<ARTICLE> 5 <LEGEND> THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATINO EXTRACTED FROM SIERRA PACIFIC DEVELOPMENT FUND III SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. </LEGEND> <PERIOD-TYPE> 9-MOS <FISCAL-YEAR-END> DEC-31-1996 <PERIOD-END> SEP-30-1996 <CASH> 9,523 <SECURITIES> 0 <RECEIVABLES> 142,909 <ALLOWANCES> 0 <INVENTORY> 0 <CURRENT-ASSETS> 157,108 <PP&E> 10,125,812 <DEPRECIATION> 4,284,744 <TOTAL-ASSETS> 6,221,219 <CURRENT-LIABILITIES> 576,466 <BONDS> 3,410,795 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 0 <OTHER-SE> 387,810 <TOTAL-LIABILITY-AND-EQUITY> 6,221,219 <SALES> 523,377 <TOTAL-REVENUES> 523,377 <CGS> 0 <TOTAL-COSTS> 388,328 <OTHER-EXPENSES> 412,794 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 204,206 <INCOME-PRETAX> (62,245) <INCOME-TAX> 0 <INCOME-CONTINUING> (62,245) <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> (62,245) <EPS-PRIMARY> (1.70) <EPS-DILUTED> (1.70)