10-K 1 f10k_lib1-march2007.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 15, 2007 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-17015 LIBERTY TAX CREDIT PLUS L.P. (Exact name of registrant as specified in its charter) Delaware 13-3446500 ------------------------------------------------ ------------------- (State or other jurisdiction of incorporation or (I.R.S. Employer organization) Identification No.) 625 Madison Avenue, New York, New York 10022 ------------------------------------------------ ------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 317-5700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Beneficial Assignment Certificates and Limited Partnership Interests (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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in 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, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] The approximate aggregate book value of the voting and non-voting common equity held by non-affiliates of the Registrant as of September 15, 2006, was ($29,082,000), based on Limited Partner equity (deficit) as of such date. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Business. General ------- Liberty Tax Credit Plus L.P. (the "Partnership") is a limited partnership which was formed under the laws of the State of Delaware on June 26, 1987. The general partners of the Partnership are Related Credit Properties L.P., a Delaware limited partnership (the "Related General Partner") and Liberty Associates III L.P., a Delaware limited partnership ("Liberty Associates", and together with the Related General Partner, the "General Partners"). The Related General Partner is also the special limited partner of the Partnership. The general partner of the Related General Partner is Credit Properties GP LLC ("Credit Properties"), a Delaware limited liability company. The general partner of Liberty Associates is the Related General Partner. The ultimate parent of the General Partners is Centerline Holding Company ("Centerline") (which had been known as CharterMac until April 2007). On March 15, 2007, Centerline announced the retirement of Alan P. Hirmes as Chief Financial Officer of Centerline. Upon his retirement, he also retired from his position as President, Chief Executive Officer and Chief Financial Officer of the general partner of the Related General Partner. Centerline has named Robert L. Levy as Chief Financial Officer and Andrew J. Weil as Chief Executive Officer to replace Mr. Hirmes. On November 20, 1987, the Partnership commenced a public offering (the "Offering") of Beneficial Assignment Certificates ("BACs") representing assignments of limited partnership interests in the Partnership ("Limited Partnership Interests"), pursuant to a prospectus dated November 20, 1987, as supplemented by the supplements thereto dated January 14, 1988 and March 14, 1988 (as so supplemented, the "Prospectus"). As of April 4, 1988 (the date on which the Partnership held the final closing of the sale of BACs and on which the Offering was terminated), the Partnership had received $79,937,500 of gross proceeds of the Offering from 5,525 investors. The Partnership was formed to invest, as a limited partner, in other limited partnerships (referred to herein as "Local Partnerships," "subsidiaries" or "subsidiary partnerships") which own leveraged-low and moderate-income multifamily residential complexes ("Apartment Complexes") that are eligible for the low-income housing tax credit ("Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties ("Rehabilitation Projects", and together with the Apartment Complexes, the "Properties") that are eligible for the historic rehabilitation tax credit (the "Historic Rehabilitation Tax Credit"). The Partnership's investment in each Local Partnership represents a 71.54% to 98% interest in each of the Local Partnerships. The Partnership does not anticipate making any additional investments. As of March 15, 2007, the Partnership has disposed of twenty-two of its thirty-one original Properties, and two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 26, 2007, one Local Partnership has entered into an agreement to sell its property and the related assets and liabilities, and on May 11, 2007, the property and the related assets and liabilities of one Local Partnership were sold. Liberty Associates is the special limited partner in all of the Local Partnerships, as well as a general partner of the Partnership. Liberty Associates has certain rights and obligations in its role as special limited partner, which permit it to exercise control over the management and policies of the Local Partnerships. The investment objectives of the Partnership are to: 1. Entitle qualified BACs holders to substantial Tax Credits (and potentially Historic Rehabilitation Tax Credits) over the period of the Partnership's entitlement to claim Tax Credits (for each Property, ten years from the date of investment or, if later, the date the Property is placed in service referred to herein as the "Tax Credit Period"); 2. Participate in any capital appreciation in the value of the Properties and provide distributions of sale or refinancing proceeds upon the disposition of Properties; 3. Preserve and protect the Partnership's capital; 4. Provide cash distributions, when available, from the operations of Properties; and 5. Allocate passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocate passive losses to corporate BACs holders to offset active business income. Each of the Local Partnerships in which the Partnership has acquired an interest has been allocated by respective state credit agencies the authority to recognize Tax Credits during the Tax Credit Period provided that the Local Partnership satisfies the rent restriction, minimum set-aside and other requirements for recognition of the Tax Credits at all times during the 15-year period (the "Compliance Period") commencing at the beginning of the Tax Credit Period. Once a Local Partnership has become eligible to recognize Tax Credits, it may lose such eligibility and suffer an event of "recapture" if its Property fails to remain in compliance with the Tax Credit requirements at any time during the Compliance Period. None of the Local Partnerships in which the Partnership has acquired an interest has suffered an event of recapture. The Tax Credits are attached to a Local Partnership for the Tax Credit Period and are transferable with the property during the entirety of such ten year period. If trends in the real estate market warranted the sale of a property, the remaining Tax Credits would transfer to the new owner, thereby adding value to the property on the market. However, such value declines each year and is not included in the financial statement carrying amount. The Tax Credit Periods expired at various times through December 31, 2003 with respect to the Local Partnerships depending upon when the Tax Credit Periods commenced. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time the property investments themselves are reduced to estimated fair value (generally using the discounted cash flow valuation method). Through March 15, 2007, the Partnership has recorded approximately $2,710,000 as an aggregate loss on impairment of assets or reduction to estimated fair value. 2 As of December 31, 2003 all the Local Partnerships had completed their Tax Credit Periods and the Partnership has met its primary objective of generating Tax Credits for qualified BACs holders. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Periods continue through December 31, 2008 with respect to the Properties depending upon when the Tax Credit Periods commenced. The Partnership also continues to meet its objective of allocating passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investment and other passive activities, and allocating passive losses to the corporate BACs holders to offset business income. At this time, there can be no assurance that the Partnership will continue to meet this investment objective. As of March 15, 2007, the Partnership has not met its investment objective of providing cash distributions from the operations of the Properties. The Partnership does not anticipate providing cash distributions to BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties. Furthermore, at this time there can be no assurance that the Partnership will achieve this investment objective. During the fiscal year ended March 15, 2007, distributions from sales proceeds were made to the BACs holders of approximately $2,750,000 and to the General Partners of approximately $28,000. Through March 15, 2007, distributions from sales proceeds were made to the BACs holders of approximately $8,122,000 and to the General Partners of approximately $82,000. The Partnership does not anticipate being able to make distributions sufficient to return to BACs holders their original capital contributions. The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally. However, no more than 33% of the Properties are located in any single state. The Partnership is the beneficiary of certain subsidy agreements pursuant to which the United States Department of Housing and Urban Development ("HUD") subsidizes the amount of rent that the Local Partnerships earn. There are substantial risks associated with owning properties receiving government assistance, such as the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. As of March 15, 2007, there are eight Local Partnerships subsidized by HUD. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. Sales of Underlying Properties/Local Partnership Interests ---------------------------------------------------------- The Partnership is currently in the process of disposing of its investments. As of March 15, 2007, the Partnership has disposed of twenty-two of its thirty-one original investments and two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 26, 2007, one Local Partnership has entered into an agreement to sell its property and the related assets and liabilities, and on May 11, 2007, the property and the related assets and liabilities of one Local Partnership were sold (see Item 8, Note 15). On December 29, 2006, the property and the related assets and liabilities of United-Pennsylvanian, L.P. ("United Penn") were sold to an unaffiliated third party purchaser for a sales price of $500,000 plus the assumption of the mortgage debt. The Partnership received $217,227 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $283,000. The sale resulted in a gain of approximately $2,225,000, resulting from the write-off of the deficit basis in the property at the date of the sale. On October 1, 2006, the Partnership sold its limited partnership interest in Shiloh Grove Limited Partnership ("Shiloh Grove") to the Local General Partner for a sales price of $149,990. The Partnership received proceeds of $49,990 on October 3, 2006 and the remaining $100,000 is to be paid in guaranteed payments payable on certain dates through April 1, 2008 and is included in other assets at March 15, 2007. The sale resulted in a gain of approximately $2,859,000 resulting from the write-off of the deficit basis in the property of approximately $2,709,000 at the time of the sale and the $149,990 cash and guaranteed payments receivable from the sale. On August 31, 2006, the Partnership sold its limited partnership interest in Alameda Towers Associates, L.P. ("Alameda Towers") to the Local General Partner for a sales price of $2,092,490. The Partnership received proceeds of $92,490 on September 5, 2006 and the remaining $2,000,000 is to be paid in guaranteed payments payable on certain dates through December 31, 2008, which is included in other assets at March 15, 2007. The sale resulted in a loss of approximately $33,000, resulting from the write-off of the basis in the property of approximately $2,126,000 and the $2,092,490 cash and guaranteed payments receivable from the sale. On June 5, 2006, the property and the related assets and liabilities of Willoughby/Wycoff Housing Associates, L.P. ("Willoughby") were sold to an unaffiliated third party purchaser for a sales price of $4,800,000. There were no distribution from this sale after the repayment of mortgages, other liabilities and closing costs of approximately $4,800,000. The sale resulted in a gain of approximately $2,785,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $(756,000) was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $2,029,000. On May 1, 2006, the property and the related assets and liabilities of Grand Concourse Housing Associates, L.P. ("Grand Concourse") were sold to an unaffiliated third party purchaser for a sales price of $4,937,500. The Partnership received $797,203 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $4,140,000. The sale resulted in a gain of approximately $2,104,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $383,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $2,487,000. On May 1, 2006, the property and the related assets and liabilities of Concourse Artists Housing Associates, L.P. ("Concourse Artists") were sold to an 3 unaffiliated third party purchaser for a sales price of $1,797,500. The Partnership received $278,553 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $1,519,000. The sale resulted in a gain of approximately $672,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $28,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $700,000. On May 1, 2006, the property and the related assets and liabilities of Robin Housing Associates, L.P. ("Robin Housing") were sold to an unaffiliated third party purchaser for a sales price of $7,265,000. The Partnership received $1,743,907 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $5,521,000. The sale resulted in a gain of approximately $3,115,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $219,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $3,334,000. On September 15, 2005, the Partnership sold its limited partnership interest in Bayridge Associates, L.P. ("Bayridge") to the Local General Partner for a sales price of $1,125,000. The Partnership received proceeds of $1,113,587 from this sale after payment of closing costs of approximately $11,000. The sale resulted in a gain of approximately $5,821,000, resulting from the write-off of the deficit basis in the property of approximately $4,707,000 at the date of the sale and the $1,113,587 cash received from the sale. On July 27, 2005, the property and the related assets and liabilities of Penn Alto Associates, L.P. ("Penn Alto") were sold to an unaffiliated third party purchaser for a sales price of $1,625,000. The proceeds were used for repayment of mortgages, other liabilities and closing costs of approximately $1,625,000. During the quarter ended September 15, 2005, in accordance with Statement of Financial Accounting Standards No. 144 ("SFAS No. 144") "Accounting for the Impairment of Disposal of Long-Lived Assets", the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $850,000. The sale resulted in a gain of approximately $127,000 resulting from the write-off of the basis in the property at the date of the sale. An adjustment to the gain of approximately ($190,000) was recorded during the quarter ended March 15, 2006, resulting in an overall loss of approximately $63,000. The sale resulted in the liquidation of Penn Alto. On June 8, 2005, the Partnership sold its limited partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn") to the Local General Partner for a sales price of $1,400,000. The Partnership received proceeds of $200,000 and a note receivable for $1,200,000, which was paid in full on February 9, 2006, from this sale. The sale resulted in a gain of approximately $3,098,000, resulting from the write-off of the deficit basis in the property at the date of the sale of approximately $1,698,000 and the $1,400,000 cash received from the sale. On June 2, 2005, the Partnership sold its limited partnership interest in Lancaster Towers Associates, LTD ("Lancaster") to an affiliate of the Local General Partner for a sales price of $449,750. The Partnership received proceeds of $445,500 from this sale after the payment of closing costs of approximately $4,000 from the sales price. During the quarter ended June 15, 2005, in accordance with SFAS No. 144, the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $1,860,000. The sale resulted in a loss of approximately $309,000, resulting from the write-off of the deficit basis in the property at the date of the sale. On March 29, 2005, the property and the related assets and liabilities of Regent Street Associates, L.P. ("Regent Street") were sold to an unaffiliated third party purchaser for the assumption of the outstanding debt plus an incentive payment of $100,000. The Partnership received $100,000 from this transaction. The sale originally resulted in a gain of approximately $1,436,000, resulting from the write-off of the deficit basis in the property of approximately $1,336,000 and the $100,000 cash received from the sale. An adjustment to the gain of approximately $206,000 was recognized during the quarter ended March 15, 2006, resulting in an overall gain of $1,230,000. The sale also resulted in a non-cash contribution to the Local Partnership from the Local General Partner of approximately $150,000 resulting from the write-off of payables owed to the Local General Partner and a non-cash contribution from the special limited partner of approximately $40,000 resulting from the write-off of payables owed to the special limited partner. The sale resulted in the liquidation of Regent Street. On February 17, 2005, the Partnership's limited partnership interest in Redwood Villa Associates ("Redwood") was sold to the Local General Partner for a sales price of $60,000. The Partnership received proceeds of $59,400 from this sale. The sale resulted in a gain of approximately $1,749,000, resulting from the write-off of the deficit basis in the property of approximately $1,690,000 and the $59,400 cash received from the sale. On January 5, 2005, the property and the related assets and liabilities of Lund Hill Associates, L.P. ("Lund Hill") were sold to an unaffiliated thirty party purchaser for a sales price of $6,500,000. The Partnership received approximately $3,225,485 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $3,276,000. The sale resulted in a gain of approximately $1,345,000 resulting from the write-off of the deficit basis in the property. The sale resulted in the liquidation of Lund Hill. On September 24, 2004, the property and the related assets and liabilities of Autumn Park Associates, L.P. ("Autumn Park") were sold to an unaffiliated third party purchaser for a sales price of $4,800,000. The Partnership received $1,049,900 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $3,750,000. The sale resulted in a gain of approximately $2,110,000, resulting from the write-off of the deficit basis in the property at the date of the sale. The sale also resulted in a non-cash contribution to the Local Partnership from the Local General Partner of approximately $95,000 resulting from the write-off of payables owed to the Local General Partner. The sale resulted in the liquidation of Autumn Park. On August 27, 2004, the property and the related assets and liabilities of 2108 Bolton Drive Associates, L.P. ("Bolton") were sold to an unaffiliated third party purchaser for a sales price of $8,891,000. The proceeds were used for the repayment of mortgages, other liabilities and closing costs. The sale originally resulted in a gain of approximately $1,622,000, resulting from the write-off of the deficit basis in the property at the date of the sale. An additional loss of approximately $(59,000) was recorded during the year ended March 15, 2006, resulting in an overall gain of approximately $1,563,000. The sale resulted in the liquidation of Bolton. On July 30, 2004, the property and the related assets and liabilities of Tanglewood Apartments, L.P. ("Tanglewood") were sold to an unaffiliated third 4 party purchaser for a sales price of $3,425,000. The Partnership received $321,640 as a distribution from the sale after the repayment of mortgages, other liabilities and closing costs of approximately $3,103,000. The sale resulted in a gain of approximately $1,120,000 resulting from the write-off of the basis in the property at the date of the sale. The sale resulted in the liquidation of Tanglewood. On March 31, 2004, the Partnership's limited partnership interest in Walnut Park Plaza ("Walnut") was sold to the Local General Partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,700,000. The sale resulted in a gain of approximately $2,589,000, resulting from the write-off of the deficit basis in the property at the date of the sale. Assets Held for Sale -------------------- On September 28, 2006, Greenleaf Associates, L.P. ("Greenleaf") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an unaffiliated third party purchaser for a sales price of $5,264,177 including the assumption of the mortgage debt. The sales documents have been executed and the initial deposit funds are being held in escrow. The closing is expected to occur in the quarter ending June 15, 2007. No assurance can be given that the sale will actually occur. Greenleaf is being held as an asset held for sale as of March 15, 2007. As of December 31, 2006, Greenleaf had property and equipment, at cost, of approximately $6,479,000, accumulated depreciation of approximately $3,923,000 and mortgage debt of approximately $4,507,000. On February 8, 2007, Charles Drew Court Associates, L.P. ("Charles Drew") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an unaffiliated third party purchaser for a sales price of $3,435,000. The sales documents have been executed and the initial deposit funds are being held in escrow. The closing is expected to occur in the quarter ending June 15, 2007. No assurance can be given that the sale will actually occur. Charles Drew is being held as an asset held for sale as of March 15, 2007. As of December 31, 2006, Charles Drew had property and equipment, at cost, of approximately $8,286,000 and accumulated depreciation of approximately $5,639,000. Subsequently, on May 11, 2007, the property and the related assets and liabilities of Charles Drew were sold (see Item 8, Note 15). Segments -------- The Partnership operates in one segment, which is the investment in multi-family residential properties. Financial information about this segment is set forth in Item 8 hereof. Competition ----------- The real estate business is highly competitive and substantially all of the Properties acquired by the Partnership are subject to active competition from similar properties in their respective vicinities. In addition, various other limited partnerships may, in the future, be formed by the General Partners and/or their affiliates to engage in businesses which may be competitive with the Partnership. Employees --------- The Partnership does not have any direct employees. All services are performed for the Partnership by its General Partners and their affiliates. The General Partners receive compensation in connection with such activities as set forth in Items 11 and 13 hereof. In addition, the Partnership reimburses the General Partners and certain of their affiliates for expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement"). Item 1A. Risk Factors The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally, however no more than 33% of the properties are located in any single state. There are also substantial risks associated with owning properties receiving government assistance, for example, the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. As of March 15, 2007, there are eight Local Partnerships subsidized by HUD. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence, without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. Item 1B. Unresolved Staff Comments None. Item 2. Properties The Partnership originally acquired an interest as a limited partner in thirty-one Local Partnerships. Except for the interest in Sartain School Venture, L.P. ("Sartain"), the Partnership's investment in each Local Partnership represents 98% of the partnership interests in the Local Partnership. The Partnership's investment in Sartain represents 71.54% of the partnership interests in the Local Partnership (the other 26.46% limited partnership interest is owned by an affiliate of the Partnership, with the same management). During the fiscal year ended March 15, 2007, the property and the related assets and liabilities of five Local Partnerships and the limited partnership interest in two Local Partnerships were sold. Through the fiscal year ended March 15, 2007, the properties and the related assets and liabilities of fourteen Local Partnerships and the limited partnership interests in eight Local Partnerships were sold. Set forth below is a schedule of the Local Partnerships including certain information concerning the Properties. Further information concerning those Local Partnerships and their Properties, including any encumbrances affecting the Properties, may be found in Item 15, Schedule III. 5 Local Partnership Schedule --------------------------

(a) The properties and the related assets and liabilities were sold during the fiscal year ended March 15, 2003 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (b) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2003 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (c) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2004 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (d) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2005 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (e) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2005 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (f) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2006 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (g) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2006 (see Note 10 in Item 8. Financial Statements and Supplementary Data). (h) The property and the related assets and liabilities were sold during the fiscal year ended March 15, 2007 (see Note 10 In Item 8. Financial Statements and Supplementary Data). (i) The Partnership's limited partnership interest was sold during the fiscal year ended March 15, 2007 (see Note 10 in Item 8. Financial Statements and Supplementary Data). All development deficit, rent-up and operating deficit guarantees with respect to the Properties have expired. All leases are generally for periods not greater than one to two years and no tenant occupies more than 10% of the rentable square footage. Commercial tenants (to which average rental per square foot applies) comprise less than 5% of the rental revenues of the Local Partnership. Maximum rents for the residential units are determined annually by HUD and reflect increases/decreases in consumer price indices in various geographic areas. Market conditions, however, determine the amount of rent actually charged. Management annually reviews the physical state of the Properties and budgets improvements when required, which improvements are generally funded from cash flow from operations or release of replacement reserve escrows to the extent available. Management continuously reviews the insurance coverage of the Properties and believes such coverage is adequate. See Item 1., Business, above for the general competitive conditions to which the Properties described above are subject. 7 Real estate taxes are calculated using rates and assessed valuations determined by the township or city in which the property is located. Such taxes have approximated 1% of the aggregate cost of the properties as shown in Schedule III to the financial statements included herein. Item 3. Legal Proceedings None Item 4. Submission of Matters to a Vote of Stockholders None 8 PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Partnership has issued 15,987.5 Limited Partnership Interests, each representing a $5,000 capital contribution to the Partnership, for aggregate gross proceeds of $79,937,500. All of the issued and outstanding Limited Partnership Interests have been issued to Liberty Credit Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued BACs to the purchasers thereof for an aggregate purchase price of $79,937,500. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a Limited Partnership Interest held by the Assignor Limited Partner. BACs may be converted into Limited Partnership Interests at no cost to the holder (other than the payment of transfer costs not to exceed $100), but Limited Partnership Interests so acquired are not thereafter convertible into BACs. Neither the BACs nor the Limited Partnership Interests are traded on any established public trading market. Because of the provisions of the Revenue Act of 1987, unless there are further changes in such law, the Partnership does not intend to include the BACs for quotation on NASDAQ or for listing on any national or regional stock exchange or any other established securities market. The Revenue Act of 1987 contained provisions which have an adverse impact on investors in "publicly traded partnerships." Accordingly, the General Partners have imposed limited restrictions on the transferability of the BACs and the Limited Partnership Interests in secondary market transactions. The restrictions should prevent a public trading market from developing and may adversely affect the ability of an investor to liquidate his or her investment quickly. It is expected that such procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions. The Partnership has 5,211 registered holders of an aggregate of 15,987.5 BACs, as of May 25, 2007. All of the Partnership's general partnership interests, representing an aggregate capital contribution of $2,000, are held by the two General Partners. Certain Local Partnerships are subject to HUD restrictions which limit annual cash distributions to partners and restrict the Local Partnerships from selling or otherwise liquidating their assets without HUD's approval during the period that the agreement with HUD is in existence. There are no material legal restrictions in the Partnership Agreement on the ability to make distributions. During the fiscal year ended March 15, 2007, distributions from sales proceeds were made to the BACs holders of approximately $2,750,000 and to the General Partners of approximately $28,000. Through March 15, 2007, distributions from sales proceeds were made to the BACs holders of approximately $8,122,000 and to the General Partners of approximately $82,000. The Partnership does not anticipate providing cash distributions to the BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties. The Partnership does not anticipate being able to make distributions sufficient to return to BACs holders their original capital contributions. Transfer Procedures ------------------- The Partnership from time to time receives requests by unit holders and others to transfer BACs and/or limited partnership interests. Such requests may occur in connection with tender offers for the Partnership's units. Such requests implicate the Partnership's policies and procedures concerning transfers generally and tender offers in particular, which were adopted by the Partnership pursuant to the terms of its Partnership Agreement, to ensure compliance with applicable law, avoid adverse tax consequences for the Partnership and its investors, and preserve the Partnership's advantageous tax status. In prior years, the Partnership relied on the 5% safe harbor established by Internal Revenue Service ("IRS") regulations to avoid being characterized as a "publicly-traded partnership" that is taxed as a corporation. The 5% safe harbor, however, expired and is no longer available as of December 31, 2005. Accordingly, the Partnership now relies on a 2% safe harbor established by another IRS regulation to avoid being characterized as a "publicly-traded partnership" that is taxed as a corporation. A brief summary of certain of the Partnership's key policies, practices and requirements with respect to transfers and tender offers is as follows: o No transfer (whether for substitution, assignment or otherwise) is effective or binding on the Partnership unless and until it is approved by the General Partners. o No transfer will be approved unless the transferor and transferee submit complete and properly executed forms of the Partnership's own transfer documentation. The Partnership does not accept forms of transfer documentation other than its own and does not accept signatures made by power of attorney in lieu of original signatures by each of the transferors and transferees. o The Partnership will not approve transfers that in the cumulative aggregate for any tax year exceed the IRS 2% safe harbor, unless a financially responsible person provides the Partnership and its partners with (i) an indemnity (in form and substance in all ways acceptable to the General Partners) for all liability (including, without limitation, any adverse tax consequences) arising from or relating to exceeding the 2% safe harbor and (ii) a legal opinion (in form and substance in all ways acceptable to the General Partners) that there will be no adverse tax consequences to the Partnership and its partners from exceeding the 2% safe harbor. o In order to avoid the undesirable situation of one or more tender offers consuming the entire safe harbor limitation early in the tax year and leaving the Partnership's remaining investors with no liquidity opportunity for the rest of that tax year, the Partnership restricts the cumulative aggregate total of transfers made pursuant to all tender offers to 1.5% of its outstanding units in each tax year, unless a financially responsible person conducting such tender offer provides the Partnership with an acceptable indemnity and legal opinion of the type described above. At the end of each tax year, the General Partners, in its their discretion, may allow the cumulative total number of transfers (including those by tender offer) to reach the 2% safe harbor limit. o The Partnership requires that all tender offers for its units be conducted in accordance with all applicable law including, without limitation, the federal securities laws. 9 The foregoing is solely a summary of the Partnership's policies, requirements and practices with respect to transfers and tender offers. More complete information, including a copy of the Partnership's transfer documentation package, may be obtained from the Partnership. Item 6. Selected Financial Data The information set forth below presents selected financial data of the Partnership. Additional financial information is set forth in the audited financial statements in Item 8 hereof.

* As reclassified for comparative purposes ** As restated (Note 2) During the years ended March 15, 2003 through 2007, total assets and liabilities decreased primarily due to the sale of Local Partnerships. 10 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The Partnership's capital was originally invested in thirty-one Local Partnerships. As of March 15, 2007, the properties and the related assets and liabilities of fourteen Local Partnerships and the limited partnership interest in eight Local Partnerships have been sold. In addition, as of March 15, 2007, two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 26, 2007, one Local Partnership has entered into an agreement to sell its property and the related assets and liabilities, and on May 11, 2007, the property and the related assets and liabilities of one Local Partnership were sold. For a discussion of these sales see Notes 10, 11 and 15 in Item 8. Short-Term ---------- The Partnership's primary source of funds is cash distributions from operations of the Local Partnerships in which the Partnership has invested. Such funds are available to meet the obligations of the Partnership. During the years ended March 15, 2007, 2006 and 2005, such distributions amounted to approximately $5,353,000, $3,131,000 and $4,698,000, respectively which included distributions from sales amounting to approximately $5,279,000, $3,030,000 and $4,585,000, respectively. In addition, certain fees and expense reimbursements owed to the General Partners amounting to approximately $2,609,000, $7,808,000 and $7,846,000 were accrued and unpaid as of March 15, 2007, 2006 and 2005, respectively. During the year ended March 15, 2007, management deemed the unpaid partnership management fees that were related to sold properties uncollectible and, as a result, wrote it off in the amount of approximately $5,251,000, resulting in a non-cash General Partner contribution of the same amount. In particular, partnership management fees owed to the General Partners amounting to approximately $2,574,000, $7,697,000 and $7,811,000 were accrued and unpaid as of March 15, 2007, 2006 and 2005, respectively. Furthermore, expense reimbursements and asset monitoring fees owed to the General Partners amounting to approximately $35,000, $111,000 and $35,000 were accrued and unpaid as of March 15, 2007, 2006 and 2005, respectively. Without the General Partners' continued accrual without payment of the partnership management fees, the Partnership will not be in the position to meet its obligations. The General Partners have allowed for the accrual without payment of the partnership management fees but are under no obligation to continue to do so. During the year ended March 15, 2007, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately ($2,384,000). This increase is attributable to net cash provided by operating activities of approximately ($772,000), proceeds from sale of investments of approximately ($19,797,000), a decrease in cash held in escrow relating to investing activities of approximately ($15,000) and an increase in due to local general partners and affiliates relating to financing activities of approximately ($711,000) which exceeded improvements to property and equipment of approximately ($500,000), costs paid relating to sale of properties of approximately ($1,563,000), an increase in deferred costs of approximately ($47,000), a decrease in due to local general partners and affiliates relating to financing activities of approximately ($971,000), repayments of mortgage notes of approximately ($14,248,000) and a decrease in capitalization of consolidated subsidiaries attributable to minority interest of approximately ($1,584,000). Included in the adjustments to reconcile net income to net cash provided by operating activities are depreciation and amortization of approximately ($4,099,000) and gain on sale of properties of approximately ($13,589,000). Total expenses for the years ended March 15, 2007, 2006 and 2005, excluding depreciation and amortization, interest and general and administrative-related parties, totaled $9,914,170, $9,232,757 and $8,044,532, respectively. Accounts payable as of March 15, 2007 and 2006 were $4,890,335 and $2,115,469, respectively. Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and in certain circumstances advances from the Partnership. Because the provisions of the secondary loans defer the payment of accrued interest of the respective Local Partnerships, the Partnership believes it (and the applicable Local Partnerships) has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term. Accrued interest payable as of March 15, 2007 and 2006 was $6,616,457 and $5,963,620, respectively. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. In addition, each Local Partnership's mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. A working capital reserve of approximately $5,363,000 remained unused at March 15, 2007. During the year ended March 15, 2007, distributions from sales proceeds were made to the Limited Partners of approximately $2,750,000 and to the General Partners of approximately $28,000. The Partnership is not expected to have access to additional sources of financing. Long-Term --------- On October 20, 1999, President Clinton signed FY 2000 VA, the HUD Independent Agencies Appropriations Act. The Act contained revisions to the HUD Mark-to-Market Program and other HUD programs concerning the preservation of the HUD housing stock. On December 29, 1999, HUD issued Notice H99-36 addressing "Project Based Section 8 Contracts Expiring in Fiscal Year 2000" reflecting the changes in the Act and superceding earlier HUD Notices 98-34, 99-08, 99-15, 99-21 and 99-32. Notice 99-36 clarified many of the earlier uncertainties with respect to the earlier HUD Section 8 Mark-to-Market Programs and continued the Mark-up-to-Market Program which allows owners with Section 8 contracts where contract rents are currently below market to increase the rents to market levels. For a discussion of contingencies affecting certain Local Partnerships, see Results of Operations of Certain Local Partnerships below. Since the maximum loss the Partnership would be liable for is its net investment in the respective 11 Local Partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership may result in recapture of Tax Credits if the investment is lost before expiration of the Compliance Period. Except as described above, management is not aware of any trends or events, commitments or uncertainties which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The portfolio is diversified by the location of the Properties around the United States so that if one area of the country is experiencing downturns in the economy, the remaining Properties in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. Sale of Underlying Properties/Local Partnership Interests --------------------------------------------------------- For a discussion of the sale of Properties in which the Partnership owns direct and indirect interests, see Note 10 in Item 8. Discontinued Operations ----------------------- For a discussion of discontinued operations, see Note 13 in Item 8. Tabular Disclosure of Contractual Obligations --------------------------------------------- The following table summarizes the Partnership's commitments from operations as of March 15, 2007, to make future payments under its debt agreements and other contractual obligations.

(a) The mortgage notes are payable in aggregate monthly installments of approximately $151,000 including principal and interest at rates varying from 1% to 12% per annum, through 2036. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnerships' rents and leases is without further recourse. (b) See Note 8(g) in Item 8. The following table summarizes the Partnership's commitments from discontinued operations as of March 15, 2007, to make future payments under its debt agreements and other contractual obligations.

(a) The mortgage notes are payable in aggregate monthly installments of approximately $5,000 including principal and interest at the rate of 6.25% per annum, through 2027. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases is without further recourse. Off Balance Sheet Arrangements ------------------------------ The Partnership has no off-balance sheet arrangements. Critical Accounting Policies ---------------------------- In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of the Partnership's accounting policies included in Note 2 in Item 8. Property and Equipment ---------------------- Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, and any other costs incurred in acquiring the Properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", the results of discontinued operations are reported as a separate component of income before 12 extraordinary items on the Consolidated Statements of Operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the Notes in Item 8. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the consolidated balance sheets. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. At that time Property investments themselves are reduced to estimated fair value (generally using discounted cash flows). During the year ended March 15, 2007, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value. Through March 15, 2007, the Partnership recorded $2,710,000 as an aggregate loss on impairment of assets or reduction to estimated fair value. Revenue Recognition ------------------- Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by Property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items. Other revenues from operations include the following amounts at both the Partnership and Local Partnership level:

Other revenues from discontinued operations include the following amounts at both the Partnership and Local Partnership level:

* Reclassified for comparative purposes The subsidy income from discontinued operations noted below is related to Charles Drew Court Associates, L.P. ("Charles Drew"). The Atlantic County Improvement Authority ("ACIA") entered into a pledge/security agreement with Bank of America (formerly Fleet Bank, N.A.), Charles Drew's mortgagor, under which ACIA pledged certificates of deposit originally in the amount of $4,772,500. The funds, including interest earned thereon, provided a subsidy to Charles Drew equal to the debt service on the mortgage. The funds were used to payoff the mortgage in September 2004.

Income Taxes ------------ The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31. Results of Operations --------------------- The following is a summary of the results of operations of the Partnership for the years ended March 15, 2007, 2006 and 2005 (the 2006, 2005 and 2004 Fiscal Years, respectively). The Partnership's revenues continue to consist primarily of the results of the Partnership's investment in consolidated Local Partnerships. Eight of the 13 remaining Local Partnerships receive HUD Section 8 subsidies which serve to stabilize the revenues of these Local Partnerships. The majority of the Local Partnership income continues to be in the form of rental income with the corresponding expenses being divided among operations, depreciation, and mortgage interest. The net income for the 2006 Fiscal Year totaled $6,013,436. The net income for the 2005 and 2004 Fiscal Years, as restated, totaled $3,666,593 and $4,978,477, respectively. As of December 31, 2003 all the Local Partnerships had completed their Tax Credit Periods and the Partnership has met its primary objective of generating Tax Credits for qualified BACs holders. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of its Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Periods continue through December 31, 2008 with respect to the Properties depending upon when the Tax Credit Period commenced. 2006 vs. 2005 ------------- Rental income decreased approximately 1% for the 2006 Fiscal Year as compared to the 2005 Fiscal Year, primarily due to increases in vacancies at three Local Partnerships partially offset by rental rate increases and decreases in vacancies at two other Local Partnerships. Total expenses, excluding general and administrative-related parties, repairs and maintenance and insurance, remained fairly consistent with a decrease of approximately 2% for the 2006 Fiscal Year as compared to the 2005 Fiscal Year. General and administrative - related parties expenses decreased approximately $526,000 for the 2006 Fiscal Year as compared to the 2005 Fiscal Year, primarily due to a decrease in partnership management fees and expense reimbursement charges at the Partnership level resulting from the sale of properties. Repairs and maintenance expenses increased approximately $391,000 for the 2006 Fiscal Year as compared to the 2005 Fiscal Year, primarily due to an increase in apartment repairs including painting, plastering and door replacements as well as boiler repairs and an increase in security costs at one Local Partnership, an increase in equipment and supplies expenses, maintenance contracts and payroll costs at a second Local Partnership, and an increase in security contract expenses and equipment repairs at a third Local Partnership. Insurance expenses increased approximately $78,000 for the 2006 Fiscal Year as compared to the 2005 Fiscal Year, primarily due to increases in premiums at two Local Partnerships. 2005 vs. 2004 ------------- Rental income increased approximately 2% for the 2005 Fiscal Year as compared to the 2004 Fiscal Year, primarily due to rental rate increases at the Local Partnerships. Other income increased approximately $166,000 for the 2005 Fiscal Year as compared to the 2004 Fiscal Year, primarily due to an increase in interest income at the Partnership level resulting from the increase in proceeds from the sale of properties. Total expenses, excluding repairs and maintenance and operating, remained fairly consistent with a decrease of approximately 1% for the 2005 Fiscal Year as compared to the 2004 Fiscal Year. Repairs and maintenance increased approximately $892,000 for the 2005 Fiscal Year as compared to the 2004 Fiscal Year, primarily due to boiler repairs, painting, plastering apartments and door repairs at one Local Partnership, an increase in appliance and carpentry repairs at a second Local Partnership and an increase in supplies and payroll at three additional Local Partnerships. Operating expenses increased approximately $340,000 for the 2005 Fiscal Year as compared to the 2004 Fiscal Year, primarily due to an increase in water, sewer and gas expenses at one Local Partnership and an increase in gas costs at a second and third Local Partnership. Results of Operations of Certain Local Partnerships --------------------------------------------------- Discussed below are the results of operations of certain Local Partnerships who had going concern issues for the year ended March 15, 2007. Magnolia Arms Associates, LTD ("Magnolia Arms") ----------------------------------------------- Magnolia Arms has not made its mortgage payments since August 2005 due to operating deficits and is currently in default. The mortgagee can take possession of the Property and other collateralized assets, collect the rents directly from the tenants and foreclose on the Property. There can be no assurance that Magnolia Arms will be able to cure the default. The mortgage payable is a current liability as of December 31, 2006. Because of these circumstances, there is substantial doubt regarding whether the Local Partnership can continue as a going concern. The Partnership's investment in Magnolia Arms was written down to zero by prior years' losses and the minority interest was approximately $33,000 and $47,000 at March 15, 2007 and 2006, respectively. The net loss after minority interest for Magnolia Arms amounted to approximately $684,000, $200,000 and $190,000 for the years ended March 15, 2007, 2006 and 2005, respectively. Magnolia Arms' Compliance Period ended as of December 31, 2003. Quality Hill Historic District-Phase II-A, L.P. ("Quality Hill") ---------------------------------------------------------------- The financial statements of Quality Hill have been prepared assuming it will continue as a going concern. Quality Hill has had negative cash flows from operating activities for the past several years. Quality Hill is trying to obtain extensions for its mortgage notes payable, and is not expected to have operating cash flow to meet the financial obligations of its mortgage notes coming due. This situation raises substantial doubt about its ability to continue as a going concern. During 2005, Quality Hill entered into a Modification Agreement with the Missouri Housing Development Commission ("MHDC") which extended the maturity date of the permanent nonrecourse financing for the Quality Hill-Cordova Hotel Apartments, which is one of the two projects included in Quality Hill, to December 2006. The balance of this note as of December 31, 2006 was $405,076. 14 During 2005, Quality Hill entered into negotiations with both the Hall Family Foundation of Kansas ("Foundation") and Kansas City Downtown Minority Development Corporation ("DMDC") to extend the maturity dates of each note payable to December 2006. The combined balance of the Foundation notes is $2,339,108 and was due in full in December 2005 and the combined balance of the DMDC notes was $735,000 ($225,000 was due in December 2005 and $510,000 was due in May 2005). As of December 31, 2005, Quality Hill had not been granted such an extension by either lender. In February 2006, Quality Hill Received a one year extension on the Foundation note to December 31, 2006. Quality Hill has filed for another extension; however, no extension has been granted as of the filing date of this Form 10-K. The total of these three notes, $3,479,184, is included as a current liability in mortgage notes payable. These items raise substantial doubt about Quality Hill's ability to continue as a going concern. The Partnership's investment in Quality Hill has been written down to zero by prior years' losses and the minority interest balance was $0 at both March 15, 2007 and 2006. The net loss after minority interest for Quality Hill amounted to approximately $324,000, $287,000 and $291,000 for the years ended March 15, 2007, 2006 and 2005, respectively. Quality Hill's Compliance Period ended as of December 31, 2004. Other ----- The Local Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Furthermore, inflation generally does not impact the fixed long-term financing under which real property investments were purchased. Inflation also affects the Local Partnerships adversely by increasing operating costs, such as fuel, utilities, and labor. For a discussion of mortgage notes payable, see Note 7 in Item 8. Item 7A. Quantitative and Qualitative Disclosure about Market Risk The Partnership has mortgage notes that are payable in aggregate monthly installments including principal and interest at rates varying from 1% to 12% per annum. The Partnership does not believe there is a material risk associated with the various interest rates associated with the mortgage notes as the majority of the Local Partnership mortgage notes have fixed rates. The Partnership currently discloses in Note 3 of Item 8, the fair value of the mortgage notes payable. The Partnership does not have any other market risk sensitive instruments. 15 Item 8. Financial Statements and Supplementary Data Sequential Page ---------- (a) 1. Consolidated Financial Statements Report of Independent Registered Public Accounting Firm 17 Consolidated Balance Sheets at March 15, 2007 and 2006 47 Consolidated Statements of Operations for the Years Ended March 15, 2007, 2006 and 2005 48 Consolidated Statements of Changes in Partners' Deficit for the Years Ended March 15, 2007, 2006 and 2005 49 Consolidated Statements of Cash Flows for the Years Ended March 15, 2007, 2006 and 2005 50 Notes to Consolidated Financial Statements 52 16 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- To the Partners of Liberty Tax Credit Plus L.P. and Subsidiaries (A Delaware Limited Partnership) We have audited the consolidated balance sheets of Liberty Tax Credit Plus L.P. (A Delaware Limited Partnership) and Subsidiaries as of March 15, 2007 and 2006, and the related consolidated statements of operations, changes in partners' deficit, and cash flows for the years ended March 15, 2007, 2006 and 2005 (the 2006, 2005 and 2004 Fiscal Years, respectively). These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements for 10 (Fiscal Year 2006), 11 (Fiscal Year 2005) and 13 (Fiscal Year 2004) subsidiary partnerships whose income (losses) aggregated $7,559,219 (2006 Fiscal Year), $(1,341,700) (2005 Fiscal Year) and $(1,763,945) (2004 Fiscal Year) and whose assets constituted 39% and 52% of the Partnership's assets at March 15, 2007 and 2006, presented in the accompanying consolidated financial statements. The financial statements for these subsidiary partnerships were audited by other auditors whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included for these subsidiary partnerships, is based solely upon the reports of the other auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based upon our audits, and the reports of the other auditors referred to above, the accompanying consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Liberty Tax Credit Plus L.P. and Subsidiaries at March 15, 2007 and 2006 and the results of their operations and their cash flows for the years ended March 15, 2007, 2006 and 2005, in conformity with U.S. generally accepted accounting principles. As discussed in Note 12(a), the consolidated financial includes the financial statements of two subsidiary partnerships with significant contingencies and uncertainties. The financial statements of these subsidiary partnerships were prepared assuming that they will continue as going concerns. These subsidiary partnerships' net losses aggregated $1,021,563 (Fiscal 2006), $491,638 (Fiscal 2005) and $484,798 (Fiscal 2004), and their assets aggregated $7,494,574 and $7,817,431 at March 15, 2007 and 2006, respectively. Management's plans in regard to these matters are also described in Note 12(a). The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. /s/ TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP New York, New York June 13, 2007 17 [FISHBEIN & COMPANY, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners State Street 86 Associates Limited Partnership We have audited the accompanying balance sheets of STATE STREET 86 ASSOCIATES LIMITED PARTNERSHIP (A Limited Partnership) as of December 31, 2006 and 2005, and the related statements of operations, partners' equity (deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and Standards of the Public Companies Auditing Oversight Board. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 State Street 86 Associates Limited Partnership as of December 31, 2006 and 2005, 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. /s/ Fishbein & Company, P.C. Horsham, Pennsylvania February 23, 2007 18 [FISHBEIN & COMPANY, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners State Street 86 Associates Limited Partnership We have audited the accompanying balance sheets of STATE STREET 86 ASSOCIATES LIMITED PARTNERSHIP (A Limited Partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and Standards of the Public Companies Auditing Oversight Board. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 State Street 86 Associates Limited Partnership as of December 31, 2005 and 2004, 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. /s/ Fishbein & Company, P.C. Horsham, Pennsylvania January 18, 2006 19 [Fishbein & Company, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners Foxglenn Investors We have audited the accompanying balance sheet of FOXGLENN INVESTORS (A Limited Partnership) as of June 8, 2005, and the related statements of operations, partners' equity deficiency and cash flows for the period from January 1, 2005 to June 8, 2005. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and standards of the PUBLIC COMPANIES AUDITING OVERSIGHT BOARD. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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, and includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Foxglenn Investors as of June 8, 2005, and the results of its operations and its cash flows for the period from January 1, 2005 to June 8, 2005 in conformity with accounting principles generally accepted in the United States of America. /s/ Fishbein & Company, P.C. Horsham, Pennsylvania March 17, 2006 20 [Fishbein & Company, P.C. Letterhead] INDEPENDENT AUDITOR'S REPORT Partners Foxglenn Investors We have audited the accompanying balance sheet of FOXGLENN INVESTORS (A Limited Partnership) as of December 31, 2004, and the related statements of operations, partners' equity deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and standards of the PUBLIC COMPANIES AUDITING OVERSIGHT BOARD. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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, and includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Foxglenn Investors as of December 31, 2004, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Fishbein & Company, P.C. Horsham, Pennsylvania January 15, 2005 21 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35445 as of September 30, 2006, and the related Statements of income, changes in partners' equity and cash flows for the period then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of September 30, 2006, and the results of its operations, changes in partners' equity and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 14, 2006 on our consideration of Shiloh Grove Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 13 to 18) are presented for purposes of additional analysis and are not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI December 14, 2006 22 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35445 as of December 31, 2005, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of December 31, 2005, and the results of its operations, changes in partners' equity and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated January 27, 2006 on our consideration of Shiloh Grove Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 13 to 18) and the Financial Data Template (shown on page 25 to 39) are presented for purposes of additional analysis and are not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI January 27, 2006 23 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35445 as of December 31, 2004, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of December 31, 2004, and the results of its operations, changes in partners' equity, and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 15, 2005 on our consideration of Shiloh Grove Limited Partnership's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 16) and the Financial Data Template is presented for purposes of additional analysis and is not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI February 15, 2005 24 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35442 as of September 30, 2006, and the related Statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of December 31, 2005, and the results of its operations, changes in partners' equity (deficit) and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 13, 2006 on our consideration of Shiloh Grove Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 17) are presented for purposes of additional analysis and are not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI December 13, 2006 25 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35442 as of December 31, 2005, and the related Statements of income, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of December 31, 2005, and the results of its operations, changes in partners' equity (deficit) and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 6, 2006 on our consideration of Shiloh Grove Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 17) and the Financial Data Template (shown on page 25 to 38) are presented for purposes of additional analysis and are not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI February 6, 2006 26 [Bordman & Winnick CPAs Letterhead] Independent Auditor's Report To the Partners of Shiloh Grove Limited Partnership We have audited the accompanying balance sheet of Shiloh Grove Limited Partnership, FHA Project #043-35442 as of December 31, 2004, and the related Statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of Shiloh Grove Limited Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Shiloh Grove Limited Partnership as of December 31, 2004, and the results of its operations, changes in partners' equity, and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 15, 2005 on our consideration of Shiloh Grove Limited Partnership's internal control and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information included in the report (shown on pages 12 to 16) and the Financial Data Template is presented for purposes of additional analysis and is not a required part of the basic financial statements of Shiloh Grove Limited Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Bordman & Winnick Certified Public Accountants West Bloomfield, MI February 15, 2005 27 [JOSE E. ROSARIO & CO. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Alameda Towers Associates, LP Rio Piedras, Puerto Rico I have audited the accompanying balance sheet of Alameda Towers Associates, LP as of August 31, 2006 and the related statement of loss, changes in partners' capital, and cash flows for the eight months period then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above, present fairly, in all material respects, the financial position of Alameda Towers Associates, L.P. as of August 31, 2006, and the results of its operations and changes in partners' capital and cash flows for the eight months period then ended in conformity with accounting principles generally accepted in the United States of America and Puerto Rico. /s/ Jose E. Rosario License No. 961 Expires December 1, 2007 November 3, 2006 San Juan, Puerto Rico Stamp No. 2198047 of the Puerto Rico Society of Certified Public Accountants is affixed to the original of this report. 28 [JOSE E. ROSARIO & CO. Letterhead] INDEPENDENT AUDITOR'S REPORT To the Partners Alameda Towers Associates, LP I have audited the accompanying balance sheets of Alameda Towers Associates, LP as of December 31, 2005 and 2004, and the related statements of loss, changes in partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor I was engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for a 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, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alameda Towers Associates, L.P. as of December 31, 2005 and 2004 and the results of its operations, changes in partners' capital, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Jose E. Rosario License No. 961 Expires December 1, 2007 February 2, 2006 San Juan, Puerto Rico Stamp No. 2114030 of the Puerto Rico College of CPA was affixed to the original. 29 [REZNICK GROUP, P.C. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Grove Parc Associates Limited Partnership We have audited the accompanying balance sheet of Grove Parc Associates Limited Partnership (An Illinois Limited Partnership) as of December 31, 2006, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor we were engaged to perform an audit of 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 control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Grove Parc Associates Limited Partnership as of December 31, 2006, and the results of its operations, changes in its partners' equity (deficit) and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 19, 2007, on our consideration of Grove Parc Associates Limited Partnership's internal control over financial reporting. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and the results of that testing and not to provide an opinion on the internal control over financial reporting. In accordance with Government Auditing Standards, we have also issued an opinion dated March 19, 2007, on Grove Parc Associates Limited Partnership's compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters that could have a direct and material effect on a major HUD-assisted program. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental information on pages 27 through 41 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ Reznick Group, P.C.. Taxpayer Identification Number: 52-1088612 Skokie, Illinois March 19, 2007 Lead Auditor: Moarij Khan 30 [Koch Group & Company, LLP Letterhead] INDEPENDENT AUDITORS' REPORT To The Partners Walnut Park Plaza Associates, L.P. We have audited the accompanying statement of financial position of Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership), as of March 31, 2004 and the related statements of operations, changes in partner's equity, and cash flows for the three months then ended. These financial statements are the responsibility of the Walnut Park Plaza Associates, L.P.'s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Walnut Park Plaza Associates, L.P. (A Pennsylvania Limited Partnership), as of March 31, 2004 and the changes in its net assets and its cash flows for the three months then ended in conformity with generally accepted accounting principles. /s/ Koch Group & Company, LLP Certified Public Accountants New York, New York December 17, 2004 31 [Habif, Arogeti & Wynne, LLP. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of United-Pennsylvanian Limited Partnership We have audited the accompanying balance sheets of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP, [FHA Project No. R-251-8E] as of December 31, 2006 and 2005, and the related statements of profit and loss, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor we were engaged to perform, an audit of 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 control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP as of December 31, 2006 and 2005, and the results of its operations, its changes in partners' equity (deficit), and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. On December 28, 2006, the Partnership sold substantially all its real and personal property for $500,000 and the assumption of substantially all its liabilities. It is anticipated that once the remaining funds are distributed, the partnership will dissolve. In accordance with Government Auditing Standards, we have also issued a report dated February 28, 2007, on our consideration of UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP's internal control over financial reporting. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and the results of that testing and not to provide an opinion on the internal control over financial reporting. In accordance with Government Auditing Standards, we have also issued an opinion dated February 28, 2007, on UNITED-PENNSYLVANIAN LIMITED PARTNERSHIP's compliance with certain provisions of laws, regulations, contracts, and grant agreements, and other matters that could have a direct and material effect on a major HUD-assisted program. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report [shown on pages 14 to 21] is presented for the purpose of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Habif, Arogeti & Wynne, LLP Atlanta, Georgia February 28, 2007 32 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of November 30, 2006, and the related statements of income, partners' capital (deficiency), and cash flows for the eleven months then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 2051 Grand Concourse Housing Associates as of November 30, 2006, and the results of its operations and its cash flows for the eleven months then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. As discussed in Note 8 to the financial statements, on April 28, 2006, the Partnership sold its apartment building for a sale price of $4,937,500. In addition, as discussed in Note 9 to the financial statements, the General Partner is in discussions with the Limited Partners with respect to certain distributions and allocations of cash flow that were made during the period. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C White Plains, New York February 16, 2007 33 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 2051 Grand Concourse Housing Associates as of December 31, 2005 and 2004, 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 made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C White Plains, New York January 27, 2006 34 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of November 30, 2006, and the related statements of income, partners' capital (deficiency), and cash flows for the eleven months then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Concourse Artists Housing Associates as of November 30, 2006, and the results of its operations and its cash flows for the eleven months then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. As discussed in Note 8 to the financial statements, on April 28, 2006, the Partnership sold its apartment building for a sale price of $1,797,500. In addition, as discussed in Note 9 to the financial statements, the General Partner is in discussions with the Limited Partners with respect to certain distributions and allocations of cash flow that were made during the period. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York February 16, 2007 35 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Concourse Artists Housing Associates as of December 31, 2005 and 2004, 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 made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 27, 2006 36 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheet of Willoughby-Wyckoff Housing Associates (a limited partnership) as of November 30, 2006, and the related statements of income, partners' deficiency, and cash flows for the eleven months then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Willoughby-Wyckoff Housing Associates as of November 30, 2006, and the results of its operations and its cash flows for the eleven months then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. As discussed in Note 7 to the financial statements, on June 5, 2006, the Partnership sold its apartment building for a sale price of $4,800,000. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York February 16, 2007 37 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing Associates (a limited partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Willoughby-Wyckoff Housing Associates as of December 31, 2005 and 2004, 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. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the financial statements, the Partnership has had operating losses and equity deficiencies. These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 27, 2006 38 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheet of Robin Housing Associates (a limited partnership) as of November 30, 2006, and the related statements of income, partners' capital (deficiency), and cash flows for the eleven months then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Robin Housing Associates as of November 30, 2006, and the results of its operations and its cash flows for the eleven months then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. As discussed in Note 8 to the financial statements, on April 28, 2006, the Partnership sold its apartment building for sale price of $7,265,000. In addition, as discussed in Note 9 to the financial statements, the General Partner is in discussions with the Limited Partners with respect to certain distributions and allocations of cash flow that were made during the period. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York February 16, 2007 39 [Marden, Harrison & Kreuter Certified Public Accountants, P.C. Letterhead] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467 We have audited the accompanying balance sheets of Robin Housing Associates (a limited partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners' deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Robin Housing Associates as of December 31, 2005 and 2004, 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 made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C. White Plains, New York January 27, 2006 40 [CARTER & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, LLC Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Lund Hill Associates We have audited the accompanying balance sheet of Lund Hill Associates, (a limited partnership), as of March 31, 2005, and the related statements of operations, partners' equity (deficit) and cash flows for the period then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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 has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that my audit provides 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 Lund Hill Associates as of March 31, 2005, and the results of its operations, changes in partners' equity (deficit) and its cash flows for the period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Carter & Company Destin, Florida May 5, 2005 41 [CARTER & COMPANY, CERTIFIED PUBLIC ACCOUNTANTS, LLC Letterhead] INDEPENDENT AUDITORS' REPORT To the Partners Lund Hill Associates We have audited the accompanying balance sheet of Lund Hill Associates, (a limited partnership), WHEDA Project No. 021, as of December 31, 2004, and the related statement of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor we were engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Lund Hill Associates as of December 31, 2004, and the results of its operations, changes in partners' equity (deficit) and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Carter & Company Destin, Florida January 31, 2005 42 [RICK J. TANNEBERGER, CERTIFIED PUBLIC ACCOUNTANT Letterhead] Independent Auditor's Report ---------------------------- The Partners Tanglewood Apartments, A Limited Partnership We have audited the accompanying balance sheets of Tanglewood Apartments, A Limited Partnership, as of July 30, 2004 and December 31, 2003, and the related statements of income, partners' capital and cash flows for the period and year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Tanglewood Apartments, A Limited Partnership as of July 30, 2004 and December 31, 2003, and the results of its operations and its cash flows for the period and year then ended 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 supplementary information presented on page 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Rick J. Tanneberger, CPA, P.A. January 31, 2005 Fayetteville, Arkansas 43 [RUBINBROWN LLP Letterhead] Independent Auditors' Report Partners Quality Hill Historic District - Phase II-A, L.P. St. Louis, Missouri We have audited the accompanying balance sheet of Quality Hill Historic District-Phase II-A, L.P., a limited partnership, as of December 31, 2005 and 2004, and the related statements of operations, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Quality Hill Historic District-Phase II-A, L.P. as of December 31, 2005 and 2004, 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. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 10 to the financial statements, the Partnership is trying to obtain extensions for its mortgage notes payable, and is not expected to have the operating cash flow to meet the financial obligations of its mortgage notes coming due. This situation raises substantial doubt about the Partnership's ability to continue as a going concern. Management's plans regarding these matters are described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ RubinBrown LLP St. Louis, Missouri February 6, 2006 44 [HAMILTON & MUSSER, P.C. LETTERHEAD] INDEPENDENT AUDITORS' REPORT ---------------------------- To the Partners of Penn Alto Associates, Limited Partnership Altoona, Pennsylvania 16601 We have audited the accompanying balance sheets of Penn Alto Associates, Limited Partnership as of December 31, 2005 (FINAL) and 2004, and the related statements of operations, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. 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 has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits 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 Penn Alto Associates, Limited Partnership as of December 31, 2005 (FINAL) and 2004, and the results of its operations, changes in partners' equity (deficit) and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. The partnership ceased operations in September 2005 as more fully explained in Note 1. /s/ Hamilton & Musser, P.C. Certified Public Accountants Mechanicsburg, Pennsylvania January 27, 2006 45 [REZNICK GROUP, P.C.] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners Sartain School Venture We have audited the accompanying balance sheet of Sartain School Venture as of December 31, 2006, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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 has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit 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, the financial position of Sartain School Venture at December 31, 2006 and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Reznick Group, P.C. Baltimore, Maryland March 28, 2007 46 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

* As restated (note 2) See accompanying notes to consolidated financial statements. 47 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

* As reclassified for comparative purposes and restated (Note 2) See accompanying notes to consolidated financial statements. 48 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) EQUITY

See accompanying notes to consolidated financial statements. 49 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

50 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (continued)

* As reclassified for comparative purposes and restated (Note 2) ** Cash and cash equivalents, end of year, includes cash and cash equivalents from discontinued operations of $343,866, $245,660 and $444,267, respectively. See accompanying notes to consolidated financial statements. 51 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 NOTE 1 - General Liberty Tax Credit Plus L.P., a Delaware limited partnership (the "Partnership"), was organized on June 26, 1987, but had no activity until October 1, 1987 (which date is considered to be inception for financial accounting purposes). The Partnership had no operations until commencement of the public offering on November 20, 1987. The Partnership's business is to invest as a limited partner in other limited partnerships ("Local Partnerships," "subsidiaries" or "subsidiary partnerships") owning leveraged apartment complexes that are eligible for the low-income housing tax credit (the "Low-Income Housing Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties that are eligible for the historic rehabilitation tax credit. The Partnership had originally invested in thirty-one subsidiary partnerships. During the year ended March 15, 2007, the properties and the related assets and liabilities of five Local Partnerships and the limited partnership interest in two Local Partnerships were sold. Through the year ended March 15, 2007, the properties and the related assets and liabilities of fourteen Local Partnerships and the limited partnership interest in eight Local Partnerships were sold, and two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 26, 2007, one Local Partnership entered into an agreement to sell its property and the related assets and liabilities, and on May 11, 2007, the property and the related assets and liabilities of one Local Partnership were sold. The general partners of the Partnership are Related Credit Properties L.P., a Delaware limited partnership (the "Related General Partner") and Liberty Associates III L.P., a Delaware limited partnership ("Liberty Associates", and together with the Related General Partner, the "General Partners"). The Related General Partner is also the special limited partner of the Partnership. The general partner of the Related General Partner is Credit Properties GP LLC ("Credit Properties"), a Delaware limited liability company. The general partner of Liberty Associates is the Related General Partner. The ultimate partner of the General Partners is Centerline Holding Company ("Centerline") (which had been known as CharterMac until April 2007). On March 15, 2007, Centerline announced the retirement of Alan P. Hirmes as Chief Financial Officer of Centerline. Upon his retirement, he also retired from his position as President, Chief Executive Officer and Chief Financial Officer of the general partner of the Related General Partner. Centerline's Board of Trustees named Robert L. Levy as Chief Financial Officer and Andrew J. Weil as Chief Executive Officer to replace Mr. Hirmes. The terms of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provide, among other things, that net profits or losses and distributions of cash flow are, in general, allocated 99% to the limited partners and Beneficial Assignment Certificates ("BACs") holders and 1% to the General Partners. NOTE 2 - Summary of Significant Accounting Policies a) Basis of Consolidation The consolidated financial statements for the years ended March 15, 2007, 2006 and 2005 include the accounts of the Partnership and 16, 23 and 27 subsidiary partnerships, respectively, in which the Partnership is a limited partner. Through the rights of the Partnership and/or a General Partner, which General Partner has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation. For financial reporting purposes, the Partnership's fiscal year ends on March 15. All subsidiaries have fiscal years ending December 31. Accounts of subsidiaries have been adjusted for intercompany transactions from January 1 through March 15. The Partnership's fiscal year ends on March 15 in order to allow adequate time for the subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from January 1 through March 15. Increases (decreases) in the capitalization of consolidated subsidiary partnerships attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners. The Partnership's investment in each subsidiary partnership is equal to the respective subsidiary partnership's partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interests' investment in subsidiary partnerships have been charged to the Partnership. There were no such losses for the years ended March 15, 2007, 2006 and 2005. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. b) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks, and investments in short-term highly liquid instruments purchased with original maturities of three months or less. Also included in cash and cash equivalents as of March 15, 2007 are a $2,000,000 and $1,500,000 auction securities. The assets are securities issued by a Missouri Higher Education loan fund with a maturity of July 2032 and September 2043, respectively. The fund is a pool of student loans packaged into a trust with a 98% guarantee by the Department of Education and AAA rated. These securities are in a 28-day auction and are reset each period which gives the Partnership the opportunity to withdraw funds as needed on liquid basis. 52 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 c) Property and Equipment Property and equipment to be held and used are carried at cost, which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", the results of discontinued operations are reported as a separate component of income before extraordinary items on the consolidated statements of operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the financials statements. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the consolidated balance sheets. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time, property investments themselves are reduced to estimated fair value (generally using discounted cash flows). Through March 15, 2007, the Partnership recorded $2,710,000 as a loss on impairment of assets or reduction to estimated fair value (see Note 13). d) Revenue Recognition Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items. Other revenues from operations include the following amounts at both the Partnership and Local Partnership level:

Other revenues from discontinued operations include the following amounts at both the Partnership and Local Partnership level:

* Reclassified for comparative purposes. The subsidy income from discontinued operations is related to Charles Drew Court Associates, L.P. ("Charles Drew"). The Atlantic County Improvement Authority ("ACIA") entered into a pledge/security agreement with Bank of America (formerly Fleet Bank, N.A.), Charles Drew's mortgagor, under which ACIA pledged certificates of deposit originally in the amount of $4,772,500. The funds, including interest earned thereon, provided a subsidy to Charles Drew equal to the debt service on the mortgage. The funds were used to payoff the mortgage in September 2004. 53 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007

e) Income Taxes The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31 (Note 9). f) Loss Contingencies The Partnership records loss contingencies as a charge to income when information becomes available which indicates that it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated. g) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly actual results could differ from those estimates. h) Prior Period Adjustment Grove Parc Associates, L.P. ("Grove Parc") ------------------------------------------ The accompanying financial statement for the years ended March 15, 2006 and 2005 have been restated to correct an overstatement of interest in the computation of annual interest expense at Grove Parc. Grove Parc executed a promissory note on March 16, 2006 to evidence the agreement reached at a prior date and is effective for all purposes as of March 1, 2004. This promissory note bears an interest rate of 5% per annum compounded annually and is secured by the substantially all of Grove Parc's property. During the year ended December 31, 2006, Grove Parc made a prior period adjustment to restate the interest that was expensed at 7.39% per annum to reflect the 5% per annum interest rate retroactive to the terms of the promissory note executed on March 16, 2006. The effects of the prior period adjustment resulted in the following changes: Balance Sheet including discontinued:

NOTE 3 - Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments (all of which are held for non-trading purposes) for which it is practicable to estimate that value: Cash and Cash Equivalents and Cash Held in Escrow --------------------------------------------------------- The carrying amount approximates fair value. 54 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 Mortgage Notes Payable ---------------------- The fair value of mortgage notes payable is estimated, where practicable, based on the borrowing rate currently available for similar loans. The estimated fair values of the Partnership's mortgage notes payable from operations are as follows:

The estimated fair values of the Partnership's mortgage notes payable from discontinued operations are as follows:

* Management believes it is not practicable to estimate the fair value of the mortgage notes payable because mortgage programs with similar characteristics are not currently available to the Local Partnerships. The carrying amount of other financial instruments that require such disclosure approximates fair value. NOTE 4 - Property and Equipment The components of property and equipment from operations are as follows:

The initial cost to the Partnership, as shown on Schedule III in Item 15, includes $6,859,371 of acquisition fees paid to the General Partners, $809,661 of acquisition expenses and $2,870,719 of capitalized interest. In connection with the development or rehabilitation of the Properties, the subsidiary partnerships have incurred developer's fees of $23,360,275 to the local general partners and affiliates. Such fees have been included in the cost of property and equipment. Depreciation expense for the years ended March 15, 2007, 2006 and 2005 amounted to $2,483,306, $2,533,747 and $2,589,554, respectively. During the years ended March 15, 2007 and 2006, there were write-offs of accumulated depreciation in the amounts of $35,717,327 and $31,075,978, respectively, which are related to the discontinued assets. 55 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 The components of property and equipment held for sale from discontinued operations are as follows:

Depreciation expense for the discontinued property and equipment for the years ended March 15, 2007, 2006 and 2005 amounted to $1,116,243, $3,015,160 and $4,975,432, respectively. NOTE 5 - Cash Held in Escrow Cash held in escrow consists of the following:

Cash held in escrow included in the discontinued assets consists of the following:

NOTE 6 - Deferred Costs The components of deferred costs (which include operating guarantee fees, financing expenses and other deferred costs) and their periods of amortization from operations are as follows:

** Over the life of the respective mortgages. Amortization of deferred costs for the years ended March 15, 2007, 2006 and 2005 amounted to $181,370, $55,708 and $57,213, respectively. The operating guarantee fee and supervisory salaries are fully amortized as of March 15, 2007. 56 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 During the years ended March 15, 2007 and 2006, there were decreases in deferred costs of $1,114,878 and $1,034,042 and net decreases in accumulated amortization of $842,055 and $639,015, respectively, due to write-offs and reclasses into discontinued operations. In addition, during the year ended March 15, 2007, $530,875 of deferred costs and accumulated amortization has been written-off due to the mortgage refinancing of State Street 86 Associates, L.P. ("State Street") (see Note 7). The discontinued assets components of other deferred costs and their periods of amortization are as follows:

** Over the life of the respective mortgages. Amortization of deferred costs in the discontinued assets for the years ended March 15, 2007, 2006 and 2005 amounted to $318,453, $44,797 and $246,926, respectively. NOTE 7 - Mortgage Notes Payable The mortgage notes from operations are payable in aggregate monthly installments of approximately $155,000 including principal and interest at rates varying from 1% to 12% per annum, through 2036. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases and is without further recourse. Annual principal payment requirements as of March 15, 2007 for each of the next five fiscal years and thereafter are as follows:

Accrued interest payable at March 15, 2007 and 2006 was approximately $6,616,000 and $5,964,000, respectively. Interest accrues on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. During October 2006, State Street entered into a mortgage restructuring agreement for the purpose of refinancing its existing mortgages. As part of the restructuring agreement, State Street refinanced its outstanding mortgage of $5,347,241 by obtaining three new mortgages. One mortgage is held by Capmark Finance, Inc. (insured by HUD) and two are held by HUD in the amounts of $462,600, $3,605,209 and $1,281,737, respectively. All three have maturity dates of November 1, 2033. Principal and interest payments of $3,182 are made monthly on the first mortgage, with an interest rate of 7% per annum; interest will accrue on the second and third mortgage at the rate of 1% per annum. Tax and insurance escrow payments and replacement reserve deposits are made monthly. During 2005, Quality Hill entered into a Modification Agreement with the Missouri Housing Development Commission ("MHDC") which extended the maturity date of the permanent nonrecourse financing for the Quality Hill-Cordova Hotel Apartments, which is one of the two projects included in Quality Hill, to December 2006. The balance of this note as of December 31, 2006 was $405,076. During 2005, Quality Hill entered into negotiations with both the Hall Family Foundation of Kansas ("Foundation") and Kansas City Downtown Minority Development Corporation ("DMDC") to extend the maturity dates of each note payable to December 2006. The combined balance of the Foundation notes is $2,339,108 and was due in full in December 2005 and the combined balance of the DMDC notes was $735,000 ($225,000 was due in December 2005 and $510,000 was due 57 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 in May 2005). As of December 31, 2005, Quality Hill had not been granted such an extension by either lender. In February 2006, Quality Hill Received a one year extension on the Foundation note to December 31, 2006. Quality Hill has filed for another extension; however, no extension has been granted as of the filing date of this form. The total of these three notes, $3,479,184, is included as a current liability in mortgage notes payable. Magnolia Arms Associates, LTD ("Magnolia Arms") has not made its mortgage payments since August 2005 due to operating deficits and is currently in default. The mortgagee can take possession of the Property and other collateralized assets, collect the rents directly from the tenants and foreclose on the Property. As of December 31, 2006, the mortgage balance of approximately $5,749,000 has been shown as currently due. There can be no assurance that Magnolia Arms will be able to cure the default. Charles Drew Court Associates, L.P. ("Charles Drew") received funds from a pledge/security agreement with Bank of America (formerly Fleet Bank, N.A.), Charles Drew's mortgagor, under which the Atlantic County Improvement Authority pledged certificates of deposit originally in the amount of $4,772,500. The funds, including interest earned thereon, provided a subsidy to Charles Drew equal to the debt service on the mortgage. The funds were used to payoff the mortgage in September 2004. The mortgage notes from discontinued operations are payable in aggregate monthly installments of approximately $5,000 including principal and interest at the rate of 6.25% per annum, through 2027. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases is without further recourse. Annual principal payment requirements as of March 15, 2007 for each of the next five fiscal years and thereafter for the discontinuing liabilities are as follows:

Accrued interest payable for the discontinued liabilities at March 15, 2007 and 2006 was approximately $57,000 and $2,910,000, respectively. Interest accrues on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. See Notes 10 and 12 for other subsidiary partnerships' financing activities. NOTE 8 - Related Party Transactions An affiliate of the General Partners has a 1% interest as a special limited partner in each of the subsidiary partnerships. An affiliate of the General Partners also has a minority interest in certain subsidiary partnerships. The costs incurred to related parties for the years ended March 15, 2007, 2006 and 2005 were as follows:

58 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007

* Reclassified for comparative purposes. (a) The General Partners are entitled to receive a Partnership management fee, after payment of all Partnership expenses, which together with the local annual administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership's Amended and Restated Agreement of Limited Partnership ("Partnership Agreement")) for administering the affairs of the Partnership. The Partnership management fee, subject to the foregoing limitation, will be determined by the General Partners in their sole discretion based upon their review of the Partnership's investments. During the year ended March 31, 2007, management deemed the unpaid partnership management fees that were related to sold properties uncollectible and, as a result, wrote it off in the amount of approximately $5,251,000, resulting in a non-cash General Partner contribution of the same amount. Partnership management fees owed to the General Partners amounting to approximately $2,574,000 (after the write-off) and $7,697,000 were accrued and unpaid as of March 15, 2007 and 2006, respectively. (b) The Partnership reimburses the General Partners and their affiliates for actual Partnership operating expenses incurred by the General Partners and their affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance. Expense reimbursements and asset monitoring fees owed to the Related General Partner amounting to approximately $35,000 and $111,000 were accrued and unpaid as of March 15, 2007 and 2006, respectively. The General Partners have allowed for the accrual without payment of the amounts set forth in (a) and (b) but are under no obligation to continue to do so. (c) Property management fees incurred by subsidiary partnerships in operations amounted to $1,153,623, $1,370,964 and $1,689,474 for the years ended March 15, 2007, 2006 and 2005, respectively. Of these fees $705,822, $803,110 and $1,035,932 were incurred to affiliates of the general partners of the Local Partnership (the "Local General Partners"), which includes $300,574, $406,109 and $611,908 of fees relating to discontinued operations. (d) Liberty Associates III L.P., the special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. (e) Liberty Associates III L.P. received cash distributions of approximately $8,000, $10,000 and $7,000 during the years ended March 15, 2007, 2006 and 2005, respectively. (f) Due to local general partners and affiliates at March 15, 2007 and 2006 consists of the following:

* As restated (Note 2) 59 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 Due to local general partners and affiliates at March 15, 2007 and 2006 included in the discontinued liabilities consists of the following:

(g) Long-term notes payable consist of the following:

* As restated (Note 2) The Partnership had negotiated Operating Deficit Guaranty Agreements with all Local Partnerships by which the general partners of the Local Partnerships had agreed to fund operating deficits for a specified period of time. The terms of the Operating Deficit Guaranty Agreements varied for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time, generally three years, commencing on the break-even date. Amounts funded under the Operating Deficit Guaranty Agreements were treated as non-interest bearing loans, which will be paid only out of available cash flow or out of available net sale or refinancing proceeds. As of March 31, 2007, there were no advances under the Operating Deficit Guaranty Agreements. Any amounts funded under such agreements would be reflected under "Due to local general partner and affiliates" on the Partnership's financial statements. As of March 31, 2007, all Operating Deficit Guaranty Agreements have expired. 60 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 NOTE 9 - Taxable Net Income A reconciliation of the financial statement net income (loss) to the taxable net income (loss) for the Partnership and its consolidated subsidiaries is as follows:

* As restated (Note 2) NOTE 10 - Sale of Properties The Partnership is currently in the process of disposing of its investments. As of March 15, 2007, the Partnership has disposed of twenty-two of its thirty-one original investments and two Local Partnerships have entered into agreements to sell their property and the related assets and liabilities. Subsequently, on April 26, 2007, one Local Partnership has entered into an agreement to sell its property and the related assets and liabilities, and on May 11, 2007, the property and the related assets and liabilities of one Local Partnership were sold (see Note 15). On December 29, 2006, the property and the related assets and liabilities of United-Pennsylvanian, L.P. ("United Penn") were sold to an unaffiliated third party purchaser for a sales price of $500,000 plus the assumption of the mortgage debt. The Partnership received $217,227 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $283,000. The sale resulted in a gain of approximately $2,225,000, resulting from the write-off of the deficit basis in the property at the date of the sale. On October 1, 2006, the Partnership sold its limited partnership interest in Shiloh Grove Limited Partnership ("Shiloh Grove") to the Local General Partner for a sales price of $149,990. The Partnership received proceeds of $49,990 on October 3, 2006 and the remaining $100,000 is to be paid in guaranteed payments payable on certain dates through April 1, 2008 and is included in other assets at March 15, 2007. The sale resulted in a gain of approximately $2,859,000 resulting from the write-off of the deficit basis in the property of approximately $2,709,000 at the time of the sale and the $149,990 cash and guaranteed payments receivable from the sale. On August 31, 2006, the Partnership sold its limited partnership interest in Alameda Towers Associates, L.P. ("Alameda Towers") to the Local General Partner for a sales price of $2,092,490. The Partnership received proceeds of $92,490 on September 5, 2006 and the remaining $2,000,000 is to be paid in guaranteed payments payable on certain dates through December 31, 2008, which is included in other assets at March 15, 2007. The sale resulted in a loss of approximately $33,000, resulting from the write-off of the basis in the property of approximately $2,126,000 and the $2,092,490 cash and guaranteed payments receivable from the sale. On June 5, 2006, the property and the related assets and liabilities of Willoughby/Wycoff Housing Associates, L.P. ("Willoughby") were sold to an unaffiliated third party purchaser for a sales price of $4,800,000. There were no distributions from this sale after the repayment of mortgages, other liabilities and closing costs of approximately $4,800,000. The sale resulted in a gain of approximately $2,785,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $(756,000) was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $2,029,000. 61 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 On May 1, 2006, the property and the related assets and liabilities of Grand Concourse Housing Associates, L.P. ("Grand Concourse") were sold to an unaffiliated third party purchaser for a sales price of $4,937,500. The Partnership received $797,203 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $4,140,000. The sale resulted in a gain of approximately $2,104,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $383,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $2,487,000. On May 1, 2006, the property and the related assets and liabilities of Concourse Artists Housing Associates, L.P. ("Concourse Artists") were sold to an unaffiliated third party purchaser for a sales price of $1,797,500. The Partnership received $278,553 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $1,519,000. The sale resulted in a gain of approximately $672,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $28,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $700,000. On May 1, 2006, the property and the related assets and liabilities of Robin Housing Associates, L.P. ("Robin Housing") were sold to an unaffiliated third party purchaser for a sales price of $7,265,000. The Partnership received $1,743,907 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $5,521,000. The sale resulted in a gain of approximately $3,115,000, resulting from the write-off of the deficit basis in the property at the date of the sale and was recorded during the quarter ended September 15, 2006. An adjustment to the gain of approximately $219,000 was recorded during the quarter ended March 15, 2007, resulting in an overall gain of approximately $3,334,000. On September 15, 2005, the Partnership sold its limited partnership interest in Bayridge Associates, L.P. ("Bayridge") to the Local General Partner for a sales price of $1,125,000. The Partnership received proceeds of $1,113,587 from this sale after payment of closing costs of approximately $11,000. The sale resulting in a gain of approximately $5,821,000, resulting from the write-off of the deficit basis in the property of approximately $4,707,000 at the date of the sale and the $1,113,587 cash received from the sale. On July 27, 2005, the property and the related assets and liabilities of Penn Alto Associates, L.P. ("Penn Alto") were sold to an unaffiliated third party purchaser for a sales price of $1,625,000. The proceeds were used for repayment of mortgages, other liabilities and closing costs of approximately $1,625,000. During the quarter ended September 15, 2005, in accordance with Statement of Financial Accounting Standards No. 144 ("SFAS No. 144") "Accounting for the Impairment of Disposal of Long-Lived Assets", the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $850,000. The sale resulted in a gain of approximately $127,000 resulting from the write-off of the basis in the property at the date of the sale. An adjustment to the gain of approximately ($190,000) was recorded during the quarter ended March 15, 2006, resulting in an overall loss of approximately $63,000. The sale resulted in the liquidation of Penn Alto. On June 8, 2005, the Partnership sold its limited partnership interest in Fox Glenn Investors, L.P. ("Fox Glenn") to the Local General Partner for a sales price of $1,400,000. The Partnership received proceeds of $200,000 and a note receivable for $1,200,000, which was paid in full on February 9, 2006, from this sale. The sale resulted in a gain of approximately $3,098,000, resulting from the write-off of the deficit basis in the property at the date of the sale of approximately $1,698,000 and the $1,400,000 cash received from the sale. On June 2, 2005, the Partnership sold its limited partnership interest in Lancaster Towers Associates, LTD ("Lancaster") to an affiliate of the Local General Partner for a sales price of $449,750. The Partnership received proceeds of $445,500 from this sale after the payment of closing costs of approximately $4,000 from the sales price. During the quarter ended June 15, 2005, in accordance with SFAS No. 144, the Partnership deemed the building impaired and wrote it down to its fair value which resulted in a loss on impairment of $1,860,000. The sale resulted in a loss of approximately $309,000, resulting from the write-off of the deficit basis in the property at the date of the sale. On March 29, 2005, the property and the related assets and liabilities of Regent Street Associates, L.P. ("Regent Street") were sold to an unaffiliated third party purchaser for the assumption of the outstanding debt plus an incentive payment of $100,000. The Partnership received $100,000 from this transaction. The sale originally resulted in a gain of approximately $1,436,000, resulting from the write-off of the deficit basis in the property of approximately $1,336,000 and the $100,000 cash received from the sale. An adjustment to the gain of approximately $206,000 was recognized during the quarter ended March 15, 2006, resulting in an overall gain of $1,230,000. The sale also resulted in a non-cash contribution to the Local Partnership from the Local General Partner of approximately $150,000 resulting from the write-off of payables owed to the Local General Partner and a non-cash contribution from the special limited partner of approximately $40,000 resulting from the write-off of payables owed to the special limited partner. The sale resulted in the liquidation of Regent Street. On February 17, 2005, the Partnership's limited partnership interest in Redwood Villa Associates ("Redwood") was sold to the Local General Partner for a sales price of $60,000. The Partnership received proceeds of $59,400 from this sale. The sale resulted in a gain of approximately $1,749,000, resulting from the write-off of the deficit basis in the property of approximately $1,690,000 and the $59,400 cash received from the sale. On January 5, 2005, the property and the related assets and liabilities of Lund Hill Associates, L.P. ("Lund Hill") were sold to an unaffiliated thirty party purchaser for a sales price of $6,500,000. The Partnership received approximately $3,225,485 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $3,276,000. The sale resulted in a gain of approximately $1,345,000 resulting from the write-off of the deficit basis in the property. The sale resulted in the liquidation of Lund Hill. 62 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 On September 24, 2004, the property and the related assets and liabilities of Autumn Park Associates, L.P. ("Autumn Park") were sold to an unaffiliated third party purchaser for a sales price of $4,800,000. The Partnership received $1,049,900 as a distribution from this sale after the repayment of mortgages, other liabilities, closing costs and distributions to minority interest of approximately $3,750,000. The sale resulted in a gain of approximately $2,110,000, resulting from the write-off of the deficit basis in the property at the date of the sale. The sale also resulted in a non-cash contribution to the Local Partnership from the Local General Partner of approximately $95,000 resulting from the write-off of payables owed to the Local General Partner. The sale resulted in the liquidation of Autumn Park. On August 27, 2004, the property and the related assets and liabilities of 2108 Bolton Drive Associates, L.P. ("Bolton") were sold to an unaffiliated third party purchaser for a sales price of $8,891,000. The proceeds were used for the repayment of mortgages, other liabilities and closing costs. The sale originally resulted in a gain of approximately $1,622,000, resulting from the write-off of the deficit basis in the property at the date of the sale. An additional loss of approximately $(59,000) was recorded during the year ended March 15, 2006, resulting in an overall gain of approximately $1,563,000. The sale resulted in the liquidation of Bolton. On July 30, 2004, the property and the related assets and liabilities of Tanglewood Apartments, L.P. ("Tanglewood") were sold to an unaffiliated third party purchaser for a sales price of $3,425,000. The Partnership received $321,640 as a distribution from the sale after the repayment of mortgages, other liabilities and closing costs of approximately $3,103,000. The sale resulted in a gain of approximately $1,120,000 resulting from the write-off of the basis in the property at the date of the sale. The sale resulted in the liquidation of Tanglewood. On March 31, 2004, the Partnership's limited partnership interest in Walnut Park Plaza ("Walnut") was sold to the Local General Partner for a purchase price of $1 plus the assumption of all the related debt which totaled approximately $7,700,000. The sale resulted in a gain of approximately $2,589,000, resulting from the write-off of the deficit basis in the property at the date of the sale. NOTE 11 - Assets Held for Sale On September 28, 2006, Greenleaf Associates, L.P. ("Greenleaf") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an unaffiliated third party purchaser for a sales price of $5,264,177 including the assumption of the mortgage debt. The sales documents have been executed and the initial deposit funds are being held in escrow. The closing is expected to occur in the quarter ending June 15, 2007. No assurance can be given that the sale will actually occur. Greenleaf is being held as an asset held for sale as of March 15, 2007. As of December 31, 2006, Greenleaf had property and equipment, at cost, of approximately $6,479,000, accumulated depreciation of approximately $3,923,000 and mortgage debt of approximately $4,507,000. On February 8, 2007, Charles Drew Court Associates, L.P. ("Charles Drew") entered into a purchase and sale agreement to sell the property and the related assets and liabilities to an unaffiliated third party purchaser for a sales price of $3,435,000. The sales documents have been executed and the initial deposit funds are being held in escrow. The closing is expected to occur in the quarter ending June 15, 2007. No assurance can be given that the sale will actually occur. Charles Drew is being held as an asset held for sale as of March 15, 2007. As of December 31, 2006, Charles Drew had property and equipment, at cost, of approximately $8,286,000 and accumulated depreciation of approximately $5,639,000. Subsequently, on May 11, 2007, the property and related assets and liabilities of Charles Drew were sold (see Note 15). NOTE 12 - Commitments and Contingencies a) Subsidiary Partnerships - Going Concern Magnolia Arms Associates, LTD ("Magnolia Arms") ----------------------------------------------- Magnolia Arms has not made its mortgage payments since August 2005 due to operating deficits and is currently in default. The mortgagee can take possession of the Property and other collateralized assets, collect the rents directly from the tenants and foreclose on the Property and other collateralized assets. There can be no assurance that Magnolia Arms will be able to cure the default. The mortgage payable is a current liability as of December 31, 2006. Because of these circumstances, there is substantial doubt regarding whether the Local Partnership can continue as a going concern. The Partnership's investment in Magnolia Arms was written down to zero by prior years' losses and the minority interest was approximately $33,000 and $47,000 at March 15, 2007 and 2006, respectively. The net loss after minority interest for Magnolia Arms amounted to approximately $684,000, $200,000 and $190,000 for the years ended March 15, 2007, 2006 and 2005, respectively. Magnolia Arms' Compliance Period ended as of December 31, 2003. Quality Hill Historic District-Phase II-A, L.P. ("Quality Hill") ---------------------------------------------------------------- The financial statements of Quality Hill have been prepared assuming it will continue as a going concern. Quality Hill has had negative cash flows from operating activities for the past several years. Quality Hill is trying to obtain extensions for its mortgage notes payable, and is not expected to have operating cash flow to meet the financial obligations of its mortgage notes coming due. This situation raises substantial doubt about its ability to continue as a going concern. During 2005, Quality Hill entered into a Modification Agreement with the Missouri Housing Development Commission ("MHDC") which extended the maturity date of the permanent nonrecourse financing for the Quality Hill-Cordova Hotel Apartments, which is one of the two projects included in Quality Hill, to December 2006. The balance of this note as of December 31, 2006 was $405,076. Quality Hill has filed for another extension; however, no extension has been granted as of the filing date of this form. 63 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 During 2005, Quality Hill entered into negotiations with both the Hall Family Foundation of Kansas ("Foundation") and Kansas City Downtown Minority Development Corporation ("DMDC") to extend the maturity dates of each note payable to December 2006. The combined balance of the Foundation notes is $2,339,108 and was due in full in December 2005 and the combined balance of the DMDC notes was $735,000 ($225,000 was due in December 2005 and $510,000 was due in May 2005). As of December 31, 2005, Quality Hill had not been granted such an extension by either lender. In February 2006, Quality Hill Received a one year extension on the Foundation note to December 31, 2006. Quality Hill has filed for another extension; however, no extension has been granted as of the filing date of this Form 10-K. The total of these three notes, $3,479,184, is included as a current liability in mortgage notes payable. These items raise substantial doubt about Quality Hill's ability to continue as a going concern. The Partnership's investment in Quality Hill has been written down to zero by prior years' losses and the minority interest balance was $0 at both March 15, 2007 and 2006. The net loss after minority interest for Quality Hill amounted to approximately $324,000, $287,000 and $291,000 for the years ended March 15, 2007, 2006 and 2005, respectively. Quality Hill's Compliance Period ended as of December 31, 2004. b) Lease Commitment None c) Uninsured Cash and Cash Equivalents The Partnership maintains its cash and cash equivalents in various banks. Accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. As of March 15, 2007, uninsured cash and cash equivalents approximated $6,253,000. d) Cash Distributions Cash distributions from the Local Partnerships to the Partnership are restricted by the provisions of the respective Local Partnership agreements and/or HUD. Such cash distributions are typically made from surplus cash flow. e) Tax Credits A portion of the Tax Credits could be subject to recapture in future years if (i) a Local Partnership ceases to meet qualification requirements, (ii) there is a decrease in the qualified basis of the Local Partnership property or (iii) there is a reduction in the Local Partnership interest in the property at any time during the 15-year period (the "Compliance Period") that began with the first tax year of the period of the Partnership's entitlement to claim Tax Credits (for each Property, ten years from the date of investment or, if later, the date the Property is placed in service is referred to herein as the "Tax Credit Period"). As of December 31, 2003, the Tax Credit Period for each Local Partnership had expired. The Compliance Periods continue through December 31, 2008 with respect to the Properties depending upon when the Tax Credit Periods commenced. f) Other Greenleaf Associates, L.P. ("Greenleaf") ---------------------------------------- A former tenant brought suit against Greenleaf's on-site manager for damages of $100,000. An amended complaint does not specify an amount of damages. The former tenant claims violation of the 14th Amendment, false arrest, obstruction of justice and civil conspiracy. Management intends to vigorously contest the matter. An evaluation of the likelihood of an unfavorable outcome and estimate of the amount of possible loss cannot be made at this early stage of the proceedings. State Street 86 Associates, L.P. ("State Street") ------------------------------------------------- The Camden Redevelopment Agency has designated the Cramer Hill Waterfront Redevelopment Agency as a possible future redevelopment project. This area includes Centennial Village, a 200-unit apartment project that State Street owns and operates. There have been various lawsuits involving this redevelopment and at this time there is no further information as to whether or not the Property will be purchased or acquired by eminent domain. The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally; however, no more than 33% of the properties are located in any single state. There are also substantial risks associated with owning properties receiving government assistance, for example the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners' equity contribution. As of March 15, 2007, there are eight Local Partnerships subsidized by HUD. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence, without HUD's approval. Furthermore, there may not be market demand for apartments at full market rents when the rental assistance contracts expire. 64 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 Note 13 - Discontinued Operations The following table summarizes the financial position of the Local Partnerships that are classified as discontinued operations because the respective Local Partnerships were classified as assets held for sale. As of March 15, 2007, Alameda, Charles Drew, Greenleaf, Concourse Artists, Grand Concourse, Robin Housing, Shiloh Grove, United Penn and Willoughby were classified as discontinued operations in the consolidated balance sheets. As of March 15, 2006, Bayridge, Bolton, Concourse Artists, Grand Concourse, Fox Glenn, Lancaster, Lund Hill, Penn Alto, Redwood, Regent Street, Robin Housing, United Penn and Willoughby were classified as discontinued operations on the consolidated balance sheets. Consolidated Balance Sheets:

The following table summarizes the results of operations of the Local Partnerships that are classified as discontinued operations. For the year ended March 15, 2007, Alameda, Concourse Artists, Grand Concourse, Robin Housing, Shiloh Grove, United Penn and Willoughby which were sold during the year and Charles Drew and Greenleaf, which were classified as assets held for sale, were all classified as discontinued operations on the consolidated financial statements. For the year ended March 15, 2006, Alameda, Concourse Artists, Grand Concourse, Robin Housing, Shiloh Grove, United Penn and Willoughby, in order to present comparable results to the year ended March 15, 2007, and Bayridge, Fox Glenn, Lancaster, Lund Hill, Penn Alto, Redwood and Regent Street, which were sold during the year, were all classified as discontinued operations on the consolidated financial statements. For the year ended March 15, 2005, Alameda, Bayridge, Concourse Artists, Fox Glenn, Grand Concourse, Lancaster, Lund Hill, Redwood, Penn Alto, Regent Street, Robin Housing, Shiloh Grove, United Penn and Willoughby, in order to present comparable results to the year ended March 15, 2007, and Autumn Park, Bolton, Tanglewood and Walnut, which were sold during the year, were all classified as discontinued operations on the consolidated financial statements. 65 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 Consolidated Statements of Discontinued Operations:

* Reclassified for comparative purposes

* Reclassified for comparative purposes. 66 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 NOTE 14 - Selected Quarterly Financial Data (Unaudited) The following table summarizes the Partnership's quarterly results of operations for the years ended March 15, 2007 and 2006. The fluctuations between the quarters are primarily due to the sales of Local Partnerships (see Note 10).

* As reclassified for comparative purposes and restated (Note 2) 67 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 15, 2007 NOTE 15 - Subsequent Events On May 11, 2007, the property and the related assets and liabilities of Charles Drew were sold to an unaffiliated third party purchaser for a sales price of $3,435,000. The Partnership received $2,765,000 as a distribution from this sale after the repayment of other liabilities, closing costs and distributions to minority interest of approximately $670,000. The sale resulted in a gain of approximately $462,000, resulting from the write-off of the basis in the property at the date of the sale, which will be recognized on the Partnership's Form 10-Q for the quarter ending June 15, 2007. On April 26, 2007, the Partnership entered into an agreement to sell its limited partnership interest in West Kinney Associates, L.P. ("West Kinney") to an affiliate of the Local General Partner for a sales price of $600,000 and the assumption of the outstanding mortgages and related accrued interest which amounted to approximately $4,548,000 on December 31, 2006. The sales documents have been executed and the initial deposit funds are being held in escrow. The closing is expected to occur by the end of 2007. No assurance can be given that the sale will actually occur. As of December 31, 2006, West Kinney had property and equipment, at cost, of approximately $7,187,000, accumulated depreciation of approximately $4,380,000 and mortgage debt of approximately $3,232,000. 68 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. The Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, have evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in Partnership's internal control over financial reporting during the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART III Item 10. Directors and Executive Officers and Corporate Governance The Partnership has no directors or officers. The Partnership's affairs are managed and controlled by the General Partners. The Partnership has not adopted a separate code of ethics because the Partnership has no directors or executive officers. However, the ultimate parent of the General Partner, Centerline Holding Company ("Centerline") (which had been known as CharterMac until April 2007), has adopted a code of ethics. See http://www.Centerline.com. On March 15, 2007, Centerline announced the retirement of Alan P. Hirmes as Chief Financial Officer of Centerline. Upon his retirement, he also retired from his position as President, Chief Executive Officer and Chief Financial Officer of the general partner of the Related General Partner. Centerline has named Robert L. Levy as Chief Financial Officer and Andrew J. Weil as Chief Executive Officer to replace Mr. Hirmes. Certain information concerning the directors and executive officers of Credit Properties GP LLC, the general partner of the Related General Partner (which, in turn, is the general partner of Liberty Associates), who may be deemed directors or executive officers of the Partnership is set forth below. Credit Properties GP LLC ------------------------ Name Position ------------------------ ---------------------------------- Robert L. Levy Chief Financial Officer Andrew J. Weil President, Chief Executive Officer Glenn F. Hopps Treasurer ROBERT L. LEVY, 41, is the Chief Financial Officer of Centerline. Mr. Levy is also the Chief Financial Officer of American Mortgage Acceptance Company ("AMAC"), a publicly traded real estate investment trust managed by an affiliate of Centerline Capital. Mr. Levy is responsible for overseeing the Corporate Finance, Capital Markets, Accounting, Budgeting, Tax and Treasury departments. Mr. Levy joined Centerline's predecessor in November of 2001 as the Director of Capital Markets. From 1998 through 2001, Mr. Levy was a Vice President in the Real Estate Equity Research and Investment Banking Departments at Robertson Stephens, an investment banking firm in San Francisco. Prior to 1998, Mr. Levy was employed by Prudential Securities in the Real Estate Equity Research Group and at Prudential Realty Group, the real estate investment arm of the Prudential Insurance Company. He received his Masters in Business Administration from the Leonard N. Stern School of Business at New York University and his Bachelor of Arts from Northwestern University. ANDREW J. WEIL, 36, is an Executive Managing Director of Centerline, and is the Head of the Affordable Housing Group. Mr. Weil is responsible for overseeing the day to day operations of the Affordable Housing Group, including the acquisition of properties with Low-Income Housing Tax Credits and the origination and structuring of institutional funds. Prior to joining Centerline's predecessor in January 1994, Mr. Weil was a Financial Analyst for the Heights Management Company, where he specialized in the analysis of potential investments and property management. Mr. Weil received a Bachelor of Science degree in Economics with a concentration in Finance form the Wharton School of the University of Pennsylvania. GLENN F. HOPPS, 44, joined Centerline in December, 1990, and prior to that date was employed by Marks Shron & Company and Weissbarth, Altman and Michaelson, Certified Public Accountants. Mr. Hopps graduated from New York State University at Albany with a Bachelor of Science degree in Accounting. Item 11. Executive Compensation The Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to directors or executive officers of the General Partners for their services. However, under the terms of the Partnership Agreement, the Partnership has entered into certain 69 arrangements with the General Partners and their affiliates which provide for compensation to be paid to the General Partners and their affiliates. Such arrangements include (but are not limited to) agreements to pay nonrecurring acquisition fees, a nonaccountable acquisition expense allowance, a Partnership management fee and an accountable expense reimbursement. The General Partners are entitled, in the aggregate, to 1% of all cash distributions and an additional 15% of distributions from net sale or refinancing proceeds after the BACs holders have received distributions of such proceeds equal to their original capital contributions plus a 10% return thereon (to the extent not previously paid out of cash flow). Certain directors and executive officers of the General Partners receive compensation from the General Partners and their affiliates for services performed for various affiliated entities which may include services performed for the Partnership. Such compensation may be based in part on the performance of the Partnership. See also Note 8 in Item 8, which is incorporated in this Item 11 by reference thereto. Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Partnership has no executive officers. The levels of compensation payable to the General Partners and/or their affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The general partnership interests in the Partnership are owned as follows:

Liberty Associates III L.P. holds a 1% limited partnership interest in each Local Partnership. No person is known by the Partnership to be the beneficial owner of more than 5% percent of the Limited Partnership Interests and/or the BACs; and none of the General Partners nor any director or executive officer of any of the General Partners owns any Limited Partnership Interests or BACs. Item 13. Certain Relationships and Related Transactions; Director Independence The Partnership has and will continue to have certain relationships with the General Partners and their affiliates, as discussed in Item 11 and also Note 8 in Item 8 above, which is incorporated herein by reference thereto and as set forth above. However, there have been no direct financial transactions between the Partnership and the directors and executive officers of the General Partners. Item 14. Principal Accounting Fees and Services Audit Fees ---------- The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and Fazzari LLP for professional services rendered for the audit of the Partnership's annual financial statements for the years ended March 15, 2007 and 2006 and for the reviews of the financial statements included in the Partnership's quarterly reports on Form 10-Q for those years were $79,900 and $54,900, respectively. Audit Related Fees ------------------ None Tax Fees -------- The aggregate fees billed by Weiser LLP and its affiliates for professional services rendered for the preparation of our annual tax returns for the years ended December 31, 2006 and 2005 were approximately $8,600 and $8,400, respectively. All Other Fees -------------- None The Partnership is not required to have, and does not have, a stand-alone audit committee. 70 PART IV Item 15. Exhibits, Financial Statement Schedules

71 Item 15. Exhibits, Financial Statement Schedules (continued)

72 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LIBERTY TAX CREDIT PLUS L.P. ---------------------------- (Registrant) By: RELATED CREDIT PROPERTIES L.P., a General Partner By: Credit Properties GP LLC, its General Partner Date: June 13, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer Date: June 13, 2007 ------------- By: /s/ Andrew J. Weil ------------------ Andrew J. Weil President, Chief Executive Officer By: LIBERTY ASSOCIATES III, L.P., a General Partner By: Related Credit Properties L.P., its General Partner By: Related Credit Properties Inc., its General Partner Date: June 13, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer Date: June 13, 2007 ------------- By: /s/ Andrew J. Weil ------------------ Andrew J. Weil President, Chief Executive Officer 73 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:

74 Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) I, Robert L. Levy, certify that: 1. I have reviewed this annual report on Form 10-K for the period ended March 15, 2007 of the Liberty Tax Credit Plus, L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and to the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 13, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer 75 Exhibit 31.2 CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a) I, Andrew J. Weil, certify that: 1. I have reviewed this annual report on Form 10-K for the period ended March 15, 2007 of the Liberty Tax Credit Plus, L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and to the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 13, 2007 ------------- By: /s/ Andrew J. Weil ------------------ Andrew J. Weil Chief Executive Officer 76 Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b) AND SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350) In connection with the Annual Report of Liberty Tax Credit Plus L.P. on Form 10-K for the period ended March 15, 2007 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, Robert L. Levy and I, Andrew J. Weil, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the registrant. A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the SEC or its staff upon request. By: /s/ Robert L. Levy By: /s/ Andrew J. Weil ------------------ ------------------ Robert L. Levy Andrew J. Weil Chief Financial Officer Chief Executive Officer June 13, 2007 June 13, 2007 77 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------------------------------------- To the Partners of Liberty Tax Credit Plus L.P. and Subsidiaries (A Delaware Limited Partnership) In connection with our audits of the consolidated financial statements of Liberty Tax Credit Plus L.P. and subsidiaries included in the Form 10-K as presented in our opinion dated June 13, 2007 on page 17 and based on the reports of other auditors, we have also audited supporting Schedule I for the 2006, 2005 and 2004 Fiscal Years and Schedule III at March 15, 2007. In our opinion, and based on the reports of the other auditors, these consolidated schedules present fairly, when read in conjunction with the related consolidated financial statements, the financial data required to be set forth therein. As discussed in Note 12(a), the consolidated financial includes the financial statements of two subsidiary partnerships with significant contingencies and uncertainties. The financial statements of these subsidiary partnerships were prepared assuming that they will continue as going concerns. These subsidiary partnerships' net losses aggregated $1,021,563 (Fiscal 2006), $491,638 (Fiscal 2005) and $484,798 (Fiscal 2004); and their assets aggregated $7,494,574 and $7,817,431 at March 15, 2007 and 2006, respectively. Management's plans in regard to these matters are also described in Note 12(a). The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. /s/ TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP New York, New York June 13, 2007 78 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT Summarized condensed financial information of registrant (not including consolidated subsidiary partnerships): LIBERTY TAX CREDIT PLUS L.P. CONDENSED BALANCE SHEETS

Investments in subsidiary partnerships are recorded in accordance with the equity method of accounting, wherein the investments are not reduced below zero. Accordingly, partners' equity on the consolidated balance sheet will differ from partners' equity shown above. 79 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT LIBERTY TAX CREDIT PLUS L.P. CONDENSED STATEMENTS OF OPERATIONS

(*) Includes suspended prior year losses in excess of investment in accordance with equity method of accounting amounting to $9,858,176, $2,234,157 and $7,694,855 for the years ended March 15, 2007, 2006, and 2005, respectively. 80 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT LIBERTY TAX CREDIT PLUS L.P. CONDENSED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents

81 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 15, 2007

82 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 15, 2007 (continued)

(a) Since all properties were acquired as operating properties, depreciation is computed using primarily the straight line method over the estimated useful lives determined by the Partnership date of acquisition. (b) Furniture and fixtures, included in buildings and improvements, are depreciated primarily by the straight line method over their estimated useful lives ranging from 3 to 20 years. (c) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2003 and included as part of discontinued operations. See Note 10 in Item 8, Financial Statements and Supplementary Data. (d) The Partnership's Local Partnership Interests in this Local Partnership was sold during the fiscal year ended March 15, 2003. See Note 10 in Item 8, Financial Statements and Supplementary Data. (e) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2004 and included as part of discontinued operations. See Note 10 in Item 8, Financial Statements and Supplementary Data. (f) The Partnership recorded the transfer of the deed in lieu of foreclosure to Bryden Road, a property owned by Shiloh. See Note 10 in Item 8, Financial Statements and Supplementary Data. (g) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2005. See Note 10 in Item 8, Financial Statements and Supplementary Data. (h) The Partnership's Local Partnership Interests in these Local Partnerships were sold during the fiscal year ended March 15, 2005. See Note 10 in Item 8., Financial Statements and Supplementary Data. (i) These properties are included in discontinued operations for the year ended March 15, 2004. See Note 13 in item 8, Financial Statements and Supplementary Data. (j) These properties are included in discontinued operations for the year ended March 15, 2005. See Note 13 in item 8, Financial Statements and Supplementary Data. (k) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2006. See Note 10 in Item 8, Financial Statements and Supplementary Data. (l) The Partnership's Local Partnership Interests in these Local Partnerships were sold during the fiscal year ended March 15, 2006. See Note 10 in Item 8., Financial Statements and Supplementary Data. (m) These properties are included in discontinued operations for the year ended March 15, 2006. See Note 13 in item 8, Financial Statements and Supplementary Data. (n) The Property and the related assets and liabilities were sold during the fiscal year ended March 15, 2007. See Note 10 in Item 8, Financial Statements and Supplementary Data. (o) The Partnership's Local Partnership Interest in these Local Partnerships was sold during the fiscal year ended March 15, 2007. See Note 10 in Item 8, Financial Statements and Supplementary Data. (p) These properties are included in discontinued operations for the year ended March 15, 2007. See Note 13 in Item 8, Financial Statements and Supplementary Data. 83 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 15, 2007 (continued)

At the time the local partnerships were acquired by Liberty Tax Credit Plus Limited Partnership, the entire purchase price paid by Liberty Tax Credit Plus Limited Partnership was pushed down to the local partnerships as property and equipment with an offsetting credit to capital. Since the projects were in the construction phase at the time of acquisition, the capital accounts were insignificant at the time of purchase. Therefore, there are no material differences between the original cost basis for tax and GAAP. 84

LIBERTY TAX CREDIT PLUS LP 10-K