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EX-32.2 - EXHIBIT 32.2 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10exihit322.htm
EX-31.2 - EXHIBIT 31.2 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10exihit312.htm
EX-32.1 - EXHIBIT 32.1 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10exihit321.htm
EX-31.1 - EXHIBIT 31.1 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10exihit311.htm
EX-99 - STARLIGHT 2008 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10starlight2008.htm
EX-99 - STARLIGHT 2007 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10starlight2007.htm
EX-99 - STARLIGHT 2006 - WNC HOUSING TAX CREDIT FUND VI LP SERIES 10starlight2006fs.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 (Mark One)

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

For the fiscal year ended March, 31, 2005
For the fiscal year ended March, 31, 2006
For the fiscal year ended March, 31, 2007
For the fiscal year ended March, 31, 2008
For the fiscal year ended March, 31, 2009
For the fiscal year ended March, 31, 2010

OR

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

For the transition period from __________ to __________

Commission file number:  000-50837

WNC HOUSING TAX CREDIT FUND VI, L.P., Series 10
(Exact name of registrant as specified in its charter)

California
33-0974362
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
   
17782 Sky Park Circle,
92614-6404
Irvine, CA
(zip code)
(Address of principal executive offices)
 

    (714) 662-5565
    (Telephone Number)

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

NONE

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

UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)

 
 

 

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

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer___ Accelerated filer___ Non-accelerated filer___X__ Smaller reporting company_____

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


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

INAPPLICABLE

DOCUMENTS INCORPORATED BY REFERENCE

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

NONE


 
 
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PART I.

Item 1.  Business

Organization

WNC Housing Tax Credit Fund VI, L.P., Series 10 (the “Partnership”) is a California Limited Partnership formed under the laws of the State of California on July 17, 2001 and commenced operations on February 28, 2003.  The Partnership was formed to acquire limited partnership interests in other limited partnerships ("Local Limited Partnerships") which own multi-family housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).  The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).

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

Pursuant to a supplement dated February 28, 2003 to the prospectus of the Partnership dated November 14, 2001, on March 6, 2003,  the Partnership commenced a public offering of 25,000 Units of Limited Partnership Interest ("Partnership Units") at a price of $1,000 per Partnership Unit. As of the close of the public offering, a total of 13,153 Partnership Units representing $13,119,270, net of dealer discounts of $31,220 and volume discounts of $2,510, had been sold.  Holders of Partnership Units are referred to herein as “Limited Partners”.

The Partnership shall continue in full force and effect until December 31, 2062 unless terminated prior to that date pursuant to the Partnership Agreement (as defined below) or law.

Description of Business

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

 
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As a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture of Low Income Housing Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships (“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy” below) and (ii) to eliminate the possibility of posting a bond against potential recapture.  The Partnership is not seeking to sell its Local Limited Partnership Interests.  And, because of (i) the nature of the Housing Complexes and the Local Limited Partnership Interests, (ii) the difficulty of predicting the resale market for low-income housing, (iii) the current economy, and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict when the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership dated July 17, 2001 (the "Partnership Agreement"), would occur.  Furthermore, the recent codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests.  Until a Local Limited Partnership Interest or the related Housing Complex is sold, it is anticipated that the Local General Partner would continue to operate such Housing Complex.  Notwithstanding the preceding, circumstances beyond the control of the General Partner or the Local General Partners may occur during the ten-year credit delivery period and/or the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Tax Credits.

The Partnership invested in six Local Limited Partnerships, none of which have been sold or otherwise disposed of as of March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004.  Each of these Local Limited Partnerships owns a single Housing Complex that is eligible for the Low Income Housing Tax Credits.  Certain Local Limited Partnerships may also benefit from additional government programs promoting low- or moderate-income housing.

Exit Strategy

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

Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits.  A sale prior to the end of the Compliance Period must satisfy the “reasonable belief” test outlined above to avoid recapture.

The following table reflects the end of the ten-year credit delivery period and the Compliance Period of each Housing Complex:

 
 
Local Limited Partnership Name
 
 
Expected last year of credit delivery
 
 
15-year Compliance Period
Catoosa Senior Village, L.P.
2013
2017
FDI-Green Manor 2003, Ltd.
2014
2018
FDI-Pine Meadows 2003, Ltd.
2014
2018
Humboldt Village, L.P.
2014
2018
Melodie Meadows Associates, Ltd.
2013
2017
Starlight Place, L.P.
2015
2019

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.

 
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Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to wind down the Partnership as Low Income Housing Tax Credits are no longer available.  Local Limited Partnership Interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of March 31, 2010.

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

Item 1A.  Risk Factors

Set forth below are the risks the Partnership believes are the most significant to the Limited Partners.  The Partnership and the Local Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time.  This section contains some forward-looking statements.  For an explanation of the qualifications and limitations on forward-looking statements, see Item 7.
 
(a)           Risks arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits

Low Income Housing Tax Credits might not be available.  If a Housing Complex does not satisfy the requirements of Internal Revenue Code Section 42, then the Housing Complex will not be eligible for Low Income Housing Tax Credits.

Low Income Housing Tax Credits might be less than anticipated.  The Local General Partners calculate the amount of the Low Income Housing Tax Credits.  No opinion of counsel will cover the calculation of the amount of Low Income Housing Tax Credits.  The IRS could challenge the amount of the Low Income Housing Tax Credits claimed for any Housing Complex under any of a number of provisions set forth in Internal Revenue Code Section 42.  A successful challenge by the IRS would decrease the amount of the Low Income Housing Tax Credits from the amount paid for by the Partnership.

Unless a bond is posted or a Treasury Direct Account is established, Low Income Housing Tax Credits may be recaptured if Housing Complexes are not owned and operated for 15 years.  Housing Complexes must comply with Internal Revenue Code Section 42 for the 15-year Compliance Period.  Low Income Housing Tax Credits will be recaptured with interest to the extent that a Housing Complex is not rented as low income housing or in some other way does not satisfy the requirements of Internal Revenue Code Section 42 during the Compliance Period.  For example, unless a bond is posted or a Treasury Direct Account is established, recapture with interest would occur if:

·  
a Local Limited Partnership disposed of its interest in a Housing Complex during the Compliance Period, or
·  
the Partnership disposed of its interest in a Local Limited Partnership during the Compliance Period.

For these purposes, disposition includes transfer by way of foreclosure.

It will be up to the Partnership to determine whether to post a bond.  There is no obligation under the agreements with the Local Limited Partnerships that the Local Limited Partnerships must do so.

 
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There can be no assurance that recapture will not occur.  If it does, recapture will be a portion of all Low Income Housing Tax Credits taken in prior years for that Housing Complex, plus interest.  During the first 11 years of the Compliance Period, non-compliance results in one-third of the Low Income Housing Tax Credits up to that point for the particular Housing Complex being recaptured, plus interest.  Between years 12 and 15, the recapture is phased out ratably.

Sales of Housing Complexes after 15 years are subject to limitations which may impact a Local Limited Partnership’s ability to sell its Housing Complex.  Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing Complex is located.  The extended low income housing commitment states the number of years that the Local Limited Partnership and any subsequent owners must rent the Housing Complex as low income housing.  Under Federal law, the commitment must be for at least 30 years.  The commitment, actually agreed to, may be significantly longer than 30 years.  In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years.  On any sale of the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period.  This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes.  The sale of a Housing Complex may be subject to other restrictions.  For example, Federal lenders or subsidizers may have the right to approve or disapprove a purchase of a Housing Complex.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any amount of cash will be distributed to the Limited Partners.  The Partnership would first use sale proceeds to pay obligations of the Partnership.  As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money originally invested in the Partnership.

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

Limited Partners can only use Low Income Housing Tax Credits in limited amounts.  The ability of an individual or other non-corporate Limited Partner to claim Low Income Housing Tax Credits on his individual tax return is limited. For example, an individual Limited Partner can use Low Income Housing Tax Credits to reduce his tax liability on:

·  
an unlimited amount of passive income, which is income from entities such as the Partnership, and
·  
$25,000 in income from other sources.

However, the use of Low Income Housing Tax Credits by an individual against these types of income is subject to ordering rules, which may further limit the use of Low Income Housing Tax Credits.  Some corporate Limited Partners are subject to similar and other limitations. They include corporations which provide personal services, and corporations which are owned by five or fewer shareholders.

Any portion of a Low Income Housing Tax Credit which is allowed to a Limited Partner under such rules is then aggregated with all of the Limited Partner’s other business credits.  The aggregate is then subject to the general limitation on all business credits.  That limitation provides that a Limited Partner can use business credits to offset the Limited Partner’s annual tax liability equal to $25,000 plus 75% of the Limited Partner’s tax liability in excess of $25,000. However, business credits may not be used to offset any alternative minimum tax.  All of these concepts are extremely complicated.

 
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(b)           Risks related to investment in Local Limited Partnerships and Housing Complexes

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

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

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

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

·  
Obtaining tenants for the Housing Complexes.  Government regulations limit the types of people who can rent subsidized housing. These regulations may make it more difficult to rent the residential units in the Housing Complexes.
·  
Obtaining rent increases.  In many cases rents can only be increased with the prior approval of the subsidizing agency.
·  
Limitations on cash distributions.  The amount of cash that may be distributed to owners of subsidized Housing Complexes is less than the amount that could be earned by the owners of non-subsidized Housing Complexes.
·  
Limitations on sale or refinancing of the Housing Complexes.  A Local Limited Partnership may be unable to sell its Housing Complex or to refinance its mortgage loan without the prior approval of the lender. The lender may withhold such approval in the discretion of the lender. Approval may be subject to conditions, including the condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a mortgage may result in the assessment of a prepayment penalty.
·  
Limitations on transfers of interests in Local Limited Partnerships.  The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the lender.  The lender may withhold such approval in the discretion of the lender.  Approval may be subject to conditions.

 
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·  
Limitations on removal and admission of Local General Partners.  The Partnership may be unable to remove a Local General Partner from a Local Limited Partnership except for cause, such as the violation of the rules of the lender or state allocating authority.  Regulations may prohibit the removal of a Local General Partner or permit removal only with the prior approval of the lender.  Regulations may also require approval of the admission of a successor Local General Partner even upon the death or other disability of a Local General Partner.
·  
Limitations on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative appropriations. The rental revenues of a Housing Complex, when combined with the maximum committed subsidy, may be insufficient to meet obligations. Congress or the state legislature, as the case may be, may fail to appropriate or increase the necessary subsidy.  In those events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement could be negotiated.
·  
Possible changes in applicable regulations.  Legislation may be enacted which adversely revises provisions of outstanding mortgage loans.  Such legislation has been enacted in the past.
·  
Limited Partners may not receive distributions if Housing Complexes are sold.  There is no assurance that Limited Partners will receive any cash distributions from the sale or refinancing of a Housing Complex.  The price at which a Housing Complex is sold may not be high enough to pay the mortgage and other expenses at the Local Limited Partnership and Partnerships levels which must be paid at such time.  If that happens, a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses.

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

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

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

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

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

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

For each of the years ended March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, a loss in value of an investment in a Local Limited Partnership, other than a temporary decline, is recorded by the Partnership in its financial statements as an impairment loss. Impairment is measured by comparing the Partnership’s carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. For the years ended March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, impairment loss related to investments in Local Limited Partnerships was $919,953, $1,519,347, $372,414, $278,095, $0, $0 and $0, respectively.

 (c)           Tax risks other than those relating to tax credits

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

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

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

The more significant of these matters include:

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

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

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

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

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

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

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

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

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

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

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

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

IRS could audit the returns of the Partnership, the Local Limited Partnerships or the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity.  The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership.  Similarly, only one judicial proceeding can be filed to contest an IRS determination.  A contest by the Partnership of any IRS determination might result in high legal fees.
 
10

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

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

·  
between the Limited Partners and the General Partner,
·  
among the Limited Partners, or
·  
between the Partnership and a Local General Partner.

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

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

·  
unused passive losses from the Partnership or other investments, or
·  
current passive losses from other investments.

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

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

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

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

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

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

 
11

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

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

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

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

(d)           Risks related to the Partnership and the Partnership Agreement

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

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

 
12

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

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

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

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

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

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

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

The interests of Limited Partners may conflict with the interests of the General Partner and it affiliates.  The General Partner and it affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership.  The General Partner and it affiliates receive substantial compensation from the Partnership. The General Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold. The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The result of these conflicts could be that the General Partner may make investments which are less desirable, or on terms which are less favorable, to the Partnership than might otherwise be the case. The Partnership has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.
 
13

 
The Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner.  These accrued payables increased by $82,000, $72,000, $74,000, $81,000, $73,000, $62,000 and $27,000 for the years ended March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, respectively.  The Partnership’s future contractual cash obligations consist of its obligations to pay future annual asset management fees and the payables due to the Local Limited Partnerships.  The future annual asset management fees will equal approximately $92,000 per year through the termination of the Partnership, which must occur no later than December 31, 2062.  Though the amounts payable to the General Partner and/or its affiliates are contractually  currently payable,  the Partnership  anticipates that the General Partner and/or its affiliates will not require the payment of these contractual  obligations until capital reserves are in excess of the aggregate of the existing  contractual  obligations  and anticipated future foreseeable  obligations of the Partnership.  The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

Item 1B.  Unresolved Staff Comments

Not Applicable

Item 2. Properties

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

 
14

 
 
     
As of March 31, 2010
 
As of December 31, 2009
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,281,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
613,000
 
40
839,000
1,118,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
668,000
668,000
 
59
906,000
1,045,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,713,000
1,713,000
 
66
2,351,000
2,311,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,215,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,258,000
 
   52
4,402,000
369,000
                 
     
$ 9,822,000
$ 9,818,000
 
   317
$  13,296,000
$ 8,339,000

(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 56% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.
 
 

 
15

 

 
For the Year Ended December 31, 2009
Local Limited Partnership Name
Rental Income
 
Net Loss
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 271,000
 
$ (101,000)
99.97%
         
FDI-Green Manor 2003, Ltd
146,000
 
(44,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
266,000
 
(1,000)
99.98%
         
Humboldt Village, L.P.
349,000
 
(81,000)
92.06%
         
Melodie Meadows Associates, Ltd.
140,000
 
(62,000)
99.98%
         
Starlight Place, L.P.
249,000
 
(106,000)
99.97%
         
 
$1,421,000
 
$ (395,000)
 
         

 
16

 

     
As of March 31, 2009
 
As of December 31, 2008
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,297,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
613,000
 
40
839,000
1,132,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
668,000
668,000
 
59
906,000
1,061,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,713,000
1,713,000
 
66
2,351,000
2,332,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,216,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,258,000
 
   52
4,402,000
371,000
                 
     
$ 9,822,000
$ 9,818,000
 
   317
$  13,296,000
$8,409,000


(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 46% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.


 
17

 
 
 
For the Year Ended December 31, 2008
Local Limited Partnership Name
Rental Income
 
Net Loss
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 250,000
 
$ (119,000)
99,97%
         
FDI-Green Manor 2003, Ltd
161,000
 
(52,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
238,000
 
(17,000)
99.98%
         
Humboldt Village, L.P.
362,000
 
(67,000)
92.06%
         
Melodie Meadows Associates, Ltd.
135,000
 
(62,000)
99.98%
         
Starlight Place, L.P.
  236,000
 
  (106,000)
99.97%
         
 
$ 1,382,000
 
$ (423,000)
 
         

 
18

 

     
As of March 31, 2008
 
As of December 31, 2007
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,313,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
613,000
 
40
839,000
1,145,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
668,000
668,000
 
59
906,000
1,075,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,713,000
1,713,000
 
66
2,351,000
2,353,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,223,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,258,000
 
   52
 4,402,000
  372,000
                 
     
$ 9,822,000
$ 9,818,000
 
  317
$  13,296,000
$ 8,481,000

(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 36% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.


 
19

 

 
For the Year Ended December 31, 2007
Local Limited Partnership Name
Rental Income
 
Net Income (Loss)
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 241,000
 
$ (103,000)
99.97%
         
FDI-Green Manor 2003, Ltd
137,000
 
(41,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
258,000
 
12,000
99.98%
         
Humboldt Village, L.P.
360,000
 
(53,000)
92.06%
         
Melodie Meadows Associates, Ltd.
127,000
 
(78,000)
99.98%
         
Starlight Place, L.P.
  230,000
 
  (63,000)
99.97%
         
 
 $1,353,000
 
 $(326,000)
 
         

 
20

 

     
As of March 31, 2007
 
As of December 31, 2006
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,331,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
613,000
 
40
839,000
1,158,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
668,000
668,000
 
59
906,000
1,089,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,713,000
1,713,000
 
66
2,351,000
2,376,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,227,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,258,000
 
     52
4,402,000
374,000
                 
     
$ 9,822,000
$ 9,818,000
 
    317
$  13,296,000
$ 8,555,000

(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 26% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.
  
 

 
21

 
 
 
For the Year Ended December 31, 2006
Local Limited Partnership Name
Rental Income
 
Net Income (Loss)
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 233,000
 
$ (127,000)
99.97%
         
FDI-Green Manor 2003, Ltd
153,000
 
(12,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
252,000
 
25,000
99.98%
         
Humboldt Village, L.P.
402,000
 
(9,000)
92.06%
         
Melodie Meadows Associates, Ltd.
122,000
 
(74,000)
99.98%
         
Starlight Place, L.P.
217,000
 
(133,000)
99.97%
         
 
$ 1,379,000
 
$ (330,000)
 
         


 
22

 

     
As of March 31, 2006
 
As of December 31, 2005
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,349,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
534,000
 
40
839,000
1,169,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
668,000
668,000
 
59
906,000
1,101,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,713,000
1,713,000
 
66
2,351,000
2,396,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,231,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,258,000
 
     52
4,402,000
375,000
                 
     
$ 9,822,000
$ 9,739,000
 
    317
$  13,296,000
$ 8,621,000

(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 16% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.

 
23

 
 
 
For the Year Ended December 31, 2005
Local Limited Partnership Name
Rental Income
 
Net Income (Loss)
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 218,000
 
$ (121,000)
99.97%
         
FDI-Green Manor 2003, Ltd
147,000
 
(49,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
247,000
 
(29,000)
99.98%
         
Humboldt Village, L.P.
409,000
 
12,000
92.06%
         
Melodie Meadows Associates, Ltd.
121,000
 
(74,000)
99.98%
         
Starlight Place, L.P.
  106,000
 
  (94,000)
99.97%
         
 
 $ 1,248,000
 
 $ (355,000)
 
         

 
24

 

     
As of March 31, 2005
 
As of December 31, 2004
Local Limited
Partnership Name
Location
General Partner Name
 Partnership’s Total Investment in Local Limited Partnership
Amount of Investment Paid to Date
 
Number of Units
Estimated Aggregate
Low Income Housing Tax Credits (1)
Mortgage Balances of Local Limited Partnership
                 
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
$ 1,997,000
$ 1,997,000
 
60
$  2,663,000
$ 2,366,000
                 
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
617,000
408,000
 
40
839,000
1,179,000
                 
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
687,000
567,000
 
59
906,000
1,112,000
                 
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
1,739,000
1,579,000
 
66
2,351,000
2,414,000
                 
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
1,569,000
1,569,000
 
40
2,135,000
1,244,000
                 
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
3,258,000
3,114,000
 
     52
4,402,000
          -
                 
     
$ 9,867,000
$ 9,234,000
 
    317
$  13,296,000
$ 8,315,000

(1)  
Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 7% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships and are no longer available to the Partnership’s Limited Partners.


 
25

 


 
For the Year Ended December 31, 2004
Local Limited Partnership Name
Rental Income
 
Net Loss
Low Income Housing Tax Credits Allocated to Partnership
         
Catoosa Senior Village, L.P.
$ 215,000
 
$ (115,000)
99.97%
         
FDI-Green Manor 2003, Ltd
82,000
 
(11,000)
99.98%
         
FDI-Pine Meadows 2003, Ltd.
126,000
 
(9,000)
99.98%
         
Humboldt Village, L.P.
199,000
 
(14,000)
92.06%
         
Melodie Meadows Associates, Ltd.
117,000
 
(66,000)
99.98%
         
Starlight Place, L.P.
            *
 
              *
99.97%
         
 
$ 739,000
 
$ (215,000)
 
         

 * As of December 31, 2004 the Local Limited Partnership was under construction.

 
26

 

WNC Housing Tax Credit Fund VI, L.P., Series 10
 
March 31, 2010, 2009, 2008, 2007, 2006 and 2005
           
   
Occupancy Rates
As of December 31,
Local Limited
Partnership Name
Location
General Partner Name
2009
2008
2007
2006
2005
2004
2003
2002
 
                       
Catoosa Senior Village, L.P.
Calhoun, Georgia
BC Holdings, LLC
90%
98%
93%
100%
97%
100%
100%
N/A
 
                       
FDI-Green Manor 2003, Ltd.
Hempstead, Texas
Fieser Holding, Inc.
83%
100%
68%
93%
90%
90%
N/A
N/A
 
                       
FDI-Pine Meadows 2003, Ltd.
Prairie View, Texas
Fieser Holdings, Inc.
90%
95%
95%
100%
95%
97%
N/A
N/A
 
                       
Humboldt Village, L.P.
Winnemucca, Nevada
Humboldt Village, LLC
97%
92%
97%
97%
97%
89%
N/A
N/A
 
                       
Melodie Meadows Associates, Ltd.
Glencoe, Alabama
Eagle Creek Partners
100%
100%
100%
100%
100%
98%
100%
N/A
 
                       
Starlight Place, L.P.
Americus, Georgia
BC Holdings, LLC
100%
100%
98%
100%
96%
     **
N/A
N/A
 
                       
     
93%
97%
93%
98%
96%
95%
100%
N/A
 

N/A - The Local Limited Partnership had not acquired its limited partnership interest in the Local Limited Partnership as of the respective year-end.

**As of the respective year-end the Local Limited Partnership was under construction.
 
27

 

Item 3.  Legal Proceedings

NONE

Item 4.  (Removed and Reserved)
 
 
PART II.

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

Item 5a.

a)  
The Partnership Units are not traded on a public exchange but were sold through a public offering.  It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists. Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied.

b)  
At March 31, 2010, 2009, 2008, 2007, 2006 and 2005, there were 640, 639, 637, 636, 633 and 633 Limited Partners, respectively, and no assignees of Partnership Units who were not admitted as Limited Partners, respectively.

c)  
The Partnership was not designed to provide operating cash distributions to Limited Partners.  It is possible that the Partnership could make distributions from sale proceeds, if the Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and any then accrued obligations of the Partnership.  There can be no assurance in this regard.  Any distributions would be made in accordance with the terms of the Partnership Agreement.  For all periods presented there were no cash distributions to the Limited Partners.

d)  
No securities are authorized for issuance by the Partnership under equity compensation plans.

e)  
The Partnership does not issue common stock

f)  
No unregistered securities were sold by the Partnership during the years ended March 31, 2010, 2009, 2008, 2007, 2006 and 2005.

Item 5b. Use of Proceeds

NOT APPLICABLE

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

NONE
 
28

 

Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:

   
March 31,
                                 
   
2010
 
2009
 
2008
 
2007
 
2006
 
2005
 
2004
 
2003
                                 
ASSETS
                               
Cash
$
234,454
$
245,020
$
261,019
$
289,760
$
395,940
$
913,526
$
6,649,763
$
1,100
Interest receivable
 
-
 
-
 
-
 
-
 
-
 
-
 
108
 
-
Investments in Local Limited Partnerships, net
 
5,599,397
 
6,908,262
 
8,857,368
 
9,588,104
 
10,229,463
 
10,678,095
 
6,425,082
 
-
Other assets
 
6,300
 
6,300
 
6,300
 
6,300
 
6,300
 
6,300
 
-
 
-
                                 
    Total Assets
$
5,840,151
$
7,159,582
$
9,124,687
$
9,884,164
$
10,631,703
$
11,597,921
$
13,074,953
$
1,100


LIABILITIES
                               
Payables to Local Limited Partnerships
$
4,233
$
4,233
$
4,233
$
4,233
$
83,318
$
633,165
$
1,822,497
$
-
Accrued fees and expenses due to General Partner and affiliates
 
477,993
 
390,253
 
320,804
 
260,783
 
192,515
 
98,701
 
29,535
 
-
                                 
    Total Liabilities
 
482,226
 
394,486
 
325,037
 
265,016
 
275,833
 
731,866
 
1,852,032
 
-
                                 
PARTNERS' EQUITY (DEFICIT)
 
5,357,925
 
6,765,096
 
8,799,650
 
9,619,148
 
10,355,870
 
10,866,055
 
11,222,921
 
1,100
                                 
   Total Liabilities and
       Partners’ Equity (Deficit)
$
5,840,151
$
7,159,582
$
9,124,687
$
9,884,164
$
10,631,703
$
11,597,921
$
13,074,953
$
1,100


 
29

 

Selected results of operations, cash flows and other information for the Partnership are as follows:
   
For the Years Ended March 31,
   
2010
 
2009
 
 
2008
 
2007
 
2006
 
2005
 
2004
 
For the period from February 28, 2003 (date operations commenced) to March 31, 2003
                                 
Loss  from  operations  (Note 1)
$
(1,018,460)
$
(1,618,917)
$
(506,664)
 $
(422,037)
$
(168,544)
$
(164,754)
      $
(67,031)
$
-
Equity in losses of Local Limited Partnerships
 
(388,912)
 
(417,148)
 
(321,968)
 
(329,048)
 
(356,838)
 
(251,203)
 
(128,146)
 
-
Interest income
 
201
 
1,511
 
9,134
 
14,363
 
15,197
 
26,776
 
6,203
 
-
Net loss
$
(1,407,171)
$
(2,034,554)
$
(819,498)
 $
(736,722)
$
(510,185)
$
(389,181)
      $
(188,974)
$
-
                                 
Net loss allocated to:
                               
General Partner
$
(1,407)
$
(2,035)
$
(819)
 $
(737)
  $
(510)
$
(389)
      $
(189)
  $
-
                                 
Limited Partners
$
(1,405,764)
$
(2,032,519)
$
(818,679)
  $
(735,985)
  $
(509,675)
$
(388,792)
      $
(188,785)
$
-
                                 
Net loss per Partnership Unit
$
(106.88)
$
(154.53)
$
(62.24)
 $
(55.96)
  $
(38.75)
$
(29.56)
      $
(22.97)
$
-
                                 
Outstanding weighted Partnership Units
 
13,153
 
13,153
 
13,153
 
13,153
 
13,153
 
13,153
 
8,220
 
-

Note 1 - Loss from operations for the years ended March 31, 2010, 2009, 2008, 2007, 2006, 2005, and 2004 and for the period from February 28, 2003 (date operations commenced) to March 31, 2003, include a charge for impairment losses on investments in Local Limited Partnerships of  $919,953, $1,519,347, $372,414, $278,095, $0, $0, $0 and $0, respectively  (see Note 2 to the financial statements).
 
30

 

   
For the Years Ended March 31,
   
2010
 
2009
 
2008
 
2007
 
2006
 
2005
 
2004
 
For the period from February 28, 2003 (date operations commenced) to March 31, 2003
                                 
Net cash provided by (used in):
                               
                                 
    Operating activities
$
(10,566)
$
(20,696)
$
(33,439)
$
(27,095)
$
(17,637)
$
(33,108)
$
(7,273)
$
-
    Investing activities
 
-
 
4,697
 
4,698
 
(79,085)
 
(499,949)
 
(5,735,444)
 
(4,754,859)
 
-
    Financing activities
 
-
 
-
 
-
 
-
 
-
 
32,315
 
11,410,795
 
-
                                 
Net change in cash
 
(10,566)
 
(15,999)
 
(28,741)
 
(106,180)
 
(517,586)
 
(5,736,237)
 
6,648,663
 
-
                                 
Cash, beginning of period
 
245,020
 
261,019
 
289,760
 
395,940
 
913,526
 
6,649,763
 
1,100
 
1,100
                                 
Cash, end of period
$
234,454
$
245,020
$
261,019
$
289,760
$
395,940
$
913,526
$
6,649,763
$
1,100

Low Income Housing Tax Credits per Partnership Unit were as follows for the years ended December 31:

   
2009
 
2008
 
2007
 
2006
 
2005
 
2004
 
2003
 
2002
                                 
Federal
$
101
$
101
$
99
$
102
$
85
$
54
$
20
$
-
State
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
                                 
Total
$
101
$
101
$
99
$
102
$
85
$
54
$
20
$
-

 
31

 

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

Forward Looking Statements

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

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

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

Critical Accounting Policies and Certain Risks and Uncertainties

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

Use of Estimates

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

Method of Accounting for Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership.  If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments were capitalized as part of the investment account and were being amortized over 30 years. (See Notes 2 and 3 to the financial statements.)
 
32

 
“Equity in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero.  For the year ended March 31, 2005, as soon as the investment balance reached zero, the related costs of acquiring the investment were written off and included with equity in losses. For the years ended March 31, 2010, 2009, 2008, 2007 and 2006, the intangibles were evaluated for impairment as discussed in footnote 1 of the financial statements.

Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance.  Distributions received after the investment has reached zero are recognized as distribution income.  If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. 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 absorbs the majority of the entity's expected losses, the majority of the expected returns, or both. Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE.  However, management does not consolidate the Partnership’s interests in these VIEs under this guidance, as it is not considered to be the primary beneficiary.  The Partnership currently records the amount of its investment in these partnerships as an asset on its balance sheet, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership’s balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss.  The Partnership’s exposure to loss on these partnerships is mitigated by the condition and financial performance of the underlying properties as well as the strength of the local general partners and their guarantee against credit recapture.

Income Taxes

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

Impact of Recent Accounting Pronouncements

In September 2006, the FASB issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions.  In February 2008, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted GAAP for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance has no material impact on the Partnership’s financial statements.
 
33

 
In February 2007, the FASB issued accounting guidance for The Fair Value Option for Financial Assets and Financial Liabilities. This guidance permits entities to choose to measure many financial instruments and certain other items at fair value.  The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. It is effective for fiscal years beginning after November 15, 2007.  On April 1, 2008, the Partnership adopted GAAP for The Fair Value Option for Financial Assets and Financial Liabilities and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of the guidance had no effect on the Partnership.

In November 2008, the FASB issued accounting guidance on Equity Method Investment Accounting Considerations that addresses how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee’s issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. This guidance is effective in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Partnership adopted the guidance for the interim quarterly period beginning April 1, 2009. The impact of adopting it does not have a material impact on the Partnership’s financial condition or results of operations.

In April 2009, the FASB issued accounting guidance for Interim Disclosures about Fair Value of Financial Instruments.  This requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as well as annual statements.  It became effective for as of and for the interim period ended June 30, 2009 and has no impact on the Partnership’s financial condition or results of operations.

In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 30, 2009. The adoption did not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Partnership did not include the disclosure in this Form 10-K.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs).  The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE.  If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE.  Additionally, the amendment requires enhanced and expanded disclosures around VIEs.  This amendment is effective for fiscal years beginning after November 15, 2009.  The adoption of this guidance on April 1, 2010 is not expected to have a material effect on the Partnership’s financial statements.

 
34

 
 
In June 2009, the FASB issued the Accounting Standards Codification (Codification).  Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP.  The Codification is intended to reorganize, rather than change, existing GAAP.  Accordingly, all references to currently existing GAAP have been removed and have been replaced with plain English explanations of the Partnership’s accounting policies.  The adoption of the Codification did not have a material impact on the Partnership’s financial position or results of operations.

Certain Risks and Uncertainties

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

To date, certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies.  In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership’s investment in certain of such Local Limited Partnerships could be lost, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

Financial Condition

For the year ended March 31, 2010

The Partnership’s assets at March 31, 2010 consisted of $234,000 in cash and cash equivalents, aggregate investments in 6 Local Limited Partnerships of $5,599,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2010 consisted of $478,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $4,000 of payables to Local Limited Partnerships.

For the year ended March 31, 2009

The Partnership’s assets at March 31, 2009 consisted of $245,000 in cash and cash equivalents, aggregate investments in 6 Local Limited Partnerships of $6,908,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2009 consisted of $390,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $4,000 of payables to Local Limited Partnerships.

For the year ended March 31, 2008

The Partnership’s assets at March 31, 2008 consisted of $261,000 in cash and cash equivalents, aggregate investments in 6 Local Limited Partnerships of $8,857,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2008 consisted of $321,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $4,000 of payables to Local Limited Partnerships.

For the year ended March 31, 2007

The Partnership’s assets at March 31, 2007 consisted of $290,000 in cash, aggregate investments in 6 Local Limited Partnerships of $9,588,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2007 consisted of $261,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $4,000 of payables to Local Limited Partnerships.

 
35

 
For the year ended March 31, 2006

The Partnership’s assets at March 31, 2006 consisted of $396,000 in cash, aggregate investments in 6 Local Limited Partnerships of $10,229,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2006 consisted of $193,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $83,000 of payables to Local Limited Partnerships.

For the year ended March 31, 2005

The Partnership’s assets at March 31, 2005 consisted of $914,000 in cash, aggregate investments in 6 Local Limited Partnerships of $10,678,000 (See “Method of Accounting for Investments in Local Limited Partnerships”) and $6,000 of other assets.  Liabilities at March 31, 2005 consisted of $99,000 of accrued fees and expenses due to General Partner and affiliates, (See “Future Contractual Cash Obligations” below) and $633,000 of payables to Local Limited Partnerships.

Results of Operations

Year Ended March 31, 2010 Compared to Year Ended March 31, 2009  The Partnership’s net loss for the year ended March 31, 2010 was $(1,407,000), reflecting a decrease of $627,000 from the net loss experienced for the year ended March 31, 2009 of $(2,034,000). That decrease in net loss was largely due to a decrease of $599,000 in impairment loss for the year ended March 31, 2010 compared to the year ended March 31, 2009.   The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership compared to the current net investment balance that is being carried for the particular Local Limited Partnerships.  For the year ended March 31, 2010, all Local Limited Partnerships were not considered to have any residual value in consideration of the economic conditions. The amortization decreased by $8,000, due to the fact that the intangibles were impaired to zero as of March 31, 2009, therefore no further amortization could be recorded.  Reporting fees decreased by $(5,000) for the year ended March 31, 2010 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  There was also a $28,000 decrease in equity in losses of Local Limited Partnerships.  The equity in losses can vary from year to year depending on the operations of the underlying Housing Complexes of the Local Limited Partnerships.   Interest income decreased by $(1,000) due to the fact that interest rates declined for the year ended March 31, 2010 compared to the year ended March 31, 2009.

Year Ended March 31, 2009 Compared to Year Ended March 31, 2008  The Partnership’s net loss for the year ended March 31, 2009 was $(2,034,000), reflecting an increase of $(1,215,000) from the net loss experienced for the year ended March 31, 2008 of $(819,000). The increase in net loss was largely due to an increase of $(1,147,000) in impairment loss for the year ended March 31, 2009 compared to the year ended March 31, 2008.  For the year ended March 31, 2008 the impairment analysis calculated any residual value to the Partnership in addition to the remaining Low Income Housing Tax Credits available to the Partnership and compared that to the current carrying value of each investment to the Partnership. For the year ended March 31, 2009 all Local Limited Partnerships were not considered to have any residual value in consideration of the economic conditions. The intangibles are also evaluated for impairment in connection with the Partnership’s investments in Local Limited Partnerships.  Impairment loss included $797,000 of impairment related to the intangibles for the year ended March 31, 2009 while no such loss was recorded against the intangibles during the year ended March 31, 2008. The impairment of the intangibles also caused the amortization to decrease by $24,000 as the intangibles were fully impairment as of June 30, 2008 and no further amortization could be recorded for the remainder of the year.   The accounting and legal fees decreased by $10,000 for the year ended March 31, 2009 compared to the year ended March 31, 2008 due to the timing of the accounting work performed.  Reporting fees increased by $1,000 for the year ended March 31, 2009 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  There was also a $(95,000) increase in equity in losses of Local Limited Partnerships.  The equity in losses of Local Limited Partnerships can vary each year depending on the operations of the underlying Housing Complexes of the Local Limited Partnerships.   Interest income decreased by $(7,000) for the year ended March 31, 2009 due to the fact that interest rates declined significantly for the year ended March 31, 2009 compared to the year ended March 31, 2008.

 
36

 

Year Ended March 31, 2008 Compared to Year Ended March 31, 2007  The Partnership’s net loss for the year ended March 31, 2008 was $(819,000), reflecting an increase of $(82,000) from the net loss experienced for the year ended March 31, 2007 of $(737,000).  There was a $(94,000) increase in impairment loss for the year ended March 31, 2008 compared to the year ended March 31, 2007.   The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value to the Partnership compared to the current carrying value of each of the investments to the Partnership.  The amortization decreased by $3,000, due to the fact that the Partnership evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. As impairment is recorded against the intangibles, the amortization expense for future periods is decreased.  For the year ended March 31, 2007, the Partnership recorded impairment against the intangibles of approximately $278,000 as compared to $0 for the year ended March 31, 2008; thereby reducing the amortization expense recorded for the subsequent quarters.  There was also a $2,000 decrease in accounting and legal fees for the year ended March 31, 2008 compared to the year ended March 31, 2007 due to the timing of the accounting work performed.  Reporting fees increased by $4,000 for the year ended March 31, 2008 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  There was also a $7,000 decrease in equity in losses of Local Limited Partnerships for the year ended March 31, 2008.  The equity in losses can vary each year depending on the operations of the underlying Housing Complexes of the Local Limited Partnerships.   Interest income decreased by $(5,000) due to the fact that interest rates and the cash balances being maintained by the Partnership declined significantly for the year ended March 31, 2008 compared to the year ended March 31, 2007.

Year Ended March 31, 2007 Compared to Year Ended March 31, 2006  The Partnership’s net loss for the year ended March 31, 2007 was $(737,000), reflecting an increase of $(227,000) from the net loss experienced for the year ended March 31, 2006 of $(510,000). The increase in net loss was partially due to an increase of $(278,000) in impairment loss for the year ended March 31, 2007 compared to the year ended March 31, 2006.   The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value to the Partnership compared to the current carrying value of each of the investments to the Partnership.  The amortization decreased by $8,000 due to the fact that the Partnership evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. As impairment is recorded against the intangibles, the amortization expense for future periods is decreased.  For the year ended March 31, 2007, the Partnership recorded impairment against the intangibles of approximately $278,000 thereby reducing the amortization expense recorded for the subsequent quarters.  The accounting and legal fees decreased by $12,000 for the year ended March 31, 2007 compared to the year ended March 31, 2006 due to the timing of the accounting work performed.  Reporting fees decreased by $(1,000) for the year ended March 31, 2007 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  There was a $28,000 decrease of equity in losses of Local Limited Partnerships.  The equity in losses can vary each year depending on the operations of the underlying Housing Complexes of the Local Limited Partnerships.   The asset management expenses decreased by $5,000 for the year ended March 31, 2007 due to the timing of the necessary property inspections.

Year Ended March 31, 2006 Compared to Year Ended March 31, 2005. The Partnership’s net loss for the year ended March 31, 2006 was $(510,000), reflecting an increase of $(121,000) from the net loss of $(389,000) experienced for the year ended March 31, 2005. The equity in losses increased by $(106,000)for the year ended March 31, 2006. The equity in losses can vary each year depending on the operations of the underlying Housing Complexes of the Local Limited Partnerships.   Also, during the year ended March 31, 2005 several of the Local Limited Partnerships were still leasing up and being acquired by the Partnership, therefore losses were lower than the year ended March 31, 2006.  The accounting and legal fees decreased by $4,000 for the year ended March 31, 2006 compared to the year ended March 31, 2005 due to the timing of the accounting work performed.   The asset management fees increased by $(15,000) for the year ended March 31, 2006 as not all Local Limited Partnerships had been acquired as of March 31, 2005.  The asset management fees are calculated based on invested assets, which is comprised of the equity contributed by the Partnership and the mortgage payable.  The asset management expenses decreased by $4,000 for the year ended March 31, 2006 due to the timing of the necessary property inspections.  Reporting fees increased by $3,000 for the year ended March 31, 2006 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  Interest income decreased by $(12,000) due to the fact that the cash balances being maintained by the Partnership declined significantly for the year ended March 31, 2006 compared to the year ended March 31, 2005.

 
37

 
 
Year Ended March 31, 2005 Compared to Period Ended March 31, 2004 The Partnership’s net loss for the year ended March 31, 2005 was $(389,000), reflecting an increase of $(200,000) from the net loss of $(189,000) experienced for the year ended March 31, 2004.  The increase in net loss is largely due to an increase in equity in losses of Local Limited Partnerships of $(123,000) for the year ended March 31, 2005 compared to the year ended March 31, 2004. The equity in losses can vary based on the operations of the underlying Housing Complexes of the Local Limited Partnerships. There was a $(50,000) increase in asset management fees as not all Local Limited Partnerships had been acquired as of March 31, 2004.  The asset management fees are calculated based on invested assets, which is comprised of the equity contributed by the Partnership and the mortgage payable. There was an $(18,000) increase in amortization of acquisition fees and costs due to the fact that some fees were capitalized during the year ended March 31, 2004 and therefore a full year of amortization was not recorded for those assets. There was also a $(21,000) increase in accounting and legal expenses due to the timing of the accounting work performed. Asset management expenses also increased by $(7,000) due to the timing of the necessary property inspections. There was a $21,000 increase in interest income which was due to the fact that the average cash balances being maintained by the Partnership increased for the year ended March 31, 2005 compared to the year ended March 31, 2004.
 
Year Ended March 31, 2004 Compared to Period Ended March 31, 2003.  The Partnership commenced operations on February 28, 2003.  Therefore, as of March 31, 2003, the Partnership had not accepted subscriptions for any Units nor made any investments in Local Limited Partnerships. As a result there were no operations for the period ended March 31, 2003. In addition, there were no Low Income Housing Credits available for allocation to the partners. The two periods are not comparable as there was no operations during the period ended March 31, 2003.

Liquidity and Capital Resources

Year Ended March 31, 2010 Compared to Year Ended March 31, 2009   The net decrease in cash and cash equivalents during the year ended March 31, 2010 was $(11,000) compared to a net decrease in cash and cash equivalents for the year ended March 31, 2009 of $(16,000). The net change was partially due to the Partnership paying accrued asset management fees of $10,000 during the year ended March 31, 2010 compared to $20,000 paid during the year ended March 31, 2009.  For the year ended March 31, 2010 the Partnership reimbursed the General Partner or an affiliate $2,000 for operating expenses paid on its behalf compared to $9,000 reimbursed during the year ended March 31, 2009.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.  The Partnership also collected $5,000 more in both reporting fees and distributions for the year ended March 31, 2009 compared to the year ended March 31, 2010 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.

Year Ended March 31, 2009 Compared to Year Ended March 31, 2008  The net decrease in cash and cash equivalents during the year ended March 31, 2009 was $(16,000) compared to a net decrease in cash and cash equivalents for the year ended March 31, 2008 of $(29,000).  The Partnership reimbursed the General Partner of affiliate $22,000 less for operating expenses paid on its behalf during the year ended March 31, 2009 and paid $3,000 more in accrued asset management fees.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.  The Partnership received $1,000 more in reporting fees for the year ended March 31, 2009, due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.  Additionally, the Partnership received $7,000 less interest income during the year ended March 31, 2009 due to the fact that interest rates decreased significantly.

 
38

 
 
Year Ended March 31, 2008 Compared to Year Ended March 31, 2007  The net decrease in cash and cash equivalents during the year ended March 31, 2008 was $(29,000) compared to a net decrease in cash and cash equivalents for the year ended March 31, 2007 of $(106,000).  During the year ended March 31, 2007 the Partnership paid capital contributions to Local Limited Partnerships in the amount of $79,000 compared to no capital contributions being paid during the year ended March 31, 2008.  Certain benchmarks must be met by the Local Limited Partnership in order for capital contributions to be paid.  The Partnership paid accrued asset management fees of $17,000 during the year ended March 31, 2008 compared to $11,000 paid during the year ended March 31, 2007. The Partnership also reimbursed the General Partner or affiliate $1,000 less of operating expenses paid on its behalf during the year ended March 31, 2008.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.  The Partnership received $4,000 more in reporting fees and $5,000 more in distributions from Local Limited Partnerships during the year ended March 31, 2008 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. Additionally, the Partnership received $5,000 less interest income during the year ended March 31, 2008 due to the fact that interest rates decreased.

Year Ended March 31, 2007 Compared to Year Ended March 31, 2006 The net decrease in cash and cash equivalents during the year ended March 31, 2007 was $(106,000) compared to a net decrease in cash and cash equivalents for the year ended March 31, 2006 of $(518,000).  During the year ended March 31, 2007 the Partnership paid capital contributions to Local Limited Partnerships in the amount of $79,000 compared to $505,000 paid during the year ended March 31, 2006.  Certain benchmarks must be met by the Local Limited Partnership in order for capital contributions to be paid.  The Partnership paid accrued asset management fees of $11,000 for the year ended March 31, 2007 compared to $19,000 paid for the year ended March 31, 2006. The Partnership reimbursed the General Partner or an affiliate $6,000 more for operating expenses paid on its behalf during the year ended March 31, 2007.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.  The Partnership received $(1,000) less in reporting fees and $(5,000) less in distributions from Local Limited Partnerships for the year ended March 31, 2007, due to the fact that Local Limited Partnerships pay the reporting fees and distribution income to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.

Year Ended March 31, 2006 Compared to Year Ended March 31, 2005. Net cash and cash equivalents used during the year ended March 31, 2006 was $(518,000) compared to net cash and cash equivalents used during year ended March 31, 2005 of $(5,736,000). During the year ended March 31, 2005 the Partnership received the final subscription payment of $36,000, therefore no such payments were received during the year ended March 31, 2006. During the year ended March 31, 2006 the Partnership paid capital contributions to Local Limited Partnerships in the amount of $505,000 compared to $5,735,000 paid during the year ended March 31, 2006.  Certain benchmarks must be met by the Local Limited Partnership in order for capital contributions to be paid.  The Partnership also paid accrued asset management fees of $19,000 during the year ended March 31, 2006 compared to $15,000 paid during the year ended March 31, 2005. The Partnership also reimbursed the General Partner of affiliate $20,000 less in operating expenses paid on its behalf during the year ended March 31, 2006.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.  The Partnership received $3,000 more in reporting fees from Local Limited Partnerships for the year ended March 31, 2006 and $(5,000) more in distributions from the Local Limited Partnerships.  The reporting fees and distributions are paid to the Partnership when the Local Limited Partnership's’ cash flow will allow for the payment.

 
39

 
 
Year Ended March 31, 2005 Compared to Period Ended March 31, 2004 Net cash and cash equivalents used during the year ended March 31, 2005 was $(5,736,000), compared to net cash and cash equivalents provided for the year ended March 31, 2004 of $6,649,000. During the year ended March 31, 2004 the Partnership was selling Partnership Units and had collected $13,083,000 in cash for subscriptions compared to only the final payment of $36,000 that was received during the year ended March 31, 2005.   As of March 31, 2004 the selling of Partnership Units had concluded.  The Partnership paid organization and offering costs and fees to the General Partner or an affiliate in the amount of $1,257,000 during the year ended March 31, 2004. These costs are earned and paid as Partnership Units are sold, therefore, the final $4,000 was paid during the year ended March 31, 2005.  During the year end March 31, 2004 the Partnership paid capital contributions to Local Limited Partnerships in the amount of $(3,498,000) compared to $(5,735,000) paid during the year ended March 31, 2005.  Capital contributions are paid to Local Limited Partnerships when certain benchmarks are met. The Partnership paid accrued asset management fees of $15,000 for the year ended March 31, 2005 compared to no asset management fees being paid for the year ended March 31, 2004. The Partnership reimbursed the General Partner or an affiliate $32,000 more for operating expenses paid on its behalf during the year ended March 31, 2005.  The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.

Year Ended March 31, 2004 Compared to Period Ended March 31, 2003.  The Partnership had no cash flows from operating or investing activities for the period ended March 31, 2003.  As such, the two periods are not comparable.

The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through May 31, 2012.

 
40

 

Future Contractual Cash Obligations

The following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2010:

   
2011
 
2012
 
2013
 
2014
 
2015
 
There after
 
Total
                             
Asset management fees(1)
$
569,893
$
91,900
$
91,900
$
91,900
$
91,900
$
4,319,300
$
5,256,793
Capital contribution payable
 
4,233
 
-
 
-
 
-
 
-
 
-
 
4,233
Total contractual cash obligations
$
574,126
$
91,900
$
91,900
$
91,900
$
91,900
 
$
4,319,300
$
5,261,026

(1)
Asset management fees are payable annually until termination of the Partnership, which is to occur no later than December 31, 2062. The estimate of the fees payable included herein assumes the retention of the Partnership’s interest in all Housing Complexes until December 31, 2062. Amounts due to the General Partner as of March 31, 2010 have been included in the 2011 column.  The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership.

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

Off-Balance Sheet Arrangements

The Partnership has no off-balance sheet arrangements.

Exit Strategy

See Item 1 for information in this regard.

Impact of Recent Accounting Pronouncements

See footnote 1 to the audited financial statements.

Item 7A.  Quantitative and Qualitative Disclosures Above Market Risk

NOT APPLICABLE

Item 8. Financial Statements and Supplementary Data


 
41

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 10

We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 10 (a California Limited Partnership) (the Partnership) as of March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, and the related statements of operations, partners’ equity (deficit) and cash flows for each of the years in the seven-year period ended March 31, 2010. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain local limited partnerships for which investments represent $3,333,361, $4,018,961, $2,967,992, $0, $4,857,056, $1,814,400 and $3,045,804 of the total Partnership assets as of March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, respectively and $(180,607), $(167,497), $(62,808), $0, $(215,193), $(133,864) and ($102,514) of the total Partnership loss for the years ended March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, respectively. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to those local limited partnerships, is based solely on the reports of the other auditors.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.
 
In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 10 (a California Limited Partnership) as of March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, and the results of its operations and its cash flows for each of the years in the seven-year period ended March 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15(a)(2) in the index related to years above are presented for the purpose of complying with the Securities and Exchange Commission’s rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole.
 

/s/ Reznick Group, P.C.
 
Bethesda, Maryland
May 27, 2011
 
 
 
42

 
Child, Van Wagoner & Bradshaw, PLLC.
 
Report of Independent Registered Public Accounting Firm
 
To the Partners
Humboldt Village, L.P.
Winnemucca, Nevada
 
We have audited the accompanying balance sheets of Humboldt Village, L.P. (the Partnership), as of December 31, 2009 and 2008, and the related statements of operations, changes in partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with auditing standards generally accepted in the United States of America, the standards of the Public Company Accounting Oversight Board (United States of America) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Partnership, at December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
In accordance with Government Auditing Standards, we have also issued a report dated March 9, 2010, on our consideration of the Partnership's internal control over fmancial reporting. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and the results of that testing and not to provide an opinion on the internal control over financial reporting. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report considering the results of our audit.
 
Our audit was conducted for the purpose of fonning an opinion on the basic financial statements taken as a whole. The accompanying supplemental information shown on page 13 is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Partnership. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
 
/s/ Child, Van Wagoner & Bradshaw, PLLC
 
Kaysville, Utah
March 9, 2010
 
 
 
43

 
INDEPENDENT AUDITORS' REPORT


To the Partners
Catoosa Senior Village, LP

We have audited the accompanying balance sheets of CATOOSA SENIOR VILLAGE, LP (a limited partnership) as of December 31, 2005 and 2004, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended.  These financial statements are the responsibility of the Partnership's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CATOOSA SENIOR VILLAGE, LP as of December 31, 2005 and 2004, and the results of its operations, its changes in partners' equity (deficit), and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental information on pages 10 - 11 is presented for purposes of additional analysis and is not a required part of the basic financial statements.  Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Habit Arogeti, Wynne, LLC
Atlanta, Georgia

February 28, 2006
 
44

 
INDEPENDENT AUDITORS' REPORT


To the Partners of
Starlight Place, LP
 
We have audited the accompanying balance sheet of  STARLIGHT PLACE, LP (USDA Rural Development), a limited partnership, as of December 31, 2005, and the related statement of operations, changes in partners' equity (deficit), and cash flows for the year then ended.  These financial statements are the responsibility of the Partnership's management.  Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States), the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Audit Program issued in December 1989 by the Rural Development Services Office of the U.S. Department of Agriculture, formerly known as the Farmers Home Administration.  Those standards and the Audit Program require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of STARLIGHT PLACE, LP as of December 31, 2005, and the results of its operations, its changes in partners' equity (deficit), and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
 
In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2006, on our consideration of STARLIGHT PLACE, LP's internal control and our report dated February 28, 2006, on its compliance with laws and regulations applicable to the financial statements.  Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
 
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental information on pages 9 - 12 is presented for purposes of additional analysis and is not a required part of the basic financial statements.  Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 
/s/Habit Arogeti, Wynne, LLC
 
Atlanta, Georgia
February 28, 2006
 
 
45

 
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
To the Partners
Starlight Place, LP
 
 
We have audited the accompanying balance sheet of Starlight Place, LP, as of December 31, 2007 and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the Standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Starlight Place, LP as of December 31, 2007 and the results of its operations, changes in partners' capital and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
 
 
 
 
/s/ PAILET, MEUNIER and LeBLANC, L.L.P.
 
Metairie, Louisiana
May 16, 2011
 
 
 
3421 N. Causeway Blvd., Suite 701  Metairie, LA 70002  Telephone (504) 837-0770  Fax (504) 837-7102
201 St. Charles Ave., Ste. 2500  New Orleans, LA 70170  Telephone (504) 599-5905  Fax (504) 837-7102
www. pmlcpa.com
Member of
Member Firms in Principal Cities  PCAOB - Public Company Accounting Oversight Board
AICPA: Center for Public Company Audit Firms (SEC) Governmantal Audit Quality Center  Private Companies Practice Section (PCPS)
 
 
 
46

 
 
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
   
To the Partners
Starlight Place, LP
   
We have audited the accompanying balance sheet of Starlight Place, LP, as of December 31, 2008 and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the Standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Starlight Place, LP as of December 31, 2008 and the results of its operations, changes in partners' capital and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
 
 

/s/ PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
May 18, 2011
 
 
 
 
 
3421 N. Causeway Blvd., Suite 701  Metairie, LA 70002  Telephone (504) 837-0770  Fax (504) 837-7102
201 St. Charles Ave., Ste. 2500  New Orleans, LA 70170  Telephone (504) 599-5905  Fax (504) 837-7102
www. pmlcpa.com
Member of
Member Firms in Principal Cities  PCAOB - Public Company Accounting Oversight Board
AICPA: Center for Public Company Audit Firms (SEC) Governmantal Audit Quality Center  Private Companies Practice Section (PCPS)
 
 
 
47

 
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
   
To the Partners Starlight Place, LP
 
We have audited the accompanying balance sheet of Starlight Place, LP, as of December 31, 2009 and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the Standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Starlight Place, LP as of December 31, 2009 and the results of its operations, changes in partners' capital and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
 
 
 
/s/ PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
May 18, 2011
 
 
 
 
 
3421 N. Causeway Blvd., Suite 701  Metairie, LA 70002  Telephone (504) 837-0770  Fax (504) 837-7102
201 St. Charles Ave., Ste. 2500  New Orleans, LA 70170  Telephone (504) 599-5905  Fax (504) 837-7102
www. pmlcpa.com
Member of
Member Firms in Principal Cities  PCAOB - Public Company Accounting Oversight Board
AICPA: Center for Public Company Audit Firms (SEC) Governmantal Audit Quality Center  Private Companies Practice Section (PCPS)
 
48

 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)

BALANCE SHEETS




   
March 31,
                               
   
2010
 
2009
 
2008
 
2007
 
2006
 
2005
 
2004
 
ASSETS
                             
Cash and cash equivalents
$
234,454
$
245,020
$
261,019
$
289,760
$
395,940
$
913,526
$
6,649,763
 
Interest receivable
 
-
 
-
 
-
 
-
 
-
 
-
 
108
 
Investments in Local Limited Partnerships, net (Notes 2 and 3)
 
5,599,397
 
6,908,262
 
8,857,368
 
9,588,104
 
10,229,463
 
10,678,095
 
6,425,082
 
Other assets
 
6,300
 
6,300
 
6,300
 
6,300
 
6,300
 
6,300
 
-
 
                               
       Total Assets
$
5,840,151
$
7,159,582
$
9,124,687
$
9,884,164
$
10,631,703
$
11,597,921
$
13,074,953
 
                               
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
                             
                               
Liabilities:
                             
Payables to Local Limited Partnerships (Note 5)
$
4,233
$
4,233
$
4,233
$
4,233
$
83,318
$
633,165
$
1,822,497
 
Accrued fees and expenses due to General Partner and affiliates (Note 3)
 
477,993
 
390,253
 
320,804
 
260,783
 
192,515
 
98,701
 
29,535
 
                               
Total Liabilities
 
482,226
 
394,486
 
325,037
 
265,016
 
275,833
 
731,866
 
1,852,032
 
                               
Partners’ Equity (Deficit)
                             
General Partner
 
(5,986)
 
(4,579)
 
(2,544)
 
(1,725)
 
(988)
 
(478)
 
(89)
 
Limited Partners (25,000 Partnership Units authorized; 13,153, 13,153, 13,153, 13,153, 13,153, 13,153 and 8,220 Partnership Units issued and outstanding as of March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004, respectively)
 
5,363,911
 
6,769,675
 
8,802,194
 
9,620,873
 
10,356,858
 
10,866,533
 
11,223,010
 
                               
Total Partners’ Equity (Deficit)
 
5,357,925
 
6,765,096
 
8,799,650
 
9,619,148
 
10,355,870
 
10,866,055
 
11,222,921
 
                               
      Total Liabilities and Partners’ Equity (Deficit)
$
5,840,151
$
7,159,582
$
9,124,687
$
9,884,164
 
$
10,631,703
$
11,597,921
$
13,074,953
 


See accompanying notes to financial statements
 
49

 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)

STATEMENTS OF OPERATIONS


   
For the Years Ended March 31,
   
2010
 
2009
 
2008
 
2007
 
2006
 
2005
 
2004
                             
    Reporting fees
$
1,500
$
6,801
$
5,800
$
1,500
$
2,500
$
-
$
-
                             
Operating expenses and loss:
                           
Amortization (Notes 2 and 3)
 
-
 
7,914
 
31,656
 
34,216
 
41,896
 
41,896
 
24,128
Asset management fees (Note 3)
 
91,900
 
91,900
 
91,900
 
91,900
 
91,900
 
77,335
 
27,168
    Impairment loss (Note 2)
 
919,953
 
1,519,347
 
372,414
 
278,095
 
-
 
-
 
-
    Accounting and legal fees
 
3,035
 
2,966
 
12,576
 
14,647
 
26,887
 
31,182
 
10,445
Asset management expenses
 
1,742
 
-
 
103
 
575
 
5,703
 
9,382
 
2,094
Other
 
3,330
 
3,591
 
3,815
 
4,104
 
4,658
 
4,959
 
3,196
Total operating expenses and loss
 
1,019,960
 
1,625,718
 
512,464
 
423,537
 
171,044
 
164,754
 
67,031
                             
Loss from operations
 
(1,018,460)
 
(1,618,917)
 
(506,664)
 
(422,037)
 
(168,544)
 
(164,754)
 
(67,031)
                             
Equity in losses of Local Limited Partnerships (Note 2)
 
(388,912)
 
(417,148)
 
(321,968)
 
(329,048)
 
(356,838)
 
(251,203)
 
(128,146)
                             
Interest income
 
201
 
1,511
 
9,134
 
14,363
 
15,197
 
26,776
 
6,203
                             
Net loss
$
(1,407,171)
$
(2,034,554)
$
(819,498)
$
(736,722)
$
(510,185)
$
(389,181)
$
(188,974)
                             
Net loss allocated to:
                           
General Partner
$
(1,407)
$
(2,035)
$
(819)
$
(737)
$
(510)
 $
(389)
 $
(189)
Limited Partners
$
(1,405,764)
$
(2,032,519)
$
(818,679)
$
(735,985)
$
(509,675)
 $
(388,792)
 $
(188,785)
                             
Net loss per Partnership Unit
$
(106.88)
$
(154.53)
$
(62.24)
$
(55.96)
$
(38.75)
$
(29.56)
$
(22.97)
                             
Outstanding weighted Partnership Units
 
13,153
 
13,153
 
13,153
 
13,153
 
13,153
 
13,153
 
8,220


See accompanying notes to financial statements
 
50

 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

For the Years Ended March 31, 2010, 2009, 2008, 2007, 2006, 2005 and 2004
 

   
General Partner
 
Limited Partners
 
Total
             
Partners’ equity (deficit) at March 31, 2003
$
100
$
1,000
$
1,100
             
Sale of Partnership Units (net of discounts of $33,730)
 
-
 
13,083,455
 
13,083,455
             
Offering expenses
 
-
 
(1,672,660)
 
(1,672,660)
             
Net loss
 
(189)
 
(188,785)
 
(188,974)
             
Partners’ equity (deficit) at March 31, 2004
 
(89)
 
11,223,010
 
11,222,921
             
Collection of promissory notes receivable
 
-
 
35,815
 
35,815
             
Offering expenses
 
-
 
(3,500)
 
(3,500)
             
Net loss
 
(389)
 
(388,792)
 
(389,181)
             
Partners’ equity (deficit) at March 31, 2005
 
(478)
 
10,866,533
 
10,866,055
 
Net loss
 
(510)
 
(509,675)
 
(510,185)
             
Partners’ equity (deficit) at March 31, 2006
 
(988)
 
10,356,858
 
10,355,870
             
Net loss
 
(737)
 
(735,985)
 
(736,722)
             
Partners’ equity (deficit) at March 31, 2007
 
(1,725)
 
9,620,873
 
9,619,148
             
Net loss
 
(819)
 
(818,679)
 
(819,498)
 
Partners’ equity (deficit) at March 31, 2008
 
(2,544)
 
8,802,194
 
8,799,650
             
Net loss
 
(2,035)
 
(2,032,519)
 
(2,034,554)
             
Partners’ equity (deficit) at March 31, 2009
 
(4,579)
 
6,769,675
 
6,765,096
             
Net loss
 
(1,407)
 
(1,405,764)
 
(1,407,171)
             
Partners’ equity (deficit) at March 31, 2010
$
(5,986)
 $
5,363,911
   $
5,357,925


See accompanying notes to financial statements
 
51

 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 10
(A California Limited Partnership)

STATEMENTS OF CASH FLOWS
 

   
For The Years Ended March 31,
 
               
   
2010
 
2009
 
2008
 
               
 Cash flows from operating activities:
   Net loss
$
(1,407,171)
 $
(2,034,554)
 $
(819,498)
 
Adjustments to reconcile net loss to net cash used in operating activities:
             
Amortization
 
-
 
7,914
 
31,656
 
Impairment loss
 
919,953
 
1,519,347
 
372,414
 
Equity in losses of Local Limited
Partnerships
 
388,912
 
417,148
 
321,968
 
Increase in accrued fees and expenses due to General Partner and affiliates
 
87,740
 
69,449
 
60,021
 
               
  Net cash used in operating activities
 
(10,566)
 
(20,696)
 
(33,439)
 
               
Cash flows from investing activities:
             
Distributions received from Local Limited
        Partnerships
 
-
 
4,697
 
4,698
 
               
  Net cash provided by investing activities
 
-
 
4,697
 
4,698
 
               
  Net decrease in cash and cash equivalents
 
(10,566)
 
(15,999)
 
(28,741)
 
               
Cash and cash equivalents, beginning of year
 
245,020
 
261,019
 
289,760
 
               
Cash and cash equivalents, end of year
$
234,454
$
245,020
$
261,019
 
               
SUPPLEMENTAL DISCLOSURE OF