10-Q 1 f10q_june2007-lib1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 15, 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 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant 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 or 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] PART I - Financial Information Item 1. Financial Statements LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Balance Sheets

~~December~~June 15, March 15, ~~2005~~2007 ~~2005~~2007 ------------- ------------- (Unaudited) (Audited) ASSETS Operating ~~Assets~~assets Property and equipment, at cost, net of accumulated depreciation of $6938,~~952~~941,~~154~~469 and $9642,~~840~~785,~~139~~507, respectively $ 5825,~~645~~741,~~752~~191 $ 8629,~~316~~093,~~389~~468 Cash and cash equivalents 65,~~617~~720,~~003~~010 46,~~335~~046,~~171~~635 Cash held in escrow 82,~~437~~812,~~834~~793 102,~~529~~940,~~679~~919 Accounts receivable - tenants ~~295~~290,~~948~~390 ~~761~~208,~~215~~079 Deferred costs, net of accumulated amortization of $~~811~~435,~~017~~143 and $1426,~~662~~439,~~029,~~ respectively 1722,~~198,361~~589 1727,~~922,580~~459 Other assets 2,~~214~~075,~~949~~800 12,~~230~~176,~~423~~261 ------------- ------------- Total operating assets 7737,~~409~~362,~~847~~773 ~~105~~41,~~095~~192,~~457~~821 ------------- ------------- Assets from discontinued operations (Note 45) Property and equipment held for sale, net of accumulated depreciation of $188,~~032~~410,~~393~~754 and $139,~~195~~605,~~220~~003, respectively 115,~~872~~350,~~222~~321 115,~~193~~252,~~351~~734 Net assets held for sale 21,~~749~~547,~~047~~150 41,~~452~~210,~~896~~221 ------------- ------------- Total assets from discontinued operations 146,~~621~~897,~~269~~471 156,~~646~~462,~~247~~955 ------------- ------------- Total assets $ 9244,~~031~~260,~~116~~244 $ ~~120~~47,~~741~~655,~~704~~776 ============= ============= LIABILITIES AND PARTNERS' DEFICIT Operating ~~Liabilities~~liabilities Mortgage notes payable $ 6334,~~984~~782,~~220~~290 $ 9738,~~203~~047,~~309~~957 Accounts payable 32,~~848~~650,~~099~~839 24,~~436~~890,~~882~~335 Accrued interest payable 85,~~525~~289,~~754~~052 76,~~885~~616,~~329~~457 Security deposits payable ~~391~~161,~~747~~185 ~~624~~194,~~852~~026 Due to local general partners and affiliates 1916,~~647~~365,~~288~~835 2116,~~080~~096,~~176~~222 Due to general partners and affiliates 82,~~056~~834,~~364~~286 82,~~261~~724,~~783~~952 ~~Due to selling partners 0 1,412,272~~ ------------- ------------- Total operating liabilities ~~104~~62,~~453~~083,~~472~~487 ~~138~~68,~~904~~569,~~603~~949 ------------- ------------- Liabilities from discontinued operations (Note 45) Mortgage notes payable of assets held for sale 187,~~806~~681,~~852~~181 124,~~032~~507,~~637~~279 Net liabilities held for sale (including minority interest) 1,~~399~~640,~~496~~595 284,~~076,114~~174 ------------- ------------- Total liabilities from discontinued operations 209,~~206~~321,~~348~~776 144,~~108~~591,~~751~~453 ------------ ------------ Total liabilities 71,405,263 73,161,402 ------------ ------------ Minority interests (~~682~~551,~~229~~759) (~~321~~548,~~605~~799) ------------- ------------- Commitments and contingencies (Note 56) Partners' deficit: Limited partners (15,987.5 BACs issued and outstanding) (30,~~904~~843,~~591~~421) (3029,~~908~~223,~~125~~352) General partners (14,~~041~~250,~~884)~~161 (14,~~041~~266,~~920)~~525 ------------- ------------- Total partners' deficit (3126,~~946~~593,~~475~~260) (3124,~~950~~956,~~045~~827) ------------- ------------- Total liabilities and partners' deficit $ 9244,~~031~~260,~~116~~244 $ ~~120~~47,~~741~~655,~~704~~776 ============= =============

See accompanying notes to consolidated financial statements. 2 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

Three Months Ended ~~Nine~~June ~~Months Ended December~~ 15, ~~December 15,~~ --------------------------~~---~~ ~~-----------------------------~~2007 ~~2005 2004~~2006* 2005 2004* ------------ ------------ ~~------------ ------------~~ Operations: Revenues Rental income $ 42,~~860~~533,~~185~~509 $ 42,~~815~~621,~~859~~937 ~~$ 14,383,691 $ 14,148,307~~ Other ~~100~~161,~~912~~204 9677,~~128~~522 ~~285,534 476,795~~ ------------ ------------ ~~------------~~Total ~~------------~~revenues 42,~~961~~694,~~097~~713 42,~~911~~699,~~987~~459 ~~14,669,225 14,625,102~~ ------------ ------------ ~~------------ ------------~~ Expenses General and administrative ~~831~~598,~~779~~266 ~~795~~546,~~180~~746 ~~2,296,053 2,458,476~~ General and administrative-related parties (Note 2) ~~539~~239,~~628~~901 ~~471~~297,~~016~~323 ~~1,531,116 1,404,255~~ Repairs and maintenance 1746,~~330,546~~153 1601,~~233,304~~132 ~~4,148,989 3,790,303~~ Operating and other ~~702~~643,~~749~~385 ~~479~~767,~~963~~519 ~~2,055,141 1,877,193~~ Taxes ~~249~~132,~~232~~517 ~~262~~128,~~675~~474 ~~711,027 624,030~~ Insurance ~~305~~154,~~215~~890 ~~281~~151,~~055~~570 ~~857,419 807,085~~ Financial 1889,~~330,994~~443 1906,~~629,584~~309 ~~3,932,737 4,539,190~~ Depreciation and amortization 1566,~~106,577~~616 1581,~~139,961~~658 ~~3,319,475 3,341,254~~ ------------ ------------ ~~------------ ------------~~ Total expenses from operations 63,~~396~~971,~~720~~171 63,~~292~~980,~~738~~731 ~~18,851,957 18,841,786~~ ------------ ------------ ~~------------ ------------~~ Loss from operations before minority interest (1,~~435~~276,~~623~~458) (1,~~380~~281,~~751~~272) ~~(4,182,732) (4,216,684)~~ Minority interest in loss of subsidiaries from operations ~~1,386 4,112~~ 7,~~201~~026 81,~~661~~751 ------------ ------------ ~~------------ ------------~~ Loss from operations (1,~~434~~269,~~237~~432) (1,~~376~~279,~~639~~521) ~~(4,175,531) (4,208,023)~~ Discontinued ~~Operations~~operations: ~~Income~~Loss from discontinued operations (including ~~gain~~loss on sale of properties) (Note 45) 5(367,~~990,094~~001) 3(805,~~682,222~~863) ~~6,117,222 5,648,517~~ ------------ ------------ ~~------------ ------------~~ Net ~~income~~loss $ 4(1,~~555~~636,~~857~~433) $ (2,~~305~~085,~~583~~384) ~~$ 1,941,691 $ 1,440,494~~ ============ ============ ~~============ ============~~ Loss from operations - limited partners $ (1,~~419~~256,~~895~~738) $ (1,~~362~~266,~~873~~726) $Loss ~~(4,133,776) $ (4,165,943) Income~~ from discontinued operations (including ~~gain~~loss on sale of properties) - limited partners 5(363,~~930,193~~331) 3(797,~~645,400~~804) ~~6,056,050 5,592,032~~ ------------ ------------ ~~------------ ------------~~ Net ~~income~~loss - limited partners $ 4(1,~~510~~620,~~298~~069) $ (2,~~282~~064,~~527~~530) ~~$ 1,922,274 $ 1,426,089~~ ============ ============ ~~============ ============~~ Number of BACs outstanding 15,987.5 15,987.550 ~~15,987.5 15,987.5~~ ============ ============ ~~============ ============~~ Loss from operations per BAC $ (8878.8161) $ (8579.2523) $Loss ~~(258.56) $ (260.58) Income~~ from discontinued operations per BAC ~~370~~(22.9372) ~~228~~(49.0290) ~~378.80 349.78~~ ------------ ------------ ~~------------ ------------~~ Net ~~income~~loss per BAC $ ~~282~~(101.1233) $ ~~142~~(129.7713) ~~$ 120.24 $ 89.20~~ ============ ===========~~= ============ ============~~

* Reclassified for comparative purposes See accompanying notes to consolidated financial statements. 3 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statement of Changes in Partners' (Deficit) Equity (Unaudited)

Limited General Total Partners Partner ------------ ------------ ------------ Partners' (deficit) equity - March 16, ~~2005~~2007 $(3124,~~950~~956,~~045~~827) $(3029,~~908~~223,~~125~~352) $ (14,~~041~~266,~~920)~~525 Net ~~income~~loss ~~1,941,691 1,922,274 19,417 Distributions~~ (1,~~938~~636,~~121~~433) (1,~~918~~620,~~740~~069) (1916,~~381~~364) ------------ ------------ ------------ Partners' (deficit) equity - ~~December~~June 15, ~~2005~~2007 $(3126,~~946~~593,~~475~~260) $(30,~~904~~843,~~591~~421) $ (14,~~041~~250,~~884)~~161 ============ ============ ============

See accompanying notes to consolidated financial statements 4 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (decrease) in Cash and Cash Equivalents (Unaudited)

~~Nine~~Three Months Ended ~~December~~June 15, --------------------------~~---~~ ~~2005~~2007 2004*2006 ------------ ------------ Net ~~income~~loss $ (1,~~941~~636,~~691~~433) $ 1(2,~~440~~085,~~494~~384) Adjustments to reconcile net ~~income~~loss to net cash (used in) provided by operating activities: ~~Gain~~Loss on sale of properties ~~(10~~23,~~550,777)~~644 (411,~~427,642)~~000 Depreciation and amortization 4697,~~936,374~~248 61,~~202~~099,~~008~~261 ~~Loss on impairment of fixed assets 2,710,000 0~~ Minority interest in income (loss) of subsidiaries 279,790 (~~272~~4,~~357~~001) (~~3,526,100~~Increase) ~~Decrease~~decrease in accounts receivable - tenants ~~147~~(104,~~056~~996) ~~243~~147,~~674~~531 ~~Increase~~Decrease (increase) in other assets (121,~~275,872)~~897 (~~571~~20,~~546~~965) Increase ~~(decrease)~~ in accounts payable 2475,~~627,491~~399 ~~(489~~972,~~993)~~955 Increase in accrued interest payable ~~763~~19,~~916~~933 1380,~~645,959~~361 Decrease in security deposits payable (~~50,038~~5) (123,~~516~~521) Increase in due to general partners and affiliates 55118,~~727~~106 1251,~~001,714~~009 (Increase) decrease in cash held in escrow (1413,~~431,645~~925) ~~(698~~52,~~962)~~337 ------------ ------------ Net cash (used in) provided by operating activities (~~398~~519,~~434~~342) ~~818~~780,~~090~~583 ------------ ------------ Cash flows from investing activities: Decrease in cash held in escrow 1171,~~179,131~~595 ~~288~~93,~~138~~877 Proceeds from sale of investments 73,~~684~~435,~~400~~000 ~~1,224,789~~0 Costs paid relating to sale of properties (~~222~~458,~~016~~750) 0(11,000) Improvements to property and equipment (~~563~~38,~~131~~565) (162,~~099,721~~891) ------------ ------------ Net cash provided by investing activities 83,~~078~~109,~~384~~280 ~~413~~19,~~206~~986 ------------ ------------ Cash flows from financing activities: Repayments of mortgage notes (491,~~482,822~~765) (1,~~828~~007,~~243~~277) Increase in due to local general partners and affiliates 1302,~~027,345~~376 1250,~~061,896~~698 Decrease in due to local general partners and affiliates 0(6,902) (~~329~~62,~~044~~632) Increase in deferred cost (~~Decrease~~3,834) ~~increase~~0 Decrease in capitalization of consolidated subsidiaries attributable to minority interest (~~235~~180,~~594~~331) ~~287~~(7,~~560~~291) Distributions (12,~~938~~777,~~121~~970) 0 ------------ ------------ Net cash provided by (used in) financing activities (52,~~629~~758,~~192~~426) (~~807~~826,~~831~~502) ------------ ------------ Net ~~increase~~decrease in cash and cash equivalents 2(168,~~050,758~~488) ~~423~~(25,~~465~~933) Cash and cash equivalents at beginning of period 46,~~779~~390,~~438~~501 54,~~224~~006,~~728~~542 ------------ ------------ Cash and cash equivalents at end of period* $ 6,~~830~~222,~~196~~013 $ 53,~~648~~980,~~193~~609 ============ ============ Summarized below are the components of the gain on sale of properties: ~~Decrease~~Proceeds infrom ~~property~~sale ~~and equipment, net~~ of ~~accumulated~~investments ~~depreciation~~- $net ~~19,996,475~~ $ ~~17,207,232 Decrease in mortgage notes payable~~ (212,~~962~~976,~~052~~250) ~~(21,261,879)~~$ 0 Decrease in ~~due~~property ~~to general partners~~ and ~~affiliates (252~~equipment,~~500)~~ ~~(474,583)~~net ~~Decrease~~of inaccumulated ~~due~~depreciation ~~to local general partner and affiliates (~~2,~~256~~605,~~995)~~211 ~~(257,744) Decrease in due to selling partners (1,412,272)~~ 0 Decrease in cash held in escrow 4265,~~554,061~~163 ~~752,892~~0 Decrease in rents receivable ~~220~~4,~~458~~393 ~~46,776~~0 Decrease in other assets 9914,~~161~~085 ~~305,553~~0 ~~Decrease~~Increase in accounts payable (1130,~~117,566)~~538 ~~(138,525)~~0 Decrease in ~~accrued interest payable (763,557) (2,236,444) Decrease in~~ security deposits payable (~~112~~19,~~271~~496) ~~(157,193) Decrease in deferred costs 189,278 461,952 (Decrease) increase in capitalization of consolidated subsidiaries attributable to minority interest (270,613) 2,549,110~~0

* Cash and cash equivalents, end of period, includes cash and cash equivalents from discontinued operations of $502,003 and $145,513, respectively. See accompanying notes to consolidated financial statements 5 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) Note 1 - General The consolidated financial statements for the three months ended June 15, 2007 and 2006, include the accounts of Liberty Tax Credit Plus L.P. (the "Partnership") and nine and sixteen subsidiary partnerships (each a "subsidiary partnership" or "Local Partnership"), respectively, in which the Partnership is a limited partner. Through the rights of the Partnership and/or a general partner of the Partnership (a "General Partner"), which General Partner has a contractual obligation to act on behalf of the Partnership, to remove the general partners of each subsidiary partnership (the "Local General Partners") and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation. For financial reporting purposes, the Partnership's fiscal quarter ends on June 15. All subsidiary partnerships have fiscal quarters ending March 31. Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from April 1 through June 15. The Partnership's quarter ends on June 15 in order to allow adequate time for the subsidiary partnerships' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of the General Partners, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Partnership as of June 15, 2007 and March 15, 2007, the results of operations and cash flows for the three months ended June 15, 2007 and 2006. However, the operating results and cash flows for the three months ended June 15, 2007 may not be indicative of the results for the year. Certain information and note disclosures which are normally included in financial statements prepared in accordance with GAAP have been omitted or condensed. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the period ended March 15, 2007. Increases (decreases) in the capitalization of consolidated subsidiaries attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners. The Partnership's investment in each subsidiary partnership is equal to the respective subsidiary partnership's partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interests' investments in the subsidiary partnerships have been charged to the Partnership. Such losses aggregate approximately $0 and $95,000 for the three months ended June 15, 2007 and 2006, respectively. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. Note 2 - Related Party Transactions An affiliate of the General Partners has a 1% interest, as a special limited partner, in each of the subsidiary partnerships. An affiliate of the General Partners also has a minority interest in certain subsidiary partnerships. The costs incurred to related parties from operations for the three months ended June 15, 2007 and 2006 were as follows:

Three Months Ended ~~Nine~~June ~~Months Ended December~~ 15, ~~December 15,~~ -------------------~~-----~~ ~~------------------------~~2007 ~~2005 2004~~2006* 2005 2004* ---------- ---------- ~~---------- ----------~~ Partnership management fees (a) $ ~~222~~119,~~750~~625 $ ~~269~~154,~~250~~500 ~~$ 670,750 $ 800,250~~ Expense reimbursement (b) ~~138~~37,~~473~~259 4759,~~431~~965 ~~347,542 131,675~~ Local administrative fee (d) 42,~~750~~500 32,~~875~~500 ~~13,250 11,625~~ ---------- ---------- ~~---------- ----------~~ Total general and administrative-General Partners ~~365~~159,~~973~~384 ~~320~~216,~~556~~965 ~~1,031,542 943,550~~ ---------- ---------- ~~---------- ----------~~ Property management fees incurred to affiliates of the local general partners (c) ~~173~~80,~~655~~517 ~~150~~80,~~460~~358 ~~499,574 460,705~~ ---------- ---------- ~~---------- ----------~~ Total general and administrative-related parties $ ~~539~~239,~~628~~901 $ ~~471~~297,~~016~~323 ~~$1,531,116 $1,404,255~~ ========== ========~~== ========== ==========~~

* Reclassified for comparative purpose. 6 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) The costs incurred to related parties from discontinued operations for the three months ended June 15, 2007 and 2006 were as follows:

Three Months Ended ~~Nine~~June ~~Months Ended December~~ 15, ~~December 15,~~ -------------------- ~~--------------------~~2007 ~~2005~~2006* ~~2004 2005 2004~~ -------- -------- ~~-------- -------- Property management fees incurred to affiliates of the General Partners (c) $ 0 $ 15,769 $ 0 $ 63,075~~ Local administrative fee (d) ~~7,250~~$ ~~9,125~~625 ~~21,750~~$ 273,~~375~~943 -------- -------- ~~-------- --------~~ Total general and administrative-General Partners ~~7,250~~625 243,~~894~~943 ~~21,750 90,450~~ -------- -------- ~~-------- --------~~ Property management fees incurred to affiliates of the local general partners (c) 4293,~~334~~178 6887,~~676~~304 ~~186,665 229,829~~ -------- -------- ~~-------- --------~~ Total general and administrative-related parties $ ~~49,584 $~~ 93,~~570~~803 $~~208,415~~ ~~$320~~91,~~279~~247 ======== ======== ~~======== ========~~

* Reclassified for comparative purposes. (a) The General Partners are entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the local annual administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership's Amended and Restated Agreement of Limited Partnership ("Partnership Agreement")), for administering the affairs of the Partnership. The partnership management fee, subject to the foregoing limitation, will be determined by the General Partners in their sole discretion based upon their review of the Partnership's investments. Unpaid partnership management fees for any year will be accrued without interest and will be payable from working capital reserves or to the extent of available funds after the Partnership has made distributions to the limited partners and BACs holders of sale or refinancing proceeds equal to their original capital contributions plus a 10% priority return thereon (to the extent not theretofore paid out of cash flow). During the year ended March 15, 2007, management deemed the unpaid partnership management fees that were related to sold properties uncollectible and wrote off 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 $2,694,000 and $2,574,000 were accrued and unpaid as of June 15, 2007 and March 15, 2007, 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 Related Credit Properties L.P., a General Partner, amounting to approximately $33,000 and $35,000 were accrued and unpaid as of June 15, 2007 and March 15, 2007, respectively. (c) Property management fees incurred by the subsidiary partnerships in operations amounted to $237,509 and $310,041 for the three months ended June 15, 2007 and 2006, respectively. Of these fees, $173,695 and $167,662 were incurred to affiliates of the local general partners, which include $93,178 and $87,304 of fees relating to discontinued operations. (d) Liberty Associates III L.P., a General Partner and the special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. Note 3 - Sale of Properties The Partnership is currently in the process of disposing of its investments. As of June 15, 2007, the Partnership has disposed of twenty-three of its thirty-one original investments and entered into an agreement to sell its limited partnership interest in one Local Partnership and one Local Partnership has entered into agreement to sell its property and the related assets and liabilities (see Note 4). On May 11, 2007, the property and the related assets and liabilities of Charles Drew Court Associates, L.P. ("Charles Drew") were sold to an unaffiliated third party purchaser for a sales price of $3,435,000. The Partnership received $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 loss of approximately $24,000, resulting from the write-off of the basis in the property at the date of 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. 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 7 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) 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. Note 4 - Assets Held for Sale 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 $4,513,000 on March 31, 2007. 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. West Kinney is being held as an asset held for sale as of June 15, 2007. As of March 31, 2007, West Kinney had property and equipment, at cost, of approximately $7,187,000, accumulated depreciation of approximately $4,444,000 and mortgage debt of approximately $3,178,000. 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 September 15, 2007. No assurance can be given that the sale will actually occur. Greenleaf has been classified as an asset held for sale as of the quarter ended December 15, 2006. As of March 31, 2007, Greenleaf had property and equipment, at cost, of approximately $6,479,000, accumulated depreciation of approximately $3,923,000 and mortgage debt of approximately $4,503,000. Note 5 - Discontinued Operations The following table summarizes the financial position of the Local Partnerships that are classified as discontinued operations because the respective Local Partnerships were classified as assets held for sale. As of June 15, 2007, Charles Drew, Concourse Artists, Grand Concourse, Greenleaf, Robin Housing, United Penn, Willoughby and West Kinney were classified as discontinued operations on the consolidated balance sheets. As of March 15, 2007, Alameda Towers, Concourse Artists, Charles Drew, Grand Concourse, Greenleaf, Robin Housing, Shiloh Grove, United Penn and Willoughby were classified as discontinued operations on the consolidated balance sheets. 8 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) Consolidated Balance Sheets of Discontinued Operations:

~~December~~June 15, March 15, ~~2005~~2007 ~~2005~~2007 ------------ ------------ Assets Property and equipment, net of accumulated depreciation of $188,~~032~~409,~~393~~059 and $139,~~195~~605,~~220~~003, respectively $ 115,~~872~~350,~~222~~321 $ 115,~~193~~252,~~351~~734 Cash and cash equivalents ~~213~~502,~~193~~003 ~~444~~343,~~267~~866 Cash held in escrow 1827,~~641,876~~627 3722,~~851,578~~334 Deferred costs, net of accumulated amortization of $~~907~~6,~~182~~841 and $~~182~~6,~~368~~341, respectively ~~515~~41,~~178~~945 6842,~~189~~445 Due from general partners and affiliates 8,772 8,772 Other assets ~~378~~166,~~800~~803 8892,~~862~~804 ------------ ------------ Total assets $ 146,~~621~~897,~~269~~471 $ 156,~~646~~462,~~247~~955 ============ ============ Liabilities Mortgage notes payable $ 187,~~806~~681,~~852~~181 $ 124,~~032~~507,~~637~~279 Accounts payable and other liabilities ~~701,705~~ 1,~~172~~620,~~267~~439 192,298 Due to local general partners and affiliates ~~935~~148,~~955~~219 ~~732~~122,~~717~~358 ~~Due to general partners and affiliates 58,146 49,500~~ Minority interest (~~296~~128,~~310~~063) ~~121~~(230,~~630~~482) ------------ ------------ Total liabilities $ 209,~~206~~321,~~348~~776 $ 144,~~108~~591,~~751~~453 ============ ============

The following table summarizes the results of operations of the Local Partnerships that are classified as discontinued operations. For the three months ended June 15, 2007, Charles Drew which was sold during the period, and Greenleaf and West Kinney, which were classified as assets held for sale, were all classified as discontinued operations on the consolidated financial statements. For the three months ended June 15, 2006 and in order to present comparable results for the three months ended June 15, 2007, Concourse Artists, Grand Concourse, Robin Housing and Willoughby which were sold during the period, and Alameda Towers, Charles Drew, Greenleaf, Shiloh Grove, United Penn and West Kinney were all classified as discontinued operations on the consolidated financial statements. 9 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) Consolidated Statements of Discontinued Operations:

Three Months Ended ~~Nine~~June ~~Months Ended December~~ 15, ~~December 15,~~ -------------------------- ~~--------------------------~~2007 ~~2005~~2006* ~~2004 2005 2004~~ ----------- ----------- ~~----------- -----------~~ Revenues: Rental income $ 1724,~~476,797~~975 $ 32,~~056~~811,~~397~~887 ~~$ 5,178,098 $ 9,574,953~~ Other 366,~~595~~570 ~~189~~52,~~905~~196 ~~139,846~~Loss ~~361,993 Gain~~ on sale of properties 6(23,~~037,429~~644) 4(11,~~417,512~~000) ~~10,550,777 4,427,642~~ ----------- ----------- ~~----------- -----------~~ Total revenue 7707,~~550,821~~901 72,~~663~~853,~~814~~083 ~~15,868,721 14,364,588~~ ----------- ----------- ~~----------- -----------~~ Expenses: General and administrative ~~334~~91,~~564~~981 ~~610~~620,~~188~~192 ~~1,081,953 1,805,017~~ General and administrative-related parties (Note 2) ~~49,584~~ 93,~~570~~803 ~~208~~91,~~415~~247 ~~320,279~~ Repairs and maintenance ~~485~~150,~~739~~658 ~~592~~932,~~902~~951 ~~1,348,764 1,984,069~~ Operating ~~205~~152,~~339~~507 ~~432~~676,~~013~~940 ~~987,396 1,523,863~~ Taxes 5942,~~939~~176 ~~112~~102,~~753~~026 ~~246,277 469,699~~ Insurance ~~121~~28,~~979~~657 ~~169~~173,~~005~~891 ~~333,692 574,532~~ Interest ~~412~~97,~~333~~672 ~~845~~546,~~007~~346 ~~1,483,259 2,695,297~~ Depreciation and amortization ~~433~~130,~~302~~632 1517,~~126,846~~603 ~~1,616,899 2,860,754 Loss on impairment of fixed assets 0 0 2,710,000 0~~ ----------- ----------- ~~----------- -----------~~ Total expenses 2788,~~102,779~~086 3,~~982~~661,~~284~~196 ~~10,016,655 12,233,510~~ ----------- ----------- ~~-----------~~Loss ~~----------- Income~~ before minority interest 5(80,~~448,042~~185) 3(808,~~681,530~~113) ~~5,852,066 2,131,078~~ Minority interest in ~~income~~loss of subsidiaries from discontinued operations ~~542~~(286,~~052~~816) ~~692 265~~2,~~156~~250 ~~3,517,439~~ ----------- ----------- ~~----------- -----------~~ Net ~~income~~loss from discontinued operations (including ~~gain~~loss on sale of properties) $ 5(367,~~990,094~~001) $ 3(805,~~682,222~~863) ~~$ 6,117,222 $ 5,648,517~~ =========== =========== ~~=========== =========== Income~~ Loss- limited partners from discontinued operations (including ~~gain~~loss on sale of properties) $ 5(363,~~930,193~~331) $ 3(797,~~645,400~~804) ~~$ 6,056,050 $ 5,592,032~~ =========== =========== ~~=========== ===========~~ Number of BACs outstanding 15,987.5 15,987.550 ~~15,987.5 15,987.5~~ =========== =========== ~~===========~~Loss ~~=========== Income~~ from discontinued operations (including ~~gain~~loss on sale of properties) per BAC $ ~~370~~(22.9372) $ ~~228~~(49.0290) ~~$ 378.80 $ 349.78~~ =========== =========== ~~===========~~* ~~===========~~Reclassified ~~Nine~~for comparative purposes Three Months Ended ~~December~~June 15, -------------------------- ~~2005~~2007 ~~2004~~2006* ----------- ----------- Cash flows from Discontinued Operations: Net cash (used in) provided by operating activities $ 1(686,~~989,516~~436) $ 25726,~~929~~101 ----------- ----------- Net cash provided by (used in) investing activities $ 7463,~~247,719~~112 $ 3(107,~~823,625~~280) ----------- ----------- Net cash used in financing activities $ (132,~~837,967~~726) $ (~~814~~917,~~413~~372) ----------- -----------

* Reclassified for comparative purposes. Note 6 - 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 currently due as of March 31, 2007. Because of these circumstances, there is substantial doubt regarding whether the Local Partnership can continue as a going concern. The Partnership's investment in 10 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) Magnolia Arms was written down to zero by prior years' losses and the minority interest was approximately $26,000 and $33,000 at June 15, 2007 and March 31, 2007, respectively. The net loss after minority interest for Magnolia Arms amounted to approximately $317,000 and $36,000 for the quarters ended June 15, 2007 and 2006, 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 March 31, 2007 was $405,076. Quality Hill has filed for another extension; however, no extension has been granted as of the filing date of this Form 10-Q. 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). 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-Q. 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 June 15, 2007 and March 31, 2007. The net loss after minority interest for Quality Hill amounted to approximately $91,000 and $86,000 for the quarters ended June 15, 2007 and 2006, 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. 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. 11 LIBERTY TAX CREDIT PLUS L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements June 15, 2007 (Unaudited) 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 25% 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 June 15, 2007, there are seven 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. 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The Partnership's capital was originally invested in thirty-one Local Partnerships. As of June 15, 2007, the properties and the related assets and liabilities of fifteen Local Partnerships and the limited partnership interest in eight Local Partnerships were sold. For a discussion of these sales of the Local Partnerships see Note 3. In addition, as of June 15, 2007, the Partnership entered into an agreement to sell its limited partnership interest in one Local Partnership and one Local Partnership has entered into agreement to sell its property and the related assets and liabilities (see Note 4). Off Balance Sheet Arrangements ------------------------------ The Partnership has no off-balance sheet arrangements. Tabular disclosure of Contractual Obligations --------------------------------------------- The Partnership annually discloses in Item 7 to the financial statements in the Partnership's Annual Report on Form 10-K for the year ended March 15, 2007, the Partnership's commitments to make future payments under its debt agreements and other contractual obligations. There are no material changes to such disclosure or amounts as of June 15, 2007. Short-Term ---------- The Partnership's primary sources of funds included: (i) working capital reserves; (ii) interest earned on the working capital reserves; (iii) cash distributions from operations of the Local Partnerships; and (iv) sales proceeds and distributions. Such funds are available to meet the obligations of the Partnership. During the three months ended June 15, 2007 and 2006, distributions from operations of the Local Partnerships amounted to approximately $60,000 and $17,000, respectively. Additionally, during the three months ended June 15, 2007 and 2006, the Partnership received approximately $2,765,000 and $2,690,000 distributions of proceeds from sales. For the three months ended June 15, 2007, cash and cash equivalents of the Partnership and its consolidated Local Partnerships decreased approximately $168,000. This decrease is attributable to a net cash used in operating activities ($519,000), improvements to property and equipment ($39,000), costs paid relating to sale of properties ($459,000), repayments of mortgage notes ($92,000), an increase in deferred cost ($4,000), a decrease in capitalization of consolidated subsidiaries attributable to minority interest ($180,000) and distributions ($2,778,000) which exceeded a decrease in cash held in escrow relating to investing activities ($172,000), proceeds from sale of investments ($3,435,000) and a net increase in due to local general partners and affiliates relating to finance activities ($295,000). Included in the adjustments to reconcile net loss to net cash used in operating activities is depreciation and amortization of approximately ($697,000) and a loss on sale of properties ($24,000). Total expenses for the three months ended June 15, 2007 and 2006, excluding depreciation and amortization, interest and general and administrative-related parties, totaled $2,275,211 and $2,195,441, respectively. Accounts payable as of June 15, 2007 and March 15, 2007, were $2,650,839 and $4,890,335, respectively. Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and in certain circumstances advances from the Partnership. The Partnership believes it (and the applicable Local Partnerships) has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term. In addition, accounts payable from discontinued operations, as of June 15, 2007 and March 15, 2007, totaled $163,132 and $95,669, respectively. Accrued interest payable as of June 15, 2007 and March 15, 2007 was $5,289,052 and $6,616,457, respectively. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership's investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. Furthermore, each Local Partnership's mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. In addition, accrued interest payable from discontinued operations, as of June 15, 2007 and March 31, 2007, totaled $1,403,870 and $56,532, respectively. Partnership management fees and expense reimbursements owed to the General Partners amounting to approximately $2,727,000 and $2,609,000 were accrued and unpaid as of June 15, 2007 and March 15, 2007, respectively. Without the General Partners' continued accrual without payment of the partnership management fees, the Partnership will not be in a position to meet its obligations. The General Partners have allowed for the accrual without payment of a portion of the partnership management fees but are under no obligation to continue to do so. A working capital reserve of approximately $5,358,000 remained unused at June 15, 2007. The Partnership is not expected to have access to additional sources of financing. Long-Term --------- For a discussion of contingencies affecting certain Local Partnerships, see Note 6 to the financial statements. Since the maximum loss the Partnership would be liable for is its net investment in the respective Local Partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership may result in recapture of Tax Credits if the investment is lost before the expiration of the applicable compliance period. 13 The Local Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Furthermore, inflation generally does not impact the fixed long-term financing under which real property investments were purchased. Inflation also affects the Local Partnerships adversely by increasing operating costs, such as fuel, utilities, and labor. Since revenues from the sales of assets are driven by market conditions, inflation has little impact. 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 Partnership's portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. 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 Item 8, Note 2 to the consolidated financial statements in the Partnership's Annual Report on Form 10-K for the year ended March 15, 2007. 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 extraordinary items on the consolidated statements of operations. Discontinued operations include the results of operations and any gain or loss recognized for Local Partnerships that have been disposed of or are held for sale. A gain or loss recognized on the disposal is disclosed in the notes to the financial statements. Adjustments to amounts previously reported in operations that are directly related to the disposal of a Local Partnership are reclassified in the current period as discontinued operations for comparability purposes. Assets and liabilities of a Local Partnership that are classified as held for sale are presented separately in the asset and liability sections, respectively, of the consolidated balance sheets. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time property investments themselves are reduced to estimated fair value (generally using discounted cash flows). During the three months ended June 15, 2007, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value. Through June 15, 2007, the Partnership has recorded approximately $2,710,000 as an aggregate loss on impairment of assets or reduction to estimated fair value. At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. As of June 15, 2007 and March 15, 2007, the Partnership has recorded property and equipment net of accumulated depreciation of $5,350,321 and $5,252,734, respectively, as held for sale. Revenue Recognition ------------------- Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and as rents become due and charged to tenants' accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned. Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income, and other rental related items. Income Taxes ------------ The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31. Results of Operations --------------------- The results of operations for the three months ended June 15, 2007 and 2006 consisted primarily of the results of the Partnership's investment in the consolidated Local Partnerships, excluding the results of its discontinued operations which are not reflected in the following discussion (see Note 5). 14 Rental income decreased approximately 3% for the three months ended June 15, 2007 as compared to the corresponding period in 2006, primarily due to an increase in vacancies due to the cancellation of a Section 8 contract at one Local Partnership offset by an increase in rental rates and decreases in vacancies at several Local Partnerships. Other income increased approximately $84,000 for the three months ended June 15, 2007 as compared to the corresponding period in 2006, primarily due to a special grant received by one Local Partnership for labor and supplies needed for repairs to the property. Total expenses, excluding general and administrative-related parties, operating and repair and maintenance, remained fairly consistent with an increase of approximately 1% for the three months ended June 15, 2007 as compared to the corresponding period in 2006. General and administrative - related parties expenses decreased approximately $57,000 for the three months ended June 15, 2007 as compared to the corresponding period in 2006, primarily due to a decrease in partnership management fees and expense reimbursements resulting from sold properties at the Partnership level. Operating and other expenses decreased approximately $124,000 for the three months ended June 15, 2007 as compared to the corresponding period in 2006, primarily due to a decrease in gas and electric expenses at one Local Partnership. Repairs and maintenance expenses increased approximately $145,000 for the three months ended June 15, 2007 as compared to the corresponding period in 2006, primarily due to an increase in painting, plumbing, ground maintenance and general repairs at one Local Partnership, an increase in major apartment repairs and an increase in security contract expenses at a second Local Partnership, and an increase in non-recurring heating system repairs at a third Local Partnership. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership has mortgage notes that are payable in aggregate monthly installments including principal and interest at rates varying from 1% to 12% per annum. The Partnership does not believe there is a material risk associated with the various interest rates associated with the mortgage notes as the majority of the Local Partnership mortgage notes have fixed rates. The Partnership currently discloses in Item 8, Note 3 to the financial statements in the Partnership's Annual Report on Form 10-K for the year ended March 15, 2007, the fair value of the mortgage notes payable. The Partnership does not have any other market risk sensitive instruments. Item 4. Controls and Procedures (a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Principal Executive Officer and Principal Financial Officer of Related Credit Properties L.P. and Liberty Associates III, L.P., the general partners of the Partnership, have evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Changes in INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in the Partnership's internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. 15 PART II. OTHER INFORMATION Item 1. Legal Proceedings - None Item 1A. Risk Factors - No changes Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - None Item 6. Exhibits (31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (31.2) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) (32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350) 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 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: July 30, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer Date: July 30, 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: July 30, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer Date: July 30, 2007 ------------- By: /s/ Andrew J. Weil ------------------ Andrew J. Weil President, Chief Executive Officer 17 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 quarterly report on Form 10-Q for the period ended June 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 most recent 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 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: July 30, 2007 ------------- By: /s/ Robert L. Levy ------------------ Robert L. Levy Chief Financial Officer 18 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 quarterly report on Form 10-Q for the period ended June 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 most recent 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 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: July 30, 2007 ------------- By: /s/ Andrew J. Weil ------------------ Andrew J. Weil Chief Executive Officer 19 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 quarterly report of Liberty Tax Credit Plus L.P. on Form 10-Q for the period ended June 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 July 30, 2007 July 30, 2007

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