UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 10-Q

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

For the quarterly period ended December 31, 2011

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:       0-21762

Gateway Tax Credit Fund III Ltd.

(Exact name of Registrant as specified in its charter)

Florida	59-3090386
(State or other jurisdiction of incorporation or organization)	(IRS Employer No.)
880 Carillon Parkway	St. Petersburg,   Florida    33716
(Address of principal executive offices)	(Zip Code)

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

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

YES  [X] NO  [  ]

Indicate by check mark whether the registrant 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 such shorter period that the registrant was required to submit and post such files).

YES  [X] NO  [  ]

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

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller Reporting Company [X]

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

Yes [  ] No [X]

PART I - Financial Information

Item 1. Financial Statements

Balance of this page intentionally left blank.

2

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

BALANCE SHEETS

(Unaudited)

	SERIES 7						SERIES 8						SERIES 9
	December 31,			March 31,			December 31,			March 31,			December 31,			March 31,
	2011			2011			2011			2011			2011			2011
ASSETS
Current Assets:
Cash and Cash Equivalents	$	831,995		$	770,297		$	163,581		$	231,397		$	169,739		$	142,196
Total Current Assets		831,995			770,297			163,581			231,397			169,739			142,196
Total Assets	$	831,995		$	770,297		$	163,581		$	231,397		$	169,739		$	142,196
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Payable to General Partners	$	5,268		$	6,174		$	81,299		$	183,126		$	42,740		$	55,327
Distribution Payable		681,877			545,751			85,362			27,385			111,748			55,030
Total Current Liabilities		687,145			551,925			166,661			210,511			154,488			110,357
Long-Term Liabilities:
Payable to General Partners		1,048,845			1,065,589			1,204,713			1,150,230			715,746			690,195
Partners' (Deficit) Equity:
Limited Partners - 10,395, 9,980, and 6,254
units for Series 7, 8, and 9, respectively,
at December 31, 2011 and March 31, 2011		(911,972	)		(854,401	)		(1,208,329	)		(1,125,775	)		(700,994	)		(651,966	)
General Partners		7,977			7,184			536			(3,569	)		499			(6,390	)
Total Partners' Deficit		(903,995	)		(847,217	)		(1,207,793	)		(1,129,344	)		(700,495	)		(658,356	)
Total Liabilities and Partners' Deficit	$	831,995		$	770,297		$	163,581		$	231,397		$	169,739		$	142,196

See accompanying notes to financial statements.

3

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

BALANCE SHEETS

(Unaudited)

	SERIES 10						SERIES 11				TOTAL SERIES 7 - 11
	December 31,			March 31,			December 31,		March 31,		December 31,			March 31,
	2011			2011			2011		2011		2011			2011
ASSETS
Current Assets:
Cash and Cash Equivalents	$	139,868		$	153,660		$	389,682	$	356,285	$	1,694,865		$	1,653,835
Total Current Assets		139,868			153,660			389,682		356,285		1,694,865			1,653,835
Investments in Project Partnerships, net		2,124			64,697			169,564		245,863		171,688			310,560
Total Assets	$	141,992		$	218,357		$	559,246	$	602,148	$	1,866,553		$	1,964,395
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Payable to General Partners	$	2,532		$	27,005		$	1,716	$	4,167	$	133,555		$	275,799
Distribution Payable		38,145			12,000			225,544		125,774		1,142,676			765,940
Total Current Liabilities		40,677			39,005			227,260		129,941		1,276,231			1,041,739
Long-Term Liabilities:
Payable to General Partners		248,400			235,562			108,695		140,876		3,326,399			3,282,452
Partners' (Deficit) Equity:
Limited Partners - 5,043 and 5,127 units
for Series 10 and 11, respectively, at
December 31, 2011 and March 31, 2011		(139,579	)		(23,468	)		222,296		330,500		(2,738,578	)		(2,325,110	)
General Partners		(7,506	)		(32,742	)		995		831		2,501			(34,686	)
Total Partners' (Deficit) Equity		(147,085	)		(56,210	)		223,291		331,331		(2,736,077	)		(2,359,796	)
Total Liabilities and Partners' Deficit	$	141,992		$	218,357		$	559,246	$	602,148	$	1,866,553		$	1,964,395

See accompanying notes to financial statements.

4

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 7						SERIES 8						SERIES 9
	2011			2010			2011			2010			2011			2010
Revenues:
Distribution Income	$	2,154		$	8,071		$	7,001		$	7,415		$	1,632		$	5,007
Total Revenues		2,154			8,071			7,001			7,415			1,632			5,007
Expenses:
Asset Management Fee - General Partner		9,767			14,387			19,678			20,117			9,207			11,314
General and Administrative:
Other		4,265			(419	)		4,282			3,554			2,967			2,351
Total Expenses		14,032			13,968			23,960			23,671			12,174			13,665
Loss Before Equity in Income of Project Partnerships
and Other Income		(11,878	)		(5,897	)		(16,959	)		(16,256	)		(10,542	)		(8,658	)
Equity in Income of Project Partnerships		-			288			-			-			-			-
Gain on Sale of Project Partnerships		15,250			195,375			38,103			-			-			43,030
Interest Income		44			11			7			9			9			5
Net Income (Loss)	$	3,416		$	189,777		$	21,151		$	(16,247	)	$	(10,533	)	$	34,377
Allocation of Net Income (Loss):
Limited Partners	$	3,384		$	187,878		$	20,772		$	(16,085	)	$	(10,532	)	$	(8,566	)
General Partners		32			1,899			379			(162	)		(1	)		42,943
	$	3,416		$	189,777		$	21,151		$	(16,247	)	$	(10,533	)	$	34,377
Net Income (Loss) Per Limited Partnership Unit	$	0.33		$	18.07		$	2.08		$	(1.61	)	$	(1.68	)	$	(1.37	)
Number of Limited Partnership Units Outstanding		10,395			10,395			9,980			9,980			6,254			6,254

See accompanying notes to financial statements.

5

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 10						SERIES 11						TOTAL SERIES 7 - 11
	2011			2010			2011			2010			2011			2010
Revenues:
Distribution Income	$	2,146		$	2,146		$	985		$	-		$	13,918		$	22,639
Total Revenues		2,146			2,146			985			-			13,918			22,639
Expenses:
Asset Management Fee - General Partner		7,212			7,812			4,229			6,972			50,093			60,602
General and Administrative:
Other		2,028			1,721			2,237			1,709			15,779			8,916
Total Expenses		9,240			9,533			6,466			8,681			65,872			69,518
Loss Before Equity in Loss of Project Partnerships
and Other Income		(7,094	)		(7,387	)		(5,481	)		(8,681	)		(51,954	)		(46,879	)
Equity in Loss of Project Partnerships		(39,756	)		(1,604	)		(28,432	)		-			(68,188	)		(1,316	)
Gain on Sale of Project Partnerships		-			-			-			-			53,353			238,405
Interest Income		8			5			22			7			90			37
Net (Loss) Income	$	(46,842	)	$	(8,986	)	$	(33,891	)	$	(8,674	)	$	(66,699	)	$	190,247
Allocation of Net (Loss) Income:
Limited Partners	$	(46,373	)	$	(8,895	)	$	(33,799	)	$	(8,587	)	$	(66,548	)	$	145,745
General Partners		(469	)		(91	)		(92	)		(87	)		(151	)		44,502
	$	(46,842	)	$	(8,986	)	$	(33,891	)	$	(8,674	)	$	(66,699	)	$	190,247
Net (Loss) Income Per Limited Partnership Unit	$	(9.20	)	$	(1.76	)	$	(6.59	)	$	(1.67	)
Number of Limited Partnership Units Outstanding		5,043			5,043			5,127			5,127

See accompanying notes to financial statements.

6

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 7						SERIES 8						SERIES 9
	2011			2010			2011			2010			2011			2010
Revenues:
Distribution Income	$	10,201		$	14,560		$	15,763		$	14,861		$	11,907		$	10,659
Total Revenues		10,201			14,560			15,763			14,861			11,907			10,659
Expenses:
Asset Management Fee - General Partner		33,257			44,518			59,484			60,350			30,551			34,483
General and Administrative:
Other		33,814			26,457			34,747			31,148			23,514			20,087
Amortization		-			146			-			-			-			-
Total Expenses		67,071			71,121			94,231			91,498			54,065			54,570
Loss Before Other Income		(56,870	)		(56,561	)		(78,468	)		(76,637	)		(42,158	)		(43,911	)
Gain on Sale of Project Partnerships		136,126			353,323			57,978			-			56,718			43,030
Interest Income		92			24			19			22			19			11
Net Income (Loss)	$	79,348		$	296,786		$	(20,471	)	$	(76,615	)	$	14,579		$	(870	)
Allocation of Net Income (Loss):
Limited Partners	$	78,555		$	293,818		$	(24,576	)	$	(75,849	)	$	7,690		$	(43,461	)
General Partners		793			2,968			4,105			(766	)		6,889			42,591
	$	79,348		$	296,786		$	(20,471	)	$	(76,615	)	$	14,579		$	(870	)
Net Income (Loss) Per Limited Partnership Unit	$	7.56		$	28.27		$	(2.46	)	$	(7.60	)	$	1.23		$	(6.95	)
Number of Limited Partnership Units Outstanding		10,395			10,395			9,980			9,980			6,254			6,254

See accompanying notes to financial statements.

7

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 10						SERIES 11						TOTAL SERIES 7 - 11
	2011			2010			2011			2010			2011			2010
Revenues:
Distribution Income	$	6,795		$	6,585		$	3,967		$	2,982		$	48,633		$	49,647
Total Revenues		6,795			6,585			3,967			2,982			48,633			49,647
Expenses:
Asset Management Fee - General Partner		22,838			23,438			17,819			20,916			163,949			183,705
General and Administrative:
General Partner		-			-			-			20,774			-			20,774
Other		17,724			15,354			17,930			15,378			127,729			108,424
Amortization		-			-			-			-			-			146
Total Expenses		40,562			38,792			35,749			57,068			291,678			313,049
Loss Before Equity in Loss of Project Partnerships
and Other Income		(33,767	)		(32,207	)		(31,782	)		(54,086	)		(243,045	)		(263,402	)
Equity in Loss of Project Partnerships		(57,124	)		(19,754	)		(76,300	)		(110,312	)		(133,424	)		(130,066	)
Gain on Sale of Project Partnerships		26,145			-			99,770			-			376,737			396,353
Interest Income		16			14			42			19			188			90
Net (Loss) Income	$	(64,730	)	$	(51,947	)	$	(8,270	)	$	(164,379	)	$	456		$	2,975
Allocation of Net (Loss) Income:
Limited Partners	$	(89,966	)	$	(51,427	)	$	(8,434	)	$	(162,735	)	$	(36,731	)	$	(39,654	)
General Partners		25,236			(520	)		164			(1,644	)		37,187			42,629
	$	(64,730	)	$	(51,947	)	$	(8,270	)	$	(164,379	)	$	456		$	2,975
Net (Loss) Income Per Limited Partnership Unit	$	(17.84	)	$	(10.20	)	$	(1.65	)	$	(31.74	)
Number of Limited Partnership Units Outstanding		5,043			5,043			5,127			5,127

See accompanying notes to financial statements.

8

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 7								SERIES 8
	Limited			General					Limited			General
	Partners			Partners		Total			Partners			Partners			Total
Balance at March 31, 2010	$	(782,420	)	$	2,449	$	(779,971	)	$	(1,028,499	)	$	(6,627	)	$	(1,035,126	)
Net Income (Loss)		293,818			2,968		296,786			(75,849	)		(766	)		(76,615	)
Distributions		(353,323	)		-		(353,323	)		-			-			-
Balance at December 31, 2010	$	(841,925	)	$	5,417	$	(836,508	)	$	(1,104,348	)	$	(7,393	)	$	(1,111,741	)
Balance at March 31, 2011	$	(854,401	)	$	7,184	$	(847,217	)	$	(1,125,775	)	$	(3,569	)	$	(1,129,344	)
Net Income (Loss)		78,555			793		79,348			(24,576	)		4,105			(20,471	)
Distributions		(136,126	)		-		(136,126	)		(57,978	)		-			(57,978	)
Balance at December 31, 2011	$	(911,972	)	$	7,977	$	(903,995	)	$	(1,208,329	)	$	536		$	(1,207,793	)

See accompanying notes to financial statements.

9

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 9									SERIES 10
	Limited			General						Limited			General
	Partners			Partners			Total			Partners			Partners			Total
Balance at March 31, 2010	$	(552,816	)	$	(50,873	)	$	(603,689	)	$	40,732		$	(34,113	)	$	6,619
Net (Loss) Income		(43,461	)		42,591			(870	)		(51,427	)		(520	)		(51,947	)
Distributions		(43,030	)		-			(43,030	)		-			-			-
Balance at December 31, 2010	$	(639,307	)	$	(8,282	)	$	(647,589	)	$	(10,695	)	$	(34,633	)	$	(45,328	)
Balance at March 31, 2011	$	(651,966	)	$	(6,390	)	$	(658,356	)	$	(23,468	)	$	(32,742	)	$	(56,210	)
Net Income (Loss)		7,690			6,889			14,579			(89,966	)		25,236			(64,730	)
Distributions		(56,718	)		-			(56,718	)		(26,145	)		-			(26,145	)
Balance at December 31, 2011	$	(700,994	)	$	499		$	(700,495	)	$	(139,579	)	$	(7,506	)	$	(147,085	)

See accompanying notes to financial statements.

10

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 11									TOTAL SERIES 7 - 11
	Limited			General						Limited			General
	Partners			Partners			Total			Partners			Partners			Total
Balance at March 31, 2010	$	543,134		$	(40,969	)	$	502,165		$	(1,779,869	)	$	(130,133	)	$	(1,910,002	)
Net (Loss) Income		(162,735	)		(1,644	)		(164,379	)		(39,654	)		42,629			2,975
Distributions		-			-			-			(396,353	)		-			(396,353	)
Balance at December 31, 2010	$	380,399		$	(42,613	)	$	337,786		$	(2,215,876	)	$	(87,504	)	$	(2,303,380	)
Balance at March 31, 2011	$	330,500		$	831		$	331,331		$	(2,325,110	)	$	(34,686	)	$	(2,359,796	)
Net (Loss) Income		(8,434	)		164			(8,270	)		(36,731	)		37,187			456
Distributions		(99,770	)		-			(99,770	)		(376,737	)		-			(376,737	)
Balance at December 31, 2011	$	222,296		$	995		$	223,291		$	(2,738,578	)	$	2,501		$	(2,736,077	)

See accompanying notes to financial statements.

11

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 7						SERIES 8
	2011			2010			2011			2010
Cash Flows from Operating Activities:
Net Income (Loss)	$	79,348		$	296,786		$	(20,471	)	$	(76,615	)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Amortization		-			146			-			-
Gain on Sale of Project Partnerships		(136,126	)		(353,323	)		(57,978	)		-
Distribution Income		(10,201	)		(14,560	)		(15,763	)		(14,861	)
Changes in Operating Assets and Liabilities:
(Decrease) Increase in Payable to General Partners		(17,650	)		(12,165	)		(47,345	)		73,419
Net Cash Used in Operating Activities		(84,629	)		(83,116	)		(141,557	)		(18,057	)
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships		10,201			13,720			15,763			14,861
Net Proceeds from Sale of Project Partnerships		136,126			353,323			57,978			-
Net Cash Provided by Investing Activities		146,327			367,043			73,741			14,861
Increase (Decrease) in Cash and Cash Equivalents		61,698			283,927			(67,816	)		(3,196	)
Cash and Cash Equivalents at Beginning of Year		770,297			209,702			231,397			238,988
Cash and Cash Equivalents at End of Period	$	831,995		$	493,629		$	163,581		$	235,792
Supplemental disclosure of non-cash activities:
Increase in Distribution Payable	$	136,126		$	353,323		$	57,978		$	-
Distribution to Assignees		(136,126	)		(353,323	)		(57,978	)		-
Increase in Receivable – Other		-			272,333			-			-
Increase in Deferred Gain on Sale of Project Partnership		-			(187,362	)		-			-
Decrease in Net Investment		-			(84,709	)		-			-
Decrease in Payable to General Partners		-			(262	)		-			-
	$	-		$	-		$	-		$	-

See accompanying notes to financial statements.

12

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 9						SERIES 10
	2011			2010			2011			2010
Cash Flows from Operating Activities:
Net Income (Loss)	$	14,579		$	(870	)	$	(64,730	)	$	(51,947	)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Used in Operating Activities:
Equity in Loss of Project Partnerships		-			-			57,124			19,754
Gain on Sale of Project Partnerships		(56,718	)		(43,030	)		(26,145	)		-
Distribution Income		(11,907	)		(10,659	)		(6,795	)		(6,585	)
Changes in Operating Assets and Liabilities:
Increase (Decrease) in Payable to General Partners		12,964			48,570			(11,635	)		18,952
Net Cash Used in Operating Activities		(41,082	)		(5,989	)		(52,181	)		(19,826	)
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships		11,907			10,659			12,244			13,486
Net Proceeds from Sale of Project Partnerships		56,718			43,030			26,145			-
Net Cash Provided by Investing Activities		68,625			53,689			38,389			13,486
Increase (Decrease) in Cash and Cash Equivalents		27,543			47,700			(13,792	)		(6,340	)
Cash and Cash Equivalents at Beginning of Year		142,196			96,912			153,660			153,638
Cash and Cash Equivalents at End of Period	$	169,739		$	144,612		$	139,868		$	147,298
Supplemental disclosure of non-cash activities:
Increase in Distribution Payable	$	56,718		$	43,030		$	26,145		$	-
Distribution to Assignees		(56,718	)		(43,030	)		(26,145	)		-
Increase in Receivable - Other		-			-			-			-
Increase in Deferred Gain on Sale of Project Partnerships		-			-			-			-
Decrease in Net Investment		-			-			-			-
Decrease in Payable to General Partners		-			-			-			-
	$	-		$	-		$	-		$	-

See accompanying notes to financial statements.

13

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2011 AND 2010

(Unaudited)

	SERIES 11						TOTAL SERIES 7 - 11
	2011			2010			2011			2010
Cash Flows from Operating Activities:
Net (Loss) Income	$	(8,270	)	$	(164,379	)	$	456		$	2,975
Adjustments to Reconcile Net (Loss) Income
to Net Cash Used in Operating Activities:
Amortization		-			-			-			146
Equity in Loss of Project Partnerships		76,300			110,312			133,424			130,066
Gain on Sale of Project Partnerships		(99,770	)		-			(376,737	)		(396,353	)
Distribution Income		(3,967	)		(2,982	)		(48,633	)		(49,647	)
Changes in Operating Assets and Liabilities:
(Decrease) Increase in Payable to General Partners		(34,633	)		15,263			(98,299	)		144,039
Net Cash Used in Operating Activities		(70,340	)		(41,786	)		(389,789	)		(168,774	)
Cash Flows from Investing Activities:
Distributions Received from Project Partnerships		3,967			7,822			54,082			60,548
Net Proceeds from Sale of Project Partnerships		99,770			-			376,737			396,353
Net Cash Provided by Investing Activities		103,737			7,822			430,819			456,901
Increase (Decrease) in Cash and Cash Equivalents		33,397			(33,964	)		41,030			288,127
Cash and Cash Equivalents at Beginning of Year		356,285			209,968			1,653,835			909,208
Cash and Cash Equivalents at End of Period	$	389,682		$	176,004		$	1,694,865		$	1,197,335
Supplemental disclosure of non-cash activities:
Increase in Distribution Payable	$	99,770		$	-		$	376,737		$	396,353
Distribution to Assignees		(99,770	)		-			(376,737	)		(396,353	)
Increase in Receivable - Other		-			177,667			-			450,000
Increase in Deferred Gain on Sale of Project Partnerships		-			(125,774	)		-			(313,136	)
Decrease in Net Investment		-			(49,893	)		-			(134,602	)
Decrease in Payable to General Partners		-			(2,000	)		-			(2,262	)
	$	-		$	-		$	-		$	-

See accompanying notes to financial statements.

14

GATEWAY TAX CREDIT FUND III LTD.

(A Florida Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2011

(Unaudited)

NOTE 1 - ORGANIZATION:

Gateway Tax Credit Fund III Ltd. (“Gateway”), a Florida Limited Partnership, was formed October 17, 1991 under the laws of Florida.  Gateway offered its limited partnership interests in Series (“Series”).  The first Series for Gateway is Series 7.  Operations commenced on July 16, 1992 for Series 7, January 4, 1993 for Series 8, September 30, 1993 for Series 9, January 21, 1994 for Series 10 and April 29, 1994 for Series 11.  Each Series invests, as a limited partner, in other limited partnerships (“Project Partnerships”), each of which owns and operates apartment complexes eligible for Low-Income Housing Tax Credits (“Tax Credits”), provided for in Section 42 of the Internal Revenue Code of 1986.  Gateway will terminate on December 31, 2040 or sooner, in accordance with the terms of the limited partnership agreement (the “Agreement”).  As of December 31, 2011, Gateway had received capital contributions of $1,000 from the General Partners and $36,799,000 from the investor Limited Partners.

Raymond James Partners, Inc. and Raymond James Tax Credit Funds, Inc., wholly owned subsidiaries of Raymond James Financial, Inc., are the General Partner and Managing General Partner, respectively and collectively the General Partners.

Gateway received capital contributions of $10,395,000, $9,980,000, $6,254,000, $5,043,000 and $5,127,000 from the investor Limited Partners in Series 7, 8, 9, 10 and 11, respectively.  Each Series is treated as though it were a separate partnership, investing in a separate and distinct pool of Project Partnerships.  Income or loss and all tax items from the Project Partnerships acquired by each Series are specifically allocated among the Limited Partners of such Series.

Operating profits and losses, cash distributions from operations and Tax Credits from each Series are generally allocated 99% to the Limited Partners in that Series and 1% to the General Partners.  Profit or loss and cash distributions from sales of properties by each Series are allocated as specified in the Agreement.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting

Gateway utilizes the accrual basis of accounting whereby revenues are recognized as earned and expenses are recognized as obligations are incurred.

Gateway accounts for its investments as the limited partner in Project Partnerships (“Investments in Project Partnerships”) using the equity method of accounting, because management believes that Gateway does not have a majority control of the major operating and financial policies of the Project Partnerships in which it invests, and reports the equity in loss of the Project Partnerships on a 3-month lag in the Statements of Operations.  Under the equity method, the Investments in Project Partnerships initially include:

1)   Gateway's capital contribution,

2)   Acquisition fees paid to the General Partner for services rendered in selecting properties for acquisition,

3)   Acquisition expenses including legal fees, travel and other miscellaneous costs relating to acquiring properties.

Quarterly the Investments in Project Partnerships are increased or decreased as follows:

1)   Increased for equity in income or decreased for equity in loss of the Project Partnerships,

2)   Decreased for cash distributions received from the Project Partnerships,

3)   Decreased for the amortization of the acquisition fees and expenses,

4)   Increased for loans or advances made to the Project Partnerships by Gateway,

5)   Decreased, where appropriate, for impairment.

15

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Pursuant to the limited partnership agreements for the Project Partnerships, cash losses generated by the Project Partnerships are allocated to the general partners of those partnerships.  In subsequent years, cash profits, if any, are first allocated to the general partners to the extent of the allocation of prior cash losses.

Since Gateway invests as a limited partner, and therefore is not obligated to fund losses or make additional capital contributions, it does not recognize losses from individual Project Partnerships to the extent that these losses would reduce the investment in those Project Partnerships below zero.  In accordance with GAAP, once the net investment in a Project Partnership is reduced to zero, receivables due from the Project Partnership are decreased by Gateway’s share of Project Partnership losses.  The suspended losses will be used to offset future income from the individual Project Partnerships.  Any cash distributions received from Project Partnerships which have a zero investment balance are accounted for as distribution income in the period the cash distribution is received by Gateway.

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.  If the sum of the expected remaining low-income housing tax credits and other tax benefits is less than the carrying amount of the investment, Gateway recognizes an impairment loss.  As part of its analysis, Gateway has historically considered the residual value of the Project Partnerships as one key component of its estimate of future cash flows.  Gateway is continuing to execute its process of disposition of its interest in Project Partnerships that have reached the end of their Tax Credit compliance period, refer to Note 5 - Summary of Disposition Activities for the most recent update of those on-going activities.  No impairment expense was recognized during each of the nine month periods ended December 31, 2011 or 2010.

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.  However, Gateway does not guarantee any of the mortgages or other debt of the Project Partnerships.  No such funding to Project Partnerships occurred during each of the nine month periods ended December 31, 2011 or 2010.

Cash and Cash Equivalents

Gateway's policy is to include short-term investments with an original maturity of three months or less in Cash and Cash Equivalents.  Short-term investments are comprised of money market mutual funds.

Concentrations of Credit Risk

Financial instruments which potentially subject Gateway to concentrations of credit risk consist of cash investments in a money market mutual fund.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates that affect certain reported amounts and disclosures.  These estimates are based on management's knowledge and experience.  Accordingly, actual results could differ from these estimates.

Income Taxes

No provision for income taxes has been made in these financial statements, as income taxes are a liability of the partners rather than of Gateway.  Gateway files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  Gateway is no longer subject to U.S. federal examination by tax authorities for years prior to calendar year 2008.  The income tax returns subject to state examination by tax authorities are generally consistent with the federal period.

16

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Distribution Payable

Distribution payable consists of amounts received as net sales proceeds.  These amounts, net of the applicable state tax withholding, are due and payable to the Assignees and will be distributed at such time that state tax withholding liabilities have been settled.

State Tax Withholding

Certain state tax jurisdictions impose a capital gains tax on the taxable gains associated with the sale of investments in partnerships.  As General Partner of Gateway, it is Gateway’s obligation to calculate and withhold the applicable state taxes that are payable by the Partners of Gateway when Project Partnerships are sold or otherwise disposed by Gateway.  In most cases, the state taxes are due regardless if proceeds are received from the sale of Project Partnerships.  Therefore, Gateway has estimated the withholding taxes payable and the amount is included in Distribution Payable on the Balance Sheet.

Variable Interest Entities

In June 2009, the FASB issued new consolidation guidance applicable to variable interest entities.  Gateway adopted this new guidance as of April 1, 2010.  The adoption of this new guidance had no impact on Gateway’s financial statements.

Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics, (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the power to direct the activities of the entity that most significantly affect its economic performance, (ii) the obligation to absorb the expected losses or the right to receive the expected benefits of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. GAAP requires a VIE to be consolidated in the financial statements of the entity that is determined to be the primary beneficiary of the VIE.  Determination of the primary beneficiary of each VIE requires judgment and is based on an analysis of control of the entity and economic factors.  A VIE would be required to be consolidated if 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 possibly be significant to the VIE.  In the design of Project Partnership VIEs, the overriding concept centers around the premise that the limited partner invests solely for tax attributes associated with the property held by the VIE, while the general partner of the Project Partnership is responsible for overseeing its operations.  Based upon its analysis of all the relevant facts and considerations, Gateway has concluded that the general partner of the Project Partnership has the power to direct the activities of the Project Partnership that most significantly impact its economic performance, and the obligation to absorb losses or receive benefits that could be significant to the Project Partnership and therefore, Gateway is not the primary beneficiary.

Gateway holds variable interests in 94 VIEs, which consist of Project Partnerships (Refer to Note 1 - Organization for information about Gateway’s involvement in the Project Partnerships).  Gateway is not the primary beneficiary of the VIEs.  Since its inception, Gateway’s maximum exposure to loss as a result of its involvement with unconsolidated VIEs is limited to Gateway’s capital contributions to those VIEs, which is approximately $19,886,225 at December 31, 2011.  Over the course of the investment and Tax Credit Cycle, this maximum exposure to loss was offset by actual losses experienced by the Project Partnerships recorded by Gateway in its equity accounting.  Accordingly, at the current stage of the investment and Tax Credit Cycle, the carrying value of Gateway’s interest in the VIEs has been reduced to $171,688.  Tabular disclosures within Note 4 - Investments in Project Partnerships detail total capital contributions to VIEs, the carrying amount of assets and liabilities related to Gateway’s VIEs and the aggregate assets, liabilities and Gateway’s exposure to loss from those VIEs.  Gateway may be subject to additional losses to the extent of any financial support that Gateway voluntarily provides to those Project Partnerships in the future.  Gateway does not currently intend to provide future financial support to the Project Partnerships.

17

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued):

Basis of Preparation

The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles.  These statements should be read in conjunction with the financial statements and notes thereto included with Gateway's report on Form 10-K for the year ended March 31, 2011.  In the opinion of management, these financial statements include adjustments, consisting only of normal recurring adjustments, necessary to fairly summarize Gateway's financial position and results of operations.  The results of operations for the periods may not be indicative of the results to be expected for the year.

NOTE 3 - RELATED PARTY TRANSACTIONS:

The Payable to General Partners primarily represents the asset management fees and general and administrative expenses owed to the General Partners at the end of the period.  It is unsecured, due on demand and, in accordance with the Agreement, non-interest bearing.  Within the next 12 months, the Managing General Partner does not intend to demand payment on the portion of Asset Management Fees payable classified as long-term on the Balance Sheet.

Value Partners, Inc., an affiliate of Gateway, acquired the general partner interest in Logan Heights, one of the Project Partnerships in Series 8, in 2003 (see further discussion in Note 4).

For the nine months ended December 31, 2011 and 2010, the General Partners and affiliates are entitled to compensation and reimbursement for costs and expenses incurred by Gateway as follows:

Asset Management Fee - The Managing General Partner is entitled to receive an annual asset management fee equal to the greater of (i) $2,000 for each limited partnership in which Gateway invests, or (ii) 0.275% of Gateway's gross proceeds from the sale of limited partnership interests.  In either event (i) or (ii), the maximum amount may not exceed 0.2% of the aggregate cost (Gateway's capital contribution plus Gateway's share of the Properties' mortgage) of Gateway's interest in properties owned by the Project Partnerships.  The asset management fee will be paid only after all other expenses of Gateway have been paid.  These fees are included in the Statements of Operations.

	2011		2010
Series 7	$	33,257	$	44,518
Series 8		59,484		60,350
Series 9		30,551		34,483
Series 10		22,838		23,438
Series 11		17,819		20,916
Total	$	163,949	$	183,705

General and Administrative Expenses - The Managing General Partner is reimbursed for general and administrative expenses of Gateway on an accountable basis.  This expense is included in the Statements of Operations.  During fiscal year 2011, the General Partner ceased further allocations of general and administrative expenses to Gateway.

	2011		2010
Series 7	$	-	$	-
Series 8		-		-
Series 9		-		-
Series 10		-		-
Series 11		-		20,774
Total	$	-	$	20,774

18

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS:

As of December 31, 2011, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 7 - 18, Series 8 - 36, and Series 9 - 19) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
The following is a summary of Investments in Project Partnerships as of:
	SERIES 7						SERIES 8						SERIES 9
	December 31,			March 31,			December 31,			March 31,			December 31,			March 31,
	2011			2011			2011			2011			2011			2011
Capital Contributions to Project Partnerships
and purchase price paid for limited partner
interests in Project Partnerships	$	3,308,861		$	4,648,444		$	6,293,277		$	6,965,669		$	3,824,212		$	4,599,313
Cumulative equity in losses of Project
Partnerships (1) (2)		(3,186,081	)		(4,533,144	)		(6,271,505	)		(6,877,633	)		(3,489,505	)		(4,242,472	)
Cumulative distributions received from
Project Partnerships		(132,154	)		(177,214	)		(144,159	)		(179,115	)		(124,615	)		(164,111	)
Investment in Project Partnerships before
Adjustment		(9,374	)		(61,914	)		(122,387	)		(91,079	)		210,092			192,730
Excess of investment cost over the underlying
assets acquired:
Acquisition fees and expenses		347,475			496,983			476,293			513,903			174,172			218,681
Accumulated amortization of acquisition
fees and expenses		(161,201	)		(229,600	)		(139,622	)		(161,554	)		(76,332	)		(103,479	)
Reserve for Impairment of Investment in
Project Partnerships		(176,900	)		(205,469	)		(214,284	)		(261,270	)		(307,932	)		(307,932	)
Investments in Project Partnerships	$	-		$	-		$	-		$	-		$	-		$	-
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $3,936,530 in Series 7, $8,847,600 in Series 8, and $3,257,945 in Series 9 for the period ended December 31, 2011; and cumulative suspended losses of $5,196,366 in Series 7, $8,784,792 in Series 8, and $3,506,137 in Series 9 for the year ended March 31, 2011 are not included.
(2) In accordance with Gateway's accounting policy to apply equity in losses of Project Partnerships to receivables from Project Partnerships, $24,220 in losses are included in Series 8 as of December 31, 2011 and March 31, 2011. (See discussion in Note 2 - Significant Accounting Policies).

19

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

As of December 31, 2011, Gateway had acquired a 99% interest in the profits, losses, and Tax Credits as a limited partner in Project Partnerships (Series 10 - 13 and Series 11 - 8) which own and operate government assisted multi-family housing complexes. Cash flows from operations are allocated according to each Project Partnership agreement. Upon dissolution, proceeds will be distributed according to each Project Partnership agreement.
The following is a summary of Investments in Project Partnerships as of:
	SERIES 10						SERIES 11						TOTAL SERIES 7 - 11
	December 31,			March 31,			December 31,			March 31,			December 31,			March 31,
	2011			2011			2011			2011			2011			2011
Capital Contributions to Project Partnerships
and purchase price paid for limited partner
interests in Project Partnerships	$	3,565,393		$	3,716,106		$	2,894,482		$	3,832,294		$	19,886,225		$	23,761,826
Cumulative equity in losses of Project
Partnerships (1)		(2,257,067	)		(2,350,831	)		(1,159,068	)		(2,013,680	)		(16,363,226	)		(20,017,761	)
Cumulative distributions received from
Project Partnerships		(242,191	)		(241,641	)		(173,763	)		(203,283	)		(816,882	)		(965,363	)
Investment in Project Partnerships before
Adjustment		1,066,135			1,123,634			1,561,651			1,615,331			2,706,117			2,778,702
Excess of investment cost over the underlying
assets acquired:
Acquisition fees and expenses		167,749			174,878			201,455			267,568			1,367,144			1,672,013
Accumulated amortization of acquisition
fees and expenses		(145,834	)		(147,889	)		(170,316	)		(200,224	)		(693,305	)		(842,746	)
Reserve for Impairment of Investment in
Project Partnerships		(1,085,926	)		(1,085,926	)		(1,423,226	)		(1,436,812	)		(3,208,268	)		(3,297,409	)
Investments in Project Partnerships	$	2,124		$	64,697		$	169,564		$	245,863		$	171,688		$	310,560
(1) In accordance with Gateway's accounting policy to not carry Investments in Project Partnerships below zero, cumulative suspended losses of $916,627 in Series 10 and $935,693 in Series 11 for the period ended December 31, 2011; and cumulative suspended losses of $856,925 in Series 10 and $1,579,776 in Series 11 for the year ended March 31, 2011 are not included.

20

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 7 and Series 8 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 7						SERIES 8 (1)
	2011			2010			2011			2010
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$	2,457,210		$	3,099,586		$	4,436,900		$	4,376,054
Investment properties, net		9,667,490			13,799,275			19,118,660			20,334,569
Other assets		11,599			14,401			136,457			356,849
Total assets	$	12,136,299		$	16,913,262		$	23,692,017		$	25,067,472
Liabilities and Partners' Deficit:
Current liabilities	$	591,001		$	671,569		$	1,446,192		$	1,357,243
Long-term debt		15,836,566			21,306,909			32,313,356			33,354,386
Total liabilities		16,427,567			21,978,478			33,759,548			34,711,629
Partners' deficit
Limited Partner		(4,059,899	)		(4,789,148	)		(9,229,499	)		(8,948,849	)
General Partners		(231,369	)		(276,068	)		(838,032	)		(695,308	)
Total partners' deficit		(4,291,268	)		(5,065,216	)		(10,067,531	)		(9,644,157	)
Total liabilities and partners' deficit	$	12,136,299		$	16,913,262		$	23,692,017		$	25,067,472
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$	1,973,722		$	2,603,372		$	4,019,623		$	4,019,935
Expenses:
Operating expenses		1,659,030			2,074,876			3,158,522			3,209,518
Interest expense		223,573			327,995			500,300			519,439
Depreciation and amortization		467,945			650,979			1,039,941			1,047,965
Total expenses		2,350,548			3,053,850			4,698,763			4,776,922
Net loss	$	(376,826	)	$	(450,478	)	$	(679,140	)	$	(756,987	)
Other partners' share of net income (loss)	$	17,713		$	25,709		$	4,583		$	(3,972	)
Gateway's share of net loss	$	(394,539	)	$	(476,187	)	$	(683,723	)	$	(753,015	)
Suspended losses		394,539			476,187			683,723			753,015
Equity in Loss of Project Partnerships	$	-		$	-		$	-		$	-

21

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

(1) As discussed in Note 3, an affiliate of the General Partner (Value Partners, Inc.) is the operating general partner in one of the Project Partnerships included in Series 8 above (Logan Heights). The Logan Heights Project Partnership is not consolidated in Gateway's financial statements as Gateway's investment in Logan Heights is accounted for under the equity method. The information below is included for related party disclosure purposes. The Project Partnership's financial information for the periods ending September 2011 and September 2010 is as follows:
	September 2011			September 2010
Total Assets	$	450,217		$	427,139
Total Liabilities		795,259			802,512
Gateway Deficit		(227,763	)		(342,970	)
Other Partner's Deficit		(117,280	)		(32,403	)
Total Revenue		107,209			84,801
Net Income (Loss)	$	9,931		$	(7,176	)

22

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 9 and Series 10 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 9						SERIES 10
	2011			2010			2011			2010
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$	1,782,080		$	2,199,747		$	2,104,504		$	2,085,261
Investment properties, net		9,531,619			12,520,332			9,678,973			10,058,063
Other assets		42,063			52,179			71,078			45,113
Total assets	$	11,355,762		$	14,772,258		$	11,854,555		$	12,188,437
Liabilities and Partners' Deficit:
Current liabilities	$	354,855		$	465,111		$	442,520		$	440,551
Long-term debt		14,513,118			18,083,323			11,850,415			11,952,788
Total liabilities		14,867,973			18,548,434			12,292,935			12,393,339
Partners' (deficit) equity
Limited Partner		(3,137,857	)		(3,342,066	)		92,119			291,124
General Partners		(374,354	)		(434,110	)		(530,499	)		(496,026	)
Total partners' (deficit) equity		(3,512,211	)		(3,776,176	)		(438,380	)		(204,902	)
Total liabilities and partners' deficit	$	11,355,762		$	14,772,258		$	11,854,555		$	12,188,437
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$	1,746,970		$	2,097,626		$	1,440,817		$	1,413,025
Expenses:
Operating expenses		1,330,262			1,677,510			1,148,327			1,075,755
Interest expense		205,842			275,469			141,866			145,586
Depreciation and amortization		453,975			543,817			329,718			329,736
Total expenses		1,990,079			2,496,796			1,619,911			1,551,077
Net loss	$	(243,109	)	$	(399,170	)	$	(179,094	)	$	(138,052	)
Other partners' share of net (loss) income	$	(2,431	)	$	(3,991	)	$	9,563		$	20,474
Gateway's share of net loss	$	(240,678	)	$	(395,179	)	$	(188,657	)	$	(158,526	)
Suspended losses		240,678			395,179			131,533			138,772
Equity in Loss of Project Partnerships	$	-		$	-		$	(57,124	)	$	(19,754	)

23

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

In accordance with Gateway's policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized balance sheets for the Project Partnerships of Series 11 and Total Series 7 - 11 as of September 30 and the respective summarized statements of operations for the nine months ended September 30 of each year:
	SERIES 11						TOTAL SERIES 7 - 11
	2011			2010			2011			2010
SUMMARIZED BALANCE SHEETS
Assets:
Current assets	$	753,269		$	1,224,481		$	11,533,963		$	12,985,129
Investment properties, net		5,534,034			8,637,973			53,530,776			65,350,212
Other assets		211,872			271,135			473,069			739,677
Total assets	$	6,499,175		$	10,133,589		$	65,537,808		$	79,075,018
Liabilities and Partners' Deficit:
Current liabilities	$	348,441		$	354,587		$	3,183,009		$	3,289,061
Long-term debt		6,054,098			9,799,866			80,567,553			94,497,272
Total liabilities		6,402,539			10,154,453			83,750,562			97,786,333
Partners' (deficit) equity
Limited Partner		400,817			404,287			(15,934,319	)		(16,384,652	)
General Partners		(304,181	)		(425,151	)		(2,278,435	)		(2,326,663	)
Total partners'(deficit) equity		96,636			(20,864	)		(18,212,754	)		(18,711,315	)
Total liabilities and partners' deficit	$	6,499,175		$	10,133,589		$	65,537,808		$	79,075,018
SUMMARIZED STATEMENTS OF OPERATIONS
Rental and other income	$	992,610		$	1,430,471		$	10,173,742		$	11,564,429
Expenses:
Operating expenses		796,094			1,131,563			8,092,235			9,169,222
Interest expense		93,632			156,371			1,165,213			1,424,860
Depreciation and amortization		272,657			392,969			2,564,236			2,965,466
Total expenses		1,162,383			1,680,903			11,821,684			13,559,548
Net loss	$	(169,773	)	$	(250,432	)	$	(1,647,942	)	$	(1,995,119	)
Other partners' share of net (loss) income	$	(1,697	)	$	(7,156	)	$	27,731		$	31,064
Gateway's share of net loss	$	(168,076	)	$	(243,276	)	$	(1,675,673	)	$	(2,026,183	)
Suspended losses		91,776			132,964			1,542,249			1,896,117
Equity in Loss of Project Partnerships	$	(76,300	)	$	(110,312	)	$	(133,424	)	$	(130,066	)

24

NOTE 4 - INVESTMENTS IN PROJECT PARTNERSHIPS (Continued):

The aggregate assets, liabilities and exposure to loss from the VIEs in which Gateway holds a variable interest, but has concluded that it is not the primary beneficiary, are provided in the table below (refer to Note 2 for discussion of variable interest entities).

	September 30, 2011						September 30, 2010
	Aggregate Assets		Aggregate Liabilities		Our Risk Of Loss		Aggregate Assets		Aggregate Liabilities		Our Risk Of Loss
Series 7	$	12,136,299	$	16,427,567	$	-	$	16,913,262	$	21,978,478	$	-
Series 8		23,692,017		33,759,548		-		25,067,473		34,711,629		-
Series 9		11,355,762		14,867,973		-		14,772,259		18,548,434		-
Series 10		11,854,555		12,292,935		2,124		12,188,437		12,393,339		70,612
Series 11		6,499,175		6,402,539		169,564		10,133,589		10,154,453		246,828
Total	$	65,537,808	$	83,750,562	$	171,688	$	79,075,020	$	97,786,333	$	317,440

NOTE 5 - SUMMARY OF DISPOSITION ACTIVITIES:

Gateway at one time held investments in 133 Project Partnerships (39 in Series 7, 43 in Series 8, 24 in Series 9, 15 in Series 10, and 12 in Series 11).  As of December 31, 2011, Gateway has sold its interest in 39 Project Partnerships (21 in Series 7, 7 in Series 8, 5 in Series 9, 2 in Series 10 and 4 in Series 11).  A summary of the sale transactions for the Project Partnerships disposed during the current fiscal year-to-date and the previous fiscal year are summarized below.

Fiscal Year 2012 Disposition Activity:

Series 7

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Blue Ridge Elderly Housing	$	32,675	$	3.14	$	32,675
April 2011	Lakeland II		23,875		2.30		23,875
April 2011	Meadow Run Apartments		38,275		3.68		38,275
April 2011	Mount Vernon Rental Housing		19,074		1.83		19,074
August 2011	Cavalry Crossing Apartments		4,977		0.48		4,977
December 2011	Nottingham Apartments		6,650		0.64		6,650
December 2011	Vardaman Manor		8,600		0.83		8,600
	Other, net (see below)		-		-		2,000
						$	136,126

The net proceeds per LP unit from the sale of Blue Ridge Elderly Housing, Lake Lakeland II, Meadow Run Apartments, Mount Vernon Rental Housing, Cavalry Crossing Apartments, Nottingham Apartments and Vardaman Manor are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

25

NOTE 5 - SUMMARY OF DISPOSITION ACTIVITIES (Continued):

Series 8

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Cottondale Rental Housing	$	19,875	$	1.99	$	19,875
December 2011	Arbor Gate Apartments		9,200		0.92		9,200
December 2011	Lincoln Apartments		15,503		1.55		15,503
December 2011	Elderly Housing of Pontotoc		13,400		1.34		13,400
						$	57,978

The net proceeds per LP unit from the sale of Cottondale Rental Housing, Arbor Gate Apartments, Lincoln Apartments and Elderly Housing of Pontotoc are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 9

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Arbor Trace Apartments Phase I	$	19,075	$	3.05	$	19,075
April 2011	Arbor Trace Apartments Phase II		33,474		5.35		33,474
August 2011	Sycamore Landing		4,169		0.67		4,169
						$	56,718

The net proceeds per LP unit from the sale of Arbor Trace Apartment Phase, Arbor Trace Apartments Phase II and Sycamore Landing are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 10

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
September 2011	Peachtree Apartments	$	26,145	$	5.18	$	26,145
						$	26,145

The net proceeds per LP unit from the sale of Peachtree Apartments is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 11

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
August 2011	Parsons Village	$	2,681	$	0.52	$	2,681
September 2011	Mountain Oak Apartments		5,324		1.04		5,324
September 2011	Warsaw Manor Apartments		89,765		17.51		89,765
	Other, net (see below)		-		-		2,000
						$	99,770

The net proceeds per LP unit from the sale of Parson Village, Mountain Oak Apartments and Warsaw Manor Apartments are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

26

NOTE 5 - SUMMARY OF DISPOSITION ACTIVITIES (Continued):

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Fiscal Year 2011 Disposition Activity:

Series 7

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
August 2010	Pioneer Apartments, L.P.	$	157,949	$	15.19	$	157,949
December 2010	Lake Village Apartments		65,124		6.27		65,124
December 2010	Savannah Park of Atoka		65,125		6.27		65,125
December 2010	Savannah Park of Coalgate		65,125		6.27		65,125
December 2010	Cardinal Apartments		272,071		26.17		187,362
						$	540,685

The net proceeds per LP unit from the sale of Pioneer Apartments, Lake Village Apartments, Savannah Park of Atoka, Savannah Park of Coalgate and Cardinal Apartments are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 8

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
	Other, net (see below)	$	-	$	-	$	4,000
						$	4,000

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $4,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 9

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
September 2010	Stilwell Properties III	$	43,030	$	6.88	$	43,030
	Other, net (see below)		-		-		2,000
						$	45,030

The net proceeds per LP unit from the sale of Stilwell Properties III is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from a Project Partnership sale transaction which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

27

NOTE 5 - SUMMARY OF DISPOSITION ACTIVITIES (Continued):

Series 10

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
	Other, net (see below)	$	-	$	-	$	2,000
						$	2,000

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from a Project Partnership sale transaction which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 11

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
December 2010	Cardinal Apartments	$	175,667	$	34.26	$	125,774
						$	125,774

The net proceeds per LP unit from the sale of Cardinal Apartments is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

NOTE 6 - SIGNIFICANT EQUITY INVESTEES:

Certain Project Partnerships constitute 20% or more of assets, equity or income (loss) from continuing operations of the respective Series in which they are held (“Significant Project Partnerships”).  In accordance with Gateway’s policy of presenting the financial information of the Project Partnerships on a three month lag, below is the summarized results of operations as of September 30, 2011 for each Significant Project Partnership:

Series 10
	Stigler Properties
Rental and other income	$	68,398
Gross loss		(43,899	)
Net loss	$	(65,395	)
Series 11
	Creekstone Apartments, L.P.			Magnolia Place Apartments, L.P.
Rental and other income	$	161,022		$	117,316
Gross profit (loss)		27,703			(15,727	)
Net loss	$	(29,682	)	$	(47,389	)

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

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Gateway.  The MD&A is provided as a supplement to, and should be read in conjunction with the financial statements and accompanying footnotes to the financial statements 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 have been implemented by Gateway and other provisions will be implemented by Gateway in subsequent years.

28

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

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.

Results of Operations

As more fully detailed in the Exit Strategy discussion included within this MD&A, all of the Project Partnerships have delivered their Tax Credits to Gateway and the Tax Credit compliance period has expired for all 133 of the Project Partnerships initially held.  Gateway is in the process of selling or disposing of its interests in Project Partnerships that have reached the end of their Tax Credit compliance period.  Net proceeds received from the sales are in turn distributed to the Limited Partners.  Once all Project Partnership interests have been sold or otherwise disposed of, Gateway will be liquidated.  The target date for liquidation of Gateway is on or before December 31, 2012, although there is no certainty, and it may not even be considered likely at this time, that all the activities necessary to occur as of such date will have transpired.

Distribution income arises from any cash distributions received from Project Partnerships which have a zero investment balance for financial reporting purposes.  Distribution income decreased $1,014 from $49,647 for the nine months ended December 31, 2010 to $48,633 for the nine months ended December 31, 2011.  The decrease in distribution income is a result of decreases in available cash at Project Partnerships to pay distributions in accordance with the partnership agreements as well as the timing of such payments.  The gross distributions received from Project Partnerships decreased from $60,548 for the nine month period ended December 31, 2010 to $54,082 for the same period ended in 2011.

Total expenses of Gateway were $291,678 for the nine months ended December 31, 2011, a decrease of $21,371 as compared to the nine months ended December 31, 2010 total expenses of $313,049.  The decrease results primarily from decreases in asset management fees and general and administrative expenses - General Partner due to sales of Project Partnerships (Gateway ceases accruing Asset Management Fees and General and Administrative expenses - General Partner for sold Project Partnerships) along with the cessation of accruals for general and administrative expenses - General Partner in Series 8 beginning in fiscal year 2010, and Series 7, Series 9, Series 10, and Series 11 beginning in fiscal year 2011.

Equity in Loss of Project Partnerships increased from $130,066 for the nine months ended December 31, 2010 to $133,424 for the nine months ended December 31, 2011 because of an increase in the losses from Project Partnerships with positive investment balances.  Because Gateway utilizes the equity method of accounting to account for its investment in Project Partnerships, income or losses from Project Partnerships with a zero investment balance are not recognized in the Statement of Operations.  For the nine months ended September 30, 2011 (Project Partnership financial information is on a three-month lag), Gateway’s share of the net loss was $1,675,673, of which $1,542,249 was suspended.  For the nine months ended September 30, 2010, Gateway’s share of the net loss was $2,026,183, of which $1,896,117 was suspended.

Gain on Sale of Project Partnerships decreased from $396,353 for the nine months ended December 31, 2010 to $376,737 for the nine months ended December 31, 2011.  As more fully discussed within this MD&A, five Project Partnership investments were sold during the third quarter of fiscal year 2012 and the third quarter of fiscal year 2011.  The amount of the gain or loss from the sale of a Project Partnership and the period 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 within this MD&A.

Interest income increased $98 from $90 for the nine months ended December 31, 2010 to $188 for the nine months ended December 31, 2011.  The change in interest income results from the fluctuation of interest rates on short-term investments over this period, along with an increase in Cash and Cash Equivalents over the same period.  Interest income is generally one source of funds available to pay administrative costs of Gateway.

29

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Liquidity and Capital Resources

The capital resources of each Series are used to pay General and Administrative operating costs including personnel, supplies, data processing, travel, legal, and accounting and audit fees associated with the administration and monitoring of Gateway and the Project Partnerships.  The capital resources are also used to pay theAsset 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.

The sources of funds to pay the expenses of Gateway are cash and cash equivalents and cash distributed to the Series from the operations of the Project Partnerships.  Due to the rent limitations applicable to the Project Partnerships as a result of their qualifying for Tax Credits, Gateway does not expect there to be a significant increases in future rental income of the Project Partnerships.  Therefore, cash distributions from the operations of the Project Partnerships are not expected to increase.  However, operational factors of the Project Partnerships and the timing of distributions contribute to fluctuations of distributions from period to period and year to year.  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.

In total, Gateway reported net income of $456 from operations for the nine months ended December 31, 2011.  Cash and Cash Equivalents increased by $41,030 during the nine months ended December 31, 2011.  Of the Cash and Cash Equivalents on hand as of December 31, 2011 and March 31, 2011, $1,142,676 and $765,940, respectively, are payable to certain Series’ Limited Partners arising from the sale of Project Partnerships.  Distributions will occur to those certain Limited Partners in a subsequent quarter, less the applicable state tax withholding.

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

Series 7 - Gateway closed this series on October 16, 1992 after receiving $10,395,000 from 635 Limited Partner investors.  Equity in Loss of Project Partnerships has been $0 for each of the nine month periods ended December 31, 2011 and 2010.  For the nine months ended September 30, 2011 and 2010, the Project Partnerships generated a loss of $376,826 and $450,478 on Rental and other income of $1,973,722 and $2,603,372, respectively.  Gateway’s share of the Project Partnerships’ net loss for the nine months ended September 30, 2011 and 2010 was $394,539 and $476,187, all of which was suspended.  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 $467,945 and $650,979 for the nine months ended September 30, 2011 and 2010, respectively.  Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2011, the Series had $831,995 of Cash and Cash Equivalents.  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 net income of $79,348 for the nine months ended December 31, 2011.  However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $84,629.  Cash provided by investing activities totaled $146,327 consisting of cash distributions from the Project Partnerships of $10,201 and Net Proceeds from Sale of Project Partnerships of $136,126.

30

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Series 8 - Gateway closed this Series on June 28, 1993 after receiving $9,980,000 from 664 Limited Partner investors.  Equity in Loss of Project Partnerships has been $0 for each of the nine month periods ended December 31, 2011 and 2010.  For the nine months ended September 30, 2011 and 2010, the Project Partnerships generated a loss of $679,140 and $756,987 on Rental and other income of $4,019,623 and $4,019,935, respectively.  Gateway’s share of the Project Partnerships’ net loss for the nine months ended September 30, 2011 and 2010 was $683,723 and $753,015, all of which was suspended.  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 $1,039,941 and $1,047,965 for the nine months ended September 30, 2011 and 2010, respectively.  Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2011, the Series had $163,581 of Cash and Cash Equivalents.  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 $20,471 for the nine months ended December 31, 2011.  However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $141,557.  Cash provided by investing activities totaled $73,741 consisting of cash distributions from the Project Partnerships of $15,763 and Net Proceeds from Sale of Project Partnerships of $57,978.

Series 9 - Gateway closed this Series on September 30, 1993 after receiving $6,254,000 from 406 Limited Partner investors.  Equity in Loss of Project Partnerships has been $0 for each of the nine month periods ended December 31, 2011 and 2010.  For the nine months ended September 30, 2011 and 2010, the Project Partnerships generated a loss of $243,109 and $399,170 on Rental and other income of $1,746,970 and $2,097,626, respectively.  Gateway’s share of the Project Partnerships’ net loss for nine months ended September 30, 2011 and 2010 was $240,678 and $395,179, all of which was suspended.  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 $453,975 and $543,817 for the nine months ended September 30, 2011 and 2010, respectively.  Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2011, the Series had $169,739 of Cash and Cash Equivalents.  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 net income of $14,579 for the nine months ended December 31, 2011.  However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $41,082.  Cash provided by investing activities totaled $68,625 consisting of cash distributions from the Project Partnerships of $11,907 and Net Proceeds from Sale of Project Partnerships of $56,718.

Series 10 - Gateway closed this Series on January 21, 1994 after receiving $5,043,000 from 325 Limited Partner investors.  Equity in Loss of Project Partnerships increased from $19,754 for the nine months ended December 31, 2010 to $57,124 for the nine months ended December 31, 2011.  For the nine months ended September 30, 2011 and 2010, the Project Partnerships generated a loss of $179,094 and $138,052 on Rental and other income of $1,440,817 and $1,413,025, respectively.  Gateway’s share of the Project Partnerships’ net loss for the nine months ended September 30, 2011 and 2010 was $188,657 and $158,526, of which $131,533 and $138,772 were suspended, respectively.  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 $329,718 and $329,736 for the nine months ended September 30, 2011 and 2010, respectively.  Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2011, the Series had $139,868 of Cash and Cash Equivalents.  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.

31

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

As disclosed on the statement of cash flows, the Series had a net loss of $64,730 for the nine months ended December 31, 2011.  However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $52,181.  Cash provided by investing activities totaled $38,389 consisting of cash distributions from the Project Partnerships of $12,244 and Net Proceeds from Sale of Project Partnerships of $26,145.

Series 11 - Gateway closed this Series on April 29, 1994 after receiving $5,127,000 from 330 Limited Partner investors.  The Equity in Loss of Project Partnerships decreased from $110,312 for the nine months ended December 31, 2010 to $76,300 for the nine months ended December 31, 2011.  For the nine months ended September 30, 2011 and 2010, the Project Partnerships generated a loss of $169,773 and $250,432 on Rental and other income of $992,610 and $1,430,471, respectively.  Gateway’s share of the Project Partnerships’ net loss for the nine months ended September 30, 2011 and 2010 was $168,076 and $243,276, of which $91,776 and $132,964 were suspended, respectively.  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 $272,657 and $392,969 for the nine months ended September 30, 2011 and 2010, respectively.  Overall, management believes the Project Partnerships are operating as expected and have generated Tax Credits which met projections.

At December 31, 2011, the Series had $389,682 of Cash and Cash Equivalents.  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 $8,270 for the nine months ended December 31, 2011.  However, after considering the changes in operating assets and liabilities, net cash used in operating activities was $70,340.  Cash provided by investing activities totaled $103,737 consisting of cash distributions from the Project Partnerships of $3,967 and Net Proceeds from Sale of Project Partnerships of $99,770.

Critical Accounting Estimates

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.  If the sum of the expected future cash flows is less than the carrying amount of the investment, Gateway recognizes an impairment loss.  No impairment expense was recognized during each of the nine-month periods ended December 31, 2011 and 2010.

Exit Strategy upon Expiration of the Project Partnership Tax Credit Compliance Period

The IRS compliance period for low-income housing Tax Credit properties is generally 15 years from occupancy following construction or rehabilitation completion.  When Project Partnerships reach the end of their Tax Credit compliance period, Gateway initiates the process of disposing of its investment in the Project Partnership; the objective of the process is to sell Gateway’s interest in the properties for fair market value and ultimately, when Gateway’s last Project Partnership investment is sold, liquidate Gateway.  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 December 31 2011, Gateway holds a limited partner interest in 94 Project Partnerships which own and operate government assisted multi-family housing complexes.  Gateway at one time held investments in 133 Project Partnerships.  As of December 31, 2010, all of the Project Partnerships had reached the end of their Tax Credit compliance period.  As of December 31 2011, 39 of the Project Partnerships have been sold (21 in Series 7, 7 in Series 8, 5 in Series 9, 2 in Series 10 and 4 in Series 11) 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 Limited Partners of the respective Series.  A summary of the sale transactions for the Project Partnerships disposed during the current fiscal year-to-date and the previous fiscal year are summarized below.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Fiscal Year 2012 Disposition Activity:

Series 7

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Blue Ridge Elderly Housing	$	32,675	$	3.14	$	32,675
April 2011	Lakeland II		23,875		2.30		23,875
April 2011	Meadow Run Apartments		38,275		3.68		38,275
April 2011	Mount Vernon Rental Housing		19,074		1.83		19,074
August 2011	Cavalry Crossing Apartments		4,977		0.48		4,977
December 2011	Nottingham Apartments		6,650		0.64		6,650
December 2011	Vardaman Manor		8,600		0.83		8,600
	Other, net (see below)		-		-		2,000
						$	136,126

The net proceeds per LP unit from the sale of Blue Ridge Elderly Housing, Lake Lakeland II, Meadow Run Apartments, Mount Vernon Rental Housing, Cavalry Crossing Apartments, Nottingham Apartments and Vardaman Manor are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 8

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Cottondale Rental Housing	$	19,875	$	1.99	$	19,875
December 2011	Arbor Gate Apartments		9,200		0.92		9,200
December 2011	Lincoln Apartments		15,503		1.55		15,503
December 2011	Elderly Housing of Pontotoc		13,400		1.34		13,400
						$	57,978

The net proceeds per LP unit from the sale of Cottondale Rental Housing, Arbor Gate Apartments, Lincoln Apartments and Elderly Housing of Pontotoc are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 9

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
April 2011	Arbor Trace Apartments Phase I	$	19,075	$	3.05	$	19,075
April 2011	Arbor Trace Apartments Phase II		33,474		5.35		33,474
August 2011	Sycamore Landing		4,169		0.67		4,169
						$	56,718

The net proceeds per LP unit from the sale of Arbor Trace Apartment Phase, Arbor Trace Apartments Phase II and Sycamore Landing are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Series 10

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
September 2011	Peachtree Apartments	$	26,145	$	5.18	$	26,145
						$	26,145

The net proceeds per LP unit from the sale of Peachtree Apartments is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 11

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
August 2011	Parsons Village	$	2,681	$	0.52	$	2,681
September 2011	Mountain Oak Apartments		5,324		1.04		5,324
September 2011	Warsaw Manor Apartments		89,765		17.51		89,765
	Other, net (see below)		-		-		2,000
						$	99,770

The net proceeds per LP unit from the sale of Parson Village, Mountain Oak Apartments and Warsaw Manor Apartments are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Fiscal Year 2011 Disposition Activity:

Series 7

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
August 2010	Pioneer Apartments, L.P.	$	157,949	$	15.19	$	157,949
December 2010	Lake Village Apartments		65,124		6.27		65,124
December 2010	Savannah Park of Atoka		65,125		6.27		65,125
December 2010	Savannah Park of Coalgate		65,125		6.27		65,125
December 2010	Cardinal Apartments		272,071		26.17		187,362
						$	540,685

The net proceeds per LP unit from the sale of Pioneer Apartments, Lake Village Apartments, Savannah Park of Atoka, Savannah Park of Coalgate and Cardinal Apartments are a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 7 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Series 8

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
	Other, net (see below)	$	-	$	-	$	4,000
						$	4,000

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $4,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from Project Partnership sale transactions which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 8 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 9

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
September 2010	Stilwell Properties III	$	43,030	$	6.88	$	43,030
	Other, net (see below)		-		-		2,000
						$	45,030

The net proceeds per LP unit from the sale of Stilwell Properties III is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from a Project Partnership sale transaction which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 9 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 10

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
	Other, net (see below)	$	-	$	-	$	2,000
						$	2,000

Gateway recognized an additional gain on sale of Project Partnerships in the amount of $2,000 resulting from the true-up of certain legal and other sale transaction closing expenses arising from a Project Partnership sale transaction which closed in the prior fiscal year.  This amount, less the applicable state tax withholding, will be distributed to the Series 10 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

Series 11

Transaction				Net Proceeds		Gain on
Month / Year	Project Partnership	Net Proceeds		Per LP Unit		Disposal
December 2010	Cardinal Apartments	$	175,667	$	34.26	$	125,774
						$	125,774

The net proceeds per LP unit from the sale of Cardinal Apartments is a component of the Distribution Payable on the Balance Sheet as of December 31, 2011.  These net proceeds, less the applicable state tax withholding, will be distributed to the Series 11 Limited Partners in a subsequent period at such time that state withholding tax liabilities have been settled.

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued):

Status Update on Unsold Project Partnerships:

The following summarizes the most recent status of the sale/disposal process for the Project Partnership investments held as of December 31, 2011:

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

Series 8

Antlers Properties	Logan Heights, Ltd.
AAA Properties of Bentonville	Meadowview Properties Limited Partnership
Concordia Senior Housing, L.P.	Mountainburg Properties
Kirksville Senior Apartments, Limited Partnership	Wetumka Properties

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 $583,000, or $58.42 per limited partnership unit.  Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 8 Limited Partners in a period subsequent to the closing of these sales transactions which would most likely occur within the next two years.

Series 9

Abernathy Properties	Jay Properties II
Boxwood Place Properties	Lamar Properties, L.P.

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 $266,000, or $42.53 per limited partnership unit.  Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 9 Limited Partners in a period subsequent to the closing of these sales transactions which would most likely occur within the next two years.

Series 10

Stigler Properties

This approval is subject to a number of contingencies, the outcome of which cannot be predicted with certainty.  However, utilizing the sale amount as approved by Gateway, should the transaction close without modification, the estimated net proceeds to Gateway from the sale of this Project Partnership is estimated to be $55,000, or $10.91 per limited partnership unit.  Sales proceeds would be available for distribution, less the applicable state tax withholding, to the Series 10 Limited Partners in a period subsequent to the closing of this sales transaction which would most likely occur within the next two years.

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Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

As a smaller reporting company, no information is required.

Item 4.  Controls and Procedures.

Not applicable to this report.

Item 4T.  Controls and Procedures.

Disclosure controls are procedures designed to ensure that information required to be disclosed in Gateway's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.  Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as Gateway's are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of the Managing General Partner’s management, including the Chief Executive Officer and Chief Financial Officer, Gateway has evaluated the effectiveness of its disclosure controls and procedures applicable to each of the Series as well as to the total partnership pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures applicable to each of the Series as well as to the total partnership are effective.  There were no changes in Gateway’s internal control over financial reporting during the nine months ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, Gateway’s internal control over financial reporting.

With respect to the Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Financial Officer, respectively, of the Managing General Partner of Gateway (see Exhibits 31.1 and 31.2 included herein), such certifications are applicable to each of the Series as well as to the total partnership.

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PART II - Other Information

Item 1.  Legal Proceedings.

Not applicable to this report.

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

Not applicable to this report.

Item 3.  Defaults upon Senior Securities.

Not applicable to this report.

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

Not applicable to this report.

Item 5.  Other Information.

Not applicable to this report.

Item 6.  Exhibits.

31.1 Principal Executive Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

31.2 Principal Financial Officer Certification as required by Rule 13a-14(a)/15d-14(a), filed herewith.

32. Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

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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.

GATEWAY TAX CREDIT FUND III, LTD.

(A Florida Limited Partnership)

By: Raymond James Tax Credit Funds, Inc.

(the Managing General Partner)

Date: February 10, 2012	By:/s/ Ronald M. Diner
	Ronald M. Diner
	President

Date: February 10, 2012	By:/s/ Toni S. Matthews
	Toni S. Matthews
	Vice President and Chief Financial Officer

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