gateway 2 March 97 10K [10K]

10-K/A 1 g2-32007kamend.htm AMENDED V-1 OF GTWY II - 10K FOR 3/31/07 gateway 2 March 97 10K [10K]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

AMENDED FORM 10-K/A
(Amendment No. 1)

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

For the fiscal year ended March 31, 2007

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: 0-19022

                                Gateway Tax Credit Fund II Ltd.
                   (Exact name of Registrant as specified in its charter)

                Florida                                          65-0142704
    (State or other jurisdiction of                          (IRS Employer No.)
     incorporation or organization)

           880 Carillon Parkway,    St. Petersburg,    Florida     33716
          (Address of principal executive offices)                (Zip Code)

Registrant's Telephone Number, Including Area Code:               (727)567-1000

Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class:   Beneficial Assignee Certificates

                                                   Number of Units
  Title of Each Class                               March 31, 2007
Beneficial Assignee Certificates                        2,533
General Partner Interest                                    2

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
                                             YES              NO   X

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
                                             YES              NO   X

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
                                             YES   X          NO

Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K (Sec. 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, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer     Accelerated filer     Non-accelerated filer   X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).             Yes   [ ]        No   [X]

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 registrants most recently completed second fiscal quarter.

There is no market for the Registrants Limited Partnership interests.

DOCUMENTS INCORPORATED BY REFERENCE

Parts I, II, III and IV - Form S-11 Registration Statement
and all amendments and supplements thereto.
File No. 33-31821

EXPLANATORY NOTE

This Amended Annual Report on Form 10-K/A corrects certain disclosures in Item 1. Financial Statements - Statements of Cash Flows specifically for "Total Series 2-6" that Gateway had reported on its original filing for the year ended March 31, 2007. Gateway corrected the following items in the statement of cash flows for "Series 2-6" for the year-ended March 31, 2007:

                                                                As Amended     As Originally Filed
Cash Flows From Operating Activities:
     (Increase) Decrease in Receivable - Other                         912              (127,588)
     Net Cash Used in Operating Activities                        (480,331)             (608,831)
Cash Flows From Investing Activities:
     Proceeds from Sale of Project Partnerships 9;                    479,512               608,012
     Net Cash Provided by Investing Activities                     182,139               310,639
Supplemental non-cash activities:
     Increase in Receivable - Other                              (128,500)                   -
     Proceeds from Sale of Project Partnerships                    128,500                    -

   Except as described above, no other changes have been made to the original Form 10-K, and this Form 10-K/A does not amend, update, or change the financial statements or any other items or disclosures in the original Form 10-K. Except for the change stated above, this Form 10-K/A does not reflect events occurring after the filing of the Form 10-K or modify or update those disclosures, including any exhibits to the Form 10-K affected by subsequent events. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the Securities and Exchange Commission made subsequent to the filing of the original Form 10-K, including any amendments to those filings.

PART I

Item 1.  Business

   Gateway Tax Credit Fund II Ltd. ("Gateway") is a Florida Limited Partnership. The general partners are Raymond James Tax Credit Funds, Inc., the Managing General Partner, and Raymond James Partners, Inc., (collectively the "General Partners") both sponsors of Gateway Tax Credit Fund II Ltd. and wholly-owned subsidiaries of Raymond James Financial, Inc.

   Pursuant to the Securities Act of 1933, Gateway filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective September 12, 1989, which covered the offering (the "Public Offering") of Gateway's Beneficial Assignee Certificates ("BACs") representing assignments of units for the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Assignor Limited Partner was formed for the purpose of serving in that capacity for Gateway and will not engage in any other business.

   Gateway is engaged in only one industry segment, to acquire limited partnership interests in unaffiliated limited partnerships ("Project Partnerships"), each of which owns and operates one or more apartment complexes eligible for Low-Income Housing Tax Credits under Section 42 of the Internal Revenue Code ("Tax Credits"), received over a ten year period. Subject to certain limitations, Tax Credits may be used by Gateway's investors to reduce their income tax liability generated from other income sources. Gateway will terminate on December 31, 2040, or sooner, in accordance with the terms of its Limited Partnership Agreement. As of March 31, 2007, Gateway had received capital contributions of $1,000 from the General Partners and $37,228,000 from Assignees.

   Gateway offered BACs in five series. BACs in the amounts of $6,136,000, $5,456,000, $6,915,000, $8,616,000 and $10,105,000 for Series 2, 3, 4, 5, and 6, respectively had been issued as of March 31, 2007. Each series is treated as a separate partnership, investing in a separate and distinct pool of Project Partnerships. Net proceeds from each series were used to acquire Project Partnerships which are specifically allocated to such series. Income or loss and all tax items from the Project Partnerships acquired by each series are specifically allocated among the Assignees of such series.

   Operating profits and losses, cash distributions from operations and Tax Credits are allocated 99% to the Assignees and 1% to the General Partners. Profit or loss and cash distributions from sales of property will be allocated as described in the Limited Partnership Agreement.

   Gateway initially held investments in 148 Project Partnerships. As more fully discussed in Item 7 herein, Gateway is presently in the process of disposing of its interests in Project Partnerships which have reached the end of their fifteen year tax credit compliance period. As of March 31, 2007, Gateway held investments in 136 Project Partnerships, 12 Project Partnerships have been sold as of March 31, 2007. As described in Note 8 herein, one additional Project Partnership has been sold subsequent to the fiscal year-end of March 31, 2007. Project Partnership investments by Series as of March 31, 2007 are as follows: 22 Project Partnerships for Series 2, 17 Project Partnerships for Series 3, 25 Project Partnerships for Series 4, 35 Project Partnerships for Series 5 and 37 Project Partnerships for Series 6. Gateway acquired its interests in these properties by becoming a limited partner in the Project Partnerships that own the properties. As of March 31, 2007, the capital received for each series was fully invested in Project Partnerships and management plans no new investments in the future.

   The primary source of funds from the inception of each series has been the capital contributions from Assignees. Gateway's operating costs are funded using the reserves established for this purpose, the interest earned on these reserves and distributions received from Project Partnerships.

   All but two of the Project Partnerships are government subsidized with mortgage loans from the Farmers Home Administration (now called United States Department of Agriculture - Rural Development) ("USDA-RD") under Section 515 of the Housing Act of 1949. These mortgage loans are made at low interest rates for multi-family housing in rural and suburban areas, with the requirement that the interest savings be passed on to low income tenants in the form of lower rents. A significant portion of the project partnerships also receive rental assistance from USDA-RD to subsidize certain qualifying tenants.

   The General Partners do not believe the Project Partnerships are subject to the risks generally associated with conventionally financed non-subsidized apartment properties. Risks related to the operations of Gateway are described in detail on pages 23 through 34 of the Prospectus, as supplemented, contained in the Registration Statement, File No. 33-31821 ("Prospectus") under the Caption "Risk Factors" which is incorporated herein by reference. The investment objectives of Gateway are to:

   1)  Provide tax benefits to Assignees in the form of Tax Credits during the period in which
       each Project is eligible to claim tax credits;
   2)  Preserve and protect the capital contribution of Investors;
   3)  Participate in any capital appreciation in the value of the Projects; and
   4)  Provide passive losses to i) individual investors to offset passive income from other passive
       activities, and ii) corporate investors to offset business income.

   The investment objectives and policies of Gateway are described in detail on pages 34 through 40 of the Prospectus, under the caption "Investment Objectives and Policies" which is incorporated herein by reference.

   Gateway's goal is to invest in a diversified portfolio of Project Partnerships located in rural and suburban locations with a high demand for low income housing. As of March 31, 2007 the investor capital contributions were successfully invested in Project Partnerships, which met the investment criteria. The Tax Credits have been delivered to Gateway and the fifteen year tax credit compliance period is now over for 129 of the 148 Project Partnership investments originally made. Gateway is now disposing of its remaining interests in Project Partnerships as they reach the end of their 15 year Tax Credit compliance period. Gateway's objective is to sell Gateway's interest in such properties for fair market value and ultimately, to liquidate the Project Partnerships and in turn ultimately liquidate Gateway.

   Gateway has no direct employees. Services are performed by the Managing General Partner and its affiliates and by agents retained by it. The Managing General Partner has full and exclusive discretion in management and control of Gateway.

Exit Strategy

   The IRS compliance period for low-income housing tax credit properties is generally 15 years from occupancy following construction or rehabilitation completion.

  Of the original 148 Project Partnership investments, 129 have reached the end of their Tax Credit compliance period as of December 31, 2006 and those Project Partnerships that have yet to reach the end of their Tax Credit compliance period will do so no later than December 31, 2008. As of March 31, 2007, twelve of the Project Partnership investments have been sold and, in accordance with the Gateway partnership agreement, the entire net proceeds received from these sales are payable to the Assignee Limited Partners of those series of Gateway. On a cumulative basis as of March 31, 2007, $99,600 representing $18.25 per Assignee Limited Partner unit in Series 3, $157,126 representing $18.23 per Assignee Limited Partner unit in Series 5 and $224,074 representing $22.17 per Assignee Limited Partner unit in Series 6 have been distributed to the Assignee Limited Partners of the respective series. An additional $357,095 representing $65.45 per Assignee Limited Partner unit in Series 3 and $146,944 representing $21.25 per Assignee Limited Partner unit in Series 4 have been distributed in May, 2007.

Item 1A.  Risk Factors

   Gateway, as a limited partner in the Project Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility of Tax Credits. If the cost of operating a property exceeds the rental income earned thereon, Gateway may deem it in its best interest to voluntarily provide funds in order to protect its investment. No such contributions have been made during fiscal year 2007.

   Investors eventually may be allocated profits for tax purposes which exceed any cash Gateway distributes to them. Under these circumstances, unless an investor has passive losses or credits to reduce such tax liability, the investor will have to pay federal income tax without a corresponding cash distribution from Gateway. Similarly, in the event of a sale or foreclosure of an apartment complex, an investor may be allocated taxable income, resulting in tax liability, in excess of any cash distributed to the investor as a result of such event.

   There is no assurance that investors will receive any cash distributions from the sale or refinancing of a Project Partnership. The price at which a Project Partnership is sold may not be large enough to pay the mortgage and other expenses which must be paid at such time.

Item 1B.  Unresolved Staff Comments

   None.

Item 2.  Properties:

   Gateway owns a majority interest in properties through its limited partnership investments in Project Partnerships. The largest single net investment as of March 31, 2007 in a Project Partnership for each respective Series is: Series 2, 3 and 4 is 0% of both the series and Gateway's total assets as there are no Investment in Project Partnership balances in any of those series, Series 5 is 19.5% of the Series' total assets and 3.3% of Gateway's total assets, and Series 6 is 18.2% of the Series' total assets and 5.2% of Gateway's total assets. The following table provides certain summary information regarding the Project Partnerships in which Gateway had an interest as of December 31, 2006:

SERIES 2

PARTNERSHIP
-----------

LOCATION OF
PROPERTY
-----------

# OF
UNIT
----

DATE
ACQUIRED
--------

PROPERTY
COST
-----------

OCCU-PANCY
RATE
-----

Claxton Elderly

Deerfield II

Hartwell Family

Cherrytree Apts.

Springwood Apts.

Lakeshore Apts.

Lewiston

Charleston

Sallisaw II

Pocola

Inverness Club

Pearson Elderly

Richland Elderly

Lake Park

Woodland Terrace

Mt. Vernon Elderly

Lakeland Elderly

Prairie Apartments

Sylacauga Heritage

Manchester Housing

Durango C.W.W.

Columbus Seniors

Claxton, GA

Douglas, GA

Hartwell, GA

Albion, PA

Westfield, NY

Tuskegee, AL

Lewiston, NY

Charleston, AR

Sallisaw, OK

Pocola, OK

Inverness, FL

Pearson, GA

Richland, GA

Lake Park, GA

Waynesboro, GA

Mt. Vernon, GA

Lakeland, GA

Eagle Butte, SD

Sylacauga, AL

Manchester, GA

Durango, CO

Columbus, KS

16
----
724

9/90

10/90

9/90

10/90

9/90

10/90

12/90

1/91

5/92

808,632

854,562

859,698

1,466,107

1,568,513

1,304,457

1,233,935

1,076,098

1,517,589

1,245,870

3,496,824

781,460

1,057,871

1,794,542

1,082,192

700,935

955,814

1,401,416

1,782,517

1,781,614

1,377,518

542,054
-----------
$28,690,218

100%

38%

88%

97%

88%

85%

96%

94%

100%

89%

94%

100%

97%

85%

97%

100%

97%

95%

98%

96%

100%

====

===========

The aggregate average effective rental income per unit for the year-ended December 31, 2006 is $4,125 per year ($344 per month)

SERIES 3

PARTNERSHIP
-----------

LOCATION OF
PROPERTY
-----------

# OF
UNIT
----

DATE
ACQUIRED
--------

PROPERTY
COST
----------

OCCU-
PANCY
RATE
-----

Poteau II

Sallisaw

Nowata Properties

Waldron Properties

Roland II

Stilwell

Hornellsville

Sunchase II

CE McKinley II

Weston Apartments

Countrywood Apts.

Wildwood Apts.

Hancock

Hopkins

Elkhart Apts.

Heritage Villas

Logansport Seniors

Poteau, OK

Sallisaw, OK

Oolagah, OK

Waldron, AR

Roland, OK

Stilwell, OK

Arkport, NY

Watertown, SD

Rising Sun, MD

Weston, AL

Centreville, AL

Pineville, LA

Hawesville, KY

Madisonville, KY

Elkhart, TX

Helena, GA

Logansport, LA

32
----
566

8/90

9/90

10/90

9/90

11/90

12/90

1/91

3/91

1,789,148

1,744,103

1,148,484

860,273

1,804,010

1,597,701

1,170,316

1,480,119

848,662

347,577

1,621,545

1,106,688

440,425

927,256

1,690,509

824,759

1,384,751
----------
$20,786,326

89%

96%

69%

96%

83%

98%

88%

100%

98%

96%

100%

87%

96%

94%

====

===========

The average effective rental income per unit for the year-ended December 31, 2006 is $3,876 per year ($323 per month).

Item 2. Properties (continued):

SERIES 4

PARTNERSHIP -----------	LOCATION OF PROPERTY -----------	# OF UNIT ----	DATE ACQUIRED --------	PROPERTY COST --------	OCCU- PANCY RATE ------
Seneca Apartments Eudora Senior Westville Wellsville Senior Stilwell II Spring Hill Sr. Tarpon Heights Oaks Apartments Wynnwood Common Chestnut Apts. St. George Williston Brackettville Sr. Sonora Seniors Ozona Seniors Fredericksburg Sr. St. Joseph Courtyard Rural Development Jasper Villas Jonesville Manor Norton Green Timpson Seniors Piedmont S.F. Arkansas City	Seneca, MO Eudora, KS Westville, OK Wellsville, KS Stilwell, OK Spring Hill, KS Galliano, LA Oakdale, LA Fairchance, PA Howard, SD St. George, SC Williston, SC Brackettville, TX Sonora, TX Ozona, TX Fredericksburg, TX St. Joseph, IL Huron, SD Ashland, ME Jasper, AR Jonesville, VA Norton, VA Timpson, TX Barnesville, GA Arkansas City, KS	24 36 36 24 52 24 48 32 34 24 24 24 32 32 24 48 24 21 25 25 40 40 28 36 12 ---- 769	2/91 3/91 3/91 3/91 3/91 3/91 4/91 4/91 4/91 5/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 6/91 8/91 8/91 8/91	821,129 1,290,143 1,101,686 810,970 1,657,974 1,036,369 2,263,014 1,532,159 1,725,462 1,079,682 939,018 990,026 1,042,263 1,047,032 802,089 1,444,252 976,883 886,309 1,429,003 1,122,986 1,784,429 1,828,850 815,916 1,289,047 412,028 ---------- $30,128,719		100% 92% 97% 88% 92% 100% 94% 97% 100% 33% 96% 100% 97% 97% 92% 98% 100% 100% 100% 96% 98% 100% 86% 97% 92%
		====		==========

The average effective rental income per unit for the year-ended December 31, 2006 is $4,023 per year ($335 per month).

SERIES 5 PARTNERSHIP -----------	LOCATION OF PROPERTY -----------	# OF UNIT ----		DATE ACQUIRED --------	PROPERTY COST --------		OCCU- PANCY RATE -----
Seymour Effingham S.F. Winfield S.F. Medicine Lodge S.F. Ottawa S.F. Concordia Carrollton Club Scarlett Oaks Brooks Hill Greensboro Greensboro II Pine Terrace Shellman Blackshear Crisp Properties Crawford Yorkshire Woodcrest Fox Ridge Redmont II Clayton Alma Pemberton Village Magic Circle Spring Hill Menard Retirement Wallis Housing Zapata Housing Mill Creek Portland II Georgetown Cloverdale So. Timber Ridge Pineville Ravenwood	Seymour, IN Effingham, IL Winfield, KS Medicine Lodge, KS Ottawa, KS Concordia, KS Carrollton, GA Lexington, SC Ellijay, GA Greensboro, GA Greensboro, GA Wrightsville, GA Shellman, GA Cordele, GA Cordele, GA Crawford, GA Wagoner, OK South Boston, VA Russellville, AL Red Bay, AL Clayton, OK Alma, AR Hiawatha, KS Eureka, KS Spring Hill, KS Menard, TX Wallis, TX Zapata, TX Grove, OK Portland, IN Georgetown, OH Cloverdale, IN Chandler, TX Pineville, MO Americus, GA	37 24 12 16 24 20 78 40 44 24 32 24 27 46 31 25 60 40 24 24 24 24 24 24 36 24 24 40 60 20 24 24 44 12 24 ----- 1,080		8/91 8/91 8/91 8/91 8/91 8/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 9/91 11/91 11/91 11/91 1/92 1/92 5/92 1/94	1,517,702 980,617 402,402 572,924 732,342 695,908 3,217,901 1,691,514 1,760,233 866,259 1,088,664 886,334 901,648 1,602,433 1,128,784 907,712 2,657,927 1,632,414 889,941 840,596 871,530 957,710 776,725 823,643 1,449,378 759,136 578,333 1,243,118 1,741,669 817,378 996,605 1,018,712 1,347,586 433,980 900,996 ----------- $39,690,754			87% 100% 83% 56% 92% 95% 97% 100% 100% 92% 100% 88% 96% 100% 90% 96% 85% 100% 92% 96% 96% 100% 83% 75% 100% 100% 92% 100% 100% 80% 96% 100% 98% 83% 96%
			=====			============

The average effective rental income per unit for the year-ended December 31, 2006 is $4,025 per year ($335 per month).

Item 2. Properties (continued):

SERIES 6

PARTNERSHIP -----------	LOCATION OF PROPERTY -----------	# OF UNIT -----	DATE ACQUIRED --------	PROPERTY COST --------	OCCU- PANCY RATE -----
Spruce Shannon Carthage Coal City Blacksburg Terrace Frazer Place Ehrhardt Sinton Frankston Flagler Beach Oak Ridge Monett Arma Southwest City Meadowcrest Parsons Newport Village Goodwater Falls Northfield Station Pleasant Hill Winter Park Cornell Heritage Drive So. Brodhead Mt. Village Hazlehurst Sunrise Stony Creek Logan Place Haines Maple Wood Summerhill Dorchester Lancaster Autumn Village Hardy Dawson	Pierre, SD O'Neill, NE Carthage, MO Coal City, IL Blacksburg, SC Smyrna, DE Ehrhardt, SC Sinton, TX Frankston, TX Flagler Beach, FL Williamsburg, KY Monett, MO Arma, KS Southwest City, MO Luverne, AL Parsons, KS Newport, TN Jenkins, KY Corbin, KY Somerset, KY Mitchell, SD Watertown, SD Jacksonville, TX Brodhead, KY Mt. Vernon, KY Hazlehurst, MS Yankton, SD Hooversville, PA Logan, OH Haines, AK Barbourville, KY Gassville, AR St. George, SC Mountain View, AR Harrison, AR Hardy, AR Dawson, GA	24 16 24 24 32 30 16 32 24 43 24 32 28 12 32 48 40 36 24 24 24 24 40 24 24 32 33 32 40 32 24 28 12 33 16 25 40 ----- 1,048	11/91 11/91 1/92 3/92 4/92 4/92 4/92 4/92 4/92 5/92 5/92 5/92 5/92 5/92 6/92 7/92 7/92 7/92 7/92 7/92 7/92 7/92 1/92 7/92 7/92 8/92 8/92 8/92 9/92 8/92 8/92 9/92 9/92 9/92 7/92 7/92 11/93	1,181,526 704,794 775,095 1,328,623 1,378,516 1,676,842 709,881 1,053,059 676,931 1,718,676 1,045,646 1,034,586 908,494 436,882 1,238,475 1,532,968 1,678,210 1,414,978 1,022,561 961,926 1,331,731 1,167,799 1,235,098 982,688 959,509 1,190,156 1,499,593 1,656,135 1,526,912 3,107,763 1,039,790 1,319,786 561,008 1,387,035 616,082 931,989 1,474,973 ----------- $44,466,716	67% 88% 92% 100% 100% 100% 88% 97% 92% 100% 92% 97% 100% 83% 97% 98% 100% 100% 96% 96% 92% 92% 95% 96% 96% 100% 100% 88% 93% 84% 100% 93% 100% 100% 88% 96% 98%
		=====		===========

The average effective rental income per unit for the year-ended December 31, 2006 is $4,409 per year ($367 per month).

Item 2. Properties (continued):

A summary of the book value of the fixed assets of the properties at December 31, 2006, 2005 and 2004 is as follows:

12/31/06

	SERIES 2	SERIES 3	SERIES 4
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum. Depreciation Properties, Net	$ 1,012,180 176,254 26,493,385 1,008,399 0 ----------- 28,690,218 14,509,817 ----------- $ 14,180,401	$ 684,171 60,548 18,752,377 1,289,230 0 ----------- 20,786,326 12,941,903 ----------- $ 7,844,423	$ 1,022,612 189,887 27,284,781 1,631,439 0 ----------- 30,128,719 14,557,123 ----------- $ 15,571,596
	============	============	============

	SERIES 5	SERIES 6	TOTAL
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum. Depreciation Properties, Net	$ 1,451,551 160,551 36,218,888 1,859,764 0 ----------- 39,690,754 19,192,129 ----------- $ 20,498,625	$ 1,709,391 569,385 39,614,448 2,573,492 0 ----------- 44,466,716 19,596,977 ----------- $ 24,869,739	$ 5,879,905 1,156,625 148,363,879 8,362,324 0 ----------- 163,762,733 80,797,949 ----------- $ 82,964,784
	============	============	============

12/31/05

	SERIES 2	SERIES 3	SERIES 4
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum.Depreciation Properties, Net	$ 1,012,180 153,721 26,439,200 975,046 38,604 ----------- 28,618,751 13,623,386 ----------- $ 14,995,365	$ 985,546 131,281 25,661,272 1,593,479 0 ----------- 28,371,578 16,335,525 ----------- $ 12,036,053	$ 1,188,112 222,427 31,384,891 1,814,832 0 ----------- 34,610,262 15,441,345 ----------- $ 19,168,917
	===========	===========	===========

	SERIES 5	SERIES 6	TOTAL
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum.Depreciation Properties, Net	$ 1,451,551 159,501 36,202,243 1,814,555 0 ----------- 39,627,850 17,923,547 ----------- $ 21,704,303	$ 1,709,391 556,191 39,024,120 2,414,255 0 ----------- 43,703,957 18,360,632 ----------- $ 25,343,325	$ 6,346,780 1,223,121 158,711,726 8,612,167 38,604 ----------- 174,932,398 81,684,435 ----------- $ 93,247,963
	===========	===========	============

12/31/04

	SERIES 2	SERIES 3	SERIES 4
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum.Depreciation Properties, Net	$ 1,012,180 136,496 26,404,542 936,014 38,604 ----------- 28,527,836 12,747,926 ----------- $ 15,779,910	$ 985,546 123,414 25,586,168 1,556,321 0 ----------- 28,251,449 15,378,450 ----------- $ 12,872,999	$ 1,188,112 222,427 31,289,900 1,758,655 0 ----------- 34,459,094 14,409,096 ----------- $ 20,049,998
	===========	===========	===========

	SERIES 5	SERIES 6	TOTAL
Land Land Improvements Buildings Furniture and Fixtures Construction in Progress Properties, at Cost Less: Accum.Depreciation Properties, Net	$ 1,451,551 159,501 36,164,853 1,771,643 0 ----------- 39,547,548 16,798,175 ----------- $ 22,749,373	$ 1,774,305 536,092 40,018,159 2,426,481 0 ----------- 44,755,037 17,672,479 ----------- $ 27,082,558	$ 6,411,694 1,177,930 159,463,622 8,449,114 38,604 ----------- 175,540,964 77,006,126 ----------- $ 98,534,838
	===========	===========	============

Item 3.  Legal Proceedings

  Gateway is not a party to any material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders

  As of March 31, 2007, no matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise.

PART II

Item 5.  Market for the Registrant's Securities and Related Security Holder Matters

(a)  Gateway's Limited Partnership interests (BACs) are not publicly traded. There is no market for Gateway's Limited Partnership interests and it is unlikely that any will develop. No transfers of Limited Partnership Interest or BAC Units are permitted without the prior written consent of the Managing General Partner. There have been several transfers from inception to date with most being from individuals to their trusts or heirs. The Managing General Partner is not aware of the price at which the units are transferred. The conditions under which investors may transfer units is found under ARTICLE XII - "Issuance of BAC'S" on pages A-29 and A-30 of the Limited Partnership Agreement within the Prospectus, which is incorporated herein by reference.

(b)  Approximate Number of Equity Security Holders:

Title of Class                                    Number of Holders
                                                as of March 31, 2007
Beneficial Assignee Certificates                        2,533
General Partner Interest                                    2

Item 6. Selected Financial Data

FOR THE YEARS ENDED MARCH 31,:

SERIES 2	2007 ----	2006 ----	2005 ----	2004 ----	2003 ----
Total Revenues	$ 15,209	$ 7,263	$ 13,938	$ 12,820	$ 12,665
Net Loss	(119,127)	(156,399)	(97,520)	(92,200)	(85,230)
Equity in (Losses) of Project Partnerships	0	(32,092)	(10,911)	(8,484)	(17,624)
Total Assets	257,364	316,805	394,306	445,532	523,794
Investments In Project Partnerships	0	0	34,391	47,597	58,381
Per BAC: (A) Tax Credits Portfolio Income Passive Loss	.02 6.65 (125.58)	.14 4.74 (129.62)	.14 4.18 (142.06)	.14 5.18 (157.55)	2.79 7.31 (146.95)
Net Loss	(19.22)	(25.23)	(15.73)	(14.88)	(13.75)

FOR THE YEARS ENDED MARCH 31,:

SERIES 3	2007 ----	2006 ----	2005 ----	2004 ----	2003 ----
Total Revenues	$ 20,439	$ 22,861	$ 18,781	$ 22,801	$ 21,167
Net Income (Loss)	305,962	(108,278)	(77,647)	(77,243)	(82,729)
Equity in Income (Losses) of Project Partnerships	490	0	0	(5,137)	(25,505)
Total Assets	598,431	294,987	329,653	344,724	405,777
Investments In Project Partnerships	0	0	0	0	6,633
Per BAC: (A) Tax Credits Portfolio Income Passive Loss	0 11.09 (118.50)	0 6.85 (137.15)	0 5.78 (147.47)	.17 6.54 (159.39)	1.38 7.92 (137.28)
Net Income (Loss)	46.84	(19.65)	(14.09)	(14.02)	(15.01)

Item 6. Selected Financial Data

FOR THE YEARS ENDED MARCH 31,:

SERIES 4	2007 ----	2006 ----	2005 ----	2004 ----	2003 ----
Total Revenues	$ 20,091	$ 18,473	$ 16,181	$ 27,960	$ 14,116
Net Loss	(79,276)	(138,304)	(102,967)	(98,159)	(160,313)
Equity in Income (Losses) of Project Partnerships	0	0	0	(8,763)	(77,657)
Total Assets	469,913	396,889	445,208	472,775	536,633
Investments In Project Partnerships	0	0	0	0	12,279
Per BAC: (A) Tax Credits Portfolio Income Passive Loss	0 9.68 (149.08)	1.22 5.99 (150.52)	.21 5.11 (140.52)	1.22 4.16 (134.34)	2.98 8.48 (147.73)
Net Loss	(20.70)	(19.80)	(14.74)	(14.05)	(22.95)

FOR THE YEARS ENDED MARCH 31,:

SERIES 5	2007 ----	2006 ----	2005 ----	2004 ----	2003 ----
Total Revenues	$ 26,812	$ 22,819	$ 27,663	$ 16,981	$ 20,909
Net Income (Loss)	(194,685)	(208,790)	15,153	(265,039)	(261,993)
Equity in Losses of Project Partnerships	(5,528)	(22,512)	(21,348)	(133,705)	(159,492)
Total Assets	402,832	508,067	773,331	827,194	1,073,840
Investments In Project Partnerships	125,403	151,630	202,405	229,630	376,275
Per BAC: (A) Tax Credits Portfolio Income Passive Loss	0 5.89 (118.24)	0 5.79 (112.76)	2.33 5.39 (151.09)	8.66 4.81 (148.50)	54.70 6.71 (136.53)
Net Income (Loss)	(22.37)	(23.99)	(6.71)	(30.45)	(30.10)

FOR THE YEARS ENDED MARCH 31,:

SERIES 6	2007 ----	2006 ----	2005 ----		2004 ----	2003 ---
Total Revenues	$ 29,678	$ 26,354	$ 32,039	$ 21,129		$ 16,919
Net Loss	(332,668)	(342,258)	(198,709)	(294,767)		(334,594)
Equity in Losses of Project Partnerships	(7,156)	(25,699)	(65,236)	(148,498)		(209,950)
Total Assets	683,149	914,235	1,374,037	1,467,978		1,731,924
Investments In Project Partnerships	208,779	372,285	781,147	858,488		1,024,672
Per BAC: (A) Tax Credits Portfolio Income Passive Loss	0 9.85 (99.04)	0 7.33 (96.72)	3.81 5.34 (99.58)	15.16 5.41 (109.10)		129.74 7.48 (115.70)
Net Loss	(32.59)	(42.09)	(19.47)	(28.88)		(32.78)

(A) The per BAC tax information is as of December 31, the year end for tax purposes.

The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this report. This statement is not covered by the auditor's opinion included elsewhere in this report.

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

   This item should be read in conjunction with the financial statements and other items contained elsewhere in this report.

   The Managing General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 (the "Act") mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas and certain provisions of the Act will require implementation by Gateway in subsequent years. In light of these additional requirements, Gateway has and expects to continue to incur increased expenses related to compliance with the Act.

Results of Operations, Liquidity and Capital Resources

   Operations commenced on September 14, 1990, with the first admission of Assignees in Series 2. The proceeds from Assignees' capital contributions available for investment were used to acquire interests in Project Partnerships.

   Gateway - All Series - The following discusses the overall results of operations, liquidity and capital resources for Gateway as a whole. A summary of the activity within each specific Series of Gateway then follows.

   Distribution income arises from any cash distributions received from Project Partnerships which have a zero investment balance for financial reporting purposes. Distribution income increased 15% in fiscal year 2007 to $112,229, an increase of $14,459 from the fiscal year 2006 distribution income of $97,770, which represented a $10,832 or 10% decrease as compared to distribution income of $108,602 in fiscal year 2005.

   The capital resources of each Series are used to pay General and Administrative operating costs including personnel, supplies, data processing, travel and legal and accounting associated with the administration and monitoring of Gateway and the Project Partnerships. The capital resources are also used to pay the Asset Management Fee due the Managing General Partner, but only to the extent that Gateway's remaining resources are sufficient to fund Gateway's ongoing needs. (Payment of any Asset Management Fee unpaid at the time Gateway sells its interests in the Project Partnerships is subordinated to the investors' return of their original capital contribution).

   Total expenses of Gateway were $1,082,466 for the fiscal year ended March 31, 2007, a decrease of $196,394 as compared to the fiscal year 2006 total expenses of $1,278,860, which represented a $578,029 increase in total expenses over the fiscal year 2005 amount of $700,831. Impairment expense represents a significant component of total expenses in fiscal year 2007 and 2006. Impairment expense is a non-cash element of expense that arises whenever events or changes in circumstances indicate that the recorded carrying value of a respective Investment in Project Partnership may not be recoverable. During fiscal year 2007, impairment expense was recorded in the aggregate amount of $103,003. In fiscal year 2006, the impairment expense recorded was $343,241. Net of this impairment expense, expenses of Gateway increased $43,844, or 5% in fiscal year 2007 versus fiscal year 2006. The increase in fiscal year 2007 results from increases in the expense of the General Partner in administering the business of Gateway as well as increases in the cost of third-parties who provide services such as audit services to Gateway. The fiscal year 2006 expense represented a $234,788, or 34% increase over the fiscal year 2005 amount of $700,831.

   The sources of funds to pay the expenses of Gateway are cash and cash equivalents and short-term investments which are comprised of U.S. Treasury Security Strips ("Zero Coupon Treasuries") and U.S. Treasury Notes along with the interest earnings thereon, which were purchased with funds set aside for this purpose, and cash distributed to the Series from the operations of the Project Partnerships. Due to the rent limitations applicable to the Project Partnerships projects as a result of their qualifying for Low-Income Housing Tax Credits, Gateway does not expect there to be a significant increase in future rental income of the Project Partnerships. Therefore, cash distributions from the operations of the Project Partnerships are not expected to increase. Management believes these sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   For the year ended March 31, 2007 the Project Partnerships reported losses of $12,194 which represents a $68,109 decrease as compared to the Losses from Project Partnerships for the year ended March 31, 2006 of $80,303. For the fiscal year ended March 31, 2005, the Project Partnerships reported a loss of $97,495. Typically, it is customary in the low-income housing tax credit industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. Since Gateway invests as a limited partner in Project Partnerships, and is therefore not obligated to fund losses or make additional capital contributions, Gateway does not recognize losses from individual Project Partnerships to the extent that these losses would reduce the investment balance below zero. Therefore, as the Project Partnership investments mature and the Investments in Project Partnership balances decrease over time, the Losses from Project Partnerships recorded by Gateway decrease.

   In fiscal year 2007, the Gain on Sale of Project Partnerships amounted to $475,364, an increase from the fiscal year 2006 Gain on Sale of Project Partnerships amount of $224,074 which was an increase over the fiscal year 2005 Gain on Sale of Project Partnerships of $157,126. In addition in fiscal year 2007, $128,050 of Gain on Sale of Project Partnerships was deferred for revenue recognition purposes and is reflected on the Balance Sheet as of March 31, 2007. This Deferred Gain will be recognized on the statement of operations in fiscal year 2008 when the proceeds are received. As more fully discussed herein, ten Project Partnership investments were sold or disposed of in fiscal year 2007 as compared to fiscal year 2006 and fiscal year 2005 when one Project Partnership investment was sold in each year. The amount of the gain or loss on a sale of a Project Partnership and the year in which it is recognized on the statement of operations is dependent upon the specifics related to each sale or disposition transaction. Refer to the discussion of each Project Partnership sold in the exit strategy section that follows.

   In total, Gateway reported a loss of $419,794 from operations for the year ended March 31, 2007. Cash and Cash Equivalents decreased by $401,872 but Investments in Securities increased by $444,723. Of the Cash and Cash Equivalents on hand as of March 31, 2007, $376,063 is payable to certain series' Assignees arising from the sale of Project Partnerships during fiscal year 2007, which are for distribution to those certain Assignees in fiscal 2008. After consideration of these sales proceeds, cash and cash equivalents and Investments in Securities decreased $333,212 as compared to the prior year-end balances.

The financial performance of each respective Series is summarized as follows:

   Series 2 - Gateway closed this series on September 14, 1990 after receiving $6,136,000 from 375 Assignees. As of March 31, 2007, the series had invested $4,524,678 in 22 Project Partnerships located in 10 states containing 724 apartment units. Average occupancy of the Project Partnerships was 93% as of December 31, 2006.

   Equity in Losses of Project Partnerships decreased $32,092 to $0 for the year ended March 31, 2007, the fiscal year 2006 losses represented an increase of $21,181 from the fiscal year 2005 loss amount of $10,911. As presented in Note 5, Gateway's share of net loss decreased from $679,662 for the year ended March 31, 2005 to $637,400 for the year ended March 31, 2006 and to $527,581 for the year ended March 31,2007. Suspended Losses were $668,751 for the year ended March 31, 2005, $605,308 for the year ended March 31, 2006 and $527,581 for the year ended March 31, 2007. If not suspended, these losses would have reduced the investment in Project Partnerships below zero. In general, it is common in the real estate industry to experience losses for financial and tax reporting purposes because of the non-cash expenses of depreciation and amortization. (These Project Partnerships reported depreciation and amortization of $869,716, $875,459, and $886,432 for the years ended December 31, 2004, 2005, and 2006 respectively.) As a result, management expects that this Series, as well as those described below, will report its equity in Project Partnerships as a loss for tax and financial reporting purposes until the year of disposition. Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits that met projections.

   At March 31, 2007, the Series had $129,724 of short-term investments (Cash and Cash Equivalents). In addition, the Series had $127,640 in U. S. Treasury Notes with a maturity value of $127,000 at June 30, 2007. Management believes the sources of funds are sufficient to meet current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   As disclosed on the statement of cash flows, the Series had a net loss of $119,127 for the year ending March 31, 2007. However, after adjusting for the changes in operating assets and liabilities, net cash used in operating activities was $77,279. Cash used in investing activities totaled $43,526, consisting of $15,209 in cash distributions from the Project Partnerships and $66,276 from matured Zero Coupon Treasuries, offset by $125,011 used to purchase U.S. Treasury Notes in July 2006.

   Series 3 - Gateway closed this series on December 13, 1990 after receiving $5,456,000 from 398 Assignees. As of March 31, 2007 the series had invested $2,866,874 in 17 Project Partnerships located in 12 states containing 566 apartment units. Average occupancy of the Project Partnerships was 92% as of December 31, 2006.

   Equity in Income of Project Partnerships was $490 for the year ended March 31, 2007, an increase from $0 for each of fiscal year 2006 and 2005. As presented in Note 5, Gateway's share of net loss decreased from $727,644 for the year ended March 31, 2005 to $595,587 for the year ended March 31, 2006 and to $334,438 for the year ended March 31, 2007. Suspended Losses decreased from $727,644 for the year ended March 31, 2005 to $595,587 for the year ended March 31, 2006 and to $333,948 for the year ended March 31, 2007. If not suspended, these losses would have reduced the investment in Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $973,367, $965,926 and $731,144 for the years ended December 31, 2004, 2005 and 2006, respectively.) Overall, management believes these Project Partnerships are operating as expected and have generated Tax Credits which met projections.

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

   At March 31, 2007, the Series had $426,791 of short-term investments (Cash and Cash Equivalents). In addition, the Series had $127,640 in U.S. Treasury Notes with a maturity value of $127,000 at June 30, 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   As disclosed on the statement of cash flows, the Series had net income of $305,962 for the year ended March 31, 2007. However, after adjusting the changes in operating assets and liabilities, net cash used in operating activities was $77,016. Cash provided by investing activities totaled $369,892, consisting of $20,439 in cash distributions from the Project Partnerships, $415,512 from the sale of 5 Project (Proceeds totaling $44,000 from the sale of 1 Project Partnership were received after year-end.), and $58,952 from matured Zero Coupon Treasuries, offset by $125,011 used to purchase U.S. Treasury Notes in July 2006. Cash used in financing activities (distributions to Limited Partners) totaled $102,120.

   Series 4 - Gateway closed this series on May 31, 1991 after receiving $6,915,000 from 465 Assignees. As of March 31, 2007, the series had invested $4,273,215 in 25 Project Partnerships located in 16 states containing 769 apartment units. Average occupancy of the Project Partnerships was 94% at December 31, 2006.

   Equity in Losses of Project Partnerships was $0 for the year ended March 31, 2007, no change from each of fiscal year 2006 and 2005. As presented in Note 5, Gateway's share of net loss decreased from $806,547 for the year ended March 31, 2005 to $684,436 for the year ended March 31, 2006 and to $592,559 for the year ended March 31, 2007. Suspended Losses decreased from $806,547 for the year ended March 31, 2005 to $684,436 for the year ended March 31, 2006 and to $592,559 for the year ended March 31, 2007. If not suspended, these losses would have reduced the investment in Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $1,045,249, $1,044,298 and $921,420 for the years ended December 31, 2004, 2005 and 2006, respectively.) Overall, management believes these Project Partnerships are operating as expected and have generated Tax Credits which met projections.

   At March 31, 2007, the Series had $206,516 of short-term investments (Cash and Cash Equivalents). In addition, the Series had $178,897 in U.S. Treasury Notes with a maturity value of $178,000 at June 30, 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   As disclosed on the statement of cash flows, the Series had a loss of $79,276 from operations for the year ended March 31, 2007. However, after adjusting for the changes in operating assets and liabilities, net cash used in operating activities was $97,692. Cash used in investing activities totaled $16,436, consisting of $20,091 in cash distributions from the Project Partnerships, $64,000 from the sale of 2 Project Partnerships (Proceeds totaling $84,500 from the sale of 2 Project Partnership were received after year-end.), and $74,685 from matured Zero Coupon Treasuries, offset by $175,212 used to purchase U.S. Treasury Notes in July 2006. Cash used in financing activities totaled $1,560.

   Series 5 - Gateway closed this series on October 11, 1991 after receiving $8,616,000 from 535 Assignees. As of March 31, 2007, the series had invested $6,010,273 in 35 Project Partnerships located in 12 states containing 1,080 apartment units. Average occupancy of the Project Partnerships was 94% as of December 31, 2006.

   Equity in Losses of Project Partnerships decreased $16,984 to $5,528 in fiscal year 2007, as compared to $22,512 in fiscal year 2006. The fiscal year 2006 amount was a $1,164 increase from the fiscal year 2005 losses of $21,348. As presented in Note 5, Gateway's share of net loss decreased from $772,904 for the year ended March 31, 2005 to $724,141 for the year ended March 31, 2006 and then increased to $738,149 for the year ended March 31, 2007. Suspended losses decreased from $746,794 for the year ended March 31, 2005 to $701,629 for the year ended March 31, 2006 and then increased to $732,621 for the year ended March 31, 2007. If not suspended, these losses would have reduced the investment in Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $1,247,246, $1,203,506 and $1,220,039 for the years ended December 31, 2004, 2005 and 2006, respectively.) Gateway reviews its investments in Project Partnerships to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. There were no impairment expenses in fiscal years 2007, 2006, and 2005. Overall, management believes these Project Partnerships are operating as expected and have generated Tax Credits which met projections.

   At March 31, 2007, the Series had $175,920 of short-term investments (Cash and Cash Equivalents). In addition, the Series had $101,509 in U.S. Treasury Notes with a maturity value of $101,000 at June 30, 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   As disclosed on the statement of cash flows, the Series had a net loss of $194,685 for the year ended March 31, 2007. However, after adjusting for Equity in Losses of Project Partnerships of $5,528 and the changes in operating assets and liabilities, net cash used in operating activities was $112,262. Cash provided by investing activities totaled $25,743 consisting of $32,075 in cash distributions from the Project Partnerships and $93,086 from matured Zero Coupon Treasuries, offset by $99,418 used to purchase U.S. Treasury Notes in July 2006.

   Series 6 - Gateway closed this series on March 11, 1992 after receiving $10,105,000 from 625 Assignees. As of March 31, 2007, the series had invested $7,250,034 in 37 Project Partnerships located in 19 states containing 1,048 apartment units. Average occupancy of the Project Partnerships was 95% as of December 31, 2006.

   Equity in Losses of Project Partnerships decreased $18,543 to $7,156 in fiscal year 2007 as compared to losses of $25,699 for fiscal year 2006. The fiscal year 2006 losses were a $39,537 decrease from a loss amount of $65,236 recorded in fiscal year 2005. As presented in Note 5, Gateway's share of net loss decreased from $673,713 for the year ended March 31, 2005 to $590,957 for the year ended March 31, 2006 and to $569,570 for the year ended March 31, 2007. Suspended losses decreased from $608,477 for the year ended March 31, 2005 to $565,258 for the year ended March 31, 2006 and to $562,414 for the year ended March 31, 2007. If not suspended, these losses would have reduced the investment in Project Partnerships below zero. (These Project Partnerships reported depreciation and amortization of $1,367,028, $1,293,203 and $1,303,827 for the years ended December 31, 2004, 2005 and 2006, respectively.) Gateway reviews its investments in Project Partnerships to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. For the fiscal years ended March 31, 2007 and 2006, impairment expenses of $103,003 and $343,241 were recognized. There was no impairment expense in fiscal year 2005. Overall, management believes these Project Partnerships are operating as expected and have generated Tax Credits which met projections.

   At March 31, 2007, the Series had $193,964 of short-term investments (Cash and Cash Equivalents). In addition, the Series had $280,406 in U.S. Treasury Notes with a maturity value of $279,000 at June 30, 2007. Management believes these sources of funds are sufficient to meet the Series' current and ongoing operating costs for the foreseeable future, and to pay part of the Asset Management Fee.

   As disclosed on the statement of cash flows, the Series had a net loss of $332,668 for the year ended March 31, 2007. However, after adjusting for Equity in Losses of Project Partnerships of $7,156 and the changes in operating assets and liabilities, net cash used in operating activities was $116,082. Cash used in investing activities totaled $153,534 consisting of $38,096 in cash distributions from the Project Partnerships and $83,000 from matured Zero Coupon Treasuries, offset by $274,630 used to purchase U.S. Treasury Notes in July 2006.

Exit Strategy

   The IRS compliance period for low-income housing Tax Credit properties is generally 15 years from occupancy following construction or rehabilitation completion. Gateway is currently in the process of disposing of its investments in Project Partnerships which have reached the end of their fifteen year Tax Credit compliance period. Gateway's objective is to sell Gateway's interest in such assets for fair market value and ultimately, to liquidate the Project Partnerships. Generally, the market for Project Partnerships is limited. Some of the factors which negatively impact the marketability of these projects include (1) requirements by government agencies or the project's debt holder to continue to maintain the property in the low-income housing program, and (2) the mortgage balance of the property is very near the initial balance as a result of the heavily subsidized debt of the Project Partnerships and lengthy (usually 50 year) amortization periods.

   As of March 31, 2007, Gateway holds a limited partner interest in 136 Project Partnerships which own and operate government assisted multi-family housing complexes. Project investments by Series are as follows: 22 Project Partnerships for Series 2, 17 Project Partnerships for Series 3, 25 Project Partnerships for Series 4, 35 Project Partnerships for Series 5, and 37 Project Partnerships for Series 6. Many of the Project Partnerships have reached the end of their Tax Credit compliance period. As of March 31, 2007, twelve of the Project Partnerships have been sold (6 in Series 3, 4 in Series 4, 1 in Series 5, and 1 in Series 6) and, in accordance with the Gateway partnership agreement, the entire net proceeds received from these sales either have been or will be distributed to the Assignees of the respective Series. Gateway at one time held investments in 148 Project Partnerships (22 in Series 2, 23 in Series 3, 29 in Series 4, 36 in Series 5, and 38 in Series 6). The transaction summaries for the Project Partnerships sold during the past three fiscal years are summarized below:

Fiscal Year 2007 Disposition Activity:

Series 3

   In March 2007, Gateway sold its Project Partnership investment in Belmont Senior Apartments. In accordance with FASB No. 66 ("FASB No. 66") "Accounting for Sales of Real Estate," although the sale of this Project Partnership was consummated on or prior to March 31, 2007, the estimated gain on the sale of this investment of $43,850 is being deferred on the Balance Sheet of Gateway as of March 31, 2007 and not recognized in the Statement of Operations until the period that the proceeds are received. The entire balance of the net proceeds due from this sale were subsequently received and distributed to the Series 3 Assignees in the amount of $8.04 per beneficial assignee certificate during the first quarter of fiscal year 2008.

   In January 2007, Gateway sold its Project Partnership investment in Southwood Apartments. Gateway received $42,652 in net proceeds ($7.82 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 3 Assignees.

   In January 2007, Gateway sold its Project Partnership investment in Plaza Senior Village Apartments. Gateway received $82,145 in net proceeds ($15.06 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 3 Assignees.

   In January 2007, Gateway sold its Project Partnership investment in Brubaker Square Apartments. Gateway received $115,009 in net proceeds ($21.08 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 3 Assignees.

   In January 2007, Gateway sold its Project Partnership investment in Villa Allegra Apartments. Gateway received $73,408 in net proceeds ($13.45 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 3 Assignees.

   In November 2006, Gateway sold its Project Partnership investment in Birchwood Apartments. Gateway received $99,410 in net proceeds ($18.25 per beneficial assignee certificate) for the sale of the Project Partnership. Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. The net proceeds from this sale transaction were distributed to the Series 3 Assignees in December 2006.

Series 4

   In March 2007, Gateway sold its Project Partnership investment in Edmonton Senior Apartments. In accordance with FASB No. 66, although the sale of this Project Partnership was consummated on or prior to March 31, 2007, the estimated gain on the sale of this investment of $38,350 is being deferred on the Balance Sheet of Gateway as of March 31, 2007 and not recognized in the Statement of Operations until the period that the proceeds are received. The entire balance of the net proceeds due from this sale were subsequently received and distributed in the amount of $5.55 per beneficial assignee certificate to the Series 4 Assignees during the first quarter of fiscal year 2008.

   In March 2007, Gateway sold its Project Partnership investment in Owingsville Senior Apartments. In accordance with FASB No. 66, although the sale of this Project Partnership was consummated on or prior to March 31, 2007, the estimated gain on the sale of this investment of $45,850 is being deferred on the Balance Sheet of Gateway as of March 31, 2007 and not recognized in the Statement of Operations until the period that the proceeds are received. The entire balance of the net proceeds due from this sale were subsequently received and distributed in the amount of $6.63 per beneficial assignee certificate to the Series 4 Assignees during the first quarter of fiscal year 2008.

   In January 2007, Gateway sold its Project Partnership investment in Alsace Village Apartments. Gateway received $23,370 in net proceeds ($3.38 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 4 Assignees.

   In January 2007, Gateway sold its Project Partnership investment in Greenbriar Apartments. Gateway received $39,370 in net proceeds ($5.69 per beneficial assignee certificate) for the sale of this Project Partnership. The net proceeds are a component of the Distribution Payable on the Balance Sheet as of March 31, 2007 and Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. Subsequent to the March 31, 2007 year-end, the net proceeds from this sale transaction were distributed to the Series 4 Assignees.

Fiscal Year 2006 Disposition Activity:

Series 6

   In August 2005, Gateway sold its Project Partnership investment in Mountain Crest Apartments. Gateway received $224,074 in net proceeds ($22.17 per beneficial assignee certificate) for the sale of this Project Partnership. Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. The net proceeds from this sale transaction were distributed to the Series 6 Assignees in November 2005.

Fiscal Year 2005 Disposition Activity:

Series 5

   In December 2004, Gateway sold its Project Partnership investment in Highland View Apartments. Gateway received $157,126 in net proceeds ($18.24 per beneficial assignee certificate) for the sale of this Project Partnership. Gateway recorded a gain in the amount of the net proceeds which is included as a component of the Gain on Sale of Project Partnerships on the Statement of Operations. The net proceeds from this sale transaction were distributed to the Series 5 Assignees in July 2005.

Project Partnership sold subsequent to March 31, 2007:

Series 2

Rolling Oaks II Apartments

   Subsequent to the March 31, 2007 year-end, Gateway sold its Project Partnership investment in Rolling Oaks II Apartments. Gateway realized approximately $55,000 in net proceeds or approximately $8.96 per beneficial assignee certificate from this sale transaction which will be distributed to the Series 2 Assignees in the 2^nd quarter of fiscal year 2008.

Gateway has approved the sale to the general partner of the Project Partnership or a third party:

Series 2

Inverness Club                                Heritage Village Apartments

   These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $360,000, or $58.67 per beneficial assignee certificate which would be available for distribution to the Series 2 Assignees subsequent to the closing of these sales transactions which would most likely occur within the next 24-month period.

Series 4

Chestnut Apartments                           Ashland Estates

   These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $22,000, or $3.18 per beneficial assignee certificate which would be available for distribution to the Series 4 Assignees subsequent to the closing of these sales transactions which would most likely occur within the next 24-month period.

Series 5

Country Place Apartments II                   Country Place Apartments II
   (Georgetown LP)                                (Portland II Ltd.)

   These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $90,000, or $10.45 per beneficial assignee certificate which would be available for distribution to the Series 5 Assignees subsequent to the closing of these sales transactions which would most likely occur within the next 24-month period.

Series 6

Autumn Place Apts.                            Spring Wood Apartments

   These approvals are subject to a number of contingencies, the outcome of which cannot be predicted with certainty. However, utilizing the sales amounts as approved by Gateway, should all the transactions close without modification, the estimated net proceeds to Gateway from the sales of these Project Partnerships are estimated to be $102,000, or $10.09 per beneficial assignee certificate which would be available for distribution to the Series 6 Assignees subsequent to the closing of these sales transactions which would most likely occur within the next 24-month period.

Gateway has consented to the general partner granting an option for either the general partner or a third-party to purchase the Project Partnership interest:

Series 2

Brookhaven Apartments                         Lakeshore Apartments
Lewiston Country Estates                      Woodland Terrace Apartments
Hidden Creek Apartments

   Should all of these options be exercised, the estimated net sales proceeds to Gateway from the sales transactions are estimated to be $715,000, or $116.53 per beneficial assignee certificate potentially available for distribution to the Series 2 Assignees over the next 24 months. These options to purchase could expire without being exercised which would result in no sales proceeds and remarketing of the Project Partnerships, the results of which are undeterminable.

Series 3

Countrywood Apartments

   Should this option be exercised, the estimated net sales proceeds to Gateway from the sales transaction are estimated to be $85,000, or $15.58 per beneficial assignee certificate potentially available for distribution to the Series 3 Assignees over the next 24 months. This option to purchase could expire without being exercised which would result in no sales proceeds and remarketing of the Project Partnership, the results of which are undeterminable.

Series 4

River Bend Apartments                         Norton Green Apartments

   Should all of these options be exercised, the estimated net sales proceeds to Gateway from the sales transactions are estimated to be $180,000, or $26.03 per beneficial assignee certificate potentially available for distribution to the Series 4 Assignees over the next 24 months. These options to purchase could expire without being exercised which would result in no sales proceeds and remarketing of the Project Partnerships, the results of which are undeterminable.

Series 5

Villa Del Rio                                 Willow Apartments
Woodvale Apartments II

   Should all of these options be exercised, the estimated net sales proceeds to Gateway from the sales transactions are estimated to be $275,000, or $31.92 per beneficial assignee certificate potentially available for distribution to the Series 5 Assignees over the next 24 months. These options to purchase could expire without being exercised which would result in no sales proceeds and remarketing of the Project Partnerships, the results of which are undeterminable.

Series 6

Country Place Apartments

   Should this option be exercised, the estimated net sales proceeds to Gateway from the sales transaction are estimated to be $90,000, or $8.91 per beneficial assignee certificate potentially available for distribution to the Series 6 Assignees over the next 24 months. This option to purchase could expire without being exercised which would result in no sales proceeds and remarketing of the Project Partnership, the results of which are undeterminable.

Project Partnerships currently listed for sale on a commercial real estate for sale website or listed for sale by the general partner of the Project Partnership:

Series 3

Logansport Seniors Apartments                 Sunchase II Apartments
Mill Run Apartments

Series 4

Oaks Apartments                               Tarpon Heights Apartments
Sonora Seniors Apartments                     Fredericksburg Seniors Apartments
Ozona Seniors Apartments                      Brackettville Seniors Apartments
Timpson Seniors Apartments                    Village Apartments of St. Joseph II

Series 5

Fox Ridge Apartments                          Redmont II Apartments
Village Apartments of Effingham               Village Apartments of Seymour II

Disclosure of Contractual Obligations

		Payment due by period
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
Long-Term Debt Obligations
Capital Lease Obligations
Operating Lease Obligations
Purchase Obligations
Other Liabilities Reflected on the Registrant's Balance Sheet under GAAP	$3,800,683 (1)	317,633	3,483,050	0	0

(1)  The Other Liabilities represent the asset management fees and other general and administrative expense reimbursements owed to the General Partners as of March 31,2007. This payable is unsecured, due on demand and, in accordance with the limited partnership agreement, non-interest bearing. As referred to in Note 4, the Managing General Partner does not intend to demand payment of the portion of this balance reflected as due later than one year within the next twelve months.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk.

   As a small business issuer, no information is required.

Item 8.  Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Gateway Tax Credit Fund II Ltd.

   We have audited the accompanying balance sheets of Gateway Tax Credit Fund II, Ltd. (a Florida Limited Partnership) as of March 31, 2007 and 2006 and the related statements of operations, partners' equity (deficit), and cash flows for each of the years in the two year period ended March 31, 2007. These financial statements are the responsibility of Gateway's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Gateway Tax Credit Fund II, Ltd. for the period ended March 31, 2005, were audited by other auditors whose report dated September 8, 2005, expressed an unqualified opinion on those statements.

   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. Gateway is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 Gateway's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Gateway Tax Credit Fund II, Ltd. at March 31, 2007 and 2006, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

   Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15(a)(2) in the index are presented for purposes 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 in the audit of the basic financial statements and, in our opinion, based on our audits and the reports of other auditors, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

                                         /s/ Reznick Group, P.C.
                                         REZNICK GROUP, P.C.

Atlanta, Georgia
July 16, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Gateway Tax Credit Fund II Ltd

   We have audited the accompanying statements of operations, partners' equity (deficit), and cash flows of each of the five Series (Series 2 through 6) constituting Gateway Tax Credit Fund II Ltd. (a Florida Limited Partnership) for the year ended March 31, 2005. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of certain Project Partnerships in Series 6 for which net losses of $5,938 are included in the accompanying financial statements for the year ended March 31, 2005. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for such underlying partnerships, is based solely on the reports of the other auditors.

   We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statements of operations, partners' equity (deficit), and cash flows 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. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of operations, partners' equity (deficit), and cash flows, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statements of operations, partners' equity (deficit), and cash flows. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinion.

   In our opinion, based on our audit and the reports of other auditors, the statements of operations, partners' equity (deficit), and cash flows present fairly, in all material respects, the results of operations and cash flows of each of the five Series (Series 2 through 6) constituting Gateway Tax Credit Fund II Ltd. for the year ended March 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants

Clearwater, Florida
September 8, 2005

PART I - Financial Information
Item 1. Financial Statements

GATEWAY TAX CREDIT FUND II LTD.
(A Florida Limited Partnership)
BALANCE SHEET
MARCH 31, 2007 AND 2006

SERIES 2	2007 ----	2006 ----
ASSETS Current Assets: Cash and Cash Equivalents Investments in Securities Total Assets LIABILITIES AND PARTNERS' EQUITY (Deficit) Current Liabilities: Payable to General Partners Other Payable Total Current Liabilities Long-Term Liabilities: Payable to General Partners Partners' Equity (Deficit): Assignor Limited Partner Units of limited partnership interest consisting of 40,000 authorized BAC's, of which Series 2 had 6,136 at March 31, 2007 and 2006 issued to the assignees Assignees Units of beneficial interest of the limited partnership interest of the assignor limited partner, $1,000 stated value per BAC, Series 2 had 6,136 at March 31, 2007 and 2006, issued and outstanding General Partners Total Partners' Equity (Deficit) Total Liabilities and Partners' Equity (Deficit)	$ 129,724 127,640 ---------- $ 257,364 ========== $ 48,705 0 ---------- 48,705 ---------- 666,568 ---------- (399,531) (58,378) ---------- (457,909) ---------- $ 257,364 ==========	$ 250,529 66,276 ---------- $ 316,805 ========== $ 48,304 8,030 ---------- 56,334 ---------- 599,253 ---------- (281,595) (57,187) ---------- (338,782) ---------- $ 316,805 ==========