Qualitative Disclosures About Market Risk                                                   |    | 26  
|Item 8.     | Financial
    Statements and Supplementary Data                                                                  |    | 27  
|Item 9.     | Changes
    in and Disagreements with Accountants on Accounting and Financial Disclosure                         |    | 28  
|Item 9A.    | Controls
    and Procedures                                                                                      |    | 28  
|Item 9B.    | Other
    Information                                                                                            |    | 29  
|           
|Part III   
|Item 10.    | Directors,
    Executive Officers and Corporate Governance                                                       |    | 30  
|Item 11.    | Executive
    Compensation                                                                                       |    | 33  
|Item 12.    | Security
    Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |    | 35  
|Item 13.    | Certain
    Relationships and Related Transactions, and Director Independence                                    |    | 35  
|Item 14.    | Principal
    Accounting Fees and Services                                                                       |    | 35  
|           
|Part IV    
|Item 15.    | Exhibits
    and Financial Statement Schedules                                                                   |    | 36  
|Signatures  |                                                                                                                  | 43



3







PART
I.



Item
1. Business



Organization



WNC
California Housing Tax Credits III, L.P. (the “Partnership”) is a California limited partnership formed under the
laws of the State of California on October 5, 1992. The Partnership was formed to acquire limited partnership interests in other
limited partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing
Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).
The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility
for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited
partnership or operating agreement (the “Local Limited Partnership Agreement”).



The
general partner of the Partnership is WNC California Tax Credits Partners III, L.P. (the “General Partner”). WNC &
Associates, Inc. (“Associates”) is the general partner of WNC Tax Credit Partners III, L.P. The chairman and president
of Associates owns all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through
Associates, as the Partnership has no employees of its own.



Pursuant
to a registration statement filed with the Securities and Exchange Commission (“SEC”), on February 17, 1993, the Partnership
commenced a public offering of 30,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000
per Partnership Unit. As of the close of the public offering on July 22, 1994, a total of 18,000 Partnership Units representing
$18,000,000 had been sold. As of March 31, 2014, a total of 17,917 Partnership Units remain outstanding. Holders of Partnership
Units are referred to herein as “Limited Partners.”



The
Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the
Partnership Agreement (as defined below) or law.



Description
of Business



The
Partnership’s principal business objective was to provide its Limited Partners with Low Income Housing Tax Credits. The
Partnership’s principal business therefore consisted of investing as a limited partner or non-managing member in Local Limited
Partnerships each of which owned and operated a Housing Complex which qualified for the Low Income Housing Tax Credits. In general,
under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to
be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15-year
compliance period (the “Compliance Period”), and under state law may have to be maintained as low income housing for
30 or more years.



4







As
a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture
of Low Income Housing Tax Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships
(“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex
prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would
be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect
at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy”
below) and (ii) to eliminate the possibility of posting a bond against potential recapture. The Partnership is seeking to sell
its Local Limited Partnership Interests. Nonetheless, because of (i) the nature of the Housing Complexes and the Local Limited
Partnership Interests, (ii) the difficulty of predicting the resale market for low income housing, (iii) the current economy,
and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation
of the Partnership’s assets and the disposition of the proceeds, if any, in accordance with the Partnership’s Agreement
of Limited Partnership dated October 5, 1992 (the “Partnership Agreement”), will be accomplished in the near term.
Furthermore, the codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about
the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have
an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests. If a Local Limited Partnership
Interest or the related Housing Complex is not sold, it is anticipated that the Local General Partner would continue to operate
such Housing Complex.



The
Partnership originally invested in eighteen Local Limited Partnerships, seventeen of which have been sold or otherwise disposed
of as of March 31, 2014. Each of these Local Limited Partnerships owns or owned a Housing Complex all of which were eligible for
the Federal Low Income Housing Tax Credit and eight of them were eligible for the California Low Income Housing Tax Credit. Certain
Local Limited Partnerships may also benefit from additional government programs promoting low- or moderate-income housing.



Exit
Strategy



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



Upon
the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no
recapture of Low Income Housing Tax Credits. The Compliance Period has ended for each of the Partnership’s remaining Housing
Complexes as of March 31, 2014.



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



Upon
identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them or the applicable Local Limited Partnership Interests. The objective is to wind
down the Partnership as Low Income Housing Tax Credits are no longer available. Local Limited Partnership Interests may be disposed
of at any time by the General Partner in its discretion. While liquidation of the Housing Complexes or the applicable Local Limited
Partnership Interests continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, 2014.



The
proceeds from the disposition of any Housing Complex will be used first to pay debts and other obligations per the applicable
Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership,
including the Partnership, in accordance with the terms of the applicable Local Limited Partnership Agreement.



5







The
sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a
Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any amounts
of cash will be distributed to the Limited Partners, as the proceeds first would be used to pay Partnership obligations and to
fund reserves. Similarly, there can be no assurance that the Partnership will be able to sell its Local Limited Partnership Interests,
or that cash therefrom would be available for distribution to the Limited Partners.



As
of March 31, 2013, the Partnership sold its Local Limited Partnership Interest in Rosewood Apartments L.P., Venus Retirement Village,
Ltd, Winters Investment Group, Parlier Garden Apartments, L.P., Tahoe Pines Apartments, L.P., Candleridge Apartments of Perry
L.P. II, Nueva Sierra Vista Associates, L.P., Walnut – Pixley, L.P., Orosi Apartments, Ltd., Memory Lane, L.P., Sun Manor,
L.P., Almond Garden Apartment Associates, Buccaneer Villas, Limited, Dallas County Housing, Ltd. and Old Fort Limited Partnership.



The
following table reflects the 2 Local Limited Partnership interests that were sold during the year ended March 31, 2014. No distributions
were made to the Limited Partners as a result of these dispositions. Each of the Local Limited Partnerships had completed its
Compliance Period so there is no risk of recapture to the investors in the Partnership.



|Local
    Limited Partnership     |  | Debt
    at 12/31 prior to sale date |           |  | Appraisal
    Value |   |         | Date
    of Sale |  |  | Sales
    Proceeds |  |  | Actual
    Sale Related Expenses |        |  | Gain
    (loss) on sale |  
|--------------------------------- |  | ------------------------------------ | --------- |  | ------------------- | - | ------- | ---------------- |  |  | ------------------ |  |  | -------------------------------- | ------ |  | ----------------------- | -
|Almond View Apartments, Limited   |  | $                                    | 1,617,000 |  |                     | $ | 295,000 |                  |  |  | 7/31/2013          |  |  | $                                | 2,500  |  |                         | $
|La Paloma del Sol, Phase II, L.P. |  |                                      | 1,336,000 |  |                     |   | 810,000 |                  |  |  | 8/31/2013          |  |  |                                  | 10,000 |  |                         |  



The
following table represents the use of the cash proceeds from the dispositions of the Local Limited Partnership interests that
were disposed of during the year ended March 31, 2014:



|Local
    Limited Partnership     |  | Cash
    Proceeds |        |  | Reimburse
    GP or affiliates for expenses |   |       | Payment
    of accrued asset management fees |  |   | Remaining
    cash to remain in reserves for future expenses |  |  | Cash
    distribution to investors |      
|--------------------------------- |  | ----------------- | ------ |  | ------------------------------------------- | - | ----- | -------------------------------------------- |  | - | ------------------------------------------------------------ |  |  | ---------------------------------- | -----
|Almond View Apartments, Limited   |  | $                 | 2,500  |  |                                             | $ | -     |                                              |  | $ | -                                                            |  |  | $                                  | 2,500
|La Paloma del Sol, Phase II, L.P. |  |                   | 10,000 |  |                                             |   | 2,441 |                                              |  |   | -                                                            |  |  |                                    | 7,559



As of March 31, 2014, the Local Limited Partnership
Interest in Colonial Village Roseville was identified to be sold. Colonial Village Roseville was appraised for $2,590,000 and
had a mortgage note balance of $1,408,000 as of December 31, 2013. The Partnership’s investment balance is zero. The Compliance
Period has been completed therefore there is no risk of recapture. The sales price has yet
been determined. The Local General Partner prevented a sale from moving forward and the Partnership filed suit to force the sale. 
The Court will identify appraisers to appraise the property and recommend a sales price to proceed.  The sale is not expected
to be concluded this calendar year.





6







Item
1A. Risk Factors



Set
forth below are the risks the Partnership believes are the most significant to the Limited Partners. The Partnership and the Local
Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time.
This section contains some forward-looking statements. For an explanation of the qualifications and limitations on forward-looking
statements, see Item 7.



| | a. | Risks
                                         arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits
| | -- | ------------------------------------------------------------------------------------------------------------------------------------



Sales
of Housing Complexes are subject to limitations which may impact a Local Limited Partnership’s ability to sell its Housing
Complex. Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing
Complex is located. The extended low income housing commitment states the number of years that the Local Limited Partnership and
any subsequent owners must rent the Housing Complex as low income housing. Under Federal law, the commitment must be for at least
30 years. The commitment, actually agreed to, may be significantly longer than 30 years. In prioritizing applicants for Low Income
Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years. On any sale of the Housing
Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income
housing for the duration of the commitment period. This requirement reduces the potential market, and possibly the sales price,
for the Housing Complexes. The sale of a Housing Complex may be subject to other restrictions. For example, Federal lenders or
subsidizers may have the right to approve or disapprove a purchase of a Housing Complex. Accordingly, there can be no assurance
that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that
any amount of cash will be distributed to the Limited Partners. The Partnership would first use sale proceeds to pay obligations
of the Partnership. As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money
originally invested in the Partnership.



As
part of the recently enacted health care legislation, Congress has codified the economic substance doctrine. Because of its recent
enactment, the full reach of this provision is unclear. Inasmuch as Housing Complexes might offer no benefit to a purchaser other
than tax benefits, it is possible that the economic substance doctrine could be interpreted to limit deduction of tax losses from
Housing Complexes, which would be expected to have a significant adverse effect on the sale value of the Housing Complexes and
the Local Limited Partnership Interests.



| | b. | Risks
                                         related to investment in Local Limited Partnerships and Housing Complexes
| | -- | ------------------------------------------------------------------------------------------------------------------------



Because
the Partnership has few investments, each investment will have a great impact on the Partnership’s results of operations.Any single Housing Complex experiencing poor operating performance, or impairment of value will have a significant impact
upon the Partnership as a whole.



The
failure to pay mortgage debt could result in a forced sale of a Housing Complex. Each Local Limited Partnership leverages
the Partnership’s investment therein by incurring mortgage debt. A Local Limited Partnership’s revenues could be less
than its debt payments and taxes and other operating costs. If so, the Local Limited Partnership would have to use working capital
reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure. The same results
could occur if government subsidies ceased. Foreclosure would result in a loss of the Partnership’s capital invested in
the Housing Complex. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely
affect the Local Limited Partnership’s ability to pay its debt service requirements. Mortgage debt may be repayable in a
self-amortizing series of equal installments or with a large balloon final payment. Balloon payments maturing prior to the end
of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There
can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or
at all.



7







The
Partnership does not control the Local Limited Partnerships and must rely on the Local General Partners. The Local General
Partners will make all management decisions for the Local Limited Partnerships and the Housing Complexes. The Partnership has
very limited rights with respect to management of the Local Limited Partnerships. The Partnership will not be able to exercise
any control with respect to Local Limited Partnership business decisions and operations. Consequently, the success of the Partnership
will depend on the abilities of the Local General Partners.



Housing
Complexes subsidized by other government programs are subject to additional rules which may make it difficult to operate and sell
Housing Complexes. Some or all of the Housing Complexes receive or may receive government financing or operating subsidies
in addition to Low Income Housing Tax Credits. The following are risks associated with some such subsidy programs:



| | ● | Obtaining
                                         tenants for the Housing Complexes. Government regulations limit the types of people who
                                         can rent subsidized housing. These regulations may make it more difficult to rent the
                                         residential units in the Housing Complexes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Obtaining
                                         rent increases. In many cases rents can only be increased with the prior approval of
                                         the subsidizing agency.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limitations
                                         on cash distributions. The amount of cash that may be distributed to owners of subsidized
                                         Housing Complexes is less than the amount that could be earned by the owners of non-subsidized
                                         Housing Complexes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limitations
                                         on sale or refinancing of the Housing Complexes. A Local Limited Partnership may be unable
                                         to sell its Housing Complex or to refinance its mortgage loan without the prior approval
                                         of the lender or state allocating agency. The lender or state allocating agency may withhold
                                         such approval in the discretion of the lender or state allocating agency. Approval may
                                         be subject to conditions, including the condition that the purchaser continues to operate
                                         the property as affordable housing for terms which could be as long as 30 years or more.
                                         In addition, any prepayment of a mortgage may result in the assessment of a prepayment
                                         penalty.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limitations
                                         on transfers of interests in Local Limited Partnerships. The Partnership may be unable
                                         to sell its interest in a Local Limited Partnership without the prior approval of the
                                         lender or state allocating agency. The lender or state allocating agency may withhold
                                         such approval in the discretion of the lender or state allocating agency. Approval may
                                         be subject to conditions.                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limitations
                                         on removal and admission of Local General Partners. The Partnership may be unable to
                                         remove a Local General Partner from a Local Limited Partnership except for cause, such
                                         as the violation of the rules of the lender or state allocating authority. Regulations
                                         may prohibit the removal of a Local General Partner or permit removal only with the prior
                                         approval of the lender. Regulations may also require approval of the admission of a successor
                                         Local General Partner even upon the death or other disability of a Local General Partner.                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limitations
                                         on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative
                                         appropriations. The rental revenues of a Housing Complex, when combined with the maximum
                                         committed subsidy, may be insufficient to meet obligations. Congress or the state legislature,
                                         as the case may be, may fail to appropriate or increase the necessary subsidy. In those
                                         events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement
                                         could be negotiated.                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Possible
                                         changes in applicable regulations. Legislation may be enacted which adversely revises
                                         provisions of outstanding mortgage loans. Such legislation has been enacted in the past.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ● | Limited
                                         Partners may not receive distributions if Housing Complexes are sold. There is no assurance
                                         that Limited Partners will receive any cash distributions from the sale or refinancing
                                         of a Housing Complex. The price at which a Housing Complex is sold may not be high enough
                                         to pay the mortgage and other expenses at the Local Limited Partnership and Partnerships
                                         levels which must be paid at such time. If that happens, a Limited Partner’s return
                                         would be derived only from the Low Income Housing Tax Credits and tax losses. Similar
                                         risks apply to sales of Local Limited Partnership Interests.                                                                                           



8







Uninsured
casualties could result in losses and recapture. There are casualties which are either uninsurable or not economically insurable.
These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters. If a Housing Complex
experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property.
Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property. A
portion of prior Low Income Housing Tax Credits could be recaptured and future Low Income Housing Tax Credits could be lost if
the Housing Complex were not restored within a reasonable period of time. Any liability judgments against the Local Limited Partnership
could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost
of liability and casualty insurance has increased in recent years. Casualty insurance has become more difficult to obtain and
may require large deductible amounts.



Housing
Complexes without financing or operating subsidies may be unable to pay operating expenses. If a Local Limited Partnership
were unable to pay operating expenses, one result could be a forced sale of its Housing Complex. If a forced sale occurs during
the Compliance Period of a Housing Complex, a partial recapture of Low Income Housing Tax Credits could occur. In this regard,
some of the Local Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits.
Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are
important to the feasibility of low income housing. Those Housing Complexes rely solely on rents to pay expenses. However, in
order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged
to tenants. Over time, the expenses of a Housing Complex will increase. If a Local Limited Partnership cannot increase its rents,
it may be unable to pay increased operating expenses.



The
Partnership’s investment protection policies will be worthless if the net worth of the Local General Partners is not sufficient
to satisfy their obligations. There is a risk that the Local General Partners will be unable to perform their financial obligations
to the Partnership. The General Partner has not established a minimum net worth requirement for the Local General Partners. Rather,
at the time of the Partnership’s investment, each Local General Partner demonstrated a net worth which the General Partner
believed was appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of
real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types
of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make
to the Partnership. Moreover, other creditors may have claims on these assets. No escrow accounts or other security arrangements
will be established to ensure performance of a Local General Partner’s obligations. The cost to enforce a Local General
Partner’s obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have
no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership.



Fluctuating
economic conditions can reduce the value of real estate. The Partnership’s principal business objective is providing
its Limited Partners with Low Income Housing Tax Credits, not the generation of gains from the appreciation of real estate held
by the Local Limited Partnerships. In its financial statements, the Partnership has carried its investments in Local Limited Partnerships
at values equal to or less than the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to
be allocated to the Partnership and the estimated residual value to the Partnership of its interests in the Local Limited Partnerships.



Any
investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the
ability to realize a profit or even to recover invested capital. Among these conditions are:



| | ● | the
                                         general and local job market,                
| | - | ------------------------------------------------------------------------------------------
| |   |                                                                                           
| | ● | the
                                         availability and cost of mortgage financing, 
| |   |                                                                                           
| | ● | monetary
                                         inflation,                              
| |   |                                                                                           
| | ● | tax,
                                         environmental, land use and zoning policies,
| |   |                                                                                           
| | ● | the
                                         supply of and demand for similar properties, 
| |   |                                                                                           
| | ● | neighborhood
                                         conditions,                         
| |   |                                                                                           
| | ● | the
                                         availability and cost of utilities and water.



9







| | c. | Tax
                                         risks other than those relating to tax credits
| | -- | -------------------------------------------------------------------------------------------



In
addition to the risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks. Additional
Federal income tax risks associated with the ownership of Partnership Units and the operations of the Partnership and the Local
Limited Partnerships include, but are not limited to, the following:



No
opinion of counsel as to certain matters. No legal opinion is obtained regarding matters:



| | ● | the
                                         determination of which depends on future factual circumstances,
| | - | ------------------------------------------------------------------------------------------------------------
| |   |                                                                                                             
| | ● | which
                                         are peculiar to individual Limited Partners, or              
| |   |                                                                                                             
| | ● | which
                                         are not customarily the subject of an opinion.               



The
more significant of these matters include:



| | ● | allocating
                                         purchase price among components of a property, particularly as between buildings and
                                         fixtures, the cost of which is depreciable, and the underlying land, the cost of which
                                         is not depreciable,                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | ● | characterizing
                                         expenses and payments made to or by the Partnership or a Local Limited Partnership,                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | ● | identifying
                                         the portion of the costs of any Housing Complex which qualify for historic and other
                                         tax credits, and                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | ● | applying
                                         to any specific Limited Partner the limitation on the use of tax credits and tax losses.
                                         Limited Partners must determine for themselves the extent to which they can use tax credits
                                         and tax losses, and                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | ● | the
                                         application of the alternative minimum tax to any specific Limited Partner, or the calculation
                                         of the alternative minimum tax by any Limited Partner. The alternative minimum tax could
                                         reduce the tax benefits from an investment in the Partnership



There
can be no assurance, therefore, that the IRS will not challenge some of the tax positions adopted by the Partnership. The courts
could sustain an IRS challenge. An IRS challenge, if successful, could have a detrimental effect on the Partnership’s ability
to realize its investment objectives.



Passive
activity rules will limit deduction of the Partnership’s losses and impose tax on interest income.The Internal Revenue
Code imposes limits on the ability of most investors to claim losses from investments in real estate. An individual may claim
these so-called passive losses only as an offset to income from investments in real estate or rental activities. An individual
may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest. These
passive activity rules will restrict the ability of most Limited Partners to use losses from the Partnership as an offset of non-passive
income.



The
Partnership may earn interest income on its reserves and loans. The passive activity rules generally will categorize interest
as portfolio income, and not passive income. Passive losses cannot be used as an offset to portfolio income. Consequently, a Limited
Partner could pay tax liability on portfolio income from the Partnership.



At
risk rules might limit deduction of the Partnership’s losses. If a significant portion of the financing used to purchase
Housing Complexes does not consist of qualified nonrecourse financing, the “at risk” rules will limit a Limited Partner’s
ability to claim Partnership losses to the amount the Limited Partner invests in the Partnership. The “at risk” rules
of the Internal Revenue Code generally limit a Limited Partner’s ability to deduct Partnership losses to the sum of:



| | ● | the
                                         amount of cash the Limited Partner invests in the Partnership, and     
| | - | --------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                     
| | ● | the
                                         Limited Partner’s share of Partnership qualified nonrecourse financing.



Qualified
nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person
actively and regularly engaged in the business of lending money.



10







Tax
liability on sale of Housing Complex or Local Limited Partnership Interest may exceed the cash available from the sale. When
a Local Limited Partnership sells a Housing Complex it will recognize gain. Such gain is equal to the difference between:



| | ● | the
                                         sales proceeds plus the amount of indebtedness secured by the Housing Complex, and                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                            
| | ● | the
                                         adjusted basis for the Housing Complex. The adjusted basis for a Housing Complex is its
                                         original cost, plus capital expenditures, minus depreciation.



Similarly,
when the Partnership sells an interest in a Local Limited Partnership the Partnership will recognize gain. Such gain is equal
to the difference between:



| | ● | the
                                         sales proceeds plus the Partnership’s share of the amount of indebtedness secured
                                         by the Housing Complex, and                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                              
| | ● | the
                                         adjusted basis for the interest. The adjusted basis for an interest in a Local Limited
                                         Partnership is the amount paid for the interest, plus income allocations and cash distributions,
                                         less loss allocations.



Accordingly,
gain will be increased by the depreciation deductions taken during the holding period for the Housing Complex. In some cases,
a Limited Partner could have a tax liability from a sale greater than the cash distributed to the Limited Partner from the sale.



IRS
could audit the returns of the Partnership, the Local Limited Partnerships or the Limited Partners. The IRS can audit the
Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity. The IRS does not have
to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership. Similarly,
only one judicial proceeding can be filed to contest an IRS determination. A contest by the Partnership of any IRS determination
might result in high legal fees.



An
audit of the Partnership or a Local Limited Partnership also could result in an audit of a Limited Partner. An audit of a
Limited Partner’s tax returns could result in adjustments both to items that are related to the Partnership and to unrelated
items. The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.



A
successful IRS challenge to tax allocations of the Partnership or a Local Limited Partnership would reduce the tax benefits of
an investment in the Partnership.Under the Internal Revenue Code, a partnership’s allocation of income, gains, deductions,
losses and tax credits must have substantial economic effect. Substantial economic effect is a highly-technical concept. The fundamental
principle is two-fold. If a partner will benefit economically from an item of partnership income or gain, that item must be allocated
to him so that he bears the correlative tax burden. Conversely, if a partner will suffer economically from an item of partnership
deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit. If a partnership’s allocations
do not have substantial economic effect, then the partnership’s tax items are allocated in accordance with each partner’s
interest in the partnership. The IRS might challenge the allocations made by the Partnership:



| | ● | between
                                         the Limited Partners and the General Partner,
| | - | ----------------------------------------------------------------------------------------------
| |   |                                                                                               
| | ● | among
                                         the Limited Partners, or                       
| |   |                                                                                               
| | ● | between
                                         the Partnership and a Local General Partner. 



If
any allocations were successfully challenged, a greater share of the income or gain or a lesser share of the losses or tax credits
might be allocated to the Limited Partners. This would increase the tax liability or reduce the tax benefits to the Limited Partners.



11







Tax
liabilities could arise in later years of the Partnership. After a period of years following commencement of operations by
a Local Limited Partnership, the Local Limited Partnership may generate profits rather than losses. A Limited Partner would have
tax liability on his share of such profits unless he could offset the income with:



| | ● | unused
                                         passive losses from the Partnership or other investments, or
| | - | ------------------------------------------------------------------------------------------------------------
| |   |                                                                                                             
| | ● | current
                                         passive losses from other investments.                     



In
such circumstances, the Limited Partner would not receive a cash distribution from the Partnership with which to pay any tax liability.



IRS
challenge to tax treatment of expenditures could reduce losses. The IRS may contend that fees and payments of the Partnership
or a Local Limited Partnership:



| | ● | should
                                         be deductible over a longer period of time or in a later year,
| | - | --------------------------------------------------------------------------------------------------------------
| |   |                                                                                                               
| | ● | are
                                         excessive and may not be capitalized or deducted in full,        
| |   |                                                                                                               
| | ● | should
                                         be capitalized and not deducted, or                           
| |   |                                                                                                               
| | ● | may
                                         not be included as part of the basis for computing tax credits.  



Any
such contention by the IRS could adversely impact, among other things:



| | ● | the
                                         eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits,
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 
| | ● | the
                                         adjusted basis of a Housing Complex used to compute depreciation,                  
| |   |                                                                                                                                 
| | ● | the
                                         correct deduction of fees,                                                         
| |   |                                                                                                                                 
| | ● | the
                                         amortization of organization and offering expenses and start-up expenditures.      



If
the IRS were successful in any such contention, the anticipated Low Income Housing Tax Credits and losses of the Partnership would
be reduced, perhaps substantially.



Changes
in tax law might reduce the value of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits are allocated
to a Housing Complex at commencement of the 10-year credit period, there can be no assurance that future legislation may not adversely
affect an investment in the Partnership. For example, legislation could reduce or eliminate the value of Low Income Housing Tax
Credits. In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses. These tax
losses generally were used to reduce an investor’s income from all sources on a dollar-for-dollar basis. Investments in
low income housing were made in reliance on the availability of such tax benefits. However, tax legislation enacted in 1986 severely
curtailed deduction of such losses.



New
administrative or judicial interpretations of the law might reduce the value of Low Income Housing Tax Credits. Many of the
provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by
the IRS in regulations, rulings or public announcements, or by the courts. In the future, these provisions may be interpreted
or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships. The IRS constantly
reviews the Federal tax rules, and can revise its interpretations of established concepts. Any such revisions could reduce or
eliminate tax benefits associated with an investment in the Partnership.



State
income tax laws may adversely affect the Limited Partners. A Limited Partner may be required to file income tax returns and
be subject to tax and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located, the Partnership
or a Local Limited Partnership engages in business activities, or the Limited Partner is a resident. Corporate Limited Partners
may be required to pay state franchise taxes.



The
tax treatment of particular items under state or local income tax laws may vary materially from the Federal income tax treatment
of such items. Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also
apply under state or local income tax law. The Partnership may be required to withhold state taxes from distributions or income
allocations to Limited Partners in some instances.



12







| | d. | Risks
                                         related to the Partnership and the Partnership Agreement
| | -- | -------------------------------------------------------------------------------------------------------



The
Partnership may be unable to timely provide financial reports to the Limited Partners which would adversely affect their ability
to monitor Partnership operations.Historically, the Partnership has been unable to timely file and provide investors with
all of its required periodic reports. In some instances, the delay has been substantial. Each Local General Partner is required
to retain independent public accountants and to report financial information to the Partnership in a timely manner. There cannot
be any assurance that the Local General Partners will satisfy these obligations. If not, the Partnership would be unable to provide
to the Limited Partners in a timely manner its financial statements and other reports. That would impact the Limited Partners’
ability to monitor Partnership operations. The Partnership’s failure to meet its filing requirements under the Securities
Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning
the Partnership. The failure to file could also result in sanctions imposed by the SEC. Any defense mounted by the Partnership
in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.



Lack
of liquidity of investment. There is no public market for the purchase and sale of Partnership Units, and it is unlikely that
one will develop. Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price.
Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited
Partnership Interests for at least 15 years. Partnership Units cannot be transferred to tax-exempt or foreign entities, or through
a secondary market. The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from
the transfer. The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.



The
Limited Partners will not control the Partnership and must rely totally on the General Partner. The General Partner will make
all management decisions for the Partnership. Management decisions include exercising powers granted to the Partnership by a Local
Limited Partnership. Limited Partners have no right or power to take part in Partnership management.



Individual
Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority. The Partnership Agreement
grants to Limited Partners owning more than 50% of the Partnership Units the right to:



| | ● | remove
                                         the General Partner and elect a replacement general partner,
| | - | ------------------------------------------------------------------------------------------------------------
| |   |                                                                                                             
| | ● | amend
                                         the Partnership Agreement,                                   
| |   |                                                                                                             
| | ● | terminate
                                         the Partnership.                                         



Accordingly,
a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the
Partnership Units opposed such action.



Limitations
on liability of the General Partner to the Partnership. The ability of Limited Partners to sue the General Partner and its
affiliates is subject to limitations. The Partnership Agreement limits the liability of the General Partner and its affiliates
to the Limited Partners. The General Partner and its affiliates will not be liable to the Limited Partners for acts and omissions:
performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within
the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence
or misconduct.



Therefore,
Limited Partners may be less able to sue the General Partner and it affiliates than would be the case if such provisions were
not included in the Partnership Agreement.



Associates
and its affiliates are serving as the general partners of many other partnerships. Depending on their corporate area of responsibility,
the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership. These individuals spend
significantly less time devoted to the Partnership after the investment of the Partnership’s capital in Local Limited Partnerships.



13







The
interests of Limited Partners may conflict with the interests of the General Partner and its affiliates. The General Partner
and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to
those of the Partnership. The General Partner and its affiliates receive substantial compensation from the Partnership. The General
Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold.
The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions
from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The Partnership
has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary
duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in
all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial
restrictions as outlined in the Partnership Agreement.



Anticipated
future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates.



The
Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner. These asset
management fees payable increased (decreased) by approximately $19,000, $(87,000), and $(337,000), for the years ended March 31,
2014, 2013 and 2012, respectively. The Partnership’s future contractual cash obligations consist solely of its obligations
to pay future annual asset management fees. These will equal approximately $25,000 per year through the termination of the Partnership,
which must occur no later than December 31, 2050. Though the amounts payable to the General Partner and/or its affiliates are
contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the
payment of these contractual obligations until capital reserves are in excess of the aggregate of the existing contractual obligations
and anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General
Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this
or any other reason.



Associates
has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership
through June 30, 2015.



Item
1B. Unresolved Staff Comments



Not
Applicable



Item
2. Properties



Through
its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes. The
following table reflects the status of the one Housing Complex for which the Partnership had ownership during the year, as of
the dates or for the periods indicated:



14







WNC
California Housing Tax Credits III, L.P.



|                                   |  |                       |  |                                                                          |  | As
    of March 31, 2014                                         |           |  | As
    of December 31, 2013           |  
|---------------------------------- |  | --------------------- |  | ------------------------------------------------------------------------ |  | ---------------------------------------------------------------- | --------- |  | ------------------------------------- | -
|Local
    Limited Partnership Name |  | Location              |  | General
    Partner Name                                                 |  | Partnership’s
    Total Investment in Local Limited Partnerships |           |  | Amount
    of Investment Paid to Date |  
|                                   |  |                       |  |                                                                          |  |                                                                  |           |  |                                       |  
|Colonial Village Roseville (1)     |  | Roseville, California |  | S.P. Thomas Company of
    Northern California Inc. and Project Go, Inc. |  | $                                                                | 2,811,000 |  |                                       | $
|                                   |  |                       |  |                                                                          |  |                                                                  |           |  |                                       |  
|                                   |  |                       |  |                                                                          |  | $                                                                | 2,811,000 |  |                                       | $



| | (1) | The
                                         Local Limited Partnership interest has been identified for sale as of March 31, 2014.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



15







WNC
California Housing Tax Credits III, L.P.



|                                   |  | For
    the year ended December 31, 2013
|---------------------------------- |  | ----------------------------------------
|Local Limited
    Partnership Name |  | Rental
    Income                       
|                                   |  |                                         
|Colonial Village Roseville (1)     |  | $                                       
|                                   |  |                                         
|                                   |  | $                                       



N/A
– All of the Low Income Housing Tax Credits have been allocated to the Partnership and there are no future Low Income Housing
Tax Credits expected to be received.



| | (1) | The
                                         Local Limited Partnership interest has been identified for sale as of March 31, 2014.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



16







WNC
California Housing Tax Credits III, L.P.

March
31, 2014



|                                        |  |                          |  |                                                                          |  | Occupancy Rates        |    
|--------------------------------------- |  | ------------------------ |  | ------------------------------------------------------------------------ |  | ---------------------- | ---
|                                        |  |                          |  |                                                                          |  | As
    of December 31, |    
|Local
    Limited Partnership Name      |  | Location                 |  | General Partner
    Name                                                 |  | 2013                   |    
|                                        |  |                          |  |                                                                          |  |                        |    
|Almond Garden Apartment Associates      |  | Delhi, California        |  | Anthony Donovan                                                          |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Almond View Apartments, Ltd.            |  | Stockton, California     |  | Daniel C. Logue and Cyrus Youssefi                                       |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Buccaneer Associates, Limited           |  | Fernandia Beach, Florida |  | Clifford E. Olsen                                                        |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Candleridge Apartments of Perry L.P. II |  | Perry, Iowa              |  | Eric A. Sheldahl                                                         |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Colonial Village Roseville              |  | Roseville, California    |  | S.P. Thomas Company of Northern California Inc.
    and Project Go, Inc. |  |                        | 93 
|                                        |  |                          |  |                                                                          |  |                        |    
|Dallas County Housing, Ltd.             |  | Orrville, Alabama        |  | Thomas H. Cooksey and Apartment Developers,
    Inc.                     |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|La Paloma del Sol Limited Partnership   |  | Deming, New Mexico       |  | Dean Greenwalt                                                           |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Memory Lane Limited Partnership         |  | Yankton, South Dakota    |  | Skogen - Peterson, Inc.                                                  |  |                        | N/A
|                                        |  |                          |  |                                                                          |  |                        |    
|Nueva Sierra Vista Associates           |  | Richgrove, California    |  | Self-Help Enterprises, Inc. and Nueva Sierra
    Vista Corporation       |  |                        | N/A



17







WNC
California Housing Tax Credits III, L.P.

March
31, 2014







|                                            |  |                                  |  |                                                                                   |  | Occupancy
    Rates    |    
|------------------------------------------- |  | -------------------------------- |  | --------------------------------------------------------------------------------- |  | ---------------------- | ---
|                                            |  |                                  |  |                                                                                   |  | As
    of December 31, |    
|Local
    LimitedPartnership Name           |  | Location                         |  | General
    Partner Name                                                          |  | 2013                   |    
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Old
    Fort Limited Partnership            |  | Hidalgo,
    Texas               |  | Alan
    Deke Noftsker and ABO Corporation                                        |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Orosi
    Apartments, Ltd.                  |  | Orosi,
    California            |  | Douglas
    W. Young                                                              |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Parlier
    Garden Apts.                    |  | Parlier,
    California          |  | David
    J. Micheal and Professional Apartment Management, Inc.                  |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Rosewood
    Apartments Limited Partnership |  | Superior,
    Wisconsin          |  | Duffy
    Development Company, Inc.                                               |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Sun
    Manor, L.P.                         |  | Itta
    Bena, Mississippi       |  | Glenn
    D. Miller                                                               |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Tahoe
    Pines Apartments                  |  | South
    Lake Tahoe, California |  | David
    J. Michael, Bucky Fong, Dean Pearson, Coy Elvis and Dr. Patricia Hatton |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Venus
    Retirement Village, Ltd.          |  | Venus,
    Texas                 |  | W.
    Joseph Chamy                                                               |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Walnut
    - Pixley, L.P.                   |  | Orange,
    California           |  | Walnut
    - Pixley, Inc.                                                         |  |                        | N/A
|                                            |  |                                  |  |                                                                                   |  |                        |    
|Winters
    InvestmentGroup                 |  | Winters,
    California          |  | John
    P. Casper                                                                |  |                        | N/A
|                                            |  |                                  |  | Weighted
    Average                                                              |  |                        | 93 



N/A
- The Partnership sold its interest in the Local Limited Partnership prior to the respective year end.



18







Item
3. Legal Proceedings





The
Partnership is a limited partner in Colonial Village Roseville, a California limited partnership (“Colonial Roseville”).
Colonial Roseville owns and operates an apartment complex. Project GO, Incorporated (“Project GO”) is the general
partner of Colonial Roseville.



Notwithstanding
its prior indications to the contrary, Project GO refused to accept an offer to buy its general partner interest in Colonial Roseville,
and in Colonial Village Auburn, a California limited partnership (“Colonial Auburn”), the limited partnership interest
in which is owned by another investment fund sponsored by Associates. Rather, Project GO engaged counsel to issue threatening
letters to the Partnership. Consequently, the Partnership and the WNC investment fund that owns the limited partner interest in
Colonial Auburn have commenced litigation against Project GO.



On
September 3, 2013, Associates, the Partnership and the other investment fund sponsored by Associates filed with the Superior Court
of California, County of Placer, a Verified Complaint naming as defendants Project GO, Colonial Roseville, and Colonial Auburn.
The following as causes of action were included therein: breach of contract for failure to sell Project GO’s general partner
interests and for failure to dissolve Colonial Roseville and Colonial Auburn, dissolution of Colonial Roseville and Colonial Auburn,
breach of fiduciary duty, accounting, and appointment of receiver, and intentional interference. On October 24, 2013, Project
GO filed a motion to purchase the Colonial Roseville LP interest pursuant to California Corporations Code Section 15908.02. Under
this provision of California law, when one partner sues for dissolution, the other may seek a court order enabling the defendant
to purchase the interest of the plaintiff at fair market value as determined by three appraisers. Project GO’s motion to
pursue this remedy was approved by court order. In accordance with the court order, each of Project GO and the Partnership submitted
for the court’s consideration the names of three appraisers. Project GO also posted a bond with the court. The court has
selected one appraiser from each of the two lists and has identified a third appraiser. The three appraisers have been charged
by the court with determining a fair market value for the Colonia Roseville and the Colonial Auburn LP interests.



The
provisions of California Corporations Code Section 15908.02(d), (e) and (f) provide as follows:



(d)
The court shall appoint three disinterested appraisers to appraise the fair market value of the partnership interests owned by
the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining
that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers
or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree
that shall provide in the alternative for winding up and dissolution of the limited partnership unless payment is made for the
partnership interests within the time specified by the decree. If the purchasing parties do not make payment for the partnership
interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount
of the expenses, including attorneys' fees, of the moving parties. Any member aggrieved by the action of the court may appeal
therefrom.



(e)
If the purchasing parties desire to prevent the winding up and dissolution of the limited partnership, they shall pay to the moving
parties the value of their partnership interests ascertained and decreed within the time specified pursuant to this section, or,
in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer
their partnership interests to the purchasing parties.



(f)
For the purposes of this section, the valuation date shall be the date upon which the action for judicial dissolution was commenced.
However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the
valuation date.



In
light of the foregoing statute, the following alternative courses of action could result. The Partnership has been informed by
counsel that these are the most likely alternatives. The actual result will depend on the court and on actions taken by Project
GO and the Partnership as the court action progresses.



| | ● | Following
                                         the appraisal process, Project GO purchases the Partnership’s Colonial Roseville
                                         LP Interest for its appraised value established by court order.                                                                                                                                                                                                                                                                                         
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | Following
                                         the appraisal process, Project GO does not purchase the interest of the Partnership.
                                         Funds from the bond are paid to the Partnership to cover all or part of its legal costs.
                                         The court enters an order requiring the dissolution of Colonial Roseville. Colonial Roseville
                                         winds up its affairs under California law by selling its apartment complex.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ● | The
                                         court action is resolved by settlement.                                                                                                                                                                                                                                                                                                                                                                                                                                                 



Accordingly,
the ultimate resolution is at present uncertain, and the resolution may be some time in coming. No estimate of a timetable can
be provided at this time.







Item
4. Mine Safety Disclosures



NOT
APPLICABLE



19







PART
                                         II.



Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Item
5a.



|(a) | The
                                         Partnership Units are not traded on a public exchange but were sold through a public
                                         offering. It is not anticipated that any public market will develop for the purchase
                                         and sale of any Partnership Units and none exists. Partnership Units can be assigned
                                         or otherwise transferred only if certain requirements in the Partnership Agreement are
                                         satisfied.                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(b) | At
                                         March 31, 2014, there were 900 Limited Partners and 0 assignees of Partnership Units
                                         who were not admitted as Limited Partners.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(c) | The
                                         Partnership was not designed to provide operating cash distributions to Limited Partners.
                                         It is possible that the Partnership could make distributions from sale proceeds, if the
                                         Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes
                                         for more than the related closing costs and any then accrued obligations of the Partnership.
                                         There can be no assurance in this regard. Any distributions would be made in accordance
                                         with the terms of the Partnership Agreement. During the years ended March 31, 2014, 2013,
                                         and 2012 the Partnership did not make any cash distributions to the Limited Partners.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(d) | No
                                         securities are authorized for issuance by the Partnership under equity compensation plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(e) | The
                                         Partnership does not issue common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(f) | No
                                         unregistered securities were sold by the Partnership during the year ended March 31,
                                         2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



Item
5b. Use of Proceeds



NOT
APPLICABLE



Item
5c. Purchases of Equity Securities by the Issuer and Affiliated Purchasers



NONE



Item
6. Selected Financial Data



Selected
balance sheet information for the Partnership is as follows:



|                                                                |  | March
    31, |           
|--------------------------------------------------------------- |  | ------------- | ----------
|                                                                |  | 2014          |           
|                                                                |  |               |           
|ASSETS                                                          |  |               |           
|Cash                                                            |  | $             | 5,698     
|Other assets                                                    |  |               | 60,756    
|Investments in Local Limited Partnerships, net                  |  |               | -         
|                                                                |  |               |           
|Total Assets                                                    |  | $             | 66,454    
|                                                                |  |               |           
|LIABILITIES                                                     |  |               |           
|Accrued fees and expenses due to General Partner and affiliates |  | $             | 1,717,344 
|                                                                |  |               |           
|PARTNERS’ DEFICIT                                               |  |               | (1,650,890
|                                                                |  |               |           
|Total Liabilities and Partners’ Deficit                         |  | $             | 66,454    



Selected
results of operations, cash flows and other information for the Partnership are as follows:



|                                           |  | For the Years Ended March
    31, |        
|------------------------------------------ |  | --------------------------------- | -------
|                                           |  | 2014                              |        
|                                           |  |                                   |        
|Loss from operations                       |  | $                                 | (74,622
|Gain on sale of Local Limited Partnerships |  |                                   | 8,409  
|Interest income                            |  |                                   | 1      
|Net income
    (loss)                      |  | $                                 | (66,212
|                                           |  |                                   |        
|Net income (loss) allocated to:            |  |                                   |        
|General Partner                            |  | $                                 | (662   
|                                           |  |                                   |        
|Limited Partners                           |  | $                                 | (65,550
|                                           |  |                                   |        
|Net income
    (loss) per Partnership Unit |  | $                                 | (3.66  
|Outstanding
    weighted Partnership Units |  |                                   | 17,917 



20







|                                |  | For
    the Years Ended March 31, |        
|------------------------------- |  | --------------------------------- | -------
|                                |  | 2014                              |        
|Net cash provided by (used in): |  |                                   |        
|Operating activities            |  | $                                 | (19,781
|Investing activities            |  |                                   | 8,409  
|                                |  |                                   |        
|Net change in cash              |  |                                   | (11,372
|                                |  |                                   |        
|Cash, beginning of year         |  |                                   | 17,070 
|                                |  |                                   |        
|Cash, end of year               |  | $                                 | 5,698  



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



Forward
Looking Statements



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



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



Subsequent
written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified
in their entirety by cautionary statements in this Form 10-K and in other reports filed with the Securities and Exchange Commission.
The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere
in this filing.



Critical
Accounting Policies and Certain Risks and Uncertainties



The
Partnership believes that the following discussion addresses the Partnership’s most significant accounting policies, which
are the most critical to aid in fully understanding and evaluating the Partnership’s reported financial results, and certain
of the Partnership’s risks and uncertainties.



21







Use
of Estimates



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



Method
of Accounting for Investments in Local Limited Partnerships



The
Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership
adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions
made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership
for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of
such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management,
generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership
and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the
carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships,
generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments
are capitalized as part of the investment account and were being amortized over 27.5 years. (See Notes 2 and 3 to the financial
statements)



“Equity
in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the
twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses
from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would
be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying
the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the
equity method was suspended.



Distributions
received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received
after the investment has reached zero are recognized as distribution income.



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



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



22







Income
Taxes



The
Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income
taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on
their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal
status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through
entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities.
Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions
which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal
Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue
Service, tax years since 2010 remain open.



Impact
of Recent Accounting Pronouncements



In
May 2011, the FASB issued an update to existing guidance related to fair value measurements on how to measure fair value and what
disclosures to provide about fair value measurements. For fair value measurements categorized as level 3, a reporting entity should
disclose quantitative information of the unobservable inputs and assumptions, a description of the valuation processes and narrative
description of the sensitivity of the fair value to changes in unobservable inputs. This update is effective for interim and annual
periods beginning after December 15, 2011. The adoption of this update did not materially affect the Partnership’s financial
statements.



Certain
Risks and Uncertainties



See
Item 1A for a discussion of risks regarding the Partnership.



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



To
date, certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies. In
the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by
the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships.



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



Financial
Condition



The
Partnership’s assets at March 31, 2014 consisted of $6,000 in cash and $61,000 in other assets. Liabilities at March 31,
2014 consisted of $1,717,000 in accrued fees and expenses due to the General Partner and affiliates. (See “Future Contractual
Cash Obligations” below).



23







Results
of Operations



Year
Ended March 31, 2014 Compared to Year Ended March 31, 2013The Partnership’s net loss for the year ended March 31, 2014
was $(66,000), reflecting a decrease of $(84,000) from the net income of $18,000 for the year ended March 31, 2013. During the
year ended March 31, 2014 the Partnership recognized an $8,000 gain on sale of Local Limited Partnerships compared to a gain of
$122,000 recorded during the year ended March 31, 2013. The gain recorded by the Partnership can vary depending on the sales prices
and values of the Housing Complexes that are sold. The reporting fees decreased by $(1,000) and the distribution income increased
by $13,000 from the year ended March 31, 2013. Local Limited Partnerships pay the reporting fees and distribution income to the
Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. The accounting and legal fees increased
by $(4,000) for the year ended March 31, 2014 due to the timing of the accounting work performed. The asset management fees decreased
by $24,000 for the year ended March 31, 2014 due to the fact that the fees are calculated based on the value of the invested assets,
which decreased as a result of the sales of Local Limited Partnerships. The outsourcing expenses increased by $(1,000) for the
year ended March 31, 2014 due to the fact that the Partnership outsourced a portion of the data entry management to increase efficiency.
The mailing expenses decreased by $2,000 for the year ended March 31, 2014 due to the decrease in proxy mailings related to the
dispositions as compared to the prior year. Write off of other assets decreased by $7,000 during the year ended March 31, 2014.
Capitalized costs from the potential disposition of Local Limited Partnerships were expensed due to the amount of time taken to
sell the property. Other expenses increased by $(10,000) primarily due to proxy and other SEC filing related printing expenses.



Year
Ended March 31, 2013 Compared to Year Ended March 31, 2012The Partnership’s net income for the year ended March 31,
2013 was $18,000, reflecting a decrease of $(236,000) from the net income of $254,000 for the year ended March 31, 2012. During
the year ended March 31, 2013 the Partnership experienced a $122,000 gain on sale of Local Limited Partnerships compared to a
gain of $382,000 recorded during the year ended March 31, 2012. The gain recorded by the Partnership can vary depending on the
sales prices and values of the Housing Complexes that are sold. The reporting fees decreased by $(4,000) and the distribution
income decreased by $(15,000) from the year ended March 31, 2013. Local Limited Partnerships pay the reporting fees and distribution
income to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. The accounting and
legal fees decreased by $11,000 for the year ended March 31, 2013 due to the timing of the accounting work performed. The asset
management fees decreased by $35,000 for the year ended March 31, 2013 due to the fact that the fees are calculated based on the
value of the invested assets, which decreased as a result of the sales of Local Limited Partnerships. The outsourcing expenses
increased by $(1,000) for the year ended March 31, 2013 due to the fact that the Partnership outsourced a portion of the data
entry management to increase efficiency. The mailing expenses decreased by $1,000 for the year ended March 31, 2013 due to the
decrease in proxy mailings related to the dispositions as compared to the prior year. Write off of other assets increased by $(7,000)
during the year ended March 31, 2013. Capitalized costs from the potential disposition of Local Limited Partnerships were expensed
due to the amount of time taken to sell the property.



Liquidity
and Capital Resources



Year
Ended March 31, 2014 Compared to Year Ended March 31, 2013 The net decrease in cash during the year ended March 31, 2014 was
$(11,000) compared to a net decrease in cash for the year ended March 31, 2013 of $(91,000). There was a decrease of $(69,000)
in net proceeds from sale of Local Limited Partnerships during the year ended March 31, 2014. The sales proceeds received from
the sales of the Local Limited Partnerships will vary depending on the value of the underlying Housing Complex compared to the
outstanding debt owed on the Housing Complex. During the year ended March 31, 2014, distribution income increased by $13,000 and
reporting fees decreased by $(1,000), as described above. The Partnership reimbursed the General Partner or an affiliate $(22,000)
of operating expenses that were paid on the Partnership’s behalf compared to $(57,000) reimbursed during the year ended
March 31, 2013. The Partnership paid $(15,000) during the year ended March 31, 2014 in accrued asset management fees compared
to $(145,000) reimbursed during the year ended March 31, 2013. The reimbursement of operating expenses and accrued asset management
fees are paid after management reviews the cash position of the Partnership.



24







Year
Ended March 31, 2013 Compared to Year Ended March 31, 2012 The net decrease in cash during the year ended March 31, 2013 was
$(91,000) compared to a net decrease in cash for the year ended March 31, 2012 of $(65,000). There was a decrease of $(305,000)
in net proceeds from sale of Local Limited Partnerships during the year ended March 31, 2013. The sales proceeds received from
the sales of the Local Limited Partnerships will vary depending on the value of the underlying Housing Complex compared to the
outstanding debt owed on the Housing Complex. The Partnership received no prepaid proceeds received during the year ended March
31, 2013 compared to $25,000 received during the year ended March 31, 2012 related to the sale of one of the Local Limited Partnerships,
which occurred subsequent to March 31, 2012. During the year ended March 31, 2013, distributions and reporting fees decreased
by $(15,000) and $(4,000), respectively, as described above. The Partnership reimbursed the General Partner or an affiliate $(57,000)
of operating expenses that were paid on the Partnership’s behalf compared to $(71,000) reimbursed during the year ended
March 31, 2012. The Partnership also paid the General Partner or an affiliate $(145,000) in accrued asset management fees during
the year ended March 31, 2013 compared to $(430,000) paid during the year ended March 31, 2012.



Accrued
payables, which consist primarily of related party management fees due to the General Partner, increased (decreased) by approximately
$115,000, $(101,000), and $(326,000) for the years ended March 31, 2014, 2013, and 2012, respectively. The General Partner does
not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.



The
Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital requirements of the Partnership through June 30, 2015.



Future
Contractual Cash Obligations



The
following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2013:



|                                   |  | 2015 |           |  | 2016 |   |        | 2017 |  |   | 2018   |  |  | 2019 |        |  | Thereafter |   |        | Total | 
|---------------------------------- |  | ---- | --------- |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  | ---------- | - | ------ | ----- | 
|                                   |  |      |           |  |      |   |        |      |  |   |        |  |  |      |        |  |            |   |        |       | 
|Asset management fees (1)          |  | $    | 1,742,432 |  |      | $ | 25,000 |      |  | $ | 25,000 |  |  | $    | 25,000 |  |            | $ | 25,000 |       | 
|Total contractual cash obligations |  | $    | 1,742,432 |  |      | $ | 25,000 |      |  | $ | 25,000 |  |  | $    | 25,000 |  |            | $ | 25,000 |       | 



| | (1) | Asset
                                         management fees are payable annually until termination of the Partnership, which is to
                                         occur no later than 2050. The estimate of the fees payable included herein assumes the
                                         retention of the Partnership’s interest in all Housing Complexes owned at March
                                         31, 2014. Amounts due to the General Partner as of March 31, 2014 have been included
                                         in the 2015 column. The General Partner does not anticipate that these fees will be paid
                                         until such time as capital reserves are in excess of the aggregate of the existing contractual
                                         obligations and the anticipated future foreseeable obligations of the Partnership.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For
additional information regarding asset management fees, see Note 3 to the financial statements included elsewhere herein.



25







Off-Balance
Sheet Arrangements



The
Partnerships has no off-balance sheet arrangements.



Exit
Strategy



See
Item 1 for information in this regard.



Impact
of Recent Accounting Pronouncements



See
footnote 1 to the financial statements.



Item
7A. Quantitative and Qualitative Disclosures about Market Risk



NOT
APPLICABLE



26







Item
8. Financial Statements and Supplementary Data



Index
to Financial Statements



|                                                                                      |  | PAGE
|------------------------------------------------------------------------------------- |  | ----
|                                                                                      |  |     
|Reports
    of Independent Registered Public Accounting Firms                         |  | F-1 
|                                                                                      |  |     
|Balance
    Sheets as of March 31, 2014 and 2013                                      |  | F-3 
|                                                                                      |  |     
|Statements
    of Operations for the years ended March 31, 2014, 2013 and 2012        |  | F-4 
|                                                                                      |  |     
|Statements
    of Partners’ Deficit for the years ended March 31, 2014, 2013 and 2012 |  | F-5 
|                                                                                      |  |     
|Statements
    of Cash Flows for the years ended March 31, 2014, 2013 and 2012        |  | F-6 
|                                                                                      |  |     
|Notes
    to Financial Statements                                                     |  | F-7 



27







Reports
of Independent Registered Public Accounting Firms



To
the Partners

WNC
California Housing Tax Credits III, L.P.



We
have audited the accompanying balance sheets of WNC California Housing Tax Credits III, L.P. (the “Partnership”) as
of March 31, 2014 and 2013, and the related statements of operations, partners’ deficit, and cash flows for the years then
ended. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion
on these financial statements based on our audits.



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



In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WNC
California Housing Tax Credits III, L.P. as of March 31, 2014 and 2013 and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles generally accepted in the United States of America.



Our audits
were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed under
Item 15(a)(2) in the index related to the years ended March 31, 2014 and 2013 is presented for the purpose of complying with the
Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected
to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly states in all material
respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as
a whole.



|/s/
    CohnReznick LLP | 
|----------------------- | 
|                        | 
|Bethesda,
    Maryland  | 
|June
    3, 2014        | 



F-1











REPORT
OF INDEPENDENT REGISTERED

PUBLIC
ACCOUNTING FIRM



To the Partners

WNC California
Housing Tax Credits III, L.P.



We have audited
the accompanying statements of operations, partners’ deficit and cash flows of WNC California Housing Tax Credits III, L.P.
(the Partnership) for the year ended March 31, 2012. The Partnership’s management is responsible for these financial statements.
Our responsibility is to express an opinion on these financial statements based on our audit.



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



In our opinion,
the financial statements referred to above present fairly, in all material respects, WNC California Housing Tax Credits III, L.P.’s
results of its operations and its cash flows for the year ended March 31, 2012, in conformity with accounting principles generally
accepted in the United States of America.



Our audit
was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed under
Item 15(a)(2) in the index related to year above are presented for the purpose of complying with the Securities and Exchange Commission’s
rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied
to the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial statement
data required to be set forth therein in relation to the basic financial statements taken as a whole.





|/s/
    Reznick Group, P.C | 
|-------------------------- | 
|                           | 
|Bethesda, Maryland         | 
|June 14, 2012              | 



F-2







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



BALANCE
SHEETS



|                                                                                                                                      |  | March
    31 |           
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                                                                                      |  | 2014         |           
|ASSETS                                                                                                                                |  |              |           
|                                                                                                                                      |  |              |           
|Cash                                                                                                                                  |  | $            | 5,698     
|Investments in Local Limited Partnerships, net                                                                                        |  |              | -         
|Other assets                                                                                                                          |  |              | 60,756    
|                                                                                                                                      |  |              |           
|Total Assets                                                                                                                          |  | $            | 66,454    
|                                                                                                                                      |  |              |           
|LIABILITIES AND PARTNERS’ DEFICIT                                                                                                     |  |              |           
|                                                                                                                                      |  |              |           
|Liabilities:                                                                                                                          |  |              |           
|Accrued fees and expenses due to General Partner  and
    affiliates (Note 3)                                                         |  | $            | 1,717,344 
|                                                                                                                                      |  |              |           
|Total Liabilities                                                                                                                     |  |              | 1,717,344 
|                                                                                                                                      |  |              |           
|Partners’ deficit:                                                                                                                    |  |              |           
|General Partner                                                                                                                       |  |              | (186,641  
|Limited Partners (30,000 Partnership Units authorized;
    17,917 and 17,957, respectively, Partnership Units issued and outstanding) |  |              | (1,464,249
|                                                                                                                                      |  |              |           
|Total Partners’ Deficit                                                                                                               |  |              | (1,650,890
|                                                                                                                                      |  |              |           
|Total Liabilities and Partners’ Deficit                                                                                               |  | $            | 66,454    



See
accompanying notes to financial statements





F-3







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



STATEMENTS
OF OPERATIONS

For
the years ended March 31, 2014, 2013 and 2012



|                                           |  | For
    the Years Ended  March 31 |        
|------------------------------------------ |  | --------------------------------- | -------
|                                           |  | 2014                              |        
|Income                                     |  |                                   |        
|Reporting fees                             |  | $                                 | -      
|Distribution income                        |  |                                   | 13,130 
|                                           |  |                                   |        
|Total income                               |  |                                   | 13,130 
|                                           |  |                                   |        
|Operating expenses:                        |  |                                   |        
|Asset management fees (Note 3)             |  |                                   | 34,405 
|Accounting and legal fees                  |  |                                   | 34,359 
|Outsourcing expenses                       |  |                                   | 5,700  
|Mailing expense                            |  |                                   | 108    
|Write off of other assets                  |  |                                   | -      
|Other                                      |  |                                   | 13,180 
|                                           |  |                                   |        
|Total operating expenses                   |  |                                   | 87,752 
|                                           |  |                                   |        
|Loss from operations                       |  |                                   | (74,622
|                                           |  |                                   |        
|Gain on sale of Local Limited Partnerships |  |                                   | 8,409  
|                                           |  |                                   |        
|Interest income                            |  |                                   | 1      
|                                           |  |                                   |        
|Net income (loss)                          |  | $                                 | (66,212
|                                           |  |                                   |        
|Net income (loss) allocated to:            |  |                                   |        
|General Partner                            |  | $                                 | (662   
|                                           |  |                                   |        
|Limited Partners                           |  | $                                 | (65,550
|                                           |  |                                   |        
|Net income (loss) per Partnership Unit     |  | $                                 | (3.66  
|                                           |  |                                   |        
|Outstanding weighted Partnership Units     |  |                                   | 17,917 



See
accompanying notes to financial statements







F-4







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



STATEMENTS
OF PARTNERS’ DEFICIT

For
the years ended March 31, 2014, 2013 and 2012



|                                    |  | General
    Partner |          |   | Limited
    Partners |   |            | Total | 
|----------------------------------- |  | ------------------- | -------- | - | -------------------- | - | ---------- | ----- | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Partners’ deficit at March 31, 2011 |  | $                   | (188,696 | ) |                      | $ | (1,667,675 | )     | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Net income                          |  |                     | 2,540    |   |                      |   | 251,446    |       | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Partners’ deficit at March 31, 2012 |  |                     | (186,156 | ) |                      |   | (1,416,229 | )     | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Net income                          |  |                     | 177      |   |                      |   | 17,530     |       | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Partners’ deficit at March 31, 2013 |  |                     | (185,979 | ) |                      |   | (1,398,699 | )     | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Net loss                            |  |                     | (662     | ) |                      |   | (65,550    | )     | 
|                                    |  |                     |          |   |                      |   |            |       | 
|Partners’ deficit at March 31, 2014 |  | $                   | (186,641 | ) |                      | $ | (1,464,249 | )     | 



See
accompanying notes to financial statements



F-5







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



STATEMENTS
OF CASH FLOWS

For
the Years Ended March 31, 2014, 2013 and 2012



|                                                                                                                                                                                                       |  | For
    the Years Ended March 31 |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------- | -------
|                                                                                                                                                                                                       |  | 2014                             |        
|                                                                                                                                                                                                       |  |                                  |        
|Cash flows from operating activities:                                                                                                                                                                  |  |                                  |        
|Net income (loss)                                                                                                                                                                                      |  | $                                | (66,212
|Adjustments to reconcile net income (loss) to net cash used
    in operating activities:                                                                                                               |  |                                  |        
|Gain on sale of Local Limited Partnerships                                                                                                                                                             |  |                                  | (8,409 
|Increase in prepaid disposition proceeds                                                                                                                                                               |  |                                  | -      
|(Increase) decrease in other assets                                                                                                                                                                    |  |                                  | (59,866
|Increase (decrease) in accrued fees and expenses due
    to General Partner and affiliates                                                                                                             |  |                                  | 114,706
|                                                                                                                                                                                                       |  |                                  |        
|Net cash used in operating activities                                                                                                                                                                  |  |                                  | (19,781
|                                                                                                                                                                                                       |  |                                  |        
|Cash flows from investing activities:                                                                                                                                                                  |  |                                  |        
|Net proceeds from sale of Local Limited Partnerships                                                                                                                                                   |  |                                  | 8,409  
|                                                                                                                                                                                                       |  |                                  |        
|Net cash provided by investing activities                                                                                                                                                              |  |                                  | 8,409  
|                                                                                                                                                                                                       |  |                                  |        
|Net decrease in cash                                                                                                                                                                                   |  |                                  | (11,372
|                                                                                                                                                                                                       |  |                                  |        
|Cash, beginning of year                                                                                                                                                                                |  |                                  | 17,070 
|                                                                                                                                                                                                       |  |                                  |        
|Cash, end of year                                                                                                                                                                                      |  | $                                | 5,698  
|                                                                                                                                                                                                       |  |                                  |        
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                                                      |  |                                  |        
|                                                                                                                                                                                                       |  |                                  |        
|Taxes paid                                                                                                                                                                                             |  | $                                | -      
|                                                                                                                                                                                                       |  |                                  |        
|NON-CASH INVESTING AND FINANCING ACTIVITIES                                                                                                                                                            |  |                                  |        
|Gain on sale of Local Limited Partnerships was increased
    and accrued fees and expenses due to the General Partner and affiliates was decreased for sales proceeds paid directly to
    Associates. |  | $                                | -      



See
accompanying notes to financial statements



F-6







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS



For
the years ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Organization



WNC
California Housing Tax Credits III, L.P. (the “Partnership”) is a California limited partnership formed under the
laws of the State of California on October 5, 1992. The Partnership was formed to acquire limited partnership interests in other
limited partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing
Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).
The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility
for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited
partnership or operating agreement (the “Local Limited Partnership Agreement”).



The
general partner of the Partnership is WNC California Housing Tax Credits Partners III, L.P. (the “General Partner”).
WNC & Associates, Inc. (“Associates”) is the general partner of WNC Tax Credit Partners III, L.P. The chairman
and president of Associates owns all of the outstanding stock of Associates. The business of the Partnership is conducted primarily
through Associates, as the Partnership has no employees of its own.



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



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



Pursuant
to a registration statement filed with the Securities and Exchange Commission, on February 17, 1993, the Partnership commenced
a public offering of 30,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership
Unit. As of the close of the public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 had
been sold. During 1995, an additional 10 Partnership Units amounting to $10,000 was collected on subscriptions accepted and previously
deemed uncollectible. As of March 31, 2014, a total of 17,917 Partnership Units remain outstanding. The General Partner has a
1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership
and Low Income Housing Tax Credits of the Partnership. The investors in the Partnership (“Limited Partners”) will
be allocated the remaining 99% of these items in proportion to their respective investments.



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



F-7







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



Risks
and Uncertainties



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



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



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



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



All
of the Low Income Housing Tax Credits anticipated to be realized from the Local Limited Partnerships have been realized. The Partnership
does not anticipate being allocated any Low Income Housing Tax Credits from the Local Limited Partnerships in the future.



F-8







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



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



The
Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital requirements of the Partnership through May 31, 2015.



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



Exit
Strategy



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



Upon
the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no
recapture of Low Income Housing Tax Credits. All Local Limited Partnerships have completed their 15-year Compliance Period.



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



Upon
identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them. The objective is to wind down the Partnership as Low Income Housing Tax Credits
are no longer available. Local Limited Partnership Interests may be disposed of any time by the General Partner in its discretion.
While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of
March 31, 2014.



The
proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective
Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership,
including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. The sale of a Housing
Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership
will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will
be distributed to the Partnership, as the proceeds first would be used to pay Partnership obligations and funding of reserves.



F-9







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



As
of March 31, 2013, the Partnership sold its Local Limited Partnership Interest in Rosewood Apartments L.P., Venus Retirement Village,
Ltd, Winters Investment Group, Parlier Garden Apartments, L.P., Tahoe Pines Apartments, L.P., Candleridge Apartments of Perry
L.P. II, Nueva Sierra Vista Associates, L.P., Walnut – Pixley, L.P., Orosi Apartments, Ltd., Memory Lane, L.P., Sun Manor,
L.P., Almond Garden Apartment Associates, Buccaneer Villas, Limited, Dallas County Housing, Ltd. and Old Fort Limited Partnership.



The
following table reflects the 2 Local Limited Partnership interests that were sold during the year ended March 31, 2014. No distributions
were made to the Limited Partners as a result of these dispositions. Each of the Local Limited Partnerships had completed its
Compliance Period so there is no risk of recapture to the investors in the Partnership.



|Local
    Limited Partnership     |  | Debt
    at 12/31 prior to sale date |           |  | Appraisal
    Value |   |         | Date
    of Sale |  |  | Sales
    Proceeds |  |  | Actual
    Sale Related Expenses |        |  | Gain
    (loss) on sale |  
|--------------------------------- |  | ------------------------------------ | --------- |  | ------------------- | - | ------- | ---------------- |  |  | ------------------ |  |  | -------------------------------- | ------ |  | ----------------------- | -
|Almond View Apartments, Limited   |  | $                                    | 1,617,000 |  |                     | $ | 295,000 |                  |  |  | 7/31/2013          |  |  | $                                | 2,500  |  |                         | $
|La Paloma del Sol, Phase II, L.P. |  |                                      | 1,336,000 |  |                     |   | 810,000 |                  |  |  | 8/31/2013          |  |  |                                  | 10,000 |  |                         |  



The
following table represents the use of the cash proceeds from the dispositions of the Local Limited Partnerships that were disposed
of during the year ended March 31, 2014:



|Local Limited Partnership         |  | Cash Proceeds |        |  | Reimburse GP or affiliates
    for expenses |   |       | Payment of accrued asset management
    fees |  |   | Remaining cash to remain in
    reserves for future expenses |  |  | Cash distribution to investors |      
|--------------------------------- |  | ------------- | ------ |  | ------------------------------------------- | - | ----- | -------------------------------------------- |  | - | ------------------------------------------------------------ |  |  | ------------------------------ | -----
|Almond View Apartments, Limited   |  | $             | 2,500  |  |                                             | $ | -     |                                              |  | $ | -                                                            |  |  | $                              | 2,500
|La Paloma del Sol, Phase II, L.P. |  |               | 10,000 |  |                                             |   | 2,441 |                                              |  |   | -                                                            |  |  |                                | 7,559



As of March 31, 2014, the Local
Limited Partnership Interest in Colonial Village Roseville was identified to be sold. Colonial Village Roseville was appraised
for $2,590,000 and had a mortgage note balance of $1,408,000 as of December 31, 2013. The Partnership’s investment balance
is zero. The Compliance Period has been completed therefore there is no risk of recapture.
The sales price has yet been determined. The Local General Partner prevented a sale from moving forward and the Partnership filed
suit to force the sale.  The Court will identify appraisers to appraise the property and recommend a sales price to proceed. 
The sale is not expected to be concluded this calendar year.



F-10







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



Method
of Accounting For Investments in Local Limited Partnerships



The
Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership
adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions
made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership
for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of
such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management,
generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership
and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the
carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships,
generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments
are capitalized as part of the investment and were being amortized over 27.5 years. (See Notes 2 and 3)



“Equity
in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the
twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses
from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would
be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying
the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the
equity method was suspended.



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



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



Distributions
received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received
after the investment has reached zero are recognized as distribution income.



F-11







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



Use
of Estimates



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



Cash
and Cash Equivalents



The
Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash
equivalents. As of March 31, 2014 and 2013, the Partnership had no cash equivalents.



Reporting
Comprehensive Income



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



Net
Income (Loss) Per Partnership Unit



Net
income (loss) per Partnership Unit includes no dilution and is computed by dividing loss available to Limited Partners by the
weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit
is not required.



Income
Taxes



The
Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income
taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on
their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal
status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through
entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities.
Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions
which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal
Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue
Service, tax years since 2010 remain open.



Revenue
Recognition



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



F-12







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued



Impact
of Recent Accounting Pronouncements



In
May 2011, the FASB issued an update to existing guidance related to fair value measurements on how to measure fair value and what
disclosures to provide about fair value measurements. For fair value measurements categorized as level 3, a reporting entity should
disclose quantitative information of the unobservable inputs and assumptions, a description of the valuation processes and narrative
description of the sensitivity of the fair value to changes in unobservable inputs. This update is effective for interim and annual
periods beginning after December 15, 2011. The adoption of this update did not materially affect the Partnership’s financial
statements.



NOTE
2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS



As
of March 31, 2014 and 2013, the Partnership owns Local Limited Partnership interests in 1 and 3 Local Limited Partnerships, respectively.
As of March 31, 2014 and 2013, these Local Limited Partnerships each own one Housing Complex consisting of an aggregate of 56
and 166 apartment units, respectively. The respective Local General Partners of the Local Limited Partnerships manage the day
to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership.
The Partnership, as a limited partner, is generally entitled to 99%, as specified in the Local Limited Partnership agreements,
of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships.



The
Partnership’s investments in Local Limited Partnerships as shown in the balance sheets at March 31, 2014 and 2013, are approximately
$(1,066,000) and $1,182,000, respectively, greater (less) than the Partnership’s equity at the preceding December 31 as
shown in the Local Limited Partnerships’ combined financial statements presented below. This difference is primarily due
to unrecorded losses as discussed below, and acquisition, selection and other costs related to the acquisition of the investments
which have been capitalized in the Partnership’s investment account along with impairment losses recorded in the Partnership’s
investment account.



At
March 31, 2014 and 2013, the investment accounts in all of Local Limited Partnerships have reached a zero balance. Consequently,
all of the Partnership’s estimated share of losses for the years ended March 31, 2014, 2013 and 2012, amounting to approximately
$89,000, $288,000, and $487,000, respectively, have not been recognized. As of March 31, 2014, the aggregate share of net losses
not recognized by the Partnership amounted to $341,000.



F-13







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued



The
financial information from the individual financial statements of the Local Limited Partnerships includes rental and interest
subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted against interest expense.
Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships
as of December 31 and for the years then ended is as follows:



COMBINED
CONDENSED BALANCE SHEETS



|                                                                                                                                            |  | 2013 |           |   | 2012 |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | -
|ASSETS                                                                                                                                      |  |      |           |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Buildings and improvements,
    net of accumulated depreciation as of December 31, 2013 and 2012 of $3,544,000 and $6,525,000 respectively. |  | $    | 1,583,000 |   |      | $
|Land                                                                                                                                        |  |      | 316,000   |   |      |  
|Other assets                                                                                                                                |  |      | 235,000   |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Total Assets                                                                                                                                |  | $    | 2,134,000 |   |      | $
|                                                                                                                                            |  |      |           |   |      |  
|LIABILITIES                                                                                                                                 |  |      |           |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Mortgage loans payable                                                                                                                      |  | $    | 1,408,000 |   |      | $
|Due to related parties                                                                                                                      |  |      | 15,000    |   |      |  
|Other liabilities                                                                                                                           |  |      | 35,000    |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Total
    Liabilities                                                                                                                       |  |      | 1,458,000 |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|PARTNERS’ EQUITY (DEFICIT)                                                                                                                  |  |      |           |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|WNC California Housing Tax Credits III, L.P.                                                                                                |  |      | 1,066,000 |   |      |  
|Other partners                                                                                                                              |  |      | (390,000  | ) |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Total
    Partners’ Equity (Deficit)                                                                                                        |  |      | 676,000   |   |      |  
|                                                                                                                                            |  |      |           |   |      |  
|Total Liabilities and Partners’
    Equity (Deficit)                                                                                        |  | $    | 2,134,000 |   |      | $



F-14







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued



COMBINED
CONDENSED STATEMENTS OF OPERATIONS



|                                          |  | 2013 |         |   | 2012 |   |           | 2011 | 
|----------------------------------------- |  | ---- | ------- | - | ---- | - | --------- | ---- | 
|                                          |  |      |         |   |      |   |           |      | 
|Revenues                                  |  | $    | 601,000 |   |      | $ | 1,124,000 |      | 
|                                          |  |      |         |   |      |   |           |      | 
|Expenses:                                 |  |      |         |   |      |   |           |      | 
|Operating
    expenses                    |  |      | 405,000 |   |      |   | 798,000   |      | 
|Interest
    expense                      |  |      | 100,000 |   |      |   | 248,000   |      | 
|Depreciation
    and amortization         |  |      | 186,000 |   |      |   | 369,000   |      | 
|                                          |  |      |         |   |      |   |           |      | 
|Total
    expenses                        |  |      | 691,000 |   |      |   | 1,415,000 |      | 
|                                          |  |      |         |   |      |   |           |      | 
|Net
    loss                              |  | $    | (90,000 | ) |      | $ | (291,000  | )    | 
|                                          |  |      |         |   |      |   |           |      | 
|Net
    loss allocable to the Partnership |  | $    | (89,000 | ) |      | $ | (288,000  | )    | 
|                                          |  |      |         |   |      |   |           |      | 
|Net
    loss recorded by the Partnership  |  | $    | -       |   |      | $ | -         |      | 



Certain
Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies. In the event these
Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership
and/or the Local General Partners may be required to sustain operations of such Local Limited Partnerships.



NOTE
3 - RELATED PARTY TRANSACTIONS



Under
the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partners or its affiliates for
the following items:



| |  | Acquisition
                                         fees equal to 9% of the gross proceeds from the sale of Partnership Units as compensation
                                         for services rendered in connection with the acquisition of Local Limited Partnerships.
                                         At the end of all periods presented, the Partnership had incurred acquisition fees of
                                         $1,620,000. As of all periods presented, the capitalized costs were fully amortized.                                                                                                                                    
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Reimbursement
                                         of costs incurred by the General Partners or an affiliate in connection with the acquisition
                                         of the Local Limited Partnerships. These reimbursements have not exceeded 1.5% of the
                                         gross proceeds. As of the end of all periods presented, the Partnership had incurred
                                         acquisition costs of $194,019 which have been included in investments in Local Limited
                                         Partnerships. As of all periods presented, the acquisition costs were fully amortized.



F-15







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
3 – RELATED PARTY TRANSACTIONS, continued



| |  | 
| |  | 

| |  | An
                                         annual asset management fee equal to 0.5% of the Invested Assets of the Partnership,
                                         as defined. “Invested Assets” means the sum of the Partnership’s investment
                                         in Local Limited Partnership interests and the Partnership’s allocable share of
                                         mortgage loans on and other debts related to the Housing Complexes owned by such Local
                                         Limited Partnerships. Asset management fees of $34,405, $58,046, and $92,738 were incurred
                                         during the years ended March 31, 2014, 2013, and 2012, respectively, of which $15,000,
                                         $144,903, and $429,628, was paid during the years ended March 31, 2014, 2013 and 2012,
                                         respectively.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | The
                                         Partnership reimbursed the General
                                         Partner or its affiliates for operating expenses incurred by the Partnership and paid
                                         for by the General Partner or its affiliates on behalf of the Partnership. Operating
                                         expense reimbursements paid were approximately $22,000, $57,000, and $71,000 during the
                                         years ended March 31, 2014, 2013 and 2012, respectively. The unpaid operating expenses
                                         reimbursable to the General Partner or its affiliates were $95,301, $0, and $14,422 for
                                         the years ended March 31, 2014, 2013 and 2012, respectively.                                                                                                                     



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



|                                                                                      |  | March
    31, |          
|------------------------------------------------------------------------------------- |  | ------------- | ---------
|                                                                                      |  | 2014          |          
|                                                                                      |  |               |          
|Expenses paid by the General Partner or an affiliate
    on behalf of the Partnership |  | $             | 95,301   
|                                                                                      |  |               |          
|Asset management fee payable                                                          |  |               | 1,622,043
|                                                                                      |  |               |          
|Total                                                                                 |  | $             | 1,717,344



The
General Partner and/or its affiliates do not anticipate that these accrued fees will be paid until such time as capital reserves
are in excess of the future foreseeable working capital requirements of the Partnership. The Partnership currently has insufficient
working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations
and working capital requirements of the Partnership through May 31, 2015.



F-16







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
4 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)



The
following is a summary of the quarterly operations for the years ended March 31 (rounded):



|                                           |  | June 30 |         |   | September 30 |   |         | December 31 |  |   | March 31 |  
|------------------------------------------ |  | ------- | ------- | - | ------------ | - | ------- | ----------- |  | - | -------- | -
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|2014                                       |  |         |         |   |              |   |         |             |  |   |          |  
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Income                                     |  | $       | 1,000   |   |              | $ | 12,000  |             |  | $ | -        |  
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Operating expenses                         |  |         | 21,000  |   |              |   | 28,000  |             |  |   | 15,000   |  
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Loss from operations                       |  |         | (20,000 | ) |              |   | (16,000 | )           |  |   | (15,000  | )
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Gain on sale of Local Limited Partnerships |  |         | -       |   |              |   | 8,000   |             |  |   | -        |  
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Net loss                                   |  |         | (20,000 | ) |              |   | (8,000  | )           |  |   | (15,000  | )
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Net loss available to Limited Partners     |  |         | (20,000 | ) |              |   | (7,000  | )           |  |   | (15,000  | )
|                                           |  |         |         |   |              |   |         |             |  |   |          |  
|Net loss per Partnership Unit              |  |         | (1      | ) |              |   | (1      | )           |  |   | (1       | )



|                                                |  | June 30 |         |   | September 30 |   |         | December 31 |  |   | March 31 |  
|----------------------------------------------- |  | ------- | ------- | - | ------------ | - | ------- | ----------- |  | - | -------- | -
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|2013                                            |  |         |         |   |              |   |         |             |  |   |          |  
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Income                                          |  | $       | -       |   |              | $ | -       |             |  | $ | -        |  
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Operating expenses                              |  |         | 39,000  |   |              |   | 27,000  |             |  |   | 18,000   |  
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Loss from operations                            |  |         | (39,000 | ) |              |   | (27,000 | )           |  |   | (18,000  | )
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Gain on sale of Local Limited Partnerships      |  |         | 81,000  |   |              |   | 41,000  |             |  |   | -        |  
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Net income (loss)                               |  |         | 42,000  |   |              |   | 14,000  |             |  |   | (18,000  | )
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Net income (loss) available to Limited Partners |  |         | 41,000  |   |              |   | 14,000  |             |  |   | (18,000  | )
|                                                |  |         |         |   |              |   |         |             |  |   |          |  
|Net income (loss) per Partnership Unit          |  |         | 2       |   |              |   | 1       |             |  |   | (1       | )



F-17







WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A
California Limited Partnership)



NOTES
TO FINANCIAL STATEMENTS - CONTINUED



For
the Years Ended March 31, 2014, 2013 and 2012



NOTE
4 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED, continued



|                                                |  | June
    30 |         |   | September
    30 |   |         | December
    31 |  |   | March
    31 |  
|----------------------------------------------- |  | ----------- | ------- | - | ---------------- | - | ------- | --------------- |  | - | ------------ | -
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|2012                                            |  |             |         |   |                  |   |         |                 |  |   |              |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Income                                          |  | $           | 16,000  |   |                  | $ | 2,000   |                 |  | $ | -            |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Operating expenses                              |  |             | 54,000  |   |                  |   | 35,000  |                 |  |   | 22,000       |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Loss from operations                            |  |             | (38,000 | ) |                  |   | (33,000 | )               |  |   | (22,000      | )
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Gain on sale of Local Limited Partnerships      |  |             | 356,000 |   |                  |   | -       |                 |  |   | 26,000       |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Net income (loss)                               |  |             | 318,000 |   |                  |   | (33,000 | )               |  |   | 4,000        |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Net income (loss) available to Limited Partners |  |             | 315,000 |   |                  |   | (33,000 | )               |  |   | 4,000        |  
|                                                |  |             |         |   |                  |   |         |                 |  |   |              |  
|Net income (loss) per Partnership Unit          |  |             | 17      |   |                  |   | (2      | )               |  |   | -            |  



F-18







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



NONE



Item
9A. Controls and Procedures



|(a) |  | Evaluation
                                         of disclosure controls and procedures
|--- |  | -----------------------------------------------------------------------------------------



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



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



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



|(b) |  | Management’s
                                         annual report on internal control over financial reporting
|--- |  | ----------------------------------------------------------------------------------------------------------------



The
management of Associates is responsible for establishing and maintaining for the Partnership adequate internal control over financial
reporting as that term is defined in Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f), and for performing an assessment
of the effectiveness of internal control over financial reporting as of March 31, 2014. The internal control process of Associates,
as it is applicable to the Partnership, was designed to provide reasonable assurance to Associates regarding the preparation and
fair presentation of published financial statements, and includes those policies and procedures that:



| | (1) | Pertain
    to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
    the assets of the Partnership;                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                    
| | (2) | Provide
    reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
    with generally accepted accounting principles in the United States, and that the Partnership’s receipts and expenditures
    are being made only in accordance with authorization of the management of Associates; and
| |     |                                                                                                                                                                                                                                                                                                                                                                    
| | (3) | Provide
    reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s
    assets that could have a material effect on the financial statements.                                                                                                                                           



All
internal control processes, no matter how well designed, have inherent limitations. Therefore, even those processes determined
to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation.
Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.



28







Management
of Associates assessed the effectiveness of its internal control over financial reporting, as it is applicable to the Partnership,
as of the end of the Partnership’s most recent fiscal year. In making this assessment, it used the criteria set forth in
Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on its assessment, management of Associates concluded that, for the reasons set forth above under “Disclosure controls
and procedures,” the internal control over financial reporting, as it is applicable to the Partnership, was not effective
as of March 31, 2014.



For
purposes of the Securities Exchange Act of 1934, the term “material weakness” is a deficiency, or a combination of
deficiencies, in a reporting company’s internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on
a timely basis. For the reasons discussed above in this Item 9A, sub-section (a) under the caption “Evaluation of disclosure
controls and procedures,” the Partnership’s internal control over financial reporting has not been effective in permitting
timely reporting of the Partnership’s financial information. Accordingly, the management of Associates believes that this
inability to generate timely reports constitutes a material weakness in its internal control over financial reporting.

|(c) |  | Changes
                                         in internal controls
|--- |  | ---------------------------------------------------------------------



There
were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended March
31, 2014 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over
financial reporting.



Item
9B. Other Information



NONE



29







PART
III.



Item
10. Directors, Executive Officers and Corporate Governance



|(a) |  | Identification
                                         of Directors, (b) Identification of Executive Officers, (c) Identification of Certain
                                         Significant Employees, (d) Family Relationships, and (e) Business Experience
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Partnership has no directors, executives officers or employees of its own. The business of the Partnership is conducted primarily
through Associates. Associates is a California corporation which was organized in 1971. The following biographical information
is presented for the officers and employees of Associates with principal responsibility for the Partnership’s affairs.



|Wilfred
    N. Cooper, Sr. |  | Chairman                                                
|-------------------------- |  | --------------------------------------------------------
|Wilfred
    N. Cooper, Jr. |  | President,
    Chief Executive Officer and Secretary    
|Michael
    J. Gaber       |  | Executive
    Vice President and Chief Operating Officer
|David
    N. Shafer, Esq.  |  | Executive
    Vice President                            
|Melanie
    R. Wenk, CPA   |  | Vice
    President – Chief Financial Officer            
|Darrick
    Metz           |  | Senior
    Vice President – Originations                
|Christine
    A. Cormier   |  | Senior
    Vice President – Investor Relations          
|Kelly
    Henderson        |  | Senior
    Vice President – Legal Affairs               
|Anand
    Kannan           |  | Senior
    Vice President – Development                 
|Gregory
    S. Hand        |  | Senior
    Vice President – Underwriting                
|Anil
    Advani            |  | Senior
    Vice President – Private Label Funds         



In
addition to Wilfred N. Cooper, Sr., the directors of WNC & Associates, Inc. are Wilfred N. Cooper, Jr., Kay L. Cooper and
Jennifer E. Cooper.



Wilfred
N. Cooper, Sr. is the founder and Chairman of the Board of Directors of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the partnerships previously sponsored by WNC & Associates, Inc. Mr. Cooper has
been actively involved in the affordable housing industry since 1968. Previously, during 1970 and 1971, he was founder and a principal
of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a
real estate investment firm. For 12 years before that, Mr. Cooper was employed by Rockwell International Corporation, last serving
as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project
management in urban planning and development. He has testified before committees of the U.S. Senate and the U.S. House of Representatives
on matters pertaining to the affordable housing industry. Mr. Cooper is a Life Director of the National Association of Home Builders
(“NAHB”), a National Trustee for NAHB’s Political Action Committee, and a past Chairman of NAHB’s Multifamily
Council. He is a Life Trustee of the National Housing Conference, and a co-founder and Director Emeritus of the California Housing
Consortium. He is the husband of Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College
in 1956 with a Bachelor of Arts degree.



Wilfred
N. Cooper, Jr. is President, Chief Executive Officer, Secretary, a Director, and a member of the Investment Committee, of WNC
& Associates, Inc. He is President and a Director of, and a registered principal with, WNC Capital Corporation. He has been
involved in real estate investment and acquisition activities since 1988 when he joined WNC & Associates, Inc. Previously,
he served as a Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper serves on the Orange County
Advisory Board of U.S. Bank, the Board of Trustees of NHC, the Editorial Advisory Board of Tax Credit Advisor, and the
Tax Policy Council of the National Trust for Historic Preservation. He is a member of the Urban Land Institute and of Vistage
International, a global network of business leaders and chief executives. He is the son of Wilfred Cooper, Sr. and Kay Cooper.
Mr. Cooper graduated from The American University in 1985 with a Bachelor of Arts degree.



30







Michael
J. Gaber is an Executive Vice President, Chief Operating Officer, chair of the Investment Committee, and oversees the Property
Acquisition and Investment Management groups, of WNC & Associates, Inc. Mr. Gaber has been involved in real estate acquisition,
valuation and investment activities since 1989 and has been associated with WNC & Associates, Inc. since 1997. Prior to joining
WNC & Associates, Inc., he was involved in the valuation and classification of major assets, restructuring of debt and analysis
of real estate taxes with a large financial institution. Mr. Gaber is a member of the Housing Credit Group of NAHB and of National
Housing and Rehabilitation Association (“NH&RA”). Mr. Gaber graduated from the California State University, Fullerton
in 1991 with a Bachelor of Science degree in business administration – finance.



David
N. Shafer is an Executive Vice President, a member of the Investment Committee, and oversees the New Markets Tax Credit group,
of WNC & Associates, Inc. He is a registered representative with WNC Capital Corporation. Mr. Shafer has been active in the
real estate industry since 1984. Before joining WNC & Associates, Inc. in 1990, he was engaged as an attorney in the private
practice of law with a specialty in real estate and taxation. Mr. Shafer is a Director and past President of the California Council
of Affordable Housing, a Director of the Council for Affordable and Rural Housing and a member of the State Bar of California.
Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England
School of Law in 1983 with a Juris Doctor degree (cum laude) and from the University of San Diego in 1986 with a Master of Laws
degree in taxation.



Melanie
R. Wenk is Vice President – Chief Financial Officer of WNC & Associates, Inc. She oversees WNC’s corporate and
partnership accounting group, which is responsible for SEC reporting and New Markets Tax Credit compliance. Prior to joining WNC
in 2003, Ms. Wenk was associated as a public accountant with BDO Seidman, LLP. She graduated from the California Polytechnic State
University, Pomona in 1999 with a Bachelor of Science degree in accounting.



Darrick
Metz is Senior Vice President – Originations of WNC & Associates, Inc. He has been involved in multifamily property
underwriting, acquisition and investment activities since 1991. Prior to joining WNC in 1999, he was employed by a Minnesota development
company specializing in tax credit and market rate multifamily projects. Mr. Metz also worked with the Minnesota Housing Finance
Agency (“MHFA”), where he held the position of Senior Housing Development Officer. While at MHFA, he was responsible
for the allocation of tax credits, HOME funds and state loan products. Mr. Metz is active in the Qualified Allocation Plan Tax
Credit Advisory Committee for the Wisconsin Housing and Economic Development Authority, a member of MHFA’s Multifamily Technical
Assistance and a board member of NH&RA. He graduated from St. Cloud State University in 1993 with a Bachelor of Science degree
in finance/economics.



Christine
A. Cormier is Senior Vice President – Investor Relations of WNC & Associates, Inc. and oversees multi-investor fund
equity raising and closings as well as the marketing group. She is a registered representative with WNC Capital Corporation. Ms.
Cormier has been active in the real estate industry since 1985. Prior to joining WNC in 2008, Ms. Cormier was with another major
tax credit syndicator for over 12 years where she was the Managing Director of investor relations. Ms. Cormier graduated from
Bentley University in 1982 with a Bachelor of Science degree (summa cum laude) in accounting and computer science.



Kelly
Henderson is Senior Vice President – Legal Affairs of WNC & Associates, Inc. She is responsible for structuring local
limited partnership letters of understanding and local limited partnership agreements, coordinating closings with outside counsel
and reviewing local limited partnership loan documents. Prior to joining WNC in 2006, she was Vice President – Acquisitions
and Senior Counsel with a national tax credit syndicator. Ms. Henderson has been underwriting tax credit properties since 1999.
She graduated from the State University of New York at Geneseo in 1993 with a Bachelor of Arts degree in political science and
from the New England School of Law in 1996 with a Juris Doctor degree. She is licensed to practice law in the States of New York
and Massachusetts.



31







Anand
Kannan is Senior Vice President – Development of WNC & Associates, Inc. and leads the preservation and development teams
for Community Preservation Partners, LLC. Prior to joining WNC in 2011, Mr. Kannan served as Associate Director at Vitus Group
(previously Pacific Housing Advisors, Inc.), where he developed or consulted on affordable housing projects across the country.
His expertise is in the acquisition and rehabilitation of existing low-income housing projects that are or will be financed by
tax-exempt bonds, tax credits, and other government subsidies. Prior to his tenure at Vitus Group, Mr. Kannan was associated with
Novogradac & Company LLP. Mr. Kannan graduated from the University of California at Berkeley in 2002 with a Bachelor of Arts
degree in economics with an emphasis in accounting.



Gregory
S. Hand is Senior Vice President – Underwriting of WNC & Associates, Inc. and oversees the property underwriting activities.
Mr. Hand has been involved in real estate analysis, development and management since 1987. Prior to joining WNC in 1998, he was
a portfolio asset manager with a national tax credit sponsor with responsibility for the management of $200 million in assets.
Prior to that, he was a finance manager with The Koll Company and a financial analyst with The Irvine Company. Mr. Hand graduated
from Iowa State University in 1987 with a Bachelor of Business Administration degree in finance.



Anil
Advani is Senior Vice President – Private Label Funds of WNC & Associates, Inc. He oversees all activities pertaining
to private label funds, including structuring, originations, underwriting and acquisitions. Mr. Advani has 16 years of experience
in affordable housing. Prior to joining WNC in 2011 and rejoining WNC in 2013, he worked for major tax credit syndicators where
he was involved in the originations, structuring, and placement to institutional investors of local limited partnership investments.
Prior to that, he was associated with a major accounting firm performing due diligence reviews of tax credit investments on behalf
of institutional investors. Mr. Advani graduated from the University of Texas at Austin in 1993 with a Bachelor of Arts degree
in economics and from The American University – Washington College of Law in 1996 with a Juris Doctor degree.



|(f) |  | Involvement
                                         in Certain Legal Proceedings
|--- |  | ---------------------------------------------------------------------------------



None.



|(g) |  | Promoters
                                         and Control Persons
|--- |  | ----------------------------------------------------------------------



Inapplicable.



|(h) |  | Audit
                                         Committee Financial Expert, and (i) Identification of the Audit Committee
|--- |  | ------------------------------------------------------------------------------------------------------------------------



Neither
the Partnership nor the General Partner, has an audit committee.



|(j) |  | Changes
                                         to Nominating Procedures
|--- |  | -------------------------------------------------------------------------



Inapplicable.



|(k) |  | Compliance
                                         With Section 16(a) of the Exchange Act
|--- |  | ------------------------------------------------------------------------------------------



None.



|(l) |  | Code
                                         of Ethics
|--- |  | -------------------------------------------------------



Associates
has adopted a Code of Ethics which applies to the Chief Executive Officer and Chief Financial Officer of Associates. The Code
of Ethics will be provided without charge to any person who requests it. Such requests should be directed to: Investor Relations
at (714)-662-5565 extension 187.



32







Item
11. Executive Compensation



The
General Partner and its affiliates are not permitted under Section 5.6 of the Partnership Agreement to receive any salary, fees,
profits, distributions or allocations from the Partnership or any Local Limited Partnership in which the Partnership invests except
as expressly allowed by the Agreement. The compensation and other economic benefits to the General Partner and its Affiliates
provided for in the Agreement and paid during the periods covered by this report or that could be paid in future periods are summarized
below.



|(a) |  | Compensation
                                         for Services
|--- |  | ------------------------------------------------------------------



For
services rendered by the General Partner or an Affiliate of the General Partner in connection with the administration of the affairs
of the Partnership, the General Partner or any such Affiliate may receive an annual asset management fee in an amount equal to
0.5% of the Partnership’s invested assets in Local Limited Partnerships which are subsidized under one or more Federal,
state or local housing assistance programs. The asset management fee is payable with respect to the previous calendar quarter
on the first day of each calendar quarter during the year. Accrued but unpaid asset management fees for any year are deferred
without interest and are payable in subsequent years from any funds available to the Partnership after payment of all other costs
and expenses of the Partnership, including any capital reserves then determined by the General Partner to no longer be necessary
to be retained by the Partnership, or from the proceeds of a sale or refinancing of Partnership assets. Asset management fees
of approximately $34,000, $58,000, and $93,000, were incurred during the years ended March 31, 2014, 2013 and 2012, respectively.
The Partnership paid the General Partner and or its affiliates approximately $15,000, $145,000, and $430,000, of those fees during
the years ended March 31, 2014, 2013 and 2012, respectively.



Subject
to a number of terms and conditions set forth in the Agreement, the General Partner and its Affiliates may be entitled to compensation
for services actually rendered or to be rendered in connection with (i) selecting, evaluating, structuring, negotiating and closing
the Partnership’s investments in Local Limited Partnership Interests, (ii) the acquisition or development of Properties
for the Local Limited Partnerships, or (iii) property management services actually rendered by the General Partners or their Affiliates
respecting the Properties owned by Local Limited Partnerships. The Partnership has completed its investment stage, so no compensation
for the services in (i) or (ii) has been paid during the period covered by this report and none will be paid in the future. None
of the services described in (iii) were rendered and no such compensation was payable for such services during the periods covered
by this report.



|(b) |  | Operating
                                         Expenses
|--- |  | -----------------------------------------------------------



Reimbursement
to the General Partner or any of its Affiliates of Operating Cash Expenses is subject to specific restrictions in Section 5.3.4
of the Partnership Agreement of Limited. The Agreement defines “Operating Cash Expenses” as



“
.. . . the amount of cash disbursed by the Partnership . . . in the ordinary course of business for the payment of its operating
expenses, such as expenses for advertising and promotion, management, utilities, repair and maintenance, insurance, investor communications,
legal, accounting, statistical and bookkeeping services, use of computing or accounting equipment, travel and telephone expenses,
salaries and direct expenses of Partnership employees while engaged in Partnership business, and any other operational and administrative
expenses necessary for the prudent operation of the Partnership. Without limiting the generality of the foregoing, Operating Cash
Expenses shall include fees paid by the Partnership to any General Partner or any Affiliate of a General Partner permitted by
this Agreement and the actual cost of goods, materials and administrative services used for or by the Partnership, whether incurred
by a General Partner, an Affiliate of a General Partner or a non-Affiliated Person in performing the foregoing functions. As used
in the preceding sentence, actual cost of goods and materials means the actual cost of goods and materials used for or by the
Partnership and obtained from entities not Affiliated with a General Partner, and actual cost of administrative services means
the pro rata cost of personnel (as if such persons were employees of the Partnership) associated therewith, but in no event to
exceed the Competitive amount.”



33







The
Agreement provides that no such reimbursement shall be permitted for services for which a General Partner or any of its Affiliates
is entitled to compensation by way of a separate fee. Furthermore, no such reimbursement is to be made for (a) rent or depreciation,
utilities, capital equipment or other such administrative items, and (b) salaries, fringe benefits, travel expenses and other
administrative items incurred or allocated to any “controlling person” of a General Partner or any Affiliate of a
General Partner. For the purposes of Section 5.3.4, “controlling person” includes, but is not limited to, any person,
however titled, who performs functions for a General Partner or any Affiliate of a General Partner similar to those of: (1) chairman
or member of the board of directors; (2) executive management, such as president, vice president or senior vice president, corporate
secretary or treasurer; (3) senior management, such as the vice president of an operating division who reports directly to executive
management; or (4) those holding 5% or more equity interest in such General Partner or any such Affiliate of a General Partner
or a person having the power to direct or cause the direction of such General Partner or any such Affiliate of a General Partner,
whether through the ownership of voting securities, by contract or otherwise.



The
unpaid operating expenses reimbursable to the General Partner or its affiliates were approximately $95,000, $0, and $14,000 for
the years ended March 31, 2014, 2013 and 2012, respectively. The Partnership reimbursed the General Partner or its affiliates
for operating expenses of approximately $22,000, $57,000, and $71,000, during the years ended March 31, 2014, 2013 and 2012, respectively.



|(c) |  | Interest
                                         in Partnership
|--- |  | ----------------------------------------------------------------



The
General Partner receives 1% of the Partnership’s allocated Low Income Housing Tax Credits, which were $0 for Associates
and $0 for the General Partner in the aggregate for the tax years (calendar years) ended December 31, 2013, 2012 and 2011. The
General Partner is also entitled to receive 1% of the Partnership’s operating income or losses, gain or loss from the sale
of property and operating cash distributions. There were no distributions of operating cash to the General Partner during the
years ended March 31, 2014, 2013 and 2012. The General Partner has an interest in sale or refinancing proceeds as follows: after
the Limited Partners have received a return of their capital, General Partner may receive an amount equal to its capital contribution,
less any prior distribution of such proceeds, then the General Partner may receive 1% and the Limited Partners 99% of any remaining
proceeds. There were no such distributions to the General Partner during the years ended March 31, 2014, 2013 or 2012.



|(d) |  | Subordinated
                                         Disposition Fee
|--- |  | ---------------------------------------------------------------------



The
General Partner may receive a subordinated disposition fee in an amount equal to 1% of the sale price of real estate sold by the
Local Limited Partnerships. Payment of this fee is subordinated to the Limited Partners receiving distributions equal to their
capital contributions and their return on investment (as defined in the Partnership Agreement) and is payable only if services
are rendered in the sales effort. No such fee was incurred for all periods presented.



|(e) |  | Compensation
                                         Committee Interlocks and Insider Participation
|--- |  | ----------------------------------------------------------------------------------------------------



The
Partnership has no compensation committee.



|(f) |  | Compensation
                                         Committee Report
|--- |  | ----------------------------------------------------------------------



The
Partnership has no compensation committee.



34







Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



|(a) |  | Securities
                                         Authorized for Issuance Under Equity Compensation Plans
|--- |  | -----------------------------------------------------------------------------------------------------------



The
Partnership has no compensation plans under which interests in the Partnership are authorized for issuance.



|(b) |  | Security
                                         Ownership of Certain Beneficial Owners
|--- |  | ----------------------------------------------------------------------------------------



No
person is known to own beneficially in excess of 5% of the outstanding Partnership Units.



|(c) |  | Security
                                         Ownership of Management
|--- |  | -------------------------------------------------------------------------



Neither
the General Partner, Associates, its affiliates, nor any of the officers or directors of the General Partner, Associates or its
affiliates own directly or beneficially any Partnership Units.



|(d) |  | Changes
                                         in Control
|--- |  | -----------------------------------------------------------



The
management and control of the General Partner and of Associates and their affiliates may be changed at any time in accordance
with their respective organizational documents, without the consent or approval of the Limited Partners. In addition, the Partnership
Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances.



First,
with the consent of any other General Partners and a majority-in-interest of the Limited Partners, any General Partners may designate
one or more persons to be successor or additional General Partners. In addition, any General Partner may, without the consent
of any other General Partner or the Limited Partners, (i) substitute in its stead as General Partner any entity which has, by
merger, consolidation or otherwise, acquired substantially all of its assets, stock or other evidence of equity interest and continued
its business, or (ii) cause to be admitted to the Partnership an additional General Partner or Partners if it deems such admission
to be necessary or desirable so that the Partnership will be classified a partnership for Federal income tax purposes. Finally,
a majority-in-interest of the Limited Partners may at any time remove the General Partners of the Partnership and elect a successor
General Partner.



Item
13. Certain Relationships and Related Transactions, and Director Independence



The
General Partner manages all of the Partnership’s affairs. The transactions with the General Partner are primarily in the
form of fees paid by the Partnership for services rendered to the Partnership, reimbursement of expenses, and the General Partner’s
interests in the Partnership, as discussed in Item 11 and in the notes to the Partnership’s financial statements.



Item
14. Principal Accountant Fees and Services



The
following is a summary of fees paid to the Partnership’s principal independent registered public accounting firm for the
years ended March 31:



|                   |  | 2013 |        |  | 2012 |  
|------------------ |  | ---- | ------ |  | ---- | -
|                   |  |      |        |  |      |  
|Audit Fees         |  | $    | 22,050 |  |      | $
|Audit-related Fees |  |      | -      |  |      |  
|Tax Fees           |  |      | -      |  |      |  
|All Other Fees     |  |      | -      |  |      |  
|TOTAL              |  | $    | 22,050 |  |      | $



The
Partnership has no Audit Committee. All audit services and any permitted non-audit services performed by the Partnership’s
independent auditors are pre-approved by the General Partner.



35







PART
IV.



Item
15. Exhibits and Financial Statement Schedules



|(a)(1) |  | List
    of Financial statements included in Part II hereof:                                                                                                                                                                                                                                                                                                                                                                                       
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |  | The
    Reports of Independent Registered Public Accounting Firms                                                                                                                                                                                                                                                                                                                                                                                  
|       |  | Balance
    Sheets, March 31, 2014 and 2013                                                                                                                                                                                                                                                                                                                                                                                                        
|       |  | Statements
    of Operations for the years ended March 31, 2014, 2013 and 2012                                                                                                                                                                                                                                                                                                                                                                     
|       |  | Statements
    of Partners’ Deficit for the years ended March 31, 2014, 2013 and 2012                                                                                                                                                                                                                                                                                                                                                              
|       |  | Statements
    of Cash Flows for the years ended March 31, 2014, 2013 and 2012                                                                                                                                                                                                                                                                                                                                                                     
|       |  | Notes
    to Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(a)(2) |  | List
    of Financial statement schedules included in Part IV hereof:                                                                                                                                                                                                                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |  | Schedule
    III - Real Estate Owned by Local Limited Partnerships                                                                                                                                                                                                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(a)(3) |  | Exhibits.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1    |  | Agreement
    of Limited Partnership dated October 5, 1992 was filed as Exhibit 28.1 to Form 10-K for the year ended December 31, 1994 is
    hereby incorporated herein by reference as Exhibit 3.1.                                                                                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|31.1   |  | Certification
    of the Chief Executive Officer pursuant to Rule 13a-14 or 15d-14. (filed herewith)                                                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|31.2   |  | Certification
    of the Chief Financial Officer pursuant to Rule 13a-14 or 15d-14. (filed herewith)                                                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|32.1   |  | Section
    1350 Certification of the Chief Executive Officer. (filed herewith)                                                                                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|32.2   |  | Section
    1350 Certification of the Chief Financial Officer. (filed herewith)                                                                                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|101.   |  | Interactive
    data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets at March 31, 2014 and 2013, (ii) the Statements
    of Operations for the years ended March 31, 2014, 2013 and 2012, (iii) the Statements of Partners’ Deficit for the years
    ended March 31, 2014, 2013, and 2012, (iv) the Statements of Cash Flows for the years ended March 31, 2014, 2013 and 2012,
    and (v) the Notes to Financial Statements



Exhibits
32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934,
or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing
under the Securities Act of 1933 or Securities Exchange Act of 1934.



36







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2014









|                                   |  |          |                                                                |  | As
    of March 31, 2013                           |   |           | As
    of December 31, 2013          
|---------------------------------- |  | -------- | -------------------------------------------------------------- |  | -------------------------------------------------- | - | --------- | -------------------------------------
|Local
    Limited Partnership Name |  | Location |                                                                |  | Total
    Investment in Local Limited Partnerships |   |           | Amount
    of Investment Paid to Date
|                                   |  |          |                                                                |  |                                                    |   |           |                                      
|Colonial
    Village Roseville (1) |  |          | Roseville,
                                         California |  |                                                    | $ | 2,811,000 |                                      
|                                   |  |          |                                                                |  |                                                    |   |           |                                      
|                                   |  |          |                                                                |  |                                                    | $ | 2,811,000 |                                      













(1)
The Local Limited Partnership interest has been identified for sale as of March 31, 2014.



37







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2014



|                                   |  | For
    the year ended December 31, 2013 |        
|---------------------------------- |  | ---------------------------------------- | -------
|Local
    Limited Partnership Name |  | Rental
    Income                        |        
|                                   |  |                                          |        
|Colonial Village Roseville (1)     |  | $                                        | 584,000
|                                   |  |                                          |        
|                                   |  | $                                        | 584,000



(1)
The Local Limited Partnership interest has been identified for sale as of March 31, 2014.



38







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2013





|                                      |  |                       |  | As
    of March 31, 2013                           |           |  | As
    of December 31, 2012           |  
|------------------------------------- |  | --------------------- |  | -------------------------------------------------- | --------- |  | ------------------------------------- | -
|Local
    Limited Partnership Name    |  | Location              |  | Total
    Investment in Local Limited Partnerships |           |  | Amount
    of Investment Paid to Date |  
|                                      |  |                       |  |                                                    |           |  |                                       |  
|Almond View Apartments, Ltd.(1)       |  | Stockton, California  |  | $                                                  | 1,639,000 |  |                                       | $
|                                      |  |                       |  |                                                    |           |  |                                       |  
|Colonial Village Roseville            |  | Roseville, California |  |                                                    | 2,811,000 |  |                                       |  
|                                      |  |                       |  |                                                    |           |  |                                       |  
|La Paloma del Sol Limited Partnership |  | Deming, New Mexico    |  |                                                    | 254,000   |  |                                       |  
|                                      |  |                       |  |                                                    |           |  |                                       |  
|                                      |  |                       |  | $                                                  | 4,704,000 |  |                                       | $





(1)
The Local Limited Partnership has been identified for sale as of March 31, 2013.



39







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2013



|                                      |  | For
    the year ended December 31, 2012 |          
|------------------------------------- |  | ---------------------------------------- | ---------
|Local
    Limited Partnership Name    |  | Rental
    Income                        |          
|                                      |  |                                          |          
|Almond View Apartments, Ltd.(1)       |  | $                                        | 296,000  
|                                      |  |                                          |          
|Colonial Village Roseville            |  |                                          | 578,000  
|                                      |  |                                          |          
|La Paloma del Sol Limited Partnership |  |                                          | 217,000  
|                                      |  |                                          |          
|                                      |  | $                                        | 1,091,000



(1)
The Local Limited Partnership has been identified for sale as of March 31, 2013.



40







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2012





|                                           |  |                          |  | As
    of March 31, 2012                           |           | As
    of December 31, 2011 |                                      
|------------------------------------------ |  | ------------------------ |  | -------------------------------------------------- | --------- | --------------------------- | -------------------------------------
|Local
    Limited Partnership Name         |  | Location                 |  | Total
    Investment in Local Limited Partnerships |           |                             | Amount
    of Investment Paid to Date
|                                           |  |                          |  |                                                    |           |                             |                                      
|Almond Garden Apartment Associates
    (1) |  | Delhi, California        |  | $                                                  | 391,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Almond View Apartments, Ltd.(2)            |  | Stockton, California     |  |                                                    | 1,639,000 |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Buccaneer Associates, Limited (2)          |  | Fernandia Beach, Florida |  |                                                    | 365,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Colonial Village Roseville                 |  | Roseville, California    |  |                                                    | 2,811,000 |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Dallas County Housing, Ltd.                |  | Orrville, Alabama        |  |                                                    | 130,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|La Paloma del Sol Limited Partnership      |  | Deming, New Mexico       |  |                                                    | 254,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Old Fort Highway Limited Partnership       |  | Hidalgo, Texas           |  |                                                    | 249,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|Sun Manor, L.P. (1)                        |  | Itta Bena, Mississippi   |  |                                                    | 230,000   |                             |                                      
|                                           |  |                          |  |                                                    |           |                             |                                      
|                                           |  |                          |  | $                                                  | 6,069,000 |                             |                                      





(1)
The Local Limited Partnership has been identified for sale as of March 31, 2012 and was sold subsequent thereto.

(2)
The Local Limited Partnership has been identified for sale as of March 31, 2012.



41







WNC
California Housing Tax Credits III, L.P.

Schedule
III

Real
Estate Owned by Local Limited Partnerships

March
31, 2012



|                                       |  | For
    the year ended December 31, 2011 |          
|-------------------------------------- |  | ---------------------------------------- | ---------
|Local
    Limited Partnership Name     |  | Rental
    Income                        |          
|                                       |  |                                          |          
|Almond Garden Apartment Associates (1) |  | $                                        | 216,000  
|                                       |  |                                          |          
|Almond View Apartments, Ltd.(2)        |  |                                          | 265,000  
|                                       |  |                                          |          
|Buccaneer Associates, Limited (2)      |  |                                          | 325,000  
|                                       |  |                                          |          
|Colonial Village Roseville             |  |                                          | 576,000  
|                                       |  |                                          |          
|Dallas County Housing, Ltd.            |  |                                          | 98,000   
|                                       |  |                                          |          
|La Paloma del Sol Limited Partnership  |  |                                          | 209,000  
|                                       |  |                                          |          
|Old Fort Limited Partnership           |  |                                          | 249,000  
|                                       |  |                                          |          
|Sun Manor, L.P. (1)                    |  |                                          | 202,000  
|                                       |  |                                          |          
|                                       |  | $                                        | 2,140,000



(1)The
Local Limited Partnership has been identified for sale as of March 31, 2012 and was sold subsequent thereto.



(2)
The Local Limited Partnership has been identified for sale as of March 31, 2012.



42







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.



WNC
CALIFORNIA HOUSING TAX CREDITS III, L.P.



|By: | WNC
    California Tax Credit Partners III, L.P. | 
|--- | ------------------------------------------------ | 
|    | General
    Partner                              | 
|    |                                                  | 
|By: | /s/
    Wilfred N. Cooper, Jr.                   | 
|    | Wilfred
    N. Cooper, Jr.,                      | 
|    | President
    of WNC & Associates, Inc.          | 



Date:
September 16, 2014



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.



|By: | /s/
    Wilfred N. Cooper, Jr.                                                                              | 
|--- | ----------------------------------------------------------------------------------------------------------- | 
|    | Wilfred
    N. Cooper, Jr.,                                                                                 | 
|    | Chief
    Executive Officer, President and Director of WNC & Associates, Inc. (principal executive officer)



Date:September 16, 2014

|    |                                                                                                                                       | 
|--- | ------------------------------------------------------------------------------------------------------------------------------------- | 
|By: | /s/
    Melanie R. Wenk                                                                                                               | 
|    | Melanie
    R. Wenk                                                                                                                   | 
|    | Vice-President
    - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer)



Date:September 16, 2014



|By: | /s/
    Wilfred N. Cooper Sr.                      | 
|--- | -------------------------------------------------- | 
|    | Wilfred N. Cooper
    Sr.                          | 
|    | Chairman
    of the Board of WNC & Associates Inc.



Date:September 16, 2014



|By: | /s/
    Kay L. Cooper                  | 
|--- | -------------------------------------- | 
|    | Kay L. Cooper                          | 
|    | Director of WNC
    & Associates, Inc. | 



Date:September 16, 2014



43