Plot hole: The tournament that Daniel is in is the All Valley under 18 tournament, but we already know that he has graduated from high school and was about to attend college. His birthday is in December, so he must already be 18.

The Karate Kid III (1989)
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Directed by: John G. Avildsen
Starring: Ralph Macchio, Pat Morita, Robyn Lively, Thomas Ian Griffith
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Mr. Kesuke Miyagi: Inside you same place you karate come from.
Daniel Larusso: My karate comes from you.
Mr. Kesuke Miyagi: Ah. Only root karate come from Miyagi. Just like bonsai choose own way grow because root strong you choose own way do karate same reason.
Daniel Larusso: I do it your way.
Mr. Kesuke Miyagi: Hai. One day you do own way.
Question: I've heard that many people (Ralph Macchio included) do not like this movie. Is there a reason why?
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Answer: Ralph Macchio admitted that he didn't like it as he felt that they were just making the first movie all over again and left out a lot of good stuff.