American Tax Credit Properties Ii L P (ATCIIX) 10-Q 2006 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 29, 2005

OR

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

For the transition period from to ___________

Commission file number: 0-18405

American Tax Credit Properties II L.P.

(Exact name of Registrant as specified in its charter)

Delaware	13-3495678
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.
Richman Tax Credit Properties II L.P. 340 Pemberwick Road Greenwich, Connecticut	06831
(Address of principal executive offices)	(ZipCode)

Registrant's telephone number, including area code: (203) 869-0900

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 filing requirements for the past 90 days.

Yes x  Noo

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No x

1

AMERICAN TAX CREDIT PROPERTIES II L.P.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents	Page
Balance Sheets	3
Statements of Operations	4
Statements of Cash Flows	5
Notes to Financial Statements	7

2

AMERICAN TAX CREDIT PROPERTIES II L.P.

BALANCE SHEETS

(UNAUDITED)

			June 29,			March 30,
	Notes		2005			2005
ASSETS
Cash and cash equivalents			$	901,738		$	90,086
Investments in bonds		2		1,572,832			1,564,149
Investment in local partnerships		3		3,630,515			4,535,161
Prepaid expenses				16,166
Interest receivable				18,163			13,568
			$	6,139,414		$	6,202,964
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses			$	606,374		$	610,118
Payable to general partner and affiliates				1,292,892			1,172,698
Other liabilities				6,600			6,600
				1,905,866			1,789,416
Commitments and contingencies		3
Partners' equity (deficit)
General partner				(450,786	)		(448,987	)
Limited partners (55,746 units of limited partnership interest outstanding)				4,649,307			4,827,416
Accumulated other comprehensive income, net		2		35,027			35,119
				4,233,548			4,413,548
			$	6,139,414		$	6,202,964

See Notes to Financial Statements.

3

AMERICAN TAX CREDIT PROPERTIES II L.P.

STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 29, 2005 AND 2004

(UNAUDITED)

	Notes		2005			2004
REVENUE
Interest			$	27,355		$	38,829
Other income from local partnerships				5,572			31,254
TOTAL REVENUE				32,927			70,083
EXPENSES
Administration fees				64,262			73,605
Management fees				64,262			73,605
Professional fees				19,169			21,340
State of New Jersey filing fee				15,366			17,359
Printing, postage and other				10,968			10,782
TOTAL EXPENSES				174,027			196,691
				(141,100	)		(126,608	)
Equity in loss of investment in local partnerships		3		(38,808	)		(275,199	)
NET LOSS				(179,908	)		(401,807	)
Other comprehensive loss, net		2		(92	)		(72,512	)
COMPREHENSIVE LOSS			$	(180,000	)	$	(474,319	)
NET LOSS ATTRIBUTABLE TO
General partner			$	(1,799	)	$	(4,018	)
Limited partners				(178,109	)		(397,789	)
			$	(179,908	)	$	(401,807	)
NET LOSS per unit of limited partnership interest (55,746 units of limited partnership interest)			$	(3.20	)	$	(7.14	)

See Notes to Financial Statements.

4

AMERICAN TAX CREDIT PROPERTIES II L.P.

STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED JUNE 29, 2005 AND 2004

(UNAUDITED)

	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received	$	13,985		$	33,015
Cash used for local partnerships for deferred expenses					(7,000	)
Cash paid for
administration fees		(8,330	)		(8,328	)
professional fees		(1,921	)		(68,699	)
State of New Jersey filing fee		(52,524	)		(67,523	)
printing, postage and other expenses		(10,968	)		(10,782	)
Net cash used in operating activities		(59,758	)		(129,317	)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to local partnerships		(25,721	)		(84,516	)
Cash distributions from local partnerships		5,572			41,254
Proceeds from maturities, redemptions and sales of bonds					230,506
Distribution in connection with sale of local partnership property		891,559
Net cash provided by investing activities		871,410			187,244
Net increase in cash and cash equivalents		811,652			57,927
Cash and cash equivalents at beginning of period		90,086			100,169
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	901,738		$	158,096
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized loss on investments in bonds, net	$	(92	)	$	(72,512	)

See reconciliation of net loss to net cash used in operating activities on page 6.

See Notes to Financial Statements.

5

AMERICAN TAX CREDIT PROPERTIES II L.P.

STATEMENTS OF CASH FLOWS - (Continued)

THREE MONTHS ENDED JUNE 29, 2005 AND 2004

(UNAUDITED)

	2005			2004
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
Net loss	$	(179,908	)	$	(401,807	)
Adjustments to reconcile net loss to net cash used in operating activities
Equity in loss of investment in local partnerships		38,808			275,199
Distributions from local partnerships classified as other income		(5,572	)		(31,254	)
Gain on redemptions and sales of bonds					(1,188	)
Amortization of net premium on investments in bonds		581			599
Accretion of zero coupon bonds		(9,356	)		(9,668	)
Increase in prepaid expenses		(16,166	)		(8,946	)
Increase in interest receivable		(4,595	)		4,443
Increase in payable to general partner and affiliates		120,194			138,882
Decrease in accounts payable and accrued expenses		(3,744	)		(88,577	)
Decrease in other liabilities					(7,000	)
NET CASH USED IN OPERATING ACTIVITIES	$	(59,758	)	$	(129,317	)

See Notes to Financial Statements.

6

AMERICAN TAX CREDIT PROPERTIES II L.P.

NOTES TO FINANCIAL STATEMENTS

JUNE 29, 2005

(UNAUDITED)

1.Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. They do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The results of operations are impacted significantly by the combined results of operations of the Local Partnerships, which are provided by the Local Partnerships on an unaudited basis during interim periods. Accordingly, the accompanying financial statements are dependent on such unaudited information. In the opinion of the General Partner, the financial statements include all adjustments necessary to present fairly the financial position as of June 29, 2005 and the results of operations and cash flows for the interim periods presented. All adjustments are of a normal recurring nature. The results of operations for the three months ended June 29, 2005 are not necessarily indicative of the results that may be expected for the entire year.

Certain prior period Local Partnership amounts reflected in Note 3 have been reclassified to conform to the current period presentation.

2.  Investments in Bonds

As of June 29, 2005, certain information concerning investments in bonds is as follows:

Description and maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities
Within one year	$	801,757	$	10,361	$	—	$	812,118
U.S. Treasury debt securities
After one year through five years		736,048		24,666		—		760,714
	$	1,537,805	$	35,027	$	—	$	1,572,832

7

AMERICAN TAX CREDIT PROPERTIES II L.P.

NOTES TO FINANCIAL STATEMENTS - (Continued)

JUNE 29, 2005

(UNAUDITED)

3.Investment in Local Partnerships

The Partnership originally acquired limited partnership interests in Local Partnerships representing capital contributions in the aggregate amount of $46,791,697, which amount includes advances made to certain Local Partnerships. As of June 29, 2005, the Partnership holds an interest in forty-nine Local Partnerships that have, as of March 31, 2005, outstanding mortgage loans payable totaling approximately $76,349,000 and accrued interest payable on such loans totaling approximately $9,024,000, which are secured by security interests and liens common to mortgage loans on the Local Partnerships' real property and other assets.

For the three months ended June 29, 2005, the investment in local partnerships activity consists of the following:

Investment in local partnerships as of March 30, 2005	$	4,535,161
Advances to Local Partnerships		25,721
Equity in loss of investment in local partnerships		(38,808)*
Proceeds in connection with sale of Local Partnership property		(891,559	)
Investment in local partnerships as of June 29, 2005	$	3,630,515

*Equity in loss of investment in local partnerships is limited to the Partnership's investment balance in each Local Partnership; any excess is applied to other partners' capital in any such Local Partnership. The amount of such excess losses applied to other partners' capital was $841,551 for the three months ended March 31, 2005 as reflected in the combined statement of operations of the Local Partnerships reflected herein Note 3.

The Property owned by Elm Hill Housing Limited Partnership (“Elm Hill”) was sold on March 31, 2005; the Partnership received $891,559 in connection with the sale. The carrying value of the Partnership’s investment in Elm Hill was adjusted to $891,559 as of March 30, 2005; accordingly, no gain in connection with the sale is reflected in the accompanying statement of operations of the Partnership for the three months ended June 29, 2005. In the event that additional proceeds are distributed to the Partnership in connection with the final settlement of the sale of Elm Hill, a gain will be recorded at such time. Elm Hill recognized a gain on sale of property of $1,177,998 as reflected in the combined statement of operations of the Local Partnerships for the three months ended March 31, 2005 herein Note 3.

The combined unaudited balance sheets of the Local Partnerships as of March 31, 2005 and December 31, 2004 and the combined unaudited statements of operations of the Local Partnerships for the three months ended March 31, 2005 and 2004 are reflected on pages 9 and 10, respectively.

8

AMERICAN TAX CREDIT PROPERTIES II L.P.

NOTES TO FINANCIAL STATEMENTS - (Continued)

JUNE 29, 2005

(UNAUDITED)

3.Investment in Local Partnerships (continued)

The combined balance sheets of the Local Partnerships as of March 31, 2005 and December 31, 2004 are as follows:

	2005			2004
ASSETS
Cash and cash equivalents	$	3,666,142		$	1,884,287
Rents receivable		331,454			540,514
Escrow deposits and reserves		7,446,820			7,165,277
Land		3,787,571			3,906,771
Buildings and improvements (net of accumulated depreciation of $69,265,438 and $74,031,464)		62,770,886			70,467,866
Intangible assets (net of accumulated amortization of $621,164 and $864,984)		836,259			1,119,389
Other assets		1,595,812			1,789,317
	$	80,434,944		$	86,873,421
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$	3,065,946		$	2,749,291
Due to related parties		4,779,194			4,740,361
Mortgage loans		76,348,815			83,424,391
Notes payable		972,641			971,764
Accrued interest		9,023,692			8,906,296
Other liabilities		645,832			688,695
		94,836,120			101,480,798
Partners' equity (deficit)
American Tax Credit Properties II L.P.
Capital contributions, net of distributions		45,199,005			45,162,362
Cumulative loss		(36,856,594	)		(37,909,578	)
		8,342,411			7,252,784
General partners and other limited partners
Capital contributions, net of distributions		3,016,079			3,016,079
Cumulative loss		(25,759,666	)		(24,876,240	)
		(22,743,587	)		(21,860,161	)
		(14,401,176	)		(14,607,377	)
	$	80,434,944		$	86,873,421

9

AMERICAN TAX CREDIT PROPERTIES II L.P.

NOTES TO FINANCIAL STATEMENTS - (Continued)

JUNE 29, 2005

(UNAUDITED)

3.Investment in Local Partnerships (continued)

The combined statements of operations of the Local Partnerships for the three months ended March 31, 2005 and 2004 are as follows:

	2005			2004
REVENUE
Rental	$	5,620,532		$	5,552,850
Interest and other		118,852			148,185
TOTAL REVENUE		5,739,384			5,701,035
EXPENSES
Administrative		1,157,918			1,150,915
Utilities		1,203,520			1,129,747
Operating and maintenance		1,237,774			1,133,920
Taxes and insurance		681,247			790,997
Financial		1,325,826			1,433,315
Depreciation and amortization		1,141,539			1,181,025
TOTAL EXPENSES		6,747,824			6,819,919
Loss from operations before gain on sale of property		(1,008,440	)		(1,118,884	)
Gain on sale of property		1,177,998
NET EARNINGS (LOSS)	$	169,558		$	(1,118,884	)
NET EARNINGS (LOSS) ATTRIBUTABLE TO
American Tax Credit Properties II L.P.*	$	1,052,984		$	(275,199	)
General partners and other limited partners, which includes $841,551 and $720,719 of Partnership loss in excess of investment		(883,426	)		(843,685	)
	$	169,558		$	(1,118,884	)

*The equity in loss of investment in local partnerships as reflected in the accompanying statement of operations of the Partnership for the three months ended June 29, 2005 is $38,808. See discussion above herein Note 3 regarding the Partnership’s nonrecognition of the gain resulting from the sale of the Elm Hill Property.

The combined results of operations of the Local Partnerships for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for an entire operating period.

10

AMERICAN TAX CREDIT PROPERTIES II L.P.

NOTES TO FINANCIAL STATEMENTS - (Continued)

JUNE 29, 2005

(UNAUDITED)

3.Investment in Local Partnerships (continued)

Effective October 1, 1998, the Partnership and the local general partners of 2000-2100 Christian Street Associates (“2000 Christian Street”) and Christian Street Associates Limited Partnership (“Christian Street”) agreed to equally share the funding of operating deficits through June 30, 2000 in the case of Christian Street and through September 30, 2000 in the case of 2000 Christian Street (the respective “Funding Agreements”). The Funding Agreements were extended through December 31, 2004. Under the terms of the Funding Agreements, the Partnership has advanced $540,938 as of June 29, 2005. Such advances have been recorded as investment in local partnerships and have been offset by additional equity in loss of investment in local partnerships. Effective May 5, 2005, the Partnership withdrew as a limited partner of Christian Street for consideration of $10; there was no impact on the Partnership’s financial statements as a result of such withdrawal.

The Partnership advanced $25,721 during the three months ended June 29, 2005 to College Avenue Apartments Limited Partnership (“College Avenue”) to fund operating deficits. Cumulative advances as of June 29, 2005 are $152,299. Such advances have been recorded as investment in local partnerships and have been offset by additional equity in loss of investment in local partnerships. The Local General Partners represent that payments on the mortgage were two months in arrears as of June 2005. As a result of the significant ongoing operating deficits and the status of the mortgage delinquency, the Local General Partners report that the Property owned by College Avenue was sold in July 2005 and that the mortgage was satisfied in full; there is no impact on the Partnership’s financial statements as a result of such sale.

The Local General Partner of The Pendleton (A Louisiana Partnership in Commendam) (“Pendleton”) reports that one of Pendleton’s mortgages, which was scheduled to commence amortization in May 2004, is fourteen months in arrears (approximately $39,000) as of June, 2005. The Local General Partner represents that no default has been declared on the delinquent mortgage and that payments on the other mortgages and the real estate taxes are current.

4.Additional Information

Additional information, including the audited March 30, 2005 Financial Statements and the Organization, Purpose and Summary of Significant Accounting Policies, is included in the Partnership's Annual Report on Form 10-K for the fiscal year ended March 30, 2005 on file with the Securities and Exchange Commission.

11

AMERICAN TAX CREDIT PROPERTIES II L.P.

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

Material Changes in Financial Condition

As of June 29, 2005, American Tax Credit Properties II L.P. (the “Registrant”) experienced a significant change in financial condition as compared to March 30, 2005 as a result of the receipt of $891,559 in connection with the sale of the Property owned by Elm Hill Housing Limited Partnership (“Elm Hill”) (see discussion below under Local Partnership Matters). Principal changes in assets are comprised of periodic transactions and adjustments, equity in loss from operations of the local partnerships (the “Local Partnerships”), which own low-income multifamily residential complexes (the “Properties”) which qualify for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the “Low-income Tax Credit”) and proceeds in connection with the sale of the Property owned by Elm Hill. During the three months ended June 29, 2005, Registrant received cash from interest revenue and distributions from Local Partnerships and utilized cash for operating expenses and advances to a Local Partnership (see Local Partnership Matters below). Cash and cash equivalents and investments in bonds increased, in the aggregate, by approximately $820,000 during the three months ended June 29, 2005 (which includes amortization of net premium on investments in bonds of approximately $1,000 and accretion of zero coupon bonds of approximately $9,000). Notwithstanding circumstances that may arise in connection with the Properties, Registrant does not expect to realize significant gains or losses on its investments in bonds, if any. During the three months ended June 29, 2005, the investment in local partnerships decreased as a result of proceeds received in connection with the sale of the Elm Hill Property of $891,559 and Registrant’s equity in the Local Partnerships’ net loss for the three months ended March 31, 2005 of $38,808, partially offset by advances to a Local Partnership of $25,721 (see discussion below under Local Partnership Matters). Accounts payable and accrued expenses includes deferred administration fees of $518,740, and payable to general partner represents deferred administration and management fees in the accompanying balance sheet as of June 29, 2005.

Results of Operations

Registrant’s operating results are dependent upon the operating results of the Local Partnerships and are significantly impacted by the Local Partnerships’ policies. In addition, the operating results herein are not necessarily the same for tax reporting. Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting. Accordingly, the investment is carried at cost and is adjusted for Registrant's share of each Local Partnership's results of operations and by cash distributions received. Equity in loss of each investment in Local Partnership allocated to Registrant is recognized to the extent of Registrant’s investment balance in each Local Partnership. Equity in loss in excess of Registrant’s investment balance in a Local Partnership is allocated to other partners' capital in any such Local Partnership. As a result, the reported equity in loss of investment in local partnerships is expected to decrease as Registrant’s investment balances in the respective Local Partnerships become zero. However, the combined statements of operations of the Local Partnerships reflected in Note 3 to Registrant’s financial statements include the operating results of all Local Partnerships, irrespective of Registrant’s investment balances.

Cumulative losses and cash distributions in excess of investment in local partnerships may result from a variety of circumstances, including a Local Partnership's accounting policies, subsidy structure, debt structure and operating deficits, among other things. In addition, the book value of Registrant’s investment in each Local Partnership (the “Local Partnership Carrying Value”) may be reduced if the Local Partnership Carrying Value is considered to exceed the estimated value derived by management. Accordingly, cumulative losses and cash distributions in excess of the investment or an adjustment to a Local Partnership’s Carrying Value are not necessarily indicative of adverse operating results of a Local Partnership. See discussion below under Local Partnership Matters regarding certain Local Partnerships currently operating below economic break even levels.

Registrant’s operations for the three months ended June 29, 2005 and 2004 resulted in a net loss of $179,908 and $401,807 respectively. The decrease in net loss is primarily attributable to (i) a decrease in equity in loss of investment in local partnerships of approximately $236,000, which decrease is primarily the result of a decrease in the net operating losses of certain Local Partnerships in which Registrant continues to have an investment balance, partially offset by a decrease in other income from local partnerships of approximately $26,000. Other comprehensive loss for the three months ended June 29, 2005 and 2004 resulted from a net unrealized loss on investments in bonds of $92 and $72,512, respectively.

12

AMERICAN TAX CREDIT PROPERTIES II L.P.

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

The Local Partnerships’ loss from operations of approximately $1,008,000 for the three months ended March 31, 2005 was attributable to rental and other revenue of approximately $5,739,000, exceeded by operating and interest expenses (including interest on non-mandatory debt) of approximately $5,605,000 and approximately $1,142,000 of depreciation and amortization expense. The Local Partnerships’ loss from operations of approximately $1,119,000 for the three months ended March 31, 2004 was attributable to rental and other revenue of approximately $5,701,000, exceeded by operating and interest expenses (including interest on non-mandatory debt) of approximately $5,639,000 and approximately $1,181,000 of depreciation and amortization expense. The results of operations of the Local Partnerships for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected in future periods.

Local Partnership Matters

Registrant's primary objective has been to provide Low-income Tax Credits to limited partners generally over a ten year period. The relevant state tax credit agency has allocated each of Registrant’s Local Partnerships an amount of Low-income Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”). The Ten Year Credit Period was substantially fully exhausted by the Local Partnerships as of December 31, 2001. The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period"). In addition, certain of the Local Partnerships have entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period, regardless of any sale of the Properties by the Local Partnerships after the Compliance Period. The Properties must satisfy various requirements including rent restrictions and tenant income limitations (the "Low-income Tax Credit Requirements") in order to maintain eligibility for the recognition of the Low-income Tax Credit at all times during the Compliance Period. Once a Local Partnership has become eligible for the Low-income Tax Credit, it may lose such eligibility and suffer an event of recapture if its Property fails to remain in compliance with the Low-income Tax Credit Requirements. It is the General Partner’s intention to sell or assign Registrant’s interests in Local Partnerships subsequent to the expiration of the respective Compliance Periods. It is uncertain as to the amount, if any, that Registrant will receive with respect to each specific Property from such sales and assignments.

The Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States and Puerto Rico. Many of the Local Partnerships receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8”). The subsidy agreements expire at various times during and after the Compliance Periods of the Local Partnerships. Since October 1997, the United States Department of Housing and Urban Development (“HUD”) has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract. Registrant cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income before debt service (“NOI”) and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies. Twelve Local Partnerships’ Section 8 contracts, certain of which cover only certain rental units, are currently subject to renewal under applicable HUD guidelines. In addition, two Local Partnerships entered into restructuring agreements in 2001, resulting in both a lower rent subsidy (resulting in lower NOI) and lower mandatory debt service.

The Local Partnerships have various financing structures which include (i) required debt service payments (“Mandatory Debt Service”) and (ii) debt service payments which are payable only from available cash flow subject to the terms and conditions of the notes, which may be subject to specific laws, regulations and agreements with appropriate federal and state agencies (“Non-Mandatory Debt Service or Interest"). During the three months ended March 31, 2005, revenue from operations of the Local Partnerships has generally been sufficient to cover operating expenses and Mandatory Debt Service. Most of the Local Partnerships are effectively operating at or above break even levels, although certain Local Partnerships’ operating information reflects operating deficits that do not represent cash deficits due to their mortgage and financing structure and the required deferral of property management fees. However, as discussed below, certain Local Partnerships' operating information indicates below break even operations after taking into account their mortgage and financing structure and any required deferral of property management fees.

13

AMERICAN TAX CREDIT PROPERTIES II L.P.

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

Christian Street Associates Limited Partnership (“Christian Street”) and 2000-2100 Christian Street Associates (“2000 Christian Street”), which Local Partnerships have certain common general partner interests and a common first mortgage lender, have experienced ongoing operating deficits. Under terms of the partnership agreements, the Local General Partners exceeded their respective operating deficit guarantees and, as of September 30, 1998, had advanced in excess of $1,000,000 in the aggregate to Christian Street and 2000 Christian Street. The Local General Partners approached the lender with the intention to restructure the loans; however, the lender indicated that in connection with any such restructuring, the respective Local Partnerships would be responsible for certain costs, which would likely have been significant. If the Local General Partners were to cease funding the operating deficits, Registrant would likely have incurred substantial recapture of Low-income Tax Credits. Effective October 1, 1998, in an attempt to avoid potential adverse tax consequences, Registrant and the Local General Partners agreed to equally share the funding of operating deficits through June 30, 2000 in the case of Christian Street and through September 30, 2000 in the case of 2000 Christian Street (the respective “Funding Agreements”). The Funding Agreements were extended through December 31, 2004. The Local General Partners agreed to cause the management agent to accrue and defer its management fees during the period of the Funding Agreements and the accrued management fees are excluded when determining the operating deficits. Christian Street and 2000 Christian Street reported a combined operating deficit of approximately $128,000, excluding accrued management fees of approximately $9,000, for the three months ended March 31, 2005. Under the terms of the Funding Agreements, Registrant has advanced $540,938 as of June 29, 2005. The Local General Partners represent that payments on the mortgages and real estate taxes are current. Registrant’s investment balances in Christian Street and 2000 Christian Street, after cumulative equity losses, became zero during the year ended March 30, 1997 and advances made by Registrant have been offset by additional equity in loss of investment in local partnerships. The Compliance Periods for Christian Street and 2000 Christian Street expired on December 31, 2003 and December 31, 2004, respectively. Effective May 5, 2005, Registrant withdrew as a limited partner of Christian Street for consideration of $10; there was no impact on Registrant’s financial statements as a result of such withdrawal.

The terms of the partnership agreement of College Avenue Apartments Limited Partnership (“College Avenue”) require the Local General Partners to cause the management agent to defer property management fees in order to avoid a default under the mortgage. College Avenue reported an operating deficit of approximately $21,000 for the three months ended March 31, 2005, which includes property management fees of approximately $3,000. Registrant has made cumulative advances to College Avenue of $152,299 as of June 29, 2005, of which $25,721 was advanced during the three months then ended. The Local General Partners represent that payments on the mortgage were two months in arrears as of June 2005. As a result of the significant ongoing operating deficits and the status of the mortgage delinquency, the Local General Partners report that the Property owned by College Avenue was sold in July 2005 and that the mortgage was satisfied in full; there is no impact on Registrant’s financial statements as a result of such sale. Registrant’s investment balance in College Avenue, after cumulative equity losses, became zero during the year ended March 30, 1999 and advances made by Registrant have been offset by additional equity in loss of investment in local partnerships. The Compliance Period for College Avenue expired on December 31, 2004.

During the three months ended March 31, 2005, Ann Ell Apartments Associates, Ltd. (“Ann Ell”) reported an operating deficit of approximately $19,000. Registrant has made cumulative advances to Ann Ell of $469,545 as of June 29, 2005. The Local General Partner represents that payments on the mortgage and real estate taxes are current. Registrant’s investment balance in Ann Ell, after cumulative equity losses, became zero during the year ended March 30, 1994 and advances made by Registrant have been offset by additional equity in loss of investment in local partnerships. Ann Ell generated approximately $16.9 per Unit to the limited partners upon the expiration of its Low-income Tax Credit allocation in 2001.

The terms of the partnership agreement of Powelton Gardens Associates (“Powelton Gardens”) require the Local General Partners to fund all operating deficits through the Compliance Period and to cause the management agent to defer property management fees in order to avoid a default under the mortgage. Powelton Gardens reported an operating deficit of approximately $16,000 for the three months ended March 31, 2005, which includes property management fees of approximately $3,000. The Local General Partners have reported that the first mortgage has been paid in full as of June 2005 and that payments on the real estate taxes are current. Registrant’s investment balance in Powelton Gardens, after cumulative equity losses, became zero during the year ended March 30, 2002. The Compliance Period for Powelton Gardens expired on December 31, 2004.

14

AMERICAN TAX CREDIT PROPERTIES II L.P.

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

The terms of the partnership agreement of The Pendleton (A Louisiana Partnership in Commendam) (“Pendleton”) require the Local General Partner to cause the management agent to defer property management fees in order to avoid a default under the mortgage. Pendleton reported an operating deficit of approximately $7,000 for the three months ended March 31, 2005, which includes property management fees of approximately $4,000. The Local General Partner reports that one of Pendleton’s mortgages, which was scheduled to commence amortization in May 2004, is fourteen months in arrears (approximately $39,000) as of June, 2005. The Local General Partner represents that no default has been declared on the delinquent mortgage and that payments on the other mortgages and the real estate taxes are current. Registrant’s investment balance in Pendleton, after cumulative equity losses, became zero during the year ended March 30, 2002. The Compliance Period for Pendleton expired on December 31, 2004.

The Property owned by Elm Hill Housing Limited Partnership ("Elm Hill") was sold on March 31, 2005; Registrant received $891,559 in connection with the sale. In the event that additional proceeds are distributed to Registrant in connection with the final settlement of the sale of Elm Hill, a gain will be recorded at such time. The Compliance Period for Elm Hill expired on December 31, 2004. Elm Hill recognized a gain on sale of property of $1,177,998 as reflected in the combined statement of operations of the Local Partnerships for the three months ended March 31, 2005 in Note 3 to the accompanying financial statements.

Critical Accounting Policies and Estimates

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which requires Registrant to make certain estimates and assumptions. The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s financial condition and results of operations. Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the financial statements.

·   Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting since Registrant does not control the operations of a Local Partnership.

·   If the book value of Registrant’s investment in a Local Partnership exceeds the estimated value derived by management, Registrant reduces its investment in any such Local Partnership and includes such reduction in equity in loss of investment in local partnerships. A loss in value of an investment in a Local Partnership other than a temporary decline would be recorded as an impairment loss. Impairment is measured by comparing the investment carrying amount to the sum of the total amount of the remaining tax credits to be allocated to Registrant and the estimated residual value of the investment.

·   Registrant does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities under Financial Accounting Standards Board Interpretation No. 46 - Revised (“FIN 46R”), “Consolidation of Variable Interest Entities,” because Registrant is not considered the primary beneficiary.

Item 3.Quantitative and Qualitative Disclosure about Market Risk

Registrant has invested a significant portion of its working capital reserves in corporate bonds and U.S. Treasury instruments. The market value of such investments is subject to fluctuation based upon changes in interest rates relative to each investment’s maturity date and the associated bond rating. Since Registrant’s investments in bonds have various maturity dates through 2008, the value of such investments may be adversely impacted in an environment of rising interest rates in the event Registrant decides to liquidate any such investment prior to its maturity. Although Registrant may utilize reserves to pay for its operating expenses and/or to assist an under performing Property, it otherwise intends to hold such investments to their respective maturities. Therefore, Registrant does not anticipate any material adverse impact in connection with such investments.

15

AMERICAN TAX CREDIT PROPERTIES II L.P.

Item 4. Controls and Procedures

As of June 29, 2005, under the direction of the Chief Executive Officer and Chief Financial Officer, Registrant evaluated the effectiveness of its disclosure controls and procedures and concluded that such disclosure controls and procedures were effective as of June 29, 2005. No changes occurred during the quarter ended June 29, 2005 that materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

16

AMERICAN TAX CREDIT PROPERTIES II L.P.

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings
	Registrant is not aware of any material legal proceedings.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	None
Item 3.	Defaults Upon Senior Securities
	None; see Item 2 of Part I regarding the mortgage defaults of certain Local Partnerships.
Item 4.	Submission of Matters to a Vote of Security Holders
	None
Item 5.	Other Information
	None
Item 6.	Exhibits
	Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
	Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
	Exhibit 32.1 Section 1350 Certification of Chief Executive Officer
	Exhibit 32.2 Section 1350 Certification of Chief Financial Officer

17

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.

	AMERICAN TAX CREDIT PROPERTIES II L.P.
	(a Delaware limited partnership)
	By:Richman Tax Credit Properties II L.P.,
	General Partner
	By:Richman Tax Credits Inc.,
	General partner
Dated: August 15, 2005	/s/ David Salzman
	By: David Salzman
	Chief Executive Officer
Dated: August 15, 2005	/s/ Neal Ludeke
	By: Neal Ludeke
	Chief Financial Officer

18