UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September~~December 3031, 2014

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

For the transition period from ________ to ~~________~~___________

Commission file number: 0-23908

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

17782 Sky Park Circle, Irvine, CA 92614

( Address of principle executive offices )

(714) 662-5565

( Telephone ~~number~~ Number )

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 þ No o

~~Yes~~Indicate ~~[X] No~~by ~~[ ]~~check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, onan ~~its~~accelerated ~~corporate Web site~~filer, ifa ~~any~~non-accelerated filer, ~~every~~or ~~Interactive Data~~a ~~File~~smaller ~~required~~reporting tocompany. beSee ~~submitted~~the ~~and~~definitions ~~posted pursuant to Rule 405~~ of ~~Regulation~~"large ~~S-T~~accelerated ~~(232.405~~filer," of"accelerated ~~this~~filer" ~~chapter)~~and ~~during~~"smaller ~~the~~reporting ~~preceding 12~~company" ~~months~~in ~~(or~~Rule ~~for~~12b-2 ~~such~~of ~~shorter period that~~ the ~~registrant~~Exchange ~~was~~Act. ~~required~~(Check ~~to submit and post such files~~one).:

~~Yes~~Large ~~[X] No~~accelerated ~~[ ]~~filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting~~ company. ~~See~~(as ~~the~~defined ~~definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”~~ in Rule 12b-2 of the Exchange Act). ~~(Check~~Yes ~~one):~~o No þ

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

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

Yes [ ] No [X]

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)

INDEX TO FORM 10-Q

For the Quarterly Period Ended ~~September~~December 3031, 2014

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
	Condensed Balance Sheets As of September 30, 2014 and March 31, 2014	F-1
	Condensed Statements of Operations For the Three and Six Months Ended September 30, 2014 and 2013	F-2
	Condensed Statement of Partners’ Deficit For the Six Months Ended September 30, 2014	F-3
	Condensed Statements of Cash Flows For the Six Months Ended September 30, 2014 and 2013	F-4
	Notes to Condensed Financial Statements	F-5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
	Item 3. Quantitative and Qualitative Disclosures about Market Risks	5
	Item 4. Controls and Procedures	5
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings	6
	Item 1A. Risk Factors	7
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	7
	Item 3. Defaults Upon Senior Securities	7
	Item 4. Mine Safety Disclosures	7
	Item 5. Other Information	7
	Item 6. Exhibits	8
	Signatures	9

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Balance Sheets as of December 31, 2014 and March 31, 2014		3

Condensed Statements of Operations for the Three and Nine Months Ended December 31, 2014 and 2013		4

Condensed Statement of Partners' Deficit for the Nine Months Ended December 31, 2014		5

Condensed Statements of Cash Flow for the Nine Months Ended December 31, 2014 and 2013		6

Notes to Condensed Financial Statements		7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3. Quantitative and Qualitative Disclosures About Market Risk		17

Item 4. Controls and Procedures		17

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		18

Item 1A. Risk Factors		19

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		19

Item 3. Defaults Upon Senior Securities		19

Item 4. Mine Safety Disclosures		19

Item 5. Other Information		19

Item 6. Exhibits.		20

Signatures		21

~~Part~~WNC I.CALIFORNIA ~~Financial~~HOUSING ~~Information~~TAX CREDITS III, L.P.

~~Item~~(A 1.California ~~Financial~~Limited ~~Statements~~Partnership)

~~WNC CALIFORNIA~~CONDENSED ~~HOUSING~~BALANCE ~~TAX CREDITS III, L.P.~~SHEETS

(~~A California Limited Partnership~~Unaudited)

CONDENSED BALANCE SHEETS

	December 31, 2014			March 31, 2014

ASSETS
Cash	$	10,041		$	5,698
Other assets		121,960			60,756
Investments in Local Limited Partnerships, net (Note 2)		-			-

Total Assets	$	132,001		$	66,454


LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
Accrued fees and expenses due to
General Partner and affiliates (Note 3)	$	1,858,266		$	1,717,344

Total Liabilities		1,858,266			1,717,344


Partners’ Deficit:
General Partner		(187,395	)		(186,641	)
Limited Partners (30,000 Partnership Units authorized;
17,897 and 17,917 Partnership Units issued and outstanding)		(1,538,870	)		(1,464,249	)

Total Partners’ Deficit		(1,726,265	)		(1,650,890	)

Total Liabilities and Partners’ Deficit	$	132,001		$	66,454

~~(Unaudited)~~See accompanying notes to condensed financial statements

	September 30, 2014			March 31, 2014
ASSETS
Cash	$	10,040		$	5,698
Other assets		93,242			60,756
Investments in Local Limited Partnerships, net (Note 2)		-			-
Total Assets	$	103,282		$	66,454
LIABILITIES AND PARTNERS’ DEFICIT
Liabilities:
Accrued fees and expenses due to General Partner and affiliates (Note 3)	$	1,779,975		$	1,717,344
Total Liabilities		1,779,975			1,717,344
Partners’ Deficit:
General Partner		(186,899	)		(186,641	)
Limited Partners (30,000 Partnership Units authorized; 17,897 and 17,917 Partnership Units issued and outstanding)		(1,489,794	)		(1,464,249	)
Total Partners’ Deficit		(1,676,693	)		(1,650,890	)
Total Liabilities and Partners’ Deficit	$	103,282		$	66,454

~~F-1~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~CONDENSED ~~Limited~~STATEMENTS ~~Partnership)~~OF OPERATIONS

~~CONDENSED STATEMENTS~~For OFthe ~~OPERATIONS~~Three and Nine Months Ended December 31, 2014 and 2013

~~For the Three and Six Months Ended September 30, 2014 and 2013~~(Unaudited)

(Unaudited)

	2014						2013
	Three Months			Nine Months			Three Months			Nine Months

Distribution income	$	-		$	14,342		$	-		$	13,130

Operating expenses:
Asset management fees (Note 3)		6,272			18,816			6,272			28,133
Legal and accounting fees		2,400			18,150			6,100			27,820
Write off of other assets		40,198			47,249			-			-
Other		702			5,502			2,397			7,830

Total operating expenses		49,572			89,717			14,769			63,783

Loss from operations		(49,572	)		(75,375	)		(14,769	)		(50,653	)

Gain on sale of Local Limited Partnerships		-			-			-			8,409

Net loss	$	(49,572	)	$	(75,375	)	$	(14,769	)	$	(42,244	)

Net loss allocated to:
General Partner	$	(496	)	$	(754	)	$	(148	)	$	(422	)

Limited Partners	$	(49,076	)	$	(74,621	)	$	(14,621	)	$	(41,822	)

Net loss per Partnership Unit	$	(3	)	$	(4	)	$	(1	)	$	(2	)

Outstanding weighted Partnership Units		17,897			17,897			17,917			17,917

	2014						2013
	Three Months			Six Months			Three Months			Six Months
Operating income:
Distribution income	$	-		$	14,342		$	12,130		$	13,130
Total operating income		-			14,342			12,130			13,130
Operating expenses:
Asset management fees (Note 3)		6,272			12,544			9,132			21,861
Legal and accounting fees		15,750			15,750			16,810			21,720
Write off of other assets		1,641			7,051			-			-
Other		3,035			4,800			1,961			5,433
Total operating expenses		26,698			40,145			27,903			49,014
Loss from operations		(26,698	)		(25,803	)		(15,773	)		(35,884	)
Gain on sale of Local Limited Partnerships		-			-			8,409			8,409
Net loss	$	(26,698	)	$	(25,803	)	$	(7,364	)	$	(27,475	)
Net loss allocated to:
General Partner	$	(267	)	$	(258	)	$	(74	)	$	(275	)
Limited Partners	$	(26,431	)	$	(25,545	)	$	(7,290	)	$	(27,200	)
Net income loss per Partnership Unit	$	(1	)	$	(1	)	$	(1	)	$	(2	)
Outstanding weighted Partnership Units		17,897			17,897			17,957			17,957

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~4

~~F-2~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~CONDENSED ~~Limited~~STATEMENT ~~Partnership)~~OF PARTNERS’ DEFICIT

~~CONDENSED STATEMENT~~For OFthe ~~PARTNERS’~~Nine ~~DEFICIT~~Months Ended December 31, 2014

~~For the Six Months Ended September 30, 2014~~(Unaudited)

(Unaudited)

	General			Limited
	Partner			Partners			Total

Partners’ deficit at March 31, 2014	$	(186,641	)	$	(1,464,249	)	$	(1,650,890	)

Net loss		(754	)		(74,621	)		(75,375	)

Partners’ deficit at December 31, 2014	$	(187,395	)		(1,538,870	)	$	(1,726,265	)

	General			Limited
	Partner			Partners			Total
Partners’ deficit at March 31, 2014	$	(186,641	)	$	(1,464,249	)	$	(1,650,890	)
Net loss		(258	)		(25,545	)		(25,803	)
Partners’ deficit at September 30, 2014	$	(186,899	)	$	(1,489,794	)	$	(1,676,693	)

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~5

~~F-3~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~CONDENSED ~~Limited~~STATEMENTS ~~Partnership)~~OF CASH FLOWS

~~CONDENSED STATEMENTS~~For OFthe ~~CASH~~Nine ~~FLOWS~~Months Ended December 31, 2014 and 2013

~~For the Six Months Ended September 30, 2014 and 2013~~(Unaudited)

(Unaudited)

	2014			2013
Cash flows from operating activities:
Net loss	$	(75,375	)	$	(42,244	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Gain on sale of Local Limited Partnerships		-			(8,409	)
Increase in other assets		(61,204	)		(46,359	)
Increase in accrued fees and expenses due to
General Partner and affiliates		140,922			77,231

Net cash provided by (used in) operating activities		4,343			(19,781	)

Cash flows from investing activities:
Net proceeds from sale of Local Limited Partnerships		-			8,409

Net cash provided by investing activities		-			8,409

Net increase (decrease) in cash		4,343			(11,372	)

Cash, beginning of period		5,698			17,070

Cash, end of period	$	10,041		$	5,698

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Taxes paid	$	-		$	-

	2014			2013
Cash flows from operating activities:
Net loss	$	(25,803	)	$	(27,475	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Increase in other assets		(32,486	)		(6,160	)
Gain on sale of Local Limited Partnerships		-			(8,409	)
Increase in accrued fees and expenses due to General Partner and affiliates		62,631			27,263
Net cash provided by (used in) operating activities		4,342			(14,781	)
Cash flows from investing activities:
Net proceeds from sale of Local Limited Partnerships		-			8,409
Net cash provided by investing activities		-			8,409
Net increase (decrease) in cash		4,342			(6,372	)
Cash, beginning of period		5,698			17,070
Cash, end of period	$	10,040		$	10,698
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid	$	-		$	-

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~6

~~F-4~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period Ended December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~General

~~General~~The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended December 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended March 31, 2014.

The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015. For further information, refer to the financial statements and footnotes thereto included in the Partnership’s annual report on Form 10-K for the fiscal year ended March 31, 2014.Organization

~~Organization~~WNC California Housing Tax Credits III, L.P. (the "Partnership") is a California Limited Partnership formed under the laws of the State of California on October 5, 1992 and began operations on July 19, 1993. The Partnership was formed to acquire limited partnership interests in other limited partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”). The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).

~~WNC California~~The ~~Housing~~general ~~Tax~~partner ~~Credits~~of ~~III, L.P. (~~the “Partnership~~”),~~ is aWNC California ~~Limited~~Housing ~~Partnership~~Tax ~~formed~~Credit ~~under~~Partners ~~the laws of the State of California on October 5~~III, ~~1992 and began operations on July 19, 1993~~L.P. ~~The Partnership was formed to acquire limited partnership interests in other limited partnerships~~ (the “~~Local~~General ~~Limited Partnerships~~Partner”). WNC ~~which~~& ~~own~~Associates, ~~multi-family~~Inc. ~~or senior housing complexes~~ (“~~Housing Complexes~~Associates”) ~~that~~and ~~are~~Wilfred ~~eligible~~N. ~~for~~Cooper ~~Federal low income housing tax credits (“Low Income Housing Tax Credits”)~~Sr. ~~The~~are ~~local~~the general partners (of the ~~“Local~~ General ~~Partners”)~~Partner. The ofchairman ~~each~~and ~~Local~~president ~~Limited~~of ~~Partnership retain~~Associates ~~responsibility~~own ~~for~~all ~~maintaining,~~of ~~operating~~the ~~and~~outstanding ~~managing~~stock ~~the~~of ~~Housing Complexes~~Associates. The ~~Each~~business ~~Local~~of ~~Limited~~the Partnership is ~~governed by~~conducted ~~its~~primarily ~~agreement~~through ofAssociates ~~limited~~as ~~partnership (~~the ~~“Local~~Partnership ~~Limited~~has ~~Partnership~~no ~~Agreement”)~~employees of its own.

The ~~general~~ ~~partner of the~~ Partnership isshall ~~WNC~~continue ~~California~~in ~~Housing~~full ~~Tax~~force ~~Credit~~and ~~Partners~~effect ~~III,~~until ~~L.P.~~December ~~(the “General Partner”). WNC & Associates~~31, ~~Inc.~~2050 ~~(“Associates”)~~unless ~~and~~terminated ~~Wilfred~~prior N.to ~~Cooper~~that ~~Sr.~~date ~~are~~pursuant ~~the~~to ~~general partners of~~ the ~~General~~partnership ~~Partner. The~~agreement ~~chairman~~or ~~and president of Associates own all of the outstanding stock of Associates~~law. ~~The business of the Partnership is conducted primarily through Associates as the Partnership has no employees of its own.~~

The ~~Partnership~~ ~~shall~~financial ~~continue~~statements ininclude ~~full~~only ~~force~~activity ~~and~~relating ~~effect~~to ~~until~~the ~~December~~business 31of the Partnership, ~~2050~~and ~~unless~~do ~~terminated~~not ~~prior~~give effect to any assets that ~~date~~the ~~pursuant~~partners tomay have outside of their interests in the ~~partnership~~ ~~agreement~~Partnership, or ~~law~~to any obligations, including income taxes, of the partners.

~~The financial~~Pursuant ~~statements~~to ~~include~~a ~~only~~registration ~~activity~~statement ~~relating~~filed towith the ~~business~~Securities and Exchange Commission, on February 17, 1993, the Partnership commenced a public offering of 30,000 units of limited partnership interest ("Partnership Units") at a price of $1,000 per Partnership Unit. As of the close of the public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 ~~and~~had dobeen ~~not~~sold. During ~~give~~1995, ~~effect~~an additional 10 Partnership Units amounting to ~~any~~$10,000 ~~assets~~was ~~that~~ collected on subscriptions accepted and previously deemed uncollectible. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the ~~partners~~Partnership ~~may~~and ~~have~~Low ~~outside~~Income Housing Tax Credits of ~~their~~the ~~interests~~Partnership. The investors in the Partnership, or(“Limited Partners”) will be allocated the remaining 99% of these items in proportion to ~~any~~their ~~obligations~~respective investments. As of December 31, ~~including~~2014 ~~income~~and ~~taxes~~March 31, 2014, a total of ~~the~~17,897 ~~partners~~and 17,917 Partnership Units remain outstanding, respectively.

Pursuant to a registration statement filed with the Securities and Exchange Commission, on February 17, 1993, the Partnership commenced a public offering of 30,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit. As of the close of the public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 had been sold. During 1995, an additional 10 Partnership Units amounting to $10,000 was collected on subscriptions accepted and previously deemed uncollectible. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors in the Partnership (“Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments. As of September 30, 2014 and March 31, 2014, a total of 17,897 and 17,917 Partnership Units, respectively, remain outstanding.7

~~F-5~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE 1~~The -proceeds ~~SUMMARY~~from OFthe ~~SIGNIFICANT~~disposition ~~ACCOUNTING~~of ~~POLICIES~~any of the Local Limited Partnership Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the Partnership. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, ~~continued~~there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.

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

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

~~An investment~~The Low Income Housing Tax Credits rules are extremely complicated. Noncompliance with these rules results in the ~~Partnership~~loss of future Low Income Housing Tax Credits and the ~~Partnership~~fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s ~~investments~~last in$25,000 of taxable income. The Local Limited Partnerships ~~and~~may ~~their~~be unable to sell the Housing Complexes ~~are~~ ~~subject~~at toa ~~risks.~~price ~~These~~which ~~risks~~would ~~may~~result ~~impact~~in the ~~tax~~Partnership ~~benefits~~realizing ofcash andistributions ~~investment~~or inproceeds from the ~~Partnership~~transaction. Accordingly, ~~and~~ the ~~amount~~Partnership ofmay ~~proceeds available~~be ~~for~~unable ~~distribution~~to distribute any cash to ~~the~~its Limited Partners,. ifLow ~~any,~~Income onHousing ~~liquidation~~Tax ofCredits may be the ~~Partnership’s~~only ~~investments.~~benefit ~~Some~~from ofan ~~those risks~~investment ~~include~~in the ~~following:~~Partnership.

The ~~Low~~ ~~Income~~Partnership ~~Housing~~has ~~Tax~~invested ~~Credits~~in ~~rules~~a ~~are~~limited ~~extremely~~number ~~complicated~~of Local Limited Partnerships. ~~Noncompliance~~Such ~~with~~limited ~~these~~diversity ~~rules~~means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years (the “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, ~~and~~a ~~the~~ fractional recapture of prior Low Income Housing Tax Credits, ~~already~~and ~~taken.~~a Inloss ~~most~~of ~~cases~~ the ~~annual amount~~Partnership’s ofinvestment ~~Low~~in ~~Income~~the Housing ~~Tax~~Complex ~~Credits~~would ~~that~~occur. anThe ~~individual~~Partnership ~~can~~is ~~use~~a islimited partner or a non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the ~~tax~~Local ~~liability~~Limited ~~due~~Partnerships. The Partnership will rely totally on the ~~person~~Local General Partners. Neither the Partnership’s ~~last~~ ~~$25,000~~investments ofin ~~taxable~~Local ~~income.~~Limited ~~The~~Partnerships, nor the Local Limited Partnerships’ ~~may~~investments bein ~~unable~~Housing toComplexes, ~~sell~~are readily marketable. To the extent the Housing Complexes atreceive agovernment ~~price~~financing ~~which~~or ~~would result~~operating insubsidies, ~~the~~they ~~Partnership~~may ~~realizing~~be ~~cash~~subject ~~distributions~~to one or ~~proceeds~~more ~~from~~of the ~~transaction.~~following ~~Accordingly,~~risks: difficulties in obtaining tenants for the ~~Partnership~~Housing ~~may~~Complexes; bedifficulties ~~unable to~~in ~~distribute~~obtaining ~~any~~rent increases; limitations on cash todistributions; ~~its~~limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits ~~may~~and berecapture ~~the~~of ~~only~~Low ~~benefit~~Income Housing Tax Credits previously taken. The value of real estate is subject to risks from anfluctuating ~~investment~~economic inconditions, ~~the Partnership~~including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar Housing Complexes, and neighborhood conditions, among others.

The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years (the “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or a non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar Housing Complexes, and neighborhood conditions, among others.8

~~F-6~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE 1~~The -ability ~~SUMMARY~~of OFLimited ~~SIGNIFICANT~~Partners ~~ACCOUNTING~~to ~~POLICIES,~~claim ~~continued~~tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to Limited Partners could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.

~~The ability~~All of ~~Limited Partners to claim tax losses from~~ the ~~Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of~~ Low Income Housing Tax Credits ~~and~~anticipated ~~tax losses allocable~~ to ~~Limited Partners could~~ be ~~reduced~~realized iffrom the ~~IRS~~Local ~~were~~Limited ~~successful~~Partnerships inhave ~~such~~been ~~a challenge~~realized. The ~~alternative~~Partnership ~~minimum~~does ~~tax~~not ~~could reduce~~anticipate ~~tax~~being ~~benefits~~allocated ~~from~~any anLow ~~investment~~Income inHousing ~~the~~Tax ~~Partnership.~~Credits ~~Changes~~from ~~in tax laws could also impact~~ the ~~tax~~Local ~~benefits~~Limited ~~from~~Partnerships ~~an investment~~ in the ~~Partnership and/or the value of the Housing Complexes~~future.

~~All~~ Anticipated future and existing cash resources of the ~~Low~~Partnership ~~Income~~are ~~Housing~~not ~~Tax~~sufficient ~~Credits~~to ~~anticipated~~pay toexisting beliabilities ~~realized~~of ~~from~~the Partnership. However, substantially all of the ~~Local~~existing ~~Limited~~liabilities ~~Partnerships~~of ~~have~~the ~~been~~Partnership ~~realized~~are payable to the General Partner and/or its affiliates. Though ~~The~~the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership ~~does~~ ~~not~~anticipates ~~anticipate~~that ~~being~~the ~~allocated~~General ~~any~~Partner ~~Low~~and/or ~~Income~~its ~~Housing~~affiliates ~~Tax~~will ~~Credits~~not ~~from~~require the ~~Local~~payment ~~Limited~~of ~~Partnerships~~these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

~~Anticipated future~~No ~~and~~trading ~~existing~~market ~~cash~~for ~~resources of~~ the Partnership ~~are~~Units ~~not~~exists ~~sufficient~~or tois ~~pay~~expected ~~existing~~to ~~liabilities of the Partnership~~develop. ~~However, substantially~~Limited ~~all~~Partners ofmay ~~the~~be ~~existing~~unable ~~liabilities~~to ofsell ~~the~~their Partnership ~~are~~Units ~~payable~~except toat ~~the~~a ~~General~~discount ~~Partner~~ and~~/or~~ ~~its~~should ~~affiliates.~~consider ~~Though the~~their ~~amounts~~Partnership ~~payable~~Units to ~~the~~be ~~General~~a ~~Partner~~long-term ~~and/or~~investment. ~~its~~Individual ~~affiliates~~Limited ~~are~~Partners ~~contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates~~ will ~~not~~have ~~require~~no ~~the~~recourse ~~payment~~if ofthey ~~these~~disagree ~~contractual~~with ~~obligations~~actions ~~until~~authorized ~~capital~~by ~~reserves are~~a invote ~~excess~~ of the ~~aggregate~~majority of ~~then~~Limited ~~existing contractual obligations and then anticipated future foreseeable obligations of the Partnership~~Partners. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

~~No trading~~The ~~market for the~~ Partnership ~~Units~~currently ~~exists~~has orinsufficient isworking ~~expected~~capital to ~~develop.~~fund ~~Limited~~its ~~Partners~~operations. ~~may~~Associates behas ~~unable~~agreed to ~~sell~~continue ~~their~~providing ~~Partnership Units~~advances ~~except~~sufficient atenough ~~a discount and should consider their Partnership Units~~ to befund athe ~~long-term~~operations ~~investment.~~and ~~Individual~~working ~~Limited~~capital ~~Partners will~~requirements ~~have no recourse if they disagree with actions authorized by a vote~~ of the ~~majority~~Partnership ofthrough ~~Limited~~February ~~Partners~~28, 2016.

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

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

~~The Compliance~~Upon ~~Period~~the ~~for~~sale of a Local Limited Partnership Interest or Housing Complex isafter ~~generally~~the 15end ~~years~~of ~~following~~the ~~construction~~Compliance orPeriod, ~~rehabilitation~~there ~~completion.~~would ~~Associates was~~be ~~one~~no recapture of ~~the~~Low ~~first~~Income inHousing ~~the~~Tax ~~industry~~Credits. A sale prior to ~~offer~~the ~~syndicated~~end ~~investments~~of the Compliance Period could result in ~~Low~~recapture ~~Income~~if ~~Housing~~certain ~~Tax~~conditions ~~Credits~~are not met. ~~The~~All ~~initial~~remaining ~~programs~~Local Limited Partnerships have completed their Compliance Periods.

~~Upon the~~With ~~sale~~that ofin amind, ~~Local~~the ~~Limited~~General ~~Partnership~~Partner ~~Interest~~is orcontinuing ~~Housing~~its ~~Complex~~review ~~after the end~~ of the ~~Compliance~~Housing ~~Period,~~Complexes. ~~there~~The ~~would~~review beconsiders ~~no recapture~~many offactors, ~~Low~~including ~~Income~~extended ~~Housing~~use ~~Tax~~requirements ~~Credits.~~(such Aas ~~sale~~those ~~prior~~due to ~~the~~mortgage ~~end~~restrictions ofor ~~the~~state ~~Compliance~~compliance ~~Period~~agreements), ~~could~~the ~~result~~condition inof ~~recapture~~the ifHousing ~~certain conditions~~Complexes, ~~are~~and ~~not~~the ~~met.~~tax ~~All~~consequences ~~remaining~~to ~~Local~~the Limited ~~Partnerships~~Partners ~~have~~from ~~completed~~the ~~their~~sale ~~Compliance~~of ~~Periods~~the Housing Complexes.

With that in mind, the General Partner is continuing its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.9

~~F-7~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE 1~~Upon -identifying ~~SUMMARY~~those OFHousing ~~SIGNIFICANT~~Complexes ~~ACCOUNTING~~with ~~POLICIES~~the highest potential for a successful sale, ~~continued~~refinancing or syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of December 31, 2014.

~~Upon identifying~~As ~~those~~of ~~Housing~~March ~~Complexes~~31, ~~with~~2014, the ~~highest~~Partnership ~~potential~~sold ~~for~~its aLocal ~~successful~~Limited ~~sale,~~Partnership ~~refinancing~~Interest orin ~~syndication~~Rosewood Apartments L.P., ~~the~~Venus ~~Partnership expects~~Retirement toVillage, ~~proceed~~Ltd, ~~with~~Winters ~~efforts~~Investment toGroup, ~~liquidate~~Parlier ~~them~~Garden Apartments, L.P., ~~The~~Tahoe ~~objective~~Pines isApartments, toL.P., ~~maximize~~Candleridge ~~the~~Apartments ~~Limited~~of ~~Partners’~~Perry ~~return~~L.P ~~wherever~~II, ~~possible and~~Nueva Sierra Vista Associates, ~~ultimately~~L.P., toWalnut ~~wind~~– ~~down~~Pixley, ~~the~~L.P., ~~Partnership~~Orosi Apartments, Ltd., ~~Local~~Memory ~~Limited~~Lane, ~~Partnership~~L.P., ~~interests~~Sun ~~may~~Manor, beL.P., ~~disposed~~Almond ofGarden ~~any~~Apartment ~~time~~Associates, byBuccaneer ~~the~~Villas, ~~General Partner~~Limited, inDallas ~~its~~County ~~discretion~~Housing Ltd., ~~While~~Old ~~liquidation~~Fort ofLimited ~~the~~Partnership, ~~Housing~~Almond ~~Complexes~~View ~~continues~~Apartments toL.P., beand ~~evaluated~~La Paloma del Sol , ~~the~~Phase ~~dissolution~~II, ofL.P. ~~the~~The Partnership ~~was~~ ~~not~~also ~~imminent~~sold the Housing Complex of Sequoia View as of ~~September~~March 3031, 2014.

As of ~~March~~December 31, 2014, the ~~Partnership sold its~~ Local Limited Partnership Interest in ~~Rosewood~~Colonial ~~Apartments~~Village ~~L.P.,~~Roseville ~~Venus~~was ~~Retirement~~identified to be sold. Colonial Village Roseville was appraised for $2, ~~Ltd.~~590,000 ~~Winters~~and ~~Investment~~had ~~Group,~~a ~~Parlier~~mortgage ~~Garden~~note ~~Apartments,~~balance ~~L.P.~~of $1,408,000 ~~Tahoe~~as ~~Pines~~of ~~Apartments~~December 31, L2013.~~P.,~~ ~~Candleridge~~The ~~Apartments~~Partnership’s ofinvestment ~~Perry L~~balance is zero.P ~~II,~~The ~~Nueva~~Compliance ~~Sierra~~Period ~~Vista~~has ~~Associates,~~been ~~L.P.,~~completed ~~Walnut~~therefore –there ~~Pixley,~~is ~~L.P.,~~no ~~Orosi~~risk ~~Apartments,~~of ~~Ltd~~recapture., The ~~Memory~~sales ~~Lane,~~price ~~L.P.,~~has ~~Sun~~yet ~~Manor, L~~to be determined.~~P.,~~ The ~~Almond~~Local ~~Garden~~General ~~Apartment~~Partner ~~Associates,~~prevented ~~Buccaneer~~a ~~Villas,~~sale ~~Limited,~~from ~~Dallas~~moving ~~County~~forward ~~Housing~~and ~~Ltd~~the Partnership filed suit to force the sale., ~~Old~~The ~~Fort~~Court identified three appraisers to appraise the property and Limited Partnership~~, Almond~~ ~~View~~interest. ~~Apartments~~It ~~L.P.,~~is ~~and~~expected Lathat ~~Paloma~~the ~~del~~Court ~~Sol,~~will ~~Phase~~make ~~II,~~its Lfinal decision in February in regards to the appraised value that is deemed most appropriate.P. The ~~Partnership~~Local ~~also~~General ~~sold~~Partner will have the ~~Housing~~option ~~complexes~~to ofacquire ~~Sequoia View~~the asLimited ofPartnership ~~March~~Interest ~~31,~~at ~~2014~~ that price. If they opt to not purchase it then it will go on the open market.

As Method of ~~September~~Accounting ~~30,~~for ~~2014,~~Investments ~~the~~in Local Limited Partnership Interest in Colonial Village Roseville was identified to be sold. Colonial Village Roseville was appraised for $2,590,000 and had a mortgage note balance of $1,408,000 as of December 31, 2013. The Partnership’s investment balance is zero. The Compliance Period has been completed therefore there is no risk of recapture. The sales price has yet been determined. The Local General Partner prevented a sale from moving forward and the Partnership filed suit to force the sale. The Court will identify appraisers to appraise the property and recommend a sales price to proceed. The sale is not expected to be concluded this calendar year.Partnerships

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

~~The~~ ~~Partnership~~“Equity ~~accounts~~in ~~for~~losses ~~its~~of ~~investments in~~ Local Limited Partnerships” ~~using~~for the ~~equity~~periods ~~method~~ended ofDecember ~~accounting~~31, ~~whereby~~2014 ~~the~~and ~~Partnership adjusts~~2013 ~~its~~has ~~investment~~been ~~balance~~recorded ~~for~~by ~~its share of~~ the ~~Local~~Partnership. ~~Limited Partnerships~~Management’s ~~results~~estimate ~~of operations and~~ for ~~any~~the ~~contributions made~~three and ~~distributions~~nine-month ~~received.~~periods ~~The~~is ~~Partnership~~based ~~reviews~~on ~~the~~either ~~carrying~~actual ~~amount~~unaudited ofresults anreported ~~individual~~by ~~investment~~the ~~in a~~ Local Limited ~~Partnership for~~Partnerships ~~possible impairment at least annually~~ or ~~whenever~~historical ~~events~~trends ~~or changes~~ in ~~circumstances indicate that~~ the ~~carrying~~operations ~~amount~~ of ~~such~~ ~~investment~~the ~~may~~Local ~~not~~Limited ~~be recoverable~~Partnerships. ~~Recoverability~~Equity ofin ~~such~~losses ~~investment is measured by the estimated value derived by management, generally consisting~~ of ~~the~~Local ~~sum~~Limited ofPartnerships ~~the~~allocated ~~remaining future Low Income Housing Tax Credits estimated~~ to ~~be allocable to~~ the Partnership ~~and~~ ~~the~~are ~~estimated~~not ~~residual~~recognized ~~value~~ to the ~~Partnership.~~extent Ifthat anthe investment isbalance ~~considered~~would to be ~~impaired,~~adjusted ~~the~~below ~~Partnership~~zero. ~~reduces~~If the ~~carrying~~ ~~value~~Local ofLimited ~~its~~Partnerships ~~investment~~report innet ~~any~~income ~~such~~in ~~Local~~future ~~Limited~~years, the Partnership. ~~The~~will ~~accounting~~resume ~~policies~~applying of the ~~Local~~equity ~~Limited~~method ~~Partnerships, generally,~~only ~~are~~after ~~expected~~its toshare beof ~~consistent~~such ~~with~~net ~~those~~income ofequals the ~~Partnership.~~share ~~Costs~~of ~~incurred~~net bylosses ~~the~~not ~~Partnership~~recognized induring ~~acquiring~~ the ~~investments are~~period(s) ~~capitalized as part of~~ the ~~investment~~equity ~~account~~method ~~and~~was ~~were~~suspended ~~amortized over 27.5 years~~ (see Note 2).

“Equity in losses of Local Limited Partnerships” for the periods ended September 30, 2014 and 2013 has been recorded by the Partnership. Management’s estimate for the three and six-month periods is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses of Local Limited Partnerships allocated to the Partnership are not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended (see Note 2).10

~~F-8~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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

InBased ~~accordance~~on ~~with~~this guidance, the ~~accounting~~Local ~~guidance for~~Limited Partnerships in which the ~~consolidation~~Partnership invests meet the definition of ~~variable~~a ~~interest~~VIE ~~entities,~~because the ~~Partnership~~owners ~~determines~~of ~~when~~the itequity ~~should~~at ~~include~~risk in these entities do not have the ~~assets,~~power ~~liabilities~~to direct their operations. However, ~~and~~ ~~activities~~management ofdoes anot ~~variable~~consolidate ~~interest~~the ~~entity~~Partnership's ~~(VIE)~~interests in ~~its~~these ~~financial statements~~VIEs, ~~and~~ ~~when~~as it ~~should~~is ~~disclose~~not ~~information~~considered ~~about~~to ~~its~~be ~~relationship~~the ~~with~~primary abeneficiary ~~VIE.~~since ~~The~~it ~~analysis~~does ~~that~~not ~~must~~have bethe ~~performed~~power to ~~determine~~direct ~~which entity~~the ~~should~~activities ~~consolidate~~that aare ~~VIE~~considered ~~focuses~~most onsignificant ~~control~~to ~~and~~the economic ~~factors.~~performance Aof ~~VIE~~these isentities. aThe ~~legal~~Partnership ~~structure~~currently ~~used~~records tothe ~~conduct~~amount ~~activities or~~of ~~hold~~its ~~assets,~~investment ~~which~~in ~~must~~these beLocal ~~consolidated~~Limited byPartnerships aas ~~company~~an ifasset iton isits ~~the~~balance ~~primary~~sheets, ~~beneficiary~~recognizes ~~because~~its itshare ~~has~~of ~~(1)~~partnership ~~the~~income ~~power~~or tolosses ~~direct~~ in the ~~activities~~statements of ~~the~~operations, ~~VIE~~and ~~that~~discloses ~~most~~how ~~significantly~~it ~~impact~~accounts ~~the~~for ~~VIE’s~~material ~~economic~~types ~~performance~~of ~~and~~these ~~(2)~~investments ~~the~~in ~~obligation~~its tofinancial ~~absorb losses~~statements. orThe ~~receive~~Partnership's ~~benefits~~balance ~~that~~in ~~could~~investment ~~potentially~~in beLocal ~~significant~~Limited toPartnerships, plus the ~~VIE.~~risk Ifof ~~multiple~~recapture ~~unrelated~~of ~~parties~~tax ~~share~~credits ~~such~~previously ~~power,~~recognized ~~as defined~~on these investments, norepresents ~~party~~its ~~will~~maximum beexposure ~~required~~to loss. The Partnership's exposure to ~~consolidate~~loss ~~the~~on ~~VIE.~~these ~~Further,~~Local Limited Partnerships is mitigated by the ~~guidance~~condition ~~requires~~and ~~continual~~financial ~~reconsideration~~performance of the ~~primary beneficiary~~underlying Housing Complexes as well as the strength of athe ~~VIE~~Local General Partners and their guarantee against credit recapture to the investors in the Partnership.

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

~~Distributions received~~Use ~~by the Partnership are accounted for as a reduction~~ of ~~the investment balance. Distributions received after the investment has reached zero are recognized as income. As of September 30, 2014, all of the investment balances had reached zero.~~Estimates

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

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

~~Cash and~~The ~~Cash~~Partnership ~~Equivalents~~considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of all periods presented, the Partnership had no cash equivalents.

~~The Partnership~~Reporting ~~considers~~Comprehensive all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of September 30, 2014 and March 31, 2014, the Partnership had no cash equivalents.Income

~~Reporting Comprehensive~~The ~~Income~~Partnership had no items of other comprehensive income for all periods presented.

~~The Partnership had no items of other comprehensive income for all periods presented.~~11

~~F-9~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE 1~~Income ~~- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued~~Taxes

The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income ~~Taxes~~ tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.

~~The Partnership~~Net ~~has~~Loss ~~elected~~Per to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.Unit

Net ~~Loss~~ ~~Per~~loss per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.

~~Net loss~~Revenue per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.Recognition

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

The Partnership is entitled to receive reporting fees from the Local Limited Partnerships. The intent of the reporting fees is to offset (in part) administrative costs incurred by the Partnership in corresponding with the Local Limited Partnerships. Due to the uncertainty of the collection of these fees, the Partnership recognizes reporting fees as collections are made.12

~~F-10~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~WNC CALIFORNIA~~(A ~~HOUSING~~California ~~TAX~~Limited ~~CREDITS III, L.P.~~Partnership)

~~(A California~~NOTES ~~Limited~~TO ~~Partnership)~~CONDENSED FINANCIAL STATEMENTS - CONTINUED

~~NOTES TO~~For ~~CONDENSED~~the ~~FINANCIAL~~Quarterly ~~STATEMENTS~~Period -Ended ~~CONTINUED~~December 31, 2014

~~For the Quarterly Period Ended September 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

~~NOTE 2~~As -of ~~INVESTMENTS~~December IN31, ~~LOCAL~~2014 ~~LIMITED~~and ~~PARTNERSHIPS~~March 31, 2014, the Partnership owns a Local Limited Partnership interest in one Limited Partnership which owns one Housing Complex consisting of an aggregate of 56 apartment units. The Local General Partner of the Local Limited Partnership manages the day to day operations of the entity. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 99%, as specified in the Local Limited Partnership governing agreement, of the operating profits and losses, taxable income and loss and Low Income Housing Tax Credits of the Local Limited Partnership.

~~As of~~Selected ~~September~~financial ~~30,~~information ~~2014~~for ~~and March 31, 2014,~~ the ~~Partnership~~nine ~~owns~~months aended ~~Local~~December ~~Limited~~31, ~~Partnership~~2014 ~~interest~~and in2013 1from ~~Local Limited Partnership which owns one Housing Complex consisting of an aggregate of 56 apartment units. The Local General Partner of~~ the ~~Local~~unaudited ~~Limited Partnership~~combined ~~manages~~condensed ~~the~~financial ~~day~~statements ~~to day operations~~ of the ~~entity. Significant~~ Local Limited ~~Partnership~~Partnerships ~~business~~in ~~decisions~~which ~~require approval from~~ the Partnership. ~~The~~has ~~Partnership,~~invested ~~as a Limited Partner,~~ is ~~generally entitled to 99%,~~ as ~~specified in the Local Limited Partnership governing agreement, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnership.~~follows:

Selected financial information for the six months ended September 30, 2014 and 2013 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the partnership has invested is as follows:

COMBINED CONDENSED STATEMENTS OF OPERATIONS

	2014			2013

Revenue	$	451,000		$	581,000
Expenses:
Operating expenses		304,000			388,000
Interest expense		75,000			114,000
Depreciation and amortization		140,000			186,000

Total expenses		519,000			688,000

Net loss	$	(68,000	)		(107,000	)

Net loss allocable to the Partnership	$	(67,000	)	$	(104,000	)

Net loss recorded by the Partnership	$	-		$	-

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

	2014			2013
Revenue	$	300,000		$	431,000
Expenses:
Operating expenses		202,000			294,000
Interest expense		50,000			88,000
Depreciation and amortization		93,000			139,000
Total expenses		345,000			521,000
Net loss	$	(45,000	)		(90,000	)
Net loss allocable to the Partnership	$	(45,000	)	$	(88,000	)
Net loss recorded by the Partnership	$	-		$	-

~~Certain Local~~WNC ~~Limited~~CALIFORNIA ~~Partnerships~~HOUSING ~~have~~TAX ~~incurred~~CREDITS ~~significant operating losses and/or have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses~~III, ~~additional capital contributions by the Partnership may be required to sustain operations of such Local Limited Partnerships~~L.P.

~~F-11~~(A California Limited Partnership)

~~WNC CALIFORNIA~~NOTES ~~HOUSING~~TO ~~TAX~~CONDENSED ~~CREDITS~~FINANCIAL ~~III,~~STATEMENTS ~~L.P.~~- CONTINUED

~~(A California~~For ~~Limited~~the ~~Partnership)~~Quarterly Period Ended December 31, 2014

~~NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED~~(Unaudited)

~~For the~~NOTE ~~Quarterly~~3 ~~Period~~- ~~Ended~~RELATED ~~September~~PARTY ~~30, 2014~~TRANSACTIONS

~~(Unaudited)~~Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates for the following items:

~~NOTE 3~~(a) -An ~~RELATED~~annual ~~PARTY~~asset ~~TRANSACTIONS~~management fee equal to 0.5% of the invested assets of the Partnership, as defined. “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnerships and the Partnership’s allocable share of mortgage loans and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $18,816 and $28,133 were incurred during the nine months ended December 31, 2014 and 2013, respectively. The Partnership paid the General Partner and its affiliates $0 and $15,000 of those fees during the nine months ended December 31, 2014 and 2013, respectively.

~~Under~~ (b) Subordinated Disposition Fee. A subordinated disposition fee is an amount equal to 1% of the ~~terms~~sales price of real estate sold. Payment of this fee is subordinated to the ~~Partnership~~Limited ~~Agreement~~Partners receiving a preferred return of 16% through December 31, 2003 and 6% thereafter (as defined in the Partnership ~~has~~Agreement) ~~paid~~and or is ~~obligated~~payable toonly if the General Partner or its affiliates ~~for~~ render services in the ~~following~~sales ~~items:~~effort. No such fees were earned during the periods presented.

(a) An annual asset management fee equal to 0.5% of the Invested Assets of the Partnership, as defined. “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnerships and the Partnership’s allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $12,544 and $21,861 were incurred during the six months ended September 30, 2014 and 2013, respectively. The Partnership paid the General Partner and its affiliates $0 and $15,000 of those fees during the six months ended September 30, 2014 and 2013, respectively. (b) A subordinated disposition fee is an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 16% through December 31, 2003 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fees were earned during the periods presented. (c) The Partnership reimburses the General Partner or its affiliates for operating expenses incurred by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements paid were $10,000 and $1722,~~003~~203 during the ~~six~~nine months ended ~~September~~December 3031, 2014 and 2013, respectively.

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

	September 30, 2014		March 31, 2014
	December 31, 2014		March 31, 2014
Expenses paid by the General Partner or affiliates on behalf of the Partnership	$	~~145~~217,~~388~~407	$	95,301
Asset management fee payable		1,~~634~~640,~~587~~859		1,622,043
Total	$	1,~~779~~858,~~975~~266	$	1,717,344

The General Partner and/or its affiliates do not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future foreseeable working capital requirements of the Partnership.

~~F-12~~14

Item 2. Management’'s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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

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

Subsequent written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports filed with the SEC.

The following discussion and analysis compares the results of operations for the three and ~~six~~nine months ended ~~September~~December 3031, 2014 and 2013, and should be read in conjunction with the condensed unaudited financial statements and accompanying notes included within this report.

Financial Condition

The Partnership’s assets at ~~September~~December 3031, 2014 consisted of $10,000 in cash and $93122,000 inof other assets. Liabilities at ~~September 30~~December 31, 2014, consisted of $1,~~780~~858,000 of accrued fees and expenses due to ~~the~~ General Partner and affiliates.

Results of Operations

Three Months Ended ~~September~~December 3031, 2014 Compared to Three Months Ended ~~September~~December 3031, 2013. The Partnership’s net loss for the three months ended ~~September~~December 3031, 2014 was $2750,000, reflecting ana increase of $2035,000 from the $715,000 of net loss for the three months ended ~~September~~December 3031, 2013. The increase in net loss was primarily due to aan ~~decrease~~increase of $1240,000 in ~~distribution~~write ~~income~~offs ~~for~~ of other assets during the three months ended ~~September~~December 3031, 2014. ~~Those~~Capitalized ~~fees~~costs ~~can~~from ~~vary~~potential ~~depending~~disposition ~~on when the Local Limited Partnerships’ cash flow will allow for the payment. Gain on sale~~ of Local Limited Partnerships ~~decreased~~were byexpensed ~~$8,000~~due ~~during~~to the ~~three~~length ~~months ended September 30, 2014. The number~~ of ~~disposition~~time ~~and~~it ~~gains~~has ~~recorded~~taken ~~vary from period~~ to ~~period~~dispose ~~depending~~of on the ~~economic conditions and the market for the~~ properties ~~in the specific location~~. There was also a $3,000 decrease in asset management fees for the three months ended September 30, 2014. There fees are calculated based on the invested assets. As Local Limited Partnerships are sold, the Invested Assets decrease, thereby decreasing the asset management fees incurred by the Partnership. The legal and accounting ~~expenses~~ fees decreased by $14,000 for the three months ended ~~September~~December 3031, 2014 due to ~~the~~ timing of the work performed. ~~The~~Other ~~write~~expenses ~~off~~decreased ~~of other assets increased~~ by $2,000 during the three months ended ~~September~~December 3031, 2014. ~~Capitalized~~The ~~costs~~decrease ~~from~~was ~~potential disposition of Local Limited Partnership were expensed~~ due to the ~~length~~ timing of ~~time~~the itconsulting ~~has~~work ~~taken to dispose of the properties~~performed.

~~Six~~ Nine Months Ended ~~September~~December 3031, 2014 Compared to ~~Six~~Nine Months Ended ~~September~~December 3031, 2013. The Partnership’s net loss for the ~~six~~ nine months ended ~~September~~December 3031, 2014 was $2675,000, reflecting aan ~~decrease~~increase of $133,000 from the $2742,000 net loss for the ~~six~~nine months ended ~~September~~December 3031, 2013. The ~~There~~increase in net loss was partially due to an increase of $147,000 in ~~distribution~~write ~~income~~off ~~during~~of ~~the~~other ~~six months~~assets ~~ended~~during ~~September 30, 2014 compared to~~ the ~~six~~nine months ended ~~September~~December 3031, ~~2013~~2014. ~~Local~~Capitalized ~~Limited~~costs ~~Partnerships~~from ~~pay~~potential ~~distribution income~~disposition toof ~~the Partnership when the~~ Local Limited Partnerships’ ~~cash~~were ~~flow~~expensed ~~will~~due ~~allow~~to ~~for~~ the ~~payment.~~length ~~Gain on sale~~ of ~~Local Limited~~time ~~Partnerships~~it ~~decreased~~has bytaken ~~$8,000~~to ~~during~~dispose of the ~~six months ended September 30, 2014, as discussed above~~properties. There was also a $9,000 decrease in asset management fees for the ~~six~~nine months ended ~~September~~December 3031, 2014. These fees are calculated based on the invested assets, which decreased due to the dispositions of Local Limited Partnerships in the prior year. There was a $610,000 decrease in legal and accounting fees ~~for~~due to the ~~six~~timing of the accounting work performed. In addition, gain on sale of Local Limited Partnerships decreased by $8,000 during the nine months ended ~~September~~December 3031, 2014. The ~~due~~gains recorded vary from period to ~~the~~period ~~timing~~depending ofon the ~~accounting work~~sales ~~performed.~~prices ~~The~~and ~~write~~values ~~off~~ of ~~other~~the ~~assets~~Local Limited Partnerships. Distribution income increased by $71,000 ~~during~~for the ~~six~~nine months ended ~~September~~December 3031, 2014. ~~Capitalized costs~~Local ~~from~~Limited ~~potential~~Partnerships ~~disposition~~pay ofdistributions to the Partnership when the Local Limited ~~Partnership~~Partnerships’ ~~were~~cash ~~expensed~~flows ~~due~~will toallow for the ~~length~~payment. ofOther ~~time~~expenses itdecreased ~~has~~by ~~taken~~$2,000 during the nine months ended December 31, 2014. The decrease was due to ~~dispose~~ the timing of the ~~properties~~consulting work performed.

315

Item 2. Management’'s Discussion and Analysis of Financial Condition and Results of Operations, continued

Liquidity and Capital Resources

~~Six~~ Nine Months Ended ~~September~~December 3031, 2014 Compared to ~~Six~~Nine Months Ended ~~September~~December 3031, 2013. The net cash provided during the ~~six~~nine months ended ~~September~~December 3031, 2014 was $4,000 compared to net cash used during the ~~six~~nine months ended ~~September~~December 3031, 2013 of $611,000. During the ~~six~~nine months ended ~~September~~December 3031, 2014, the Partnership paid $0, and $10,000 to the General Partner or an affiliate for accrued asset management fees and reimbursement of operating expenses paid on behalf of the Partnership, respectively, compared to $15,000 and $1722,000~~, respectively,~~ paid during the ~~six~~nine months ended ~~September~~December 3031, 2013 , respectively. Each quarter the Partnership evaluates the cash position and determines how much of ~~operating~~the ~~expenses reimbursements and~~ accrued asset management ~~fess~~fees and operating expense reimbursements will be paid to the General Partner or affiliates. InDuring ~~addition, during~~ the ~~six~~nine months ended ~~September~~December 3031, 2013, the Partnership received $8,000 in net cash proceeds from the disposition of ~~two of~~ its Local Limited Partnerships compared to $0 ~~for~~of sales proceeds received during the ~~six~~nine months ended ~~September~~December 3031, 2014. Reporting fees decreased by $1,000 during the nine months ended December 31, 2014. Local Limited Partnerships pay reporting fees to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payrment.

During the ~~six~~nine months ended ~~September~~December 3031, 2014 accrued payables, which consist primarily of asset management fees to the General Partner or affiliates, increased by $63141,000. The General Partner does not anticipate that these accrued fees will be paid in full until such time as capital reserves are in excess of future foreseeable working capital requirements of the Partnership.

The Partnership expects its future cash flows, together with its net available assets at ~~September~~December 3031, 2014, to be insufficient to meet all currently foreseeable future cash requirements. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through ~~November~~January 3031, ~~2015~~2016.

Recent Accounting Changes

In January 2014, the FASB issued an amendment to the accounting and disclosure requirements for investments in qualified affordable housing projects. The amendments provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. Early adoption is permitted. The adoption of this update is not expected to materially affect the Partnership’'s financial statements.

416

Item 3. Quantitative and Qualitative Disclosures About Market Risks

NOT APPLICABLE

Item 4. Controls and Procedures

(a)	Disclosure controls and procedures
	As of the end of the period covered by this report, the Partnership’s General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.
	The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.
	Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.
(b)	Changes in internal controls
	There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended September 30, 2014 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

(a) Disclosure controls and procedures

5As of the end of the period covered by this report, the Partnership’s General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.

Part II.	Other Information
Item 1.	Legal Proceedings
	The Partnership is a limited partner in Colonial Village Roseville, a California limited partnership (“Colonial Roseville”). Colonial Roseville owns and operates an apartment complex. Project GO, Incorporated (“Project GO”) is the general partner of Colonial Roseville.
	Notwithstanding its prior indications to the contrary, Project GO refused to accept an offer to buy its general partner interest in Colonial Roseville, and in Colonial Village Auburn, a California limited partnership (“Colonial Auburn”), the limited partnership interest in which is owned by another investment fund sponsored by Associates. Rather, Project GO engaged counsel to issue threatening letters to the Partnership. Consequently, the Partnership and the WNC investment fund that owns the limited partner interest in Colonial Auburn have commenced litigation against Project GO.
	On September 3, 2013, Associates, the Partnership and the other investment fund sponsored by Associates filed with the Superior Court of California, County of Placer, a Verified Complaint naming as defendants Project GO, Colonial Roseville, and Colonial Auburn. The following as causes of action were included therein: breach of contract for failure to sell Project GO’s general partner interests and for failure to dissolve Colonial Roseville and Colonial Auburn, dissolution of Colonial Roseville and Colonial Auburn, breach of fiduciary duty, accounting, and appointment of receiver, and intentional interference. On October 24, 2013, Project GO filed a motion to purchase the Colonial Roseville LP interest pursuant to California Corporations Code Section 15908.02. Under this provision of California law, when one partner sues for dissolution, the other may seek a court order enabling the defendant to purchase the interest of the plaintiff at fair market value as determined by three appraisers. Project GO’s motion to pursue this remedy was approved by court order. In accordance with the court order, each of Project GO and the Partnership submitted for the court’s consideration the names of three appraisers. Project GO also posted a bond with the court. The court has selected one appraiser from each of the two lists and has identified a third appraiser. The three appraisers have been charged by the court with determining a fair market value for the Colonia Roseville and the Colonial Auburn LP interests.
	The provisions of California Corporations Code Section 15908.02(d), (e) and (f) provide as follows:
	(d) The court shall appoint three disinterested appraisers to appraise the fair market value of the partnership interests owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree that shall provide in the alternative for winding up and dissolution of the limited partnership unless payment is made for the partnership interests within the time specified by the decree. If the purchasing parties do not make payment for the partnership interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses, including attorneys’ fees, of the moving parties. Any member aggrieved by the action of the court may appeal therefrom.
	(e) If the purchasing parties desire to prevent the winding up and dissolution of the limited partnership, they shall pay to the moving parties the value of their partnership interests ascertained and decreed within the time specified pursuant to this section, or, in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer their partnership interests to the purchasing parties.

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

6Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.

(fb) Changes ~~For~~in ~~the~~internal purposes of this section, the valuation date shall be the date upon which the action for judicial dissolution was commenced. However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date. In light of the foregoing statute, the following alternative courses of action could result. The Partnership has been informed by counsel that these are the most likely alternatives. The actual result will depend on the court and on actions taken by Project GO and the Partnership as the court action progresses.controls

●There ~~Following~~were ~~the~~no ~~appraisal~~changes ~~process,~~in ~~Project GO purchases~~ the Partnership’s ~~Colonial~~internal ~~Roseville~~control LPover ~~Interest~~financial ~~for~~reporting ~~its~~that ~~appraised~~occurred ~~value~~during ~~established~~the byquarter ~~court~~ended ~~order.~~December ●31, ~~Following~~2014 ~~the~~that ~~appraisal~~materially ~~process~~affected, ~~Project~~or ~~GO does not purchase the interest of the Partnership. Funds from the bond~~ are ~~paid~~reasonably tolikely ~~the Partnership~~ to ~~cover~~materially ~~all~~affect, ~~or part of its legal costs. The court enters an order requiring~~ the ~~dissolution~~Partnership’s ofinternal ~~Colonial~~control ~~Roseville.~~over ~~Colonial~~financial ~~Roseville winds up its affairs under California law by selling its apartment complex~~reporting. ~~● The court action is resolved by settlement.~~

~~Accordingly, the ultimate resolution is at present uncertain, and the resolution may be some time in coming. No estimate of a timetable can be provided at this time.~~17

Item 1A.	Risk Factors
	No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	NONE
Item 3.	Defaults Upon Senior Securities
	NONE
Item 4.	Mine Safety Disclosures
	NOT APPLICABLE
Item 5.	Other Information
	NONE

Part II. Other Information

7Item 1. Legal Proceedings

Item 6.	Exhibits
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.1	Section 1350 Certification of the Chief Executive Officer. (filed herewith)
32.2	Section 1350 Certification of the Chief Financial Officer. (filed herewith)
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at September 30, 2014 and March 31, 2014, (ii) the Condensed Statements of Operations for the three and six month periods ended September 30, 2014 and September 30, 2013, (iii) the Condensed Statements of Partners’ Deficit for the six months ended September 30, 2014 (iv) the Condensed Statements of Cash Flows for the six months ended September 30, 2014 and September 30, 2013 and (iv) the Notes to Condensed Financial Statements.
	Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

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

8Notwithstanding its prior indications to the contrary, Project GO refused to accept an offer to buy its general partner interest in Colonial Roseville, and in Colonial Village Auburn, a California limited partnership (“Colonial Auburn”), the limited partnership interest in which is owned by another investment fund sponsored by Associates. Rather, Project GO engaged counsel to issue threatening letters to the Partnership. Consequently, the Partnership and the WNC investment fund that owns the limited partner interest in Colonial Auburn have commenced litigation against Project GO.

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

~~Pursuant to~~The ~~the~~provisions ~~requirements~~ of ~~the~~California ~~Securities~~Corporations ~~Exchange~~Code ~~Act~~Section ~~of 1934~~15908.02(d), ~~the~~(e) ~~registrant~~and ~~has~~(f) ~~duly~~provide ~~caused~~as ~~this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~follows:

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

~~By:~~(e) ~~WNC~~If ~~California~~the ~~Housing~~purchasing ~~Tax~~parties ~~Credit~~desire ~~Partners~~to ~~III~~prevent the winding up and dissolution of the limited partnership, ~~L.P.~~they ~~General~~shall ~~Partner~~pay ~~By:~~to ~~/s/~~the ~~Wilfred~~moving N.parties ~~Cooper~~the ~~Jr.~~value ~~Wilfred~~of N.their ~~Cooper,~~partnership ~~Jr.~~interests ~~President~~ascertained and ~~Chief~~decreed ~~Executive~~within ~~Officer~~the time specified pursuant to this section, or, in the case of ~~WNC~~an &appeal, ~~Associates~~as fixed on appeal. On receiving that payment or the tender thereof, ~~Inc~~the moving parties shall transfer their partnership interests to the purchasing parties.

~~Date:~~(f) ~~November 13~~For the purposes of this section, ~~2014~~the valuation date shall be the date upon which the action for judicial dissolution was commenced. However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date.

~~By:~~In ~~/s/~~light ~~Melanie~~of Rthe foregoing statute, the following alternative courses of action could result. ~~Wenk~~The ~~Melanie~~Partnership Rhas been informed by counsel that these are the most likely alternatives. The ~~Wenk~~actual ~~Senior~~result ~~Vice~~will ~~President~~depend –on ~~Chief~~the ~~Financial~~court ~~Officer~~and ofon ~~WNC~~actions &taken ~~Associates,~~by ~~Inc~~Project GO and the Partnership as the court action progresses.

~~Date:~~● Following ~~November~~ the 13appraisal process, ~~2014~~Project GO purchases the Partnership’s Colonial Roseville LP Interest for its appraised value established by court order.

9● Following the appraisal process, Project GO does not purchase the interest of the Partnership. Funds from the bond are paid to the Partnership to cover all or part of its legal costs. The court enters an order requiring the dissolution of Colonial Roseville. Colonial Roseville winds up its affairs under California law by selling its apartment complex.

● The court action is resolved by settlement.

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

Item 1A. Risk Factors

No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

NONE

Item 3. Defaults Upon Senior Securities

NONE

Item 4. Mine Safety Disclosures

NOT APPLICABLE

Item 5. Other Information

NONE

Item 6. Exhibits

Exhibit Number		Description

31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

32.1		Section 1350 Certification of the Chief Executive Officer. (filed herewith)

32.2		Section 1350 Certification of the Chief Financial Officer. (filed herewith)

101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at December 31, 2014 and March 31, 2014, (ii) the Condensed Statements of Operations for the three and nine months ended December 31, 2014 and 2013, (iii) the Condensed Statements of Partners’ Deficit for the nine months ended December 31, 2014, (iv) the Condensed Statement of Cash Flows for the nine months ended December 31, 2014 and 2013 and (v) the Notes to Condensed Financial Statements. Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

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.

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

By: WNC California Housing Tax Credit Partners III, L.P General Partner

By: /s/ Wilfred N. Cooper Jr.

Wilfred N. Cooper, Jr.

President and Chief Executive Officer of WNC & Associates, Inc.

Date: February 6, 2015

By: /s/ Melanie R. Wenk

Melanie R. Wenk

Senior Vice President – Chief Financial Officer of WNC & Associates, Inc.

Date: February 6, 2015

Filing Compare · WNC CALIFORNIA HOUSING TAX CREDITS III LP