WNC HOUSING TAX CREDIT FUND II LP - FORM 10-Q/A

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EXCEL - IDEA: XBRL DOCUMENT - WNC HOUSING TAX CREDIT FUND II LP	Financial_Report.xls
EX-32.2 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND II LP	wncfundii_10qaex-3202.htm
EX-31.2 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND II LP	wncfundii_10qaex-3102.htm
EX-31.1 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND II LP	wncfundii_10qaex-3101.htm
EX-32.1 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND II LP	wncfundii_10qaex-3201.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

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


For the quarterly period ended September 30, 2011

OR

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

For the transition period from ________ to ___________

Commission file number: 0-20057

WNC HOUSING TAX CREDIT FUND II, L.P.

California	33-0391979
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

17782 Sky Park Circle
Irvine, CA	92614-6404
(Address of principal executive offices)	(Zip Code)

(714) 662-5565

(Telephone number)

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

Yes x No o

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

Yes x No o

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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company o

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

Yes o No x

EXPLANATORY NOTE

WNC Housing Tax Credit Fund II, L.P. is filing this amendment to its Quarterly Report on Form 10-Q for the period ended September 30, 2011 to file the corrected Statement of Operations.

This Form 10-Q/A does not reflect events occurring after the filing of the original Form 10-Q filed with the Securities and Exchange Commission on November 14, 2011, or modify or update those disclosures affected by subsequent events. Except as described above, the Partnership has not modified or updated other disclosures or information presented in the original Form 10-Q.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

INDEX TO FORM 10 – Q/A

For the Quarterly Period Ended September 30, 2011

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Balance Sheets
As of September 30, 2011 and March 31, 2011	3

Condensed Statements of Operations
For the Three and Six Months Ended September 30, 2011 and 2010	4

Condensed Statement of Partners' Deficit
For the Six Months Ended September 30, 2011	5

Condensed Statements of Cash Flows
For the Six Months Ended September 30, 2011 and 2010	6

Notes to Condensed Financial Statements	7

Signatures	19

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

CONDENSED BALANCE SHEETS

(For the Six Months Ended September 30, 2011)

(Unaudited)

	September 30, 2011			March 31, 2011

ASSETS

Cash	$	9,277		$	43,639
Investments in Local Limited Partnerships, net (Note 2)		-			-
Other assets		35,911			51,500

Total Assets	$	45,188		$	95,139


LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
Accrued expenses	$	363		$	-
Accrued fees and expenses due to
General Partner and affiliates (Note 3)		2,541,603			2,573,107

Total Liabilities		2,541,966			2,573,107

Partners’ Deficit:
General Partner		(82,128	)		(81,940	)
Limited Partners (12,000 Partnership Units authorized;
7,000 Partnership Units issued and outstanding)		(2,414,650	)		(2,396,028	)

Total Partners’ Deficit		(2,496,778	)		(2,477,968	)

Total Liabilities and Partners’ Deficit	$	45,188		$	95,139

See accompanying notes to condensed financial statements

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

CONDENSED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended September 30, 2011 and 2010

(Unaudited)

	2011						2010
	Three Months			Six Months			Three Months			Six Months

Reporting fees	$	6,134		$	6,134		$	1,457		$	11,767
Distribution income		-			500			-			-

Total operating income		6,134			6,634			1,457			11,767

Operating expenses:
Asset management fees (Note 3)		18,234			38,437			26,810			54,103
Legal and accounting fees		3,263			31,652			33,319			33,335
Other		9,549			11,287			-			825

Total operating expenses		31,046			81,376			60,129			88,263

Loss from operations		(24,912	)		(74,742	)		(58,672	)		(76,496	)

Gain on sale of Local Limited Partnerships		17,004			55,928			50,000			50,000

Interest income		2			4			2			5

Net loss	$	(7,906	)	$	(18,810	)	$	(8,670	)	$	(26,491	)

Net loss allocated to:
General Partner	$	(79	)	$	(188	)	$	(87	)	$	(265	)

Limited Partners	$	(7,827	)	$	(18,622	)	$	(8,583	)	$	(26,226	)

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

Outstanding weighted Partnership Units		7,000			7,000			7,000			7,000

See accompanying notes to condensed financial statements

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

CONDENSED STATEMENT OF PARTNERS’ DEFICIT

For the Six Months Ended September 30, 2011

(Unaudited)

	General			Limited
	Partners			Partners			Total

Partners’ deficit at March 31, 2011	$	(81,940	)	$	(2,396,028	)	$	(2,477,968	)

Net loss		(188	)		(18,622	)		(18,810	)

Partners’ deficit at September 30, 2011	$	(82,128	)	$	(2,414,650	)	$	(2,496,778	)

See accompanying notes to condensed financial statements

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

CONDENSED STATEMENTS OF CASH FLOWS

For the Six Months Ended September 30, 2011 and 2010

(Unaudited)

	2011			2010

Cash flows from operating activities:
Net loss	$	(18,810	)	$	(26,491	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase in other assets		(16,546	)		(3,000	)
Increase in accrued expenses		363			-
Increase (decrease) in accrued fees and expenses due to General Partner and affiliates		(31,504	)		34,263
Gain on sale of Local Limited Partnerships		(55,928	)		(50,000	)

Net cash used in operating activities		(122,425	)		(45,228	)

Cash flows from investing activities:
Proceeds from sale of Local Limited Partnerships		88,063			50,000

Net cash provided by investing activities		88,063			50,000

Net increase (decrease) in cash		(34,362	)		4,772

Cash, beginning of period		43,639			27,658

Cash, end of period	$	9,277		$	32,430

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Taxes paid	$	-		$	-

See accompanying notes to condensed financial statements

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q/A for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2012. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended March 31, 2011.

Organization

WNC Housing Tax Credit Fund II, L.P. (the "Partnership") is a California Limited Partnership formed under the laws of the State of California on January 19, 1990. 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 Complexes. 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 Financial Group, L.P., a California partnership (the “General Partner”). The general partners of the General Partner are WNC & Associates, Inc., a California corporation (“Associates”), and Wilfred N. Cooper Sr. The chairman and president of Associates own all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own.

The Partnership shall continue in full force and effect until December 31, 2045 unless terminated prior to that date pursuant to the partnership agreement or law.

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

The Partnership Agreement authorized the sale of up to 12,000 units of Limited Partnership interests (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units concluded on December 31, 1992 at which time 7,000 Partnership Units representing subscriptions in the amount of $7,000,000 had been accepted. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors (the “Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The proceeds from the disposition of any of the Local Limited Partnership Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the Partnership. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to its capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 95% to the Limited Partners (in proportion to their respective investments) and 5% to the General Partner.

Risks and Uncertainties

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

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

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

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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

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

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

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 February 28, 2013.

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

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 are completing their Compliance Periods.

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

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

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 September 30, 2011.

Upon management of the Partnership identifying a Local Limited Partnership for disposition, costs incurred by the Partnership in preparation for the disposition are deferred. Upon the sale of the Local Limited Partnership interest, the Partnership nets the costs that had been deferred against the proceeds from the sale in determining the gain or loss on sale of the Local Limited Partnership. Deferred disposition costs are included in other assets on the condensed balance sheets.

As of March 31, 2011, the Partnership sold its Local Limited Partnership Interest in Lake View, a California limited partnership, Ashland Investment Group, Wilcox Investment Group, Cherokee Square, Ltd., Divall Midland Associates Limited Partnership II, Candleridge Apartments of Perry, L.P., Candleridge Apartments of Runnells, L.P., Whitewater Woods, and Brian’s Village Apartments, L.P. Each of the Local Limited Partnerships had completed its Compliance Period.

The Partnership has received the majority vote in favor of the plan of liquidation of the Partnership. Therefore, the Partnership is engaging third party appraisers to appraise several of the Local Limited Partnerships in this Partnership. The appraisal is one of the preliminary steps that need to be completed in order to move forward with the approved liquidation plan. Expenses incurred for the appraisals, or any other disposition related expenses the Partnership incurs, are being capitalized and will remain on the balance sheet until the respective Local Limited Partnership is sold. At the time of disposition all related the capitalized costs will be netted with any sale proceeds received in order to calculate the net gain or loss on the disposition.

During the six months ended September 30, 2011, the Local Limited Partnership Interests for the six following Local Limited Partnerships were sold.

The Partnership sold its Local Limited Partnership Interest in Brantley Housing, Ltd. (“Brantley”) to the Local General Partner for $16,372. Brantley was appraised for $365,000 and had a mortgage note balance of $545,746 at December 31, 2010. The Partnership will use all the cash proceeds to pay $16,372 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $6,050, legal expenses of $805 and has agreed to pay the cost of the Local Limited Partnership’s final tax return at a cost of $2,000. Therefore, a gain of $7,517 was recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

The Partnership also sold its Local Limited Partnership Interest in Eclectic Housing, Ltd. (“Eclectic”) to the Local General Partner for $10,936. Eclectic was appraised for $260,000 and had a mortgage note balance of $364,532 at December 31, 2010. The Partnership will use all the cash proceeds to pay $10,936 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $2,600, legal expenses of $471 and has agreed to pay the cost of the Local Limited Partnership’s final tax return at a cost of $2,000. Therefore, a gain of $5,865 was recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The Partnership also sold its Local Limited Partnership Interest in Perry County Housing, Ltd. (“Perry County”) to the Local General Partner for $12,521. Perry County was appraised for $200,000 and had a mortgage note balance of $417,358 at December 31, 2010. The Partnership will use all the cash proceeds to pay $12,521 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $2,600, legal expenses of $471 and has agreed to pay the cost of the Local Limited Partnership’s final tax return at a cost of $2,000. Therefore, a gain of $7,450 was recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

The Partnership also sold its Local Limited Partnership Interest in Pine Hill Housing, Ltd. (“Pine Hill”) to the Local General Partner for $15,685. Pine Hill was appraised for $365,000 and had a mortgage note balance of $517,839 at December 31, 2010. The Partnership will use all the cash proceeds to pay $15,685 of accrued fees and expenses due to General Partner. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $2,600, legal expenses of $471 and has agreed to pay the cost of the Local Limited Partnership’s final tax return at a cost of $2,000. Therefore, a gain of $10,614 was recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

The Partnership also sold its Local Limited Partnership Interest in Wadley Housing, Ltd. (“Wadley”) to the Local General Partner for $12,549. Wadley was appraised for $360,000 and had a mortgage note balance of $418,290 at December 31, 2010. The Partnership will use all the cash proceeds to pay $12,549 of accrued fees and expenses due to General Partner and affiliates. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $2,600, legal expenses of $471 and has agreed to pay the cost of the Local Limited Partnership’s final tax return at a cost of $2,000. Therefore, a gain of $7,478 was recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

The Partnership also sold its Local Limited Partnership Interest in Rociada, LP (“Rociada”) to the Local General Partner for $20,000. Eclectic was appraised for $120,000 and had a mortgage note balance of $693,000 at December 31, 2010. The Partnership will use the cash proceeds to pay $9,500 of accrued fees and expenses due to General Partner and affiliates, and $10,500 will remain in reserves for future expenses. The Partnership’s investment balance was zero at the time of the sale and the Partnership incurred appraisal expenses of $2,400, legal expenses of $596. Therefore, a gain of $17,004 will be recorded during the six months ended September 30, 2011. No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has expired so there is no risk of tax credit recapture to the investors in the Partnership.

As of September 30, 2011 the Partnership has identified nine Local Limited Partnerships for potential disposition as listed in the table below. Six of the Local Limited Partnerships, noted with an asterisk (*) had been disposed prior to the issuance of this report. The Partnership is selling its Local Limited Partnership Interest in each of the Local Limited Partnerships. The Compliance Period for all Local Limited Partnerships have expired so there is no risk of recapture to the investors in the Partnership.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Local Limited Partnership	Debt at 12/31/10	Appraisal value	Difference between mortgage balance and appraisal value**	Estimated sales price	Actual appraisal expense	Estimated legal expense	Estimated gain on sale
Airport Road Associate, LTD	1,381,000	950,000	(431,000)	30,000	3,100	400	26,500
Am-Kent Asssociates	1,066,000	940,000	(126,000)	30,000	3,100	400	26,500
Elizabeth Square, LP	1,367,000	1,270,000	(97,000)	30,000	3,100	400	26,500
Idalou Manor, LP *	591,000	300,000	(291,000)	17,726	2,400	400	14,926
Littlefield Manor, LP *	567,000	280,000	(287,000)	17,018	2,400	400	14,218
Emory Capital *	353,000	180,000	(173,000)	10,575	2,400	400	7,775
Emory Manor *	527,000	310,000	(217,000)	15,920	2,400	400	13,120
Jefferson Capital *	682,000	360,000	(322,000)	20,466	2,400	400	17,666
Jefferson Manor *	729,000	400,000	(329,000)	21,876	2,400	400	19,076

** Negative value indicates that the appraisal value is less than the outstanding mortgage debt on the property.

The sales price and legal expenses are estimated and are subject to change pending final negotiations of contracts.

The following table represents the anticipated use of the cash proceeds from the potential disposition of the three Local Limited Partnerships.

Local Limited Partnership	Expected Cash Proceeds	Reimburse GP or affiliates for expenses	Payment of accrued asset management fees	Remaining cash to remain in reserves for future expenses
Airport Road Associate, LTD	30,000	4,759	18,574	6,667
Am-Kent Associates	30,000	4,759	18,574	6,667
Elizabeth Square, LP	30,000	4,760	18,574	6,666

The following table represents the use of the cash proceeds from the disposition of the six Local Limited Partnerships that were disposed of as of the issuance of the report.

Local Limited Partnership	Expected Cash Proceeds	Reimburse GP or affiliates for expenses	Payment of accrued asset management fees	Remaining cash to remain in reserves for future expenses
Idalou Manor, LP *	17,726	-	6,363	11,363
Littlefield Manor, LP *	17,018	-	6,009	11,009
Emory Capital *	10,575	-	2,788	7,787
Emory Manor *	15,920	-	5,460	10,460
Jefferson Capital *	20,466	-	7,733	12,733
Jefferson Manor *	21,876	-	8,438	13,438

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Method of Accounting for Investments in Local Limited Partnerships

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

“Equity in losses of Local Limited Partnerships” for the periods ended September 30, 2011 and 2010 has been recorded by the Partnership. Management’s estimate for the three and six-month periods is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses of Local Limited Partnerships allocated to the Partnership are not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended (see Note 2).

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

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

Distributions received by the Partnership are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. As of September 30, 2011, all of the investment balances had reached zero.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Use of Estimates

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

Cash and Cash Equivalents

The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of September 30, 2011 and March 31, 2011, the Partnership had no cash equivalents.

Reporting Comprehensive Income

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

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.

Net Loss Per Partnership Unit

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

Revenue Recognition

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

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

As of September 30, 2011 and March 31, 2011, the Partnership owns Local Limited Partnership interests in 12 and 18 Local Limited Partnerships, respectively. Each of these Local Limited Partnership’s own one Housing Complex consisting of an aggregate of 394 and 505 apartment units, respectively. The Local General Partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 99%, as specified in the Local Limited Partnership governing agreements, of the operating profits and losses, taxable income and losses, and tax credits of the Local Limited Partnerships.

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

Selected financial information for the six months ended September 30, 2011 and 2010 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

COMBINED CONDENSED STATEMENTS OF OPERATIONS
	2011			2010

Revenues	$	1,101,000		$	1,470,000

Expenses
Interest expense		117,000			170,000
Depreciation and amortization		218,000			292,000
Operating expenses		875,000			1,185,000
Total expenses		1,210,000			1,647,000

Net loss	$	(109,000	)	$	(177,000	)
Net loss allocable to the Partnership	$	(108,000	)	$	(175,000	)
Net loss recorded by the Partnership	$	-		$	-

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

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 3 - RELATED PARTY TRANSACTIONS

Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates the following fees:

(a)

An annual asset management fee equal to 0.5% of the invested assets of the Partnership, as defined. “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnership interests and the Partnership’s allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Asset management fees of $38,437 and $54,103 were incurred during the six months ended September 30, 2011 and 2010, respectively. The Partnership paid the General Partner and or its affiliates $33,063 and $5,000 of those fees during the six months ended September 30, 2011 and 2010, respectively.

(b)

The Partnership reimburses the General Partner or its affiliates for operating expenses incurred by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements were $86,000 and $42,000 during the six months ended September 30, 2011 and 2010, respectively.

(c)

A subordinated disposition fee in an amount equal to 1% of the sale price may be received in connection with the sale or disposition of a Housing Complex or Local Limited Partnership interest. Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 6% (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fee was incurred for period presented.

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

	September 30, 2011		March 31, 2011

Expenses paid by the General Partner or affiliates on behalf of the Partnership	$	21,528	$	58,406
Accrued asset management fees		2,520,075		2,514,701

Total	$	2,541,603	$	2,573,107

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

WNC HOUSING TAX CREDIT FUND II, L.P.

(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

For the Quarterly Period Ended September 30, 2011

(Unaudited)

NOTE 4 – SUBSEQUENT EVENTS

Subsequent to the quarter ended September 30, 2011, the Partnership sold six of its Local Limited Partnerships as listed in the table below. These Local Limited Partnerships had been disposed prior to the issuance of this report.

Local Limited Partnership	Debt at 12/31/10	Appraisal value	Value of Local Limited Partnership	Estimated sales price	Actual appraisal expense	Estimated legal expense	Estimated gain on sale
Idalou Manor, LP	591,000	300,000	(291,000)	17,726	2,400	400	14,926
Littlefield Manor, LP	567,000	280,000	(287,000)	17,018	2,400	400	14,218
Emory Capital	353,000	180,000	(173,000)	10,575	2,400	400	7,775
Emory Manor	527,000	310,000	(217,000)	15,920	2,400	400	13,120
Jefferson Capital	682,000	360,000	(322,000)	20,466	2,400	400	17,666
Jefferson Manor	729,000	400,000	(329,000)	21,876	2,400	400	19,076

The following table represents the use of the cash proceeds from the disposition of those six Local Limited Partnerships. The Compliance Period for all of these Local Limited Partnerships have expired so there is no risk of recapture to the investors in the Partnership.

Local Limited Partnership	Cash Proceeds	Reimburse GP or affiliates for expenses	Payment of accrued asset management fees	Remaining cash to remain in reserves for future expenses
Idalou Manor, LP	17,726	-	6,363	11,363
Littlefield Manor, LP	17,018	-	6,009	11,009
Emory Capital	10,575	-	2,788	7,787
Emory Manor	15,920	-	5,460	10,460
Jefferson Capital	20,466	-	7,733	12,733
Jefferson Manor	21,876	-	8,438	13,438

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WNC HOUSING TAX CREDIT FUND II, L.P.

By: WNC Financial Group, L.P. General Partner of the Registrant

By: /s/ Wilfred N. Cooper, Jr.

Wilfred N. Cooper, Jr.

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

Date: February 14, 2012

By: /s/ Melanie R. Wenk

Melanie R. Wenk

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

Date: February 14, 2012

Attached files

WNC HOUSING TAX CREDIT FUND II LP Reports

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