SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
United States Securities and Exchange Commission
May 20, 2005
Page 8 of 8
                        NATIONAL TAX CREDIT INVESTORS II
                         55 Beattie Place, P.O. Box 1089
                              Greenville, SC 29602

May 20, 2005

Correspondence Filing Via Edgar and Overnight Delivery

United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 0409
450 Fifth Street, NW
Washington, D.C.  20549
Attn:  Mr. Steven Jacobs

Re:   National Tax Credit Investors II
      Form 10-KSB for the year ended December 31, 2004 File No. 0-20610

Ladies and Gentlemen:

This letter responds to the comments of the staff of the Securities and Exchange
Commission  (the  "Staff")  addressed  to National  Tax Credit  Investors  II, a
California limited partnership (the "Partnership"),  in a letter dated April 26,
2005.  The  Partnership  appreciates  the  Staff's  willingness  to  provide  an
extension of time for this response.  The Partnership's  response to the Staff's
comments are set forth below and are numbered to  correspond to the numbering of
the Staff's comments in the Staff's letter.

                        *     *     *     *     *

Form 10-KSB for the year ended December 31, 2004

Financial Statements and Notes

Report of Independent Registered Public Accounting Firm

1.   Comment:   Please  file  the  report(s)  of  the  independent   accountants
     referenced by the  principal  accountants  in their report,  as required by
     Rule 2-05 of Regulation S-X.

     Response:  In the  Partnership's  Annual Report on Form 10-KSB for the year
     ended  December 31, 2004,  specifically  in exhibit 99.1,  the  Partnership
     filed the report of the independent accountants referenced by the principal
     accountants in their report.

Note 1 - Organization and Summary of Significant Accounting Policies

Recent Accounting Pronouncements

2.   Comment:  You  determined  that  seventeen  of the  entities  in which  the
     Partnership  holds  an  interest  at  December  31,  2004  are VIEs and the
     Partnership is not the Primary  Beneficiary of any of these entities.  In a
     supplemental  response,  please tell us how you determined seventeen of the
     entities  were  VIEs and the  remaining  fourteen  entities,  of which  the
     Partnership  holds an interest of greater than  fifty-percent  in eleven of
     them after  December  15, 2004,  were not VIEs.  In your  response,  please
     address the  authority  and  obligations  of the general  partner(s) of the
     Local  Limited  Partnerships,   and  your  relationship  with  the  general
     partners.  Finally,  please quantify the equity investment at risk for each
     Local General Partner, net of any upfront fees received.

     Response:  The  Partnership  first became  involved  with the local limited
     partnerships in the early 1990's. The Partnership historically has used the
     equity  method  of  accounting   for  its   investments  in  local  limited
     partnerships. The individuals involved with the creation of the Partnership
     are no longer employed by National Partnership Investments Corp ("NAPICO"),
     the general partner of the  Partnership.  With the exception of one general
     partner that is wholly owned by NAPICO and serves as the general partner of
     three local limited partnerships, the general partners of the local limited
     partnerships   are  not  affiliated   with  the   Partnership  or  National
     Partnership  Investments  Corp.  Accordingly,   the  Partnership's  initial
     consideration  of the requirements of FASB  Interpretation  No. 46 (revised
     December 2003),  Consolidation of Variable  Interest Entities (FIN 46R) was
     based  primarily on documents  related to the formation of the  Partnership
     and the local limited partnerships in its adoption of FIN 46R and financial
     information  available as of December 31, 2003 and 2004. There may be other
     facts and circumstances  related to the Partnership's  involvement with the
     local limited partnerships that might be relevant in making  determinations
     required  by FIN  46R;  however,  the  Partnership  necessarily  based  its
     determination upon those written documents  available and other information
     that is currently available to the Partnership.

     The  Partnership's  determination  that the local limited  partnerships are
     variable  interest  entities  ("VIE")  was made based on  consideration  of
     paragraphs 5, 9 and 10 of FIN 46R. The Partnership  specifically determined
     that fourteen of the local limited partnerships are VIEs based on paragraph
     5(b)(1) and that three of the local limited  partnerships are VIEs based on
     paragraphs 5(a), 9 and 10.

     With  respect  to  the  fourteen  local  limited   partnerships  that  were
     determined to be VIEs under paragraph 5(b)(1),  the group of equity holders
     at risk  was  comprised  only  of its  limited  partners  (the  group  that
     contributed  the capital  necessary to fund the  acquisition  of properties
     owned  by  local  limited  partnerships).  The  general  partners  were not
     considered to have equity at risk because their capital  contributions were
     insignificant.  Based on the terms of the related local limited partnership
     agreements,  the limited partners were not deemed to have the right to make
     decisions  that have a significant  effect on the  operations or success of
     the local limited  partnership.  Therefore,  these  fourteen  local limited
     partnerships  were  determined to be VIEs and no further  evaluation  under
     paragraph 5 was necessary.

     With respect to three local limited partnerships that were determined to be
     VIEs under paragraphs  5(a), 9 and 10, the Partnership  determined based on
     review of the local limited  partnership  audited financial  statements and
     other  available  financial  information,  that each of the  local  limited
     partnerships had insufficient equity investment at risk to permit the local
     limited partnerships to finance their activities.  Accordingly, these three
     local limited partnerships were determined to be VIEs.

     The  Partnership's   determination  that  fourteen  of  the  local  limited
     partnerships are not VIE's was made based on consideration of paragraphs 5,
     9 and 10 of FIN 46R.

     With respect to these fourteen local limited partnerships,  the Partnership
     determined  that the  capital  contributions  of the general  partners  and
     limited partners were significant and therefore the group of equity holders
     at risk was comprised of both the general partner and the limited  partner.
     The Partnership  further  determined that the general partner  controls and
     manages the  day-to-day  activities of the local limited  partnerships  and
     therefore the group of equity holders at risk were deemed to have the right
     to make  decisions  that have a  significant  effect on the  operations  or
     success of the local limited partnership.

     The  Partnership  noted that the general  partner's  relationship  with the
     local limited partnerships  involves the following  significant  activities
     related to its rights and obligations under the related limited partnership
     agreements:

       o   The general partner shall manage and conduct the business of the
           local limited partnerships;
       o   Employees of the general partner (or its affiliates) are actively
           involved in managing the operations of the local limited
           partnerships
       o   The general partner has the obligation to fund any recourse
           obligations of the local limited partnerships
       o   The general partner is authorized to borrow funds, execute and issue
           mortgage notes and other evidences of indebtedness
       o   The general  partner shall operate the local limited  partnerships
           and shall cause the management  agents to manage the properties in
           such a manner  that the  properties  will be  eligible  to receive
           applicable tax credits
       o   The general  partner shall  promptly take any and all action which
           may be necessary or  appropriate to perfect and maintain the local
           limited  partnerships,  as a limited  partnership under state law,
           and to develop, maintain, and operate the respective local limited
           partnerships  in accordance  with  provisions of the local limited
           partnership agreement and applicable Federal, state and local laws
           and regulations
      o    The general partner shall cause the local limited  partnerships to
           obtain and maintain at all times, insurance in such amounts and at
           terms  customary  for a  project  similar  to  the  local  limited
           partnerships
      o    The general  partner is  responsible  for  obtaining a  management
           agent for the respective local limited partnerships

In  addition,  the local  limited  partnership  agreements  each  state that the
Partnership,  as limited  partner,  shall not take part in the management of the
local  limited  partnership's  business or transact  any  business for the local
limited partnership, nor have any power to sign for or to bind the local limited
partnership  or to subject the local  limited  partnership  to any  liability or
obligation.

The Partnership next considered paragraph 5(b)(2) and determined based on review
of each of the local  limited  partnership  agreements  that the group of equity
holders  at risk do not lack the  ability  to absorb  expected  losses,  are not
protected from the expected losses and are not guaranteed a return.

The Partnership next considered paragraph 5(b)(3) and determined based on review
of each of the local  limited  partnership  agreements  that the group of equity
holders at risk do receive the expected  residual returns and are not subject to
caps on expected returns.

The Partnership next considered paragraph 5(c) and determined based on review of
each of the local limited  partnership  agreements  that the general  partner is
generally the equity holder who is involved in the partnership  activity of real
estate  development and operations and also benefits through the receipt of fees
for services provided to the local limited partnerships and the right to receive
distributions  from the local limited  partnerships.  Therefore the  Partnership
does not believe that  substantially  all of the  activities  of the  respective
local limited  partnerships  involve and are performed on behalf of the investor
(the limited partner) that has disproportionately few voting rights.

The Partnership next considered paragraph 5(a), 9 and 10 and determined based on
review of the local limited partnership  audited financial  statements and other
available financial  information with respect to the local limited partnerships,
that each of the local limited  partnerships had sufficient equity investment at
risk, as demonstrated by the ability of the local limited partnership to finance
its activities without additional subordinated financial support.

The Partnership concluded, based on its qualitative consideration of the factors
above, that the fourteen local limited partnerships are not VIEs.

The  Partnership's  approach to the  quantification  of the equity investment at
risk for each general  partner of the local  limited  partnerships  consisted of
reviewing  the  partnership  agreements  for the  determination  of the  capital
contribution  of the  respective  partners  as a  percentage  of  total  capital
contributed.  The  partnership  considered  payments to the general  partners of
certain fees as defined in the local limited  partnership  agreements that could
be  considered a reduction of the capital  contributed;  however these fees were
generally  in  consideration  of services  performed  by the general  partner or
covenants  provided  by the general  partner to fund  development  deficits  and
operating  deficits  within a defined time period at the inception of each local
limited  partnership,  and were  determined  to be reasonable in relation to the
nature of the services provided. Therefore, the Partnership concluded that these
fees should not be considered a reduction of capital  contributed by the general
partner.

3. Comment: You refer to the Partnership's  maximum exposure to loss at December
31, 2004 relative to  determining  the primary  beneficiary  for the  identified
VIEs.  In a  supplemental  response,  please tell us whether you  evaluated  the
Partnership's expected losses and residual returns and equity investment at risk
as applicable at the time the Partnership became involved with the Local Limited
Partnerships,   as  opposed  to  its  equity  at  risk  at  December  31,  2004.
Additionally,  please address whether you included the  Partnership's  rights to
tax credits in the expected cash flows.

Response: The Partnership refers to the maximum exposure to loss at December 31,
2004 as a result of its involvement with  unconsolidated VIEs in order to comply
with  the  disclosure  requirements  of  paragraph  24(c) of FIN 46R and not for
purposes of determining the primary beneficiary for the identified VIEs.

The Partnership  evaluated the equity investment at risk based on the provisions
of the  local  limited  partnership  agreements  in  place  and  any  subsequent
amendments  to  such  local  limited  partnership  agreements.  As  provided  in
paragraph  38 of FIN 46R,  the  Partnership  was  unable  to  obtain  all of the
information  necessary  to make its  determination  at the date the  Partnership
first became  involved  with the local limited  partnerships.  The local limited
partnership agreements are considered "living" documents that capture changes in
structure and terms of the respective local limited  partnerships.  Accordingly,
the  Partnership's  evaluation of equity investment at risk was considered to be
performed  as of the date on which FIN 46R was first  applied,  or December  31,
2004.  Although the  Partnership  has not performed a  quantitative  analysis to
determine the relative  exposures of the Partnership and general partners to the
expected losses of the respective  local limited  partnerships,  the Partnership
generally believes that at December 31, 2004 it would have the greatest exposure
based on provisions in the local limited partnership agreements that provide for
allocations  and  distributions  in  accordance  with  ownership  interest.  The
Partnership considered this factor,  together with other factors in paragraph 17
of FIN 46R,  in the  determination  of the  primary  beneficiary  of those local
limited partnerships determined to be VIEs.

The Partnership determined that the tax credit allocation period for each of the
thirty-one  local  limited  partnerships  had expired at  December  31, 2004 and
investors were fully allocated their portion of tax credits. In addition, in the
event the amount of tax credits allocated to investors were less than the amount
originally  provided  to the  investors,  the  general  partner  would  have the
responsibility to make the investor whole.  Therefore if a quantitative analysis
of the relative exposures of the Partnership to the expected losses and residual
returns had been performed at December 31, 2004, the Partnership's rights to tax
credits would not have been a factor in the expected cash flows.

Note 2 - Investments in Local Partnerships

4.  Comment:  It appears you applied  the cost  recovery  method for the sale of
partial  interests in Rancho Del Mar Limited  Partnership and Wedgewood  Commons
Limited  Partnership in 2003. In