##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE
REQUIRED)
 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 333-62526
 COMMONWEALTH INCOME & GROWTH FUND IV
  Pennsylvania
(State or other jurisdiction of 
incorporation or organization)
    
    23-3080409
(I.R.S. Employer Identification Number)
 
 
  Title of each class to 
be so registered
    
    Name of exchange on
which each class
is to be registeredNone
    
    N/A
  Units of Limited Partnership Interest
 o þ
 YES
o NO
þ
 þ o
 þ o
  o o þ
 o þ




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##### 



FORM 10-K
DECEMBER 31, 2006
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    14Item 1B.
    
    Unresolved Staff Comments
    
    
    15Item 2.
    
    Properties
    
    
    15Item 3.
    
    Legal Proceedings
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    16Item 6.
    
    Selected Financial Data
    
    
    19Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 8.
    
    Financial Statements and Supplementary Data
    
    
    25Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    25Item 9A.
    
    Controls and Procedures
    
    
    25Item 9B.
    
    Other Information
    
    
    25PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    25Item 11.
    
    Executive Compensation
    
    
    29Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    29Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    30Item 14.
    
    Principal Accountant Fees and Services
    
    
    35PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    36Index to
ExhibitsSignaturesCertificationsRule 13a-14(a)/15d-14(a) Certifications by the Principal Executive OfficerRule 13a-14(a)/15d-14(a) Certifications by the Principal Financial OfficerSection 1350 Certifications by the Principal Executive Officer and Principal Financial Officer
  2




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##### Table of Contents



Forward-Looking Statements
    
 PART I
 
 ITEM 1: BUSINESS
 GENERAL
   PRINCIPAL INVESTMENT OBJECTIVES
  3




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##### Table of Contents



(a)
    
    Acquire, lease and sell Equipment to generate revenues from operations sufficient
to provide annual cash distributions to Limited Partners;(b)
    
    Preserve and protect Limited Partners capital;(c)
    
    Use a portion of Cash Flow and Net Disposition Proceeds derived from the sale, refinancing
or other disposition of Equipment to purchase additional Equipment; and(d)
    
    Refinance, sell or otherwise dispose of Equipment in a manner that will
maximize the proceeds to the Partnership.
 THERE CAN BE NO ASSURANCE THAT ANY OF THESE OBJECTIVES WILL BE ATTAINED
      4




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##### Table of Contents



TYPES OF EQUIPMENT
 Computer Information Technology Equipment.
  Other Equipment-Restrictions.
 DIVERSIFICATION
  Equipment Type
    
    
    
    Approximate %Servers
    
    
    
    
    32
    %Telecommunications

    
    
    
    
    24
    %Workstations
    
    
    
    
    17
    %Printers
    
    
    
    
    10
    %Storage
    
    
    
    
    9
    %Data Communications
    
    
    
    
    5
    %Audio Visual
    
    
    
    
    3
    %Total
    
    
    
    
    100
    %
 5




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##### Table of Contents



DESCRIPTION OF LEASES
      6




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##### Table of Contents



BORROWING POLICIES
    7




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##### Table of Contents



REFINANCING POLICIES
   LIQUIDATION POLICIES
   MANAGEMENT OF EQUIPMENT
  8




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##### Table of Contents



COMPETITION
    INVESTMENTS
  PURCHASE
    
    MONTHLYLESSEE
    
    MFG
    
    EQUIPMENT DESCRIPTION
    
    LIST PRICE
    
    PRICE
    
    ENTAL
    
    LEASE TERMAlcatel USA Sourcing, L.P.
    
    Sun
    
    Small Sun Servers
    
    
    57,316
    
    
    
    56,578
    
    
    
    2,186
    
    
    
    23Allen Chase Foundation
    
    Toshiba
    
    Servers
    
    
    19,854
    
    
    
    19,854
    
    
    
    1,194
    
    
    
    14Alliant Techsystems, Inc.
    
    Dell
    
    Engineering Workstations
    
    
    64,695
    
    
    
    39,593
    
    
    
    1,083
    
    
    
    36Alliant Techsystems, Inc.
    
    Konica
    
    Network Printer
    
    
    50,662
    
    
    
    31,005
    
    
    
    848
    
    
    
    36Alliant Techsystems, Inc.
    
    Konica
    
    Mulitifuncitional Printers
    
    
    39,364
    
    
    
    30,113
    
    
    
    824
    
    
    
    36Allserve System Corp (A)
    
    Avaya
    
    Communication
    
    
    1,114,155
    
    
    
    724,200
    
    
    
    21,513
    
    
    
    36Allserve System Corp (A)
    
    Gateway
    
    Server
    
    
    643,385
    
    
    
    418,200
    
    
    
    12,423
    
    
    
    36Allserve System Corp (A)
    
    Nortel
    
    Communication
    
    
    1,114,153
    
    
    
    724,200
    
    
    
    21,513
    
    
    
    36Allserve System Corp (A)
    
    Nortel
    
    Communications
    
    
    418,200
    
    
    
    418,200
    
    
    
    12,423
    
    
    
    36Allserve System Corp (A)
    
    Nortel
    
    Server
    
    
    503,778
    
    
    
    503,778
    
    
    
    14,965
    
    
    
    36Amcol International
    
    Compaq
    
    Servers
    
    
    24,955
    
    
    
    24,955
    
    
    
    1,167
    
    
    
    19America Online LLC.
    
    Sun
    
    Midrange Sun Servers
    
    
    269,766
    
    
    
    275,161
    
    
    
    6,973
    
    
    
    36America Online LLC.
    
    Sun
    
    Server
    
    
    57,285
    
    
    
    44,992
    
    
    
    1,199
    
    
    
    36
 9




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##### Table of Contents



PURCHASE
    
    MONTHLYLESSEE
    
    MFG
    
    EQUIPMENT DESCRIPTION
    
    LIST PRICE
    
    PRICE
    
    ENTAL
    
    LEASE TERMAnteon Corporation
    
    ICL
    
    Routers
    
    $
    16,210
    
    
    $
    7,047
    
    
    $
    444
    
    
    
    16Anteon Corporation
    
    ICL
    
    Routers
    
    
    15,266
    
    
    
    8,112
    
    
    
    437
    
    
    
    19Anteon Corporation
    
    IBM
    
    Communications
    
    
    13,575
    
    
    
    9,410
    
    
    
    397
    
    
    
    25Anteon Corporation
    
    HP
    
    Servers
    
    
    15,192
    
    
    
    10,779
    
    
    
    492
    
    
    
    23Anteon Corporation
    
    Dell
    
    Terminal
    
    
    13,229
    
    
    
    11,165
    
    
    
    442
    
    
    
    27Anteon Corporation
    
    Nokia
    
    Routers
    
    
    19,811
    
    
    
    15,532
    
    
    
    658
    
    
    
    25Anteon Corporation
    
    Nokia
    
    Routers
    
    
    13,135
    
    
    
    10,253
    
    
    
    420
    
    
    
    26Anteon Corporation
    
    Dell/Epson
    
    Workstations
    
    
    24,481
    
    
    
    18,636
    
    
    
    675
    
    
    
    30Anteon Corporation
    
    Epson
    
    Hardware
    
    
    27,422
    
    
    
    21,166
    
    
    
    760
    
    
    
    30Anteon Corporation
    
    Nokia
    
    Tape
    
    
    9,695
    
    
    
    7,166
    
    
    
    257
    
    
    
    30Anteon Corporation
    
    Dell/Cisco
    
    Workstations/Servers
    
    
    26,924
    
    
    
    25,068
    
    
    
    851
    
    
    
    32Anteon Corporation
    
    Cisco
    
    CON-OS
    
    
    18,314
    
    
    
    14,673
    
    
    
    485
    
    
    
    33Anteon Corporation
    
    Dell
    
    Software
    
    
    17,804
    
    
    
    15,527
    
    
    
    500
    
    
    
    34Bank of America
    
    IBM
    
    Server
    
    
    1,106,353
    
    
    
    731,990
    
    
    
    22,902
    
    
    
    27Bank of America
    
    IBM
    
    Server
    
    
    75,858
    
    
    
    55,603
    
    
    
    1,750
    
    
    
    28BFS Diversified Products
    
    Compaq
    
    Servers
    
    
    29,638
    
    
    
    29,638
    
    
    
    864
    
    
    
    34BFS Diversified Products
    
    Compaq
    
    Servers
    
    
    40,177
    
    
    
    40,177
    
    
    
    1,143
    
    
    
    35BFS Diversified Products
    
    Compaq
    
    Workstation
    
    
    145,718
    
    
    
    102,003
    
    
    
    2,975
    
    
    
    35BFS Diversified Products
    
    Compaq
    
    Workstation
    
    
    150,141
    
    
    
    105,099
    
    
    
    3,065
    
    
    
    32BFS Diversified Products
    
    Compaq
    
    Workstation
    
    
    465,600
    
    
    
    302,639
    
    
    
    8,949
    
    
    
    36C. Hagar & Sons Hinge Manufacturing Company
    
    Toshiba
    
    Workstation/Server
    
    
    22,520
    
    
    
    10,460
    
    
    
    424
    
    
    
    29C. Hagar & Sons Hinge Manufacturing Company
    
    Dell
    
    Workstation/Server
    
    
    47,823
    
    
    
    26,662
    
    
    
    888
    
    
    
    22C. Hagar & Sons Hinge Manufacturing Company
    
    IBM
    
    Workstation/Server
    
    
    2,234
    
    
    
    1,382
    
    
    
    60
    
    
    
    25Christian Brothers College
    
    IBM
    
    Workstations
    
    
    69,575
    
    
    
    49,698
    
    
    
    1,454
    
    
    
    34Cone Mills Corporation
    
    Nortel
    
    Workstation
    
    
    35,400
    
    
    
    23,529
    
    
    
    652
    
    
    
    36Cone Mills Corporation
    
    Nortel
    
    Workstation
    
    
    107,000
    
    
    
    70,106
    
    
    
    1,960
    
    
    
    36Convergys Corporation
    
    HP
    
    Midrange HP Servers
    
    
    116,079
    
    
    
    101,974
    
    
    
    3,081
    
    
    
    30Convergys Corporation
    
    Sun
    
    Small Sun Servers
    
    
    18,250
    
    
    
    14,269
    
    
    
    375
    
    
    
    34Daimler Chrysler Corporation
    
    Intermec
    
    Printers
    
    
    4,815
    
    
    
    4,815
    
    
    
    197
    
    
    
    24Daimler Chrysler Corporation
    
    Intermec
    
    Printers
    
    
    4,221
    
    
    
    4,221
    
    
    
    171
    
    
    
    24Daimler Chrysler Corporation
    
    Visara
    
    NCT Base Ethernet
    
    
    1,280,418
    
    
    
    831,622
    
    
    
    21,932
    
    
    
    36Daimler Chrysler Corporation
    
    Visara
    
    Communication
    
    
    64,400
    
    
    
    41,860
    
    
    
    1,080
    
    
    
    36Daimler Chrysler Corporation
    
    Visara
    
    Communication
    
    
    550,000
    
    
    
    357,517
    
    
    
    9,428
    
    
    
    36Daimler Chrysler Corporation
    
    Visara
    
    Communication
    
    
    106,125
    
    
    
    68,982
    
    
    
    1,819
    
    
    
    36Daimler Chrysler Corporation
    
    Visara
    
    Communication
    
    
    510,350
    
    
    
    126,446
    
    
    
    3,335
    
    
    
    36Daimler Chrysler Corporation
    
    HP
    
    Workstations
    
    
    42,370
    
    
    
    25,930
    
    
    
    680
    
    
    
    36Daimler Chrysler Corporation
    
    HP
    
    Engineering Workstations
    
    
    100,467
    
    
    
    56,362
    
    
    
    1,479
    
    
    
    36Daimler Chrysler Corporation
    
    Visara
    
    Thin Client Terminals
    
    
    120,833
    
    
    
    73,950
    
    
    
    1,901
    
    
    
    36Datapage Technologies
    
    Dell
    
    Workstation
    
    
    26,000
    
    
    
    17,706
    
    
    
    544
    
    
    
    32Dietrich Milk Products
    
    IBM
    
    Workstations
    
    
    31,850
    
    
    
    31,850
    
    
    
    1,085
    
    
    
    28Dominion Resources Services
    
    Fujitsu
    
    Server
    
    
    39,250
    
    
    
    25,512
    
    
    
    1,355
    
    
    
    19Environmental Management Corporation
    
    Cisco-Dell
    
    Printers/Workstation
    
    
    89,500
    
    
    
    60,344
    
    
    
    2,110
    
    
    
    25Garlich Printing
    
    Galaxy
    
    Server
    
    
    61,450
    
    
    
    33,950
    
    
    
    1,286
    
    
    
    23GE Medical Systems
    
    Cisco
    
    VPN
    
    
    65,215
    
    
    
    43,277
    
    
    
    1,141
    
    
    
    36GE Medical Systems
    
    Nokia
    
    Telephone
    
    
    125,200
    
    
    
    81,388
    
    
    
    2,194
    
    
    
    36GE Medical Systems
    
    Net App
    
    Fiber Chanel
    
    
    37,250
    
    
    
    26,520
    
    
    
    1,052
    
    
    
    23GE Medical Systems
    
    Compaq
    
    Server
    
    
    27,235
    
    
    
    17,704
    
    
    
    458
    
    
    
    36Government Employees Insurance Company
    
    HP
    
    Workstations
    
    
    91,839
    
    
    
    52,135
    
    
    
    1,449
    
    
    
    33Government Employees Insurance Company
    
    Dell
    
    Workstations
    
    
    7,525
    
    
    
    3,629
    
    
    
    117
    
    
    
    27
 10




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##### Table of Contents



PURCHASE
    
    MONTHLYLESSEE
    
    MFG
    
    EQUIPMENT DESCRIPTION
    
    LIST PRICE
    
    PRICE
    
    ENTAL
    
    LEASE TERMGovernment Employees Insurance Company
    
    HP
    
    Workstations
    
    
    153,773
    
    
    
    80,436
    
    
    
    2,430
    
    
    
    30Government Employees Insurance Company
    
    Panasonic
    
    Workstations
    
    
    137,250
    
    
    
    60,480
    
    
    
    2,133
    
    
    
    24Government Employees Insurance Company
    
    IBM
    
    Servers
    
    
    342,637
    
    
    
    179,389
    
    
    
    15,072
    
    
    
    30Government Employees Insurance Company
    
    HP
    
    Storage
    
    
    70,727
    
    
    
    40,627
    
    
    
    3,675
    
    
    
    25The Hertz Corporation
    
    HP
    
    Servers
    
    
    186,855
    
    
    
    186,855
    
    
    
    4,717
    
    
    
    36The Hertz Corporation
    
    HP
    
    Servers
    
    
    1,092,200
    
    
    
    779,810
    
    
    
    20,306
    
    
    
    36Hollingsworth Marketing
    
    Xerox
    
    Printer
    
    
    498,559
    
    
    
    498,559
    
    
    
    13,489
    
    
    
    35JC Penney Corporation
    
    HP
    
    Small HP/Compaq Servers
    
    
    51,891
    
    
    
    38,871
    
    
    
    4,192
    
    
    
    24Jefferson Smurfit Corporation
    
    Dell
    
    Workstations
    
    
    264,425
    
    
    
    183,385
    
    
    
    5,119
    
    
    
    34Kaiser Foundation Health
    
    
    
    Storage
    
    
    1,238,745
    
    
    
    718,473
    
    
    
    18,769
    
    
    
    36Kaiser Foundation Health
    
    IBM
    
    Enterprise Storage Server
    
    
    640,240
    
    
    
    143,013
    
    
    
    3,587
    
    
    
    38Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    12,727
    
    
    
    8,758
    
    
    
    276
    
    
    
    28Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    13,600
    
    
    
    9,706
    
    
    
    298
    
    
    
    29Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    8,675
    
    
    
    6,149
    
    
    
    184
    
    
    
    30Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    14,750
    
    
    
    10,478
    
    
    
    299
    
    
    
    32Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    20,300
    
    
    
    14,407
    
    
    
    411
    
    
    
    32Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    19,850
    
    
    
    14,076
    
    
    
    392
    
    
    
    33Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    7,250
    
    
    
    5,122
    
    
    
    201
    
    
    
    22Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    4,950
    
    
    
    3,415
    
    
    
    134
    
    
    
    22Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    2,350
    
    
    
    1,648
    
    
    
    67
    
    
    
    21Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    2,410
    
    
    
    1,707
    
    
    
    67
    
    
    
    22Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    3,765
    
    
    
    2,681
    
    
    
    75
    
    
    
    33Kellogg USA Inc.
    
    Compaq
    
    Workstation
    
    
    2,900
    
    
    
    2,057
    
    
    
    56
    
    
    
    34Kellogg USA Inc.
    
    IBM
    
    Workstation
    
    
    180,845
    
    
    
    117,501
    
    
    
    3,370
    
    
    
    32L-3 Integrated Systems
    
    Konica
    
    Printer
    
    
    342,349
    
    
    
    342,349
    
    
    
    9,868
    
    
    
    33Marketing Direct
    
    IBM
    
    Server/Tape
    
    
    120,625
    
    
    
    70,855
    
    
    
    2,657
    
    
    
    25Marketing Direct
    
    IBM
    
    Server/Workstation
    
    
    28,000
    
    
    
    17,744
    
    
    
    580
    
    
    
    30Marketing Direct
    
    IBM
    
    Server/Workstation
    
    
    24,281
    
    
    
    15,370
    
    
    
    425
    
    
    
    36Matsushita Mobile
    
    Panasonic
    
    Workstations
    
    
    22,200
    
    
    
    22,200
    
    
    
    830
    
    
    
    25Milton Hershey Medical Center
    
    HP
    
    Small HP/Compaq Servers
    
    
    112,348
    
    
    
    116,336
    
    
    
    9,218
    
    
    
    11Mitsubishi Motors North America, Inc.
    
    Toshiba
    
    Printers
    
    
    319,979
    
    
    
    319,979
    
    
    
    8,570
    
    
    
    36Mitsubishi Power
    
    Panasonic
    
    Workstations
    
    
    33,768
    
    
    
    33,768
    
    
    
    1,031
    
    
    
    32MyCart
    
    IBM
    
    Servers
    
    
    19,200
    
    
    
    12,386
    
    
    
    393
    
    
    
    31NBC Universal, Inc.
    
    Avid
    
    Digital Storage System
    
    
    128,926
    
    
    
    85,478
    
    
    
    6536.56
    
    
    
    36Northrup Grumman Corporation
    
    Sun
    
    Server
    
    
    421,500
    
    
    
    331,724
    
    
    
    10,004
    
    
    
    30Northrup Grumman Corporation
    
    IBM
    
    Digital Storage
    
    
    161,993
    
    
    
    57,831
    
    
    
    1,502
    
    
    
    36Occupational Health & Rehabilitation Inc.
    
    Cisco/Compaq
    
    Workstations
    
    
    367,350
    
    
    
    249,823
    
    
    
    7,331
    
    
    
    36Occupational Health & Rehabilitation Inc.
    
    Cisco/Compaq
    
    Router
    
    
    348,480
    
    
    
    236,967
    
    
    
    7,548
    
    
    
    36Occupational Health & Rehabilitation Inc.
    
    Citrix
    
    Server
    
    
    400,317
    
    
    
    280,222
    
    
    
    8,318
    
    
    
    36Paric Corporation
    
    HP
    
    Servers/Printers
    
    
    68,900
    
    
    
    44,035
    
    
    
    1,648
    
    
    
    26Paric Corporation
    
    HP
    
    Printers/Workstation
    
    
    30,115
    
    
    
    20,153
    
    
    
    574
    
    
    
    35Paric Corporation
    
    HP
    
    Printers/Workstation
    
    
    19,626
    
    
    
    11,197
    
    
    
    447
    
    
    
    24Paric Corporation
    
    HP
    
    Printers/Terminals
    
    
    76,000
    
    
    
    42,516
    
    
    
    1,980
    
    
    
    20Paric Corporation
    
    Sony
    
    Tape
    
    
    17,300
    
    
    
    11,379
    
    
    
    324
    
    
    
    35Paric Corporation
    
    Gxaryte
    
    Telecommunications
    
    
    18,200
    
    
    
    12,016
    
    
    
    342
    
    
    
    35
 11




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##### Table of Contents



PURCHASE
    
    MONTHLYLESSEE
    
    MFG
    
    EQUIPMENT DESCRIPTION
    
    LIST PRICE
    
    PRICE
    
    ENTAL
    
    LEASE TERMParic Corporation
    
    Gxaryte
    
    Telecommunications
    
    
    30,115
    
    
    
    20,183
    
    
    
    574
    
    
    
    35Pepsico, Inc.
    
    Konica
    
    Printers
    
    
    135,991
    
    
    
    135,991
    
    
    
    3,746
    
    
    
    36Physician First Health
    
    Microsystems
    
    Workstation
    
    
    15,790
    
    
    
    11,566
    
    
    
    320
    
    
    
    36Preferred Freezer Services
    
    Dell
    
    Servers
    
    
    89,363
    
    
    
    45,803
    
    
    
    1,289
    
    
    
    36Preferred Freezer Services
    
    Dell
    
    Servers
    
    
    106,704
    
    
    
    54,092
    
    
    
    1,522
    
    
    
    36Preferred Freezer Services
    
    Dell
    
    Servers
    
    
    56,163
    
    
    
    36,506
    
    
    
    1,045
    
    
    
    36Preferred Freezer Services
    
    Dell
    
    Scanners
    
    
    7,700
    
    
    
    5,100
    
    
    
    150
    
    
    
    34Preferred Freezer Services
    
    Panasonic
    
    Communications
    
    
    35,845
    
    
    
    23,591
    
    
    
    663
    
    
    
    36Preferred Freezer Services
    
    Dell
    
    Server/Workstation
    
    
    136,020
    
    
    
    88,451
    
    
    
    2,489
    
    
    
    36Principal Financial Group
    
    Nexpress
    
    Printers
    
    
    416,007
    
    
    
    416,007
    
    
    
    8,850
    
    
    
    42Qwest Communications International, Inc.
    
    Stratus
    
    Misc High End Servers
    
    
    154,193
    
    
    
    104,128
    
    
    
    46,517
    
    
    
    36Raytheon Company
    
    HP
    
    Desktops - Tier 1
    
    
    130,488
    
    
    
    123,050
    
    
    
    3,751
    
    
    
    30Raytheon Company
    
    HP
    
    Desktops - Tier 1
    
    
    56,196
    
    
    
    55,752
    
    
    
    1,615
    
    
    
    31Raytheon Company
    
    HP
    
    Engineering Workstations
    
    
    49,749
    
    
    
    50,744
    
    
    
    1,334
    
    
    
    36Raytheon Company
    
    HP
    
    Engineering Workstations
    
    
    55,710
    
    
    
    56,824
    
    
    
    1,494
    
    
    
    36Refco Group Ltd, LLC.
    
    HP
    
    Workstation
    
    
    254,352
    
    
    
    165,329
    
    
    
    4,739
    
    
    
    36Refco Group Ltd, LLC.
    
    Dell
    
    Workstation
    
    
    303,000
    
    
    
    196,949
    
    
    
    5,751
    
    
    
    36Sprint
    
    STK
    
    Tape Drives
    
    
    234,702
    
    
    
    239,396
    
    
    
    6,135
    
    
    
    36Thomson Consumer Electronics
    
    Christie Digital
    
    Workstation
    
    
    666,440
    
    
    
    433,190
    
    
    
    11,486
    
    
    
    36UCN, Inc.
    
    HP
    
    High End Sun Servers
    
    
    202,275
    
    
    
    174,351
    
    
    
    10,148
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations/Server
    
    
    84,855
    
    
    
    56,089
    
    
    
    1,581
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    55,438
    
    
    
    36,756
    
    
    
    1,036
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    37,780
    
    
    
    25,054
    
    
    
    705
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    50,475
    
    
    
    33,465
    
    
    
    942
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    23,650
    
    
    
    14,520
    
    
    
    409
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    28,030
    
    
    
    18,584
    
    
    
    523
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    19,730
    
    
    
    13,080
    
    
    
    369
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    25,800
    
    
    
    23,741
    
    
    
    670
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstations
    
    
    8,707
    
    
    
    5,773
    
    
    
    163
    
    
    
    36Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    22,125
    
    
    
    8,547
    
    
    
    426
    
    
    
    18Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    28,400
    
    
    
    11,632
    
    
    
    532
    
    
    
    20Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    14,460
    
    
    
    6,152
    
    
    
    269
    
    
    
    21Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    23,500
    
    
    
    10,640
    
    
    
    450
    
    
    
    22Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    20,792
    
    
    
    9,885
    
    
    
    387
    
    
    
    24Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    14,770
    
    
    
    7,271
    
    
    
    275
    
    
    
    25Vatterott Educational Systems
    
    Dell
    
    Workstation
    
    
    13,938
    
    
    
    7,311
    
    
    
    260
    
    
    
    27Walker & Assoc. Inc.
    
    HP / Panasonic
    
    Workstation
    
    
    180,000
    
    
    
    135,045
    
    
    
    3,718
    
    
    
    36Weight Watchers
    
    ADIC
    
    Tape Library
    
    
    110,871
    
    
    
    110,871
    
    
    
    3,125
    
    
    
    36Weight Watchers
    
    HP
    
    Servers
    
    
    165,713
    
    
    
    165,713
    
    
    
    4,552
    
    
    
    36Westar Corporation
    
    Cisco
    
    Router
    
    
    19,993
    
    
    
    13,010
    
    
    
    440
    
    
    
    29Xerox Corporation
    
    Sunfire
    
    Servers
    
    
    481,243
    
    
    
    481,243
    
    
    
    12,428
    
    
    
    36Xerox Corporation
    
    Sun
    
    Storage
    
    
    6,499
    
    
    
    6,499
    
    
    
    167
    
    
    
    34Xerox Corporation
    
    Sun
    
    Storage
    
    
    12,644
    
    
    
    7,101
    
    
    
    353
    
    
    
    17Xerox Corporation
    
    IBM
    
    Small IBM Servers
    
    
    18,057
    
    
    
    12,459
    
    
    
    492
    
    
    
    22Xerox Corporation
    
    Dell
    
    Dell Servers
    
    
    14,823
    
    
    
    11,376
    
    
    
    411
    
    
    
    24Xerox Corporation
    
    Sun
    
    Midrange Sun Servers
    
    
    17,812
    
    
    
    15,911
    
    
    
    480
    
    
    
    30Xerox Corporation
    
    Sun
    
    Small Sun Servers
    
    
    19,445
    
    
    
    17,328
    
    
    
    532
    
    
    
    30Xerox Corporation
    
    IBM
    
    Small IBM Servers
    
    
    13,654
    
    
    
    12,167
    
    
    
    373
    
    
    
    30Xerox Corporation
    
    IBM
    
    Small IBM Servers
    
    
    14,136
    
    
    
    12,597
    
    
    
    387
    
    
    
    30Xerox Corporation
    
    IBM
    
    Small IBM Servers
    
    
    9,363
    
    
    
    8,344
    
    
    
    256
    
    
    
    30
 12




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PURCHASE
    
    MONTHLYLESSEE
    
    MFG
    
    EQUIPMENT DESCRIPTION
    
    LIST PRICE
    
    PRICE
    
    ENTAL
    
    LEASE TERMXerox Corporation
    
    Sun
    
    Midrange Sun Servers
    
    
    24,999
    
    
    
    24,042
    
    
    
    675
    
    
    
    33Xerox Corporation
    
    Sun
    
    Small Sun Servers
    
    
    5,999
    
    
    
    6,043
    
    
    
    162
    
    
    
    35Xerox Corporation
    
    Sun
    
    Storage
    
    
    13,814
    
    
    
    13,916
    
    
    
    373
    
    
    
    35Xerox Corporation
    
    IBM
    
    Small IBM Servers
    
    
    13,841
    
    
    
    8,130
    
    
    
    387
    
    
    
    18Xerox Corporation
    
    NetApp
    
    Storage
    
    
    14,121
    
    
    
    9,739
    
    
    
    385
    
    
    
    22XM Satellite
    
    Sun
    
    Workstation
    
    
    407,140
    
    
    
    285,000
    
    
    
    7,973
    
    
    
    36XTS Corporation
    
    Dell/Ciso/HP
    
    Workstations/Router/Printer/Server
    
    
    31,778
    
    
    
    22,734
    
    
    
    647
    
    
    
    36
 
  RESERVES
  GENERAL RESTRICTIONS
  (a)
    
    Invest in junior trust deeds unless received in connection with the sale of an item of
Equipment in an aggregate amount that does not exceed 30% of the assets of the
Partnership on the date of the investment;(b)
    
    Invest in or underwrite the securities of other issuers;(c)
    
    Acquire any Equipment for Units;(d)
    
    Issue senior securities (except that the issuance to lenders of notes or
other evidences of indebtedness in connection with the financing or refinancing of
Equipment or the Partnerships business shall not be deemed to be the issuance of
senior securities);(e)
    
    Make loans to any Person, including the General Partner or any of its
Affiliates, except to the extent a Conditional Sales Contract constitutes a loan;(f)
    
    Sell or lease any Equipment to, lease any Equipment from, or enter into any
sale- leaseback transactions with, the General Partner or any of its Affiliates;
or(g)
    
    Give the General Partner or any of its Affiliates an exclusive right or
employment to sell the Partnerships Equipment.
   13




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EMPLOYEES
  
 ITEM 1A: RISK FACTORS
         14




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ITEM 1B: UNRESOLVED STAFF COMMENTS
  
 ITEM 2: PROPERTIES
  
 ITEM 3: LEGAL PROCEEDINGS
 th
    15




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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 NOT APPLICABLE
 
 PART II
 
 ITEM 5:
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  GENERAL LIMITATIONS
  REDEMPTION PROVISION
   16




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##### Table of Contents



EXEMPT TRANSFERS
  (1)
    
    Transfers in which the basis of the Unit in the hands of the transferee is
determined, in whole or in part, by reference to its basis in the hands of the
transferor (for example, Units acquired by corporations in certain reorganizations,
contributions to capital, gifts of Units, Units contributed to another partnership,
and nonliquidating as well as liquidating distributions by a parent partnership to its
partners of interests in a sub partnership);(2)
    
    Transfers at death;(3)
    
    Transfers between members of a family (which include brothers and sisters,
spouse, ancestors, and lineal descendants);(4)
    
    Transfers resulting from the issuance of Units by the Partnership in exchange
for cash, property, or services;(5)
    
    Transfers resulting from distributions from Qualified Plans; and(6)
    
    Any transfer by a Limited Partner in one or more transactions during any
30-day period of Units representing in the aggregate more than five percent of the
total outstanding interests in capital or profits of the Partnership.
 ADDITIONAL RESTRICTIONS ON TRANSFER
   ALLOCATION AND DISTRIBUTION BETWEEN THE GENERAL PARTNER AND THE LIMITED PARTNERS
  17




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Quarter Ended
    
    
    
    
    
    2006
    
    2005
    
    2004March 31
    
    
    
    
    
    $
    370,632
    
    
    $
    371,028
    
    
    $
    371,737June 30
    
    
    
    
    
    
    370,632
    
    
    
    370,929
    
    
    
    371,226September 30
    
    
    
    
    
    
    370,569
    
    
    
    370,731
    
    
    
    371,226December 31
    
    
    
    
    
    
    372,044
    
    
    
    370,631
    
    
    
    371,226Total
    
    
    
    
    
    $
    1,483,877
    
    
    $
    1,483,319
    
    
    $
    1,485,415
 ALLOCATIONS AND DISTRIBUTIONS AMONG THE LIMITED PARTNERS
   18




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ITEM 6: SELECTED FINANCIAL DATA
  PERIOD ENDED DECEMBER 31,
 July 8, 2002(Commencement ofOperations) throughStatements of Operations Data:
    
    2006
    
    2005
    
    2004
    
    2003
    
    December 31, 2002Lease Income
    
    $
    3,095,404
    
    
    $
    4,940,262
    
    
    $
    4,365,487
    
    
    $
    1,645,547
    
    
    $
    142,205Net (Loss)
    
    
    (1,919,122
    )
    
    
    (700,240
    )
    
    
    (341,208
    )
    
    
    (994,448
    )
    
    
    (453,921
    )Cash Distributions
    
    
    1,498,823
    
    
    
    1,498,302
    
    
    
    1,500,420
    
    
    
    935,899
    
    
    
    87,417Net (Loss) allocated to Limited Partners
    
    
    (1,934,068
    )
    
    
    (715,223
    )
    
    
    (356,213
    )
    
    
    (1,003,855
    )
    
    
    (454,795
    )Net (Loss) Per Limited Partner Unit
    
    
    (2.58
    )
    
    
    (0.95
    )
    
    
    (0.45
    )
    
    
    (1.92
    )
    
    
    (3.77
    )Cash Distribution Per Limited Partner
Unit
    
    
    1.98
    
    
    
    1.99
    
    
    
    1.98
    
    
    
    1.80
    
    
    
    0.72
 PERIOD ENDED DECEMBER 31,
 July 8, 2002(Commencement ofOperations) throughOther Data:
    
    2006
    
    2005
    
    2004
    
    2003
    
    December 31, 2002Net cash provided by (used in)
operating activities
    
    $
    779,857
    
    
    $
    2,017,517
    
    
    $
    93,833
    
    
    $
    2,260,738
    
    
    
    ($388,968
    )Net cash (used in) investing activities
    
    
    (23,730
    )
    
    
    (366,070
    )
    
    
    (2,481,996
    )
    
    
    (6,877,103
    )
    
    
    (2,247,159
    )Net cash (used in) provided by
financing activities
    
    
    (1,462,272
    )
    
    
    (1,478,900
    )
    
    
    (1,536,969
    )
    
    
    8,749,878
    
    
    
    3,145,907
 19




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##### Table of Contents



AS OF DECEMBER 31,
 2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Total Assets
    
    $
    4,411,844
    
    
    $
    8,556,768
    
    
    $
    11,502,859
    
    
    $
    15,032,718
    
    
    $
    2,782,599Notes Payable
    
    
    975,457
    
    
    
    1,653,066
    
    
    
    2,035,898
    
    
    
    1,816,668
    
    
    
    Partners Capital
    
    
    3,224,155
    
    
    
    6,642,100
    
    
    
    8,858,467
    
    
    
    10,700,095
    
    
    
    2,692,986
  
 ITEM 7: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   COMPUTER EQUIPMENT
  REVENUE RECOGNITION
  20




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LONG-LIVED ASSETS
   RECENT ACCOUNTING PRONOUNCEMENTS
 (SAB 108)
 (SFAS 157) ,
 REIMBURSABLE EXPENSES
  LIQUIDITY AND CAPITAL RESOURCES
    21




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th
    22




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RESULTS OF OPERATIONS
       23




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NET LOSS
  COMMITMENTS AND CONTINGENCIES
 Contractual Cash Obligations
  Payments due by periodTotal
    
    2007
    
    2008
    
    2009Installment notes
payable due 2007:Principal
    
    $
    424,863
    
    
    $
    424,863
    
    
    
    
    
    
    
    Interest
    
    
    11,084
    
    
    
    11,084
    
    
    
    
    
    
    
    Installment notes
payable due 2008:Principal
    
    $
    309,316
    
    
    
    228,009
    
    
    $
    81,307
    
    
    
    Interest
    
    
    12,664
    
    
    
    11,415
    
    
    
    1,249
    
    
    
    Installment notes
payable due 2009:Principal
    
    $
    241,278
    
    
    
    88,236
    
    
    
    90,742
    
    
    $
    62,300Interest
    
    
    48,273
    
    
    
    10,828
    
    
    
    17,886
    
    
    
    19,559Total
    
    $
    1,047,478
    
    
    $
    774,435
    
    
    $
    191,184
    
    
    $
    81,859
 
 24




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##### Table of Contents



ITEM 7.A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8: FINANCIAL STATEMENTS
  
 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A: CONTROLS AND PROCEDURES
  
 ITEM 9B: OTHER INFORMATION
  
 ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 GENERAL
    NAME
    
    TITLEKimberly A. Springsteen
    
    Chairman of the Board, Chief Executive Officer, Chief Compliance Officer of
CCC, CCSC, & CIGF,     Inc.Henry J. Abbott
    
    President of CCC & CIGF, Inc. Director of CCC, CCSC & CIGF,Inc.
 25




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##### Table of Contents



NAME
    
    TITLEKatrina M. Mason
    
    President of CCSC, Due Diligence Officer, Director of CCC, CCSC & CIGF, Inc.Lynn A. Franceschina
    
    Executive Vice President, Director of CCC, CCSC & CIGF, Inc.Jay Dugan
    
    Executive Vice President & Chief Technology Officer of CCC, CCSC & CIGF, Inc.
and Director of     CCCPeter Daley
    
    Independent Director of CCCRichard G. Devlin III
    
    Vice President and General Counsel of CCC, CCSC & CIGF Inc.Edmond J. Enderle
    
    Vice President and Controller of CCC, CCSC, & CIGF Inc.James Green
    
    Vice President & Portfolio Manager of CCC & CIGF, Inc.James Pruett
    
    Vice President & Compliance Officer of CCC, CCSC, & CIGF, Inc.Mark Hershenson
    
    Vice President & Broker Services Manager of CCC, CCSC & CIGF, Inc.Donna Abbott
    
    Vice President & Investor Services Manager of CCC, CCSC & CIGF, Inc.
 Kimberly A. Springsteen
 Henry J. Abbott
 26




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##### Table of Contents



Katrina M. Mason ,
 Lynn A. Franceschina
 Jay Dugan
 Peter Daley
 27




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##### Table of Contents



Richard G. Devlin III,
 Edmond J. Enderle,
 James Green ,
 James Pruett
 28




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##### Table of Contents



Mark Hershenson
 Donnamarie D. Abbott
   CODE OF ETHICS
  
 ITEM 11: EXECUTIVE COMPENSATION
  
 ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  29




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##### Table of Contents



ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  AMOUNT
    
    AMOUNT
    
    AMOUNTENTITY RECEIVING
    
    
    
    INCURRED
    
    INCURRED
    
    INCURREDCOMPENSATION
    
    TYPE OF COMPENSATION
    
    DURING 2006
    
    DURING 2005
    
    DURING 2004OFFERING AND ORGANIZATION STAGEOPERATIONAL AND SALEOR LIQUIDATION STAGESThe General Partner
    
    Equipment Acquisition Fee. An
Equipment Acquisition Fee of
four percent of the Purchase
Price of each item of
Equipment purchased as
compensation for the
negotiation of the acquisition
of the Equipment and the lease
thereof or sale under a
Conditional Sales Contract.
The fee was paid upon each
closing of the Offering with
respect to the Equipment
purchased by the Partnership
with the net proceeds of the
Offering available for
investment in Equipment. If
the Partnership acquires
Equipment in an amount
exceeding the net proceeds of
the Offering available for
investment in Equipment, the
fee will be paid when such
Equipment is acquired. Of
this amount, approximately
$21,000 and $8,000 has been
earned by the General Partner
relating to equipment acquired
in 2006 and 2005,
respectively. The remaining
balance of approximately
$70,000 and $91,000 from 2006
and 2005, respectively, will
be earned with acquisitions in
future periods.
    
    $
    41,000
    
    
    $
    8,000
    
    
    $
    161,000The General Partner
and its Affiliates
    
    Reimbursable Expenses. The
General and its Affiliates
Partner are entitled to
reimbursement by the
Partnership for the cost of
goods, supplies or services
obtained and used by the
General Partner in connection
with the administration and
operation of the Partnership
from third parties
unaffiliated with the General
Partner. In addition, the
General Partner and its
affiliates are entitled to
reimbursement of certain
expenses incurred by the
General Partner and its
affiliates in connection with
the administration and
operation of the Partnership.
The amounts set forth on this
table do not include expenses
incurred in the offering of
Units.
    
    $
    615,000
    
    
    $
    367,000
    
    
    $
    840,000The General Partner
    
    Debt Placement Fee. As
compensation for arranging
Term Debt to finance the
acquisition of Equipment to
the Partnership, a fee equal
to one percent of such
indebtedness; provided,
however, that such fee is
reduced to the extent the
Partnership incurs such fees
to third Parties, unaffiliated
with the General Partner or
the lender, with respect to
such indebtedness and no such
fee is paid with respect to
borrowings from the General
Partner or its Affiliates.
    
    $
    4,000
    
    
    $
    10,000
    
    
    $
    13,000
 30




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##### Table of Contents



AMOUNT
    
    AMOUNT
    
    AMOUNTENTITY RECEIVING
    
    
    
    INCURRED
    
    INCURRED
    
    INCURREDCOMPENSATION
    
    TYPE OF COMPENSATION
    
    DURING 2006
    
    DURING 2005
    
    DURING 2004The General Partner
    
    Equipment Management Fee. A
monthly fee equal to the
lesser of (I) the fees which
would be charged by an
independent third party for
similar services for similar
equipment or (ii) the sum of
(a) two percent of (1) the
Gross Lease Revenues
attributable to Equipment
which is subject to Full
Payout Net Leases which
contain net lease provisions
plus (2) the purchase price
paid on Conditional Sales
Contracts as received by the
Partnership and (b) five
percent of the Gross Lease
Revenues attributable to
Equipment which is subject to
Operating Leases.
    
    $
    155,000
    
    
    $
    247,000
    
    
    $
    218,000The General Partner
    
    Equipment
Liquidation Fee.
With respect to
each item of
Equipment sold by
the General Partner
(other than in
connection with a
Conditional Sales
Contract), a fee
equal to the lesser
of (i) 50% of the
Competitive
Equipment Sale
Commission or (ii)
three percent of
the sales price for
such Equipment. The
payment of such fee
is subordinated to
the receipt by the
Limited Partners of
(i) a return of
their Capital
Contributions and
10% annum
cumulative return,
compounded daily,
on Adjusted Capital
Contributions
(Priority Return)
and (ii) the Net
Disposition
Proceeds from such
sale in accordance
with the
Partnership
Agreement. Such fee
is reduced to the
extent any
liquidation or
resale fees are
paid to
unaffiliated
parties.
    
    $
    20,000
    
    
    $
    9,000
    
    
    $
    2,000The General Partner
    
    Partnership
Interest. The
General Partner has
a present and
continuing one
percent interest of
$1,000 in the
Partnerships item
of income, gain,
loss, deduction,
credit, and tax
preference. In
addition, the
General Partner
receives one
percent of Cash
Available for
Distribution until
the Limited
Partners have
received
distributions of
Cash Available for
Distribution equal
to their Capital
Contributions plus
the 10% Cumulative
Return and
thereafter, the
General Partner
will receive 10% of
Cash Available for
Distribution.
    
    $
    15,000
    
    
    $
    15,000
    
    
    $
    15,000
  COMPETITION WITH GENERAL PARTNER AND AFFILIATES: COMPETITION FOR MANAGEMENTS TIME
    31




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ACQUISITIONS
     32




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GLOSSARY
             33




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34




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##### Table of Contents



ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
 AUDIT FEES
  35




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##### Table of Contents



AUDIT-RELATED FEES
  TAX FEES
  ALL OTHER FEES
  PRE-APPROVAL POLICIES AND PROCEDURES
   
 PART IV
 
 ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
 FORM 10-K(a) (1)
    
    Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    F-1Balance Sheets as of December 31, 2006 and 2005
    
    
    F-2Statements of Operations for the years ended December 31, 2006, 2005 and 2004
    
    
    F-4Statements of Partners Capital for the years ended December 31, 2006, 2005 and 2004
    
    
    F-5Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004
    
    
    F-6Notes to Financial Statements
    
    
    F-8Supplemental Schedules
    
    
    F-25
 36




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##### Table of Contents



(a) (2)
    
    Schedules.Changes in Allowance for doubtful accounts(a) (3)
    
    Exhibits.* 3.1
    
    Certificate of Limited Partnership* 3.2
    
    Agreement of Limited Partnership*
    
    Incorporated by reference from the Partnerships Registration Statement on Form S-1
(Registration No. 333-62526)(b)
    
    Reports on Form 8-K
   (c)
    
    Exhibits.
 31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications by the Principal Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications by the Principal Financial Officer32
    
    Section 1350 Certifications by the Principal Executive Officer and Principal
Financial Officer
 37




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##### Table of Contents



SIGNATURES
  COMMONWEALTH INCOME & GROWTH FUND IVBy:
    
    COMMONWEALTH INCOME & GROWTH FUND, INC.,
 General PartnerBy:
    

/s/ Kimberly A. SpringsteenKimberly A. Springsteen, Chief Executive Officer
  SIGNATURE
    
    CAPACITY/s/ Kimberly A. Springsteen
    
    Chairman, Chief Executive Officer,Kimberly A. Springsteen
    
    Commonwealth Income & Growth Fund, Inc./s/Henry J. Abbott
    
    Director, President,Henry J. Abbott
    
    Commonwealth Income & Growth Fund, Inc.
 38




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##### Table of Contents



Commonwealth Income
& Growth Fund IV
 For the years ended December 31, 2006, 2005, and 2004




---



##### Table of Contents



Commonwealth Income
& Growth Fund IV
 
 Financial Statements
 For the years ended December 31, 2006, 2005, and 2004




---



##### Table of Contents



Commonwealth Income & Growth Fund IV
 Contents
 Report of Independent Registered Public Accounting Firm
    
    
    F-1Financial statementsBalance sheets
    
    
    F-2Statements of operations
    
    
    F-4Statements of partners capital
    
    
    F-5Statements of cash flows
    
    
    F-6Notes to financial statements
    
    
    F-8Supplemental SchedulesChanges in allowance for doubtful accounts
    
    
    F-25




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 F-1




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Balance Sheets
 December 31,
    
    2006
    
    
    2005AssetsCash and cash equivalents
    
    $
    185,564
    
    
    $
    891,708Lease income receivable, net of reserves of $282,587
and $260,937 at December 31, 2006 and 2005,
respectively
    
    
    441,123
    
    
    
    180,993Accounts receivable, affiliated limited partnerships
    
    
    26,493
    
    
    
    22,684Deferred revenue
    
    
    
    
    
    
    189Refundable deposits
    
    
    1,130
    
    
    
    1,130Prepaid expenses
    
    
    3,762
    
    
    
    658,072
    
    
    
    1,096,704Computer equipment, at cost
    
    
    10,748,987
    
    
    
    14,103,160Accumulated depreciation
    
    
    (7,326,525
    )
    
    
    (7,161,685
    )3,422,462
    
    
    
    6,941,475Equipment acquisition costs and deferred expenses,net
of accumulated amortization of $245,519 and
$394,011, at December 31, 2006 and 2005,
respectively
    
    
    95,323
    
    
    
    220,786Prepaid acquisition fees, General Partner
    
    
    70,528
    
    
    
    91,671Accounts receivable, Commonwealth Capital Corp
    
    
    165,459
    
    
    
    206,132331,310
    
    
    
    518,589Total assets
    
    $
    4,411,844
    
    
    $
    8,556,768
 F-2




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Balance Sheets
 December 31,
    
    2006
    
    
    2005Liabilities and Partners CapitalLiabilitiesAccounts payable
    
    $
    103,534
    
    
    $
    102,254Accounts payable, General Partner
    
    
    58,367
    
    
    
    39,628Unearned lease income
    
    
    50,331
    
    
    
    119,720Notes payable
    
    
    975,457
    
    
    
    1,653,066Total liabilities
    
    
    1,187,689
    
    
    
    1,914,668Partners capitalGeneral Partner
    
    
    1,000
    
    
    
    1,000Limited Partners
    
    
    3,223,155
    
    
    
    6,641,100Total partners capital
    
    
    3,224,155
    
    
    
    6,642,100Total liabilities and partners capital
    
    $
    4,411,844
    
    
    $
    8,556,768
 See accompanying notes to financial statements.
 F-3




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Statement of Operations
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004IncomeLease
    
    $
    3,095,404
    
    
    $
    4,940,262
    
    
    $
    4,365,487Interest and other
    
    
    27,359
    
    
    
    8,292
    
    
    
    10,945Total income
    
    
    3,122,763
    
    
    
    4,948,554
    
    
    
    4,376,432ExpensesOperating, excluding depreciation
    
    
    689,701
    
    
    
    554,442
    
    
    
    946,876Equipment management fee, General Partner
    
    
    154,770
    
    
    
    247,013
    
    
    
    218,274Interest
    
    
    70,218
    
    
    
    107,986
    
    
    
    105,201Depreciation
    
    
    3,632,783
    
    
    
    4,100,700
    
    
    
    3,231,173Amortization of equipment acquisition costs
and deferred expenses
    
    
    170,353
    
    
    
    211,174
    
    
    
    183,150Bad Debt Expense
    
    
    21,650
    
    
    
    260,937
    
    
    
    Loss on sale of computer equipment
    
    
    302,410
    
    
    
    166,542
    
    
    
    32,966Total expenses
    
    
    5,041,885
    
    
    
    5,648,794
    
    
    
    4,717,640Net (loss)
    
    $
    (1,919,122
    )
    
    $
    (700,240
    )
    
    $
    (341,208
    )Net (loss) allocated to limited partners
    
    $
    (1,934,068
    )
    
    $
    (715,223
    )
    
    $
    (356,213
    )Net (loss) per equivalent limited partnership unit
    
    $
    (2.58
    )
    
    $
    (0.95
    )
    
    $
    (0.47
    )Weighted average number of equivalent
limited partnership units outstanding
during the year
    
    
    749,400
    
    
    
    749,400
    
    
    
    749,950
 See accompanying notes to financial statements.
 F-4




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Statements of Partners Capital
 General
    
    
    LimitedPartner
    
    
    Partner
    
    
    General
    
    
    LimitedUnits
    
    
    Units
    
    
    Partner
    
    
    Partners
    
    
    TotalBalance,December 31, 2003
    
    
    50
    
    
    
    749,950
    
    
    $
    1,000
    
    
    $
    10,699,095
    
    
    $
    10,700,095Net income (loss)
    
    
    
    
    
    
    
    
    
    
    15,005
    
    
    
    (356,213
    )
    
    
    (341,208
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (15,005
    )
    
    
    (1,485,415
    )
    
    
    (1,500,420
    )Balance,December 31, 2004
    
    
    50
    
    
    
    749,950
    
    
    $
    1,000
    
    
    $
    8,857,467
    
    
    $
    8,858,467Net income (loss)
    
    
    
    
    
    
    
    
    
    
    14,983
    
    
    
    (715,223
    )
    
    
    (700,240
    )Redemptions
    
    
    
    
    
    
    (550
    )
    
    
    
    
    
    
    (17,825
    )
    
    
    (17,825
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (14,983
    )
    
    
    (1,483,319
    )
    
    
    (1,498,302
    )Balance,December 31, 2005
    
    
    50
    
    
    
    749,400
    
    
    $
    1,000
    
    
    $
    6,641,100
    
    
    $
    6,642,100Net income (loss)
    
    
    
    
    
    
    
    
    
    
    14,946
    
    
    
    (1,934,068
    )
    
    
    (1,919,122
    )Distributions
    
    
    
    
    
    
    
    
    
    
    (14,946
    )
    
    
    (1,483,877
    )
    
    
    (1,498,823
    )Balance, December 31, 2006
    
    
    50
    
    
    
    749,400
    
    
    $
    1,000
    
    
    $
    3,223,155
    
    
    $
    3,224,155
 See accompanying notes to financial statements.
 F-5




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Statements of Cash Flows
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activitiesNet loss
    
    $
    (1,919,122
    )
    
    $
    (700,240
    )
    
    $
    (341,208
    )Adjustments to reconcile net loss to net
cash provided by operating activitiesDepreciation and amortization
    
    
    3,803,136
    
    
    
    4,311,874
    
    
    
    3,414,323Loss on sale of computer
equipment
    
    
    302,411
    
    
    
    166,542
    
    
    
    32,966Other noncash activities included in
determination of net loss
    
    
    (1,089,682
    )
    
    
    (1,358,870
    )
    
    
    (1,103,890
    )Changes in assets and liabilitiesLease income receivable
    
    
    (260,130
    )
    
    
    (23,252
    )
    
    
    (68,745
    )Accounts receivable,
affiliated limited partnerships
    
    
    
    
    
    
    
    
    
    
    429,454Other receivables
    
    
    (3,809
    )
    
    
    (22,684
    )
    
    
    3,737Deferred revenue
    
    
    189
    
    
    
    724
    
    
    
    1,525Prepaid expenses
    
    
    (3,763
    )
    
    
    
    
    
    
    Accounts payable
    
    
    (12,038
    )
    
    
    (16,150
    )
    
    
    (2,207,043
    )Accounts payable, General
Partner
    
    
    18,739
    
    
    
    (13,447
    )
    
    
    (17,949
    )Accounts payable,
Commonwealth Capital Corp.
    
    
    
    
    
    
    (9,684
    )
    
    
    9,684Accounts payable,
affiliated limited partnerships
    
    
    
    
    
    
    (376,552
    )
    
    
    Other accrued expenses
    
    
    13,314
    
    
    
    
    
    
    
    (17,000
    )Unearned lease income
    
    
    (69,388
    )
    
    
    59,256
    
    
    
    (42,021
    )Net cash provided by operating activities
    
    $
    779,857
    
    
    $
    2,017,517
    
    
    $
    93,833
 F-6




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Statements of Cash Flows
 Years ended December 31,
    
    2006
    
    
    2005
    
    
    2004Cash flows from investing activitiesCapital expenditures
    
    $
    (586,018
    )
    
    $
    (562,066
    )
    
    $
    (2,394,884
    )Net proceeds from sale of computer
equipment
    
    
    603,057
    
    
    
    248,994
    
    
    
    73,581Equipment acquisition fees to the General
Partner
    
    
    (40,769
    )
    
    
    (52,998
    )
    
    
    (160,693
    )Net cash used in investing activities
    
    
    (23,730
    )
    
    
    (366,070
    )
    
    
    (2,481,996
    )Cash flows from financing activitiesRedemptions
    
    
    
    
    
    
    (17,825
    )
    
    
    Distributions to partners
    
    
    (1,498,823
    )
    
    
    (1,498,302
    )
    
    
    (1,500,420
    )Other receivable, Commonwealth Capital
Corp.
    
    
    40,672
    
    
    
    46,987
    
    
    
    (23,318
    )Debt placement fee to the General
Partner
    
    
    (4,121
    )
    
    
    (9,760
    )
    
    
    (13,231
    )Net cash used for financing activities
    
    
    (1,462,272
    )
    
    
    (1,478,900
    )
    
    
    (1,536,969
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (706,144
    )
    
    
    172,547
    
    
    
    (3,925,132
    )Cash and cash equivalents at beginning of year
    
    
    891,708
    
    
    
    719,161
    
    
    
    4,644,293Cash and cash equivalents at end of year
    
    $
    185,564
    
    
    $
    891,708
    
    
    $
    719,161
 See
accompanying notes to financial statements.
 F-7




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Notes to Financial Statements
 1.
    
    Business
    
    Commonwealth Income & Growth Fund IV (the Partnership) is a limited
partnership organized in the Commonwealth of Pennsylvania on May 15,
2001. The Partnership offered for sale up to 750,000 units of the
limited partnership at the purchase price of $20 per unit (the
Offering). The Partnership reached the minimum amount in escrow and
commenced operations on July 8, 2002. As of September 15, 2003, the
Partnership had reached full subscription, receiving $14,968,729 in
contributions from limited and general partners, amounting to 750,000
units.The Partnership uses the proceeds of the Offering to acquire, own and
lease various types of computer peripheral equipment and other similar
capital equipment, which will be leased primarily to U.S. corporations
and institutions. Commonwealth Capital Corp (CCC), on behalf of the
Partnership and other affiliated partnerships, will acquire computer
equipment subject to associated debt obligations and lease agreements
and allocate a participation in the cost, debt and lease revenue to the
various partnerships based on certain risk factorsThe Partnerships General Partner is Commonwealth Income & Growth Fund,
Inc. (the General Partner), a Pennsylvania corporation that is an
indirect wholly owned subsidiary of CCC. CCC is a member of the
Investment Program Association (IPA), Financial Planning Association
(FPA), and the Equipment Leasing Association (ELA). Approximately ten
years after the commencement of operations, the Partnership intends to
sell or otherwise dispose of all of its computer equipment, make final
distributions to partners, and to dissolve. Unless sooner terminated,
the Partnership will continue until December 31, 2012.Allocations of income and distributions of cash are
based on the Partnerships Limited Partnership Agreement
(the Agreement). The various allocations under the
Agreement prevent any limited partners capital account
from being reduced below zero and ensure the capital
accounts reflect the anticipated sharing ratios of cash
distributions, as defined in the Agreement. During
2006, 2005 and 2004, annual cash distributions to
limited partners were made at a rate of approximately
10% of their original contributed capital.
Distributions during 2006, 2005 and 2004 reflect an
annual return of capital in the amount of approximately
$1.98, $1.99, and $1.98, respectively, per weighted
average number of limited partnership units outstanding
during the year.
 F-8




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 2.
    
    Summary of
Significant
Accounting
Policies
    
    Revenue Recognition

Through December 31, 2006, the Partnership has only
entered into operating leases. Lease revenue is
recognized on a monthly basis in accordance with the
terms of the operating lease agreements.The Partnership reviews a customers credit history
before extending credit and may establish a provision
for uncollectible accounts receivable based upon the
credit risk of specific customers, historical trends and
other information.Use of EstimatesThe preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.Fair Value of Financial InstrumentsStatement of Financial Accounting Standards (SFAS) No.
107, Disclosures about Fair Value of Financial
Instruments, requires disclosure of the fair value of
certain instruments. The carrying values of cash,
receivables and payables approximate fair value due to
the short term maturity of these instruments. For debt,
the carrying amounts approximate fair value because the
interest rates approximate current market rates.Long-Lived AssetsThe Partnership evaluates its long-lived assets when
events or circumstances indicate that the value of the
asset may not be recoverable.
 F-9




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 The Partnership
determines whether impairment exists by estimating the
undiscounted cash flows to be generated by each asset.
If the estimated undiscounted cash flows are less than
the carrying value of the asset then impairment exists.
The amount of the impairment is determined based on the
difference between the carrying value and the fair
value. The fair value is determined based on estimated
discounted cash flows to be generated by the asset. In
2006 and 2005, the Partnership determined that the
carrying amount of certain assets was greater than the
undiscounted cash flows to be generated by these assets.
The Partnership recorded charges of $543,000, $443,000
and $62,000 for the periods ended December 31, 2006, 2005 and
2004, respectively, to record the assets at their
estimated fair value. Such amounts have been included
in depreciation expense in the accompanying financial
statements.Depreciation on computer equipment for financial
statement purposes is based on the straight-line method
over estimated useful lives of four years.Intangible AssetsEquipment acquisition costs and deferred expenses are
amortized on a straight-line basis over two-to-four year
lives. Unamortized acquisition costs and deferred
expenses are charged to amortization expense when the
associated leased equipment is sold.Cash and Cash EquivalentsThe Partnership considers all highly liquid investments
with a maturity of three months or less to be cash
equivalents. Cash equivalents have been invested in a
money market fund investing directly in Treasury
obligations. Cash at December 31, 2006 and 2005 was
held in the custody of one financial institution. At
times, the balances may exceed federally insured limits.
The Partnership mitigates this risk by depositing funds
with a major financial institution. The Partnership has
not experienced any losses in such accounts, and
believes it is not exposed to any significant credit
risk.
 F-10




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 Accounts ReceivableAccounts receivable includes current accounts
receivable, net of allowances and other accruals. The
Partnership regularly reviews the collectability of its
receivables and the credit worthiness of its customers
and adjusts its allowance for doubtful accounts
accordingly.Income TaxesThe Partnership is not subject to federal income taxes;
instead, any taxable income (loss) is passed through to
the partners and included on their respective income tax
returns.Taxable income differs from financial statement net
income as a result of reporting certain income and
expense items for tax purposes in periods other than
those used for financial statement purposes, principally
relating to depreciation, amortization, and lease
income.Offering CostsOffering costs are payments for selling commissions,
dealer manager fees, professional fees and other
offering expenses relating to the syndication. Selling
commissions are 8% of the partners contributed capital
and dealer manager fees are 1% of the partners
contributed capital. These costs have been deducted
from partnership capital in the accompanying financial
statements.Net Income (Loss) Per Equivalent Limited Partnership UnitThe net income (loss) per equivalent limited partnership
unit is computed based upon net income (loss) allocated
to the limited partners and the weighted average number
of equivalent limited partner units outstanding during
the year.Reimbursable ExpensesReimbursable expenses, which are charged to the
Partnership by CCC in connection with the administration
and operation of the Partnership, are allocated to the
Partnership based upon several factors including, but
not limited to, the number of investors, compliance issues, and the
number of existing leases.
 F-11




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 Recent Accounting PronouncementsIn September 2006, the Securities and Exchange
Commission staff issued Staff Accounting Bulletin
(SAB) 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current
Year Financial Statements (SAB 108). SAB 108 was
issued to provide consistency between how registrants
quantify financial statement misstatements. SAB 108
established an approach that requires quantification of
financial statement misstatements based on the effects
of the misstatement on each of a registrants financial
statements and the related financial statement
disclosures. The SEC staff believes that both a balance
sheet and an income statement approach should be
employed by the registrant to quantify errors and
evaluate if either approach results in quantifying a
material misstatement. The effective date for SAB 108 is
the first annual period ending after November 15, 2006.
This bulletin was implemented by the Partnership for the
year ending December 31, 2006 and did not have an impact
on the financial statements.In September 2006, the FASB issued Statement of
Financial Accounting Standards (SFAS) 157, Fair Value
Measurements (SFAS 157),which provides guidance on
measuring the fair value of assets and liabilities. SFAS
157 will apply to other accounting pronouncements that
require or permit assets or liabilities to be measured
at fair value but does not expand the use of fair value
to any new circumstances. This standard will also
require additional disclosures in both annual and
quarterly reports. SFAS 157 will be effective for
financial statements issued for fiscal years beginning
after November 15, 2007 and will be adopted by the
Partnership in the first quarter of its fiscal year
2008. The Partnership is currently determining the
effect, if any, that the adoption of SFAS 157 will have
on its financial statements.
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 3.
    
    Computer
Equipment
    
    The Partnership is the lessor of equipment under
operating leases with periods generally ranging from 12
to 42 months. In general, associated costs such as
repairs and maintenance, insurance and property taxes
are paid by the lessee. Remarketing fees are paid to
the leasing companies from which the Partnership
purchases leases. These are fees that are earned by the
leasing companies when the initial terms of the lease
have been met. The General Partner believes that this
strategy adds value since it entices the leasing company
to stay with the lease for potential extensions,
remarketing or sale of equipment. This strategy
potentially minimizes any conflicts the leasing company
may have with a potential new lease and will potentially
assist in maximizing overall portfolio performance.The remarketing fee is tied into lease performance
thresholds and is factored in the negotiation of the
fee. For the years ended December 31, 2006, 2005, and
2004, the Partnership paid $15,000, $22,000, and $3,000,
respectively.The Partnership participates in leases that are shared
with other affiliated partnerships. The Partnerships
share of the computer equipment in which they
participate at December 31, 2006 and 2005 was
approximately $1,617,000 and $1,188,000 respectively,
which is included in the Partnerships fixed assets on
their balance sheet, and the total cost of the equipment
shared by the Partnership with other affiliated
partnerships at December 31, 2006 and 2005 was
approximately $4,467,000 and $2,667,000 respectively.
The Partnerships share of the outstanding debt
associated with this equipment at December 31, 2006 and
2005 was approximately $164,000 and $137,000,
respectively, which is included in the Partnerships
liabilities on the balance sheet. And the total
outstanding debt at December 31, 2006 and 2005 related
to the equipment shared by the Partnership was
approximately $328,000 and $266,000, respectively.
 F-13




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 The following is a schedule of future minimum rentals on
noncancelable operating leases at December 31, 2006:Years ending December 31,
    
    Amount2007
    
    $
    1,359,0002008
    
    
    437,0002009
    
    
    141,000$
    1,937,000
 4.
    
    Significant Customers
    
    No leases exceeded 10% in 2006.
Lessees exceeding 10% of lease
income for the years ended:
 Lessee
    
    2005
    
    
    2004Lessee A
    
    
    20
    %
    
    
    18
    %Lessee B
    
    
    
    
    
    
    10
    %Total % of Lease Income
    
    
    20
    %
    
    
    28
    %
 Lessees exceeding 10% of net accounts receivable at December 31:
 Lessee
    
    2006
    
    
    2005Lessee B
    
    
    15
    %
    
    
    31
    %Lessee D
    
    
    39
    %
    
    
    34
    %Lessee E
    
    
    17
    %
    
    
    20
    %Total % of Accounts Receivable
    
    
    71
    %
    
    
    85
    %
 5.
    
    Related Party
Transactions
    
    Reimbursable ExpensesThe General Partner and its
affiliates are entitled to
reimbursement by the Partnership
for the cost of supplies or
services obtained and used by the
General Partner in connection with
the administration and operation
of the Partnership from third
parties unaffiliated with the
General Partner. In addition, the
General Partner and its affiliates
are entitled to reimbursement for
certain expenses incurred by the
General Partner and its affiliates
in connection with the
administration and operation of
the Partnership. An understanding
exists between CCC and the
Partnership, whereby CCC will not
be reimbursed for the
administration of the Partnership
for as long as the Partnership has
not broken escrow.
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 When the
Partnership reached the minimum
amount to break escrow, the
Partnership reimbursed CCC for its
share of the expenses to
administer the Partnership
retroactively from the effective
date through the date of the first
closing. During 2006, 2005, and
2004, the Partnership recorded
$615,000, $367,000, and $840,000,
respectively, for reimbursement of
expenses to the General Partner.
At December 31, 2006, 2005, and
2004, the amount due to CCC was
approximately $8,800, $14,300, and
$9,700, respectively.Equipment Acquisition FeeThe General Partner is entitled to
be paid an equipment acquisition
fee of 4% of the purchase price of
each item of equipment purchased
as compensation for the
negotiation of the acquisition of
the equipment and lease thereof or
sale under a conditional sales
contract. The fee was paid upon
each closing of the Offering with
respect to the equipment to be
purchased by the Partnership with
the net proceeds for the Offering
available for investment in
equipment. If the Partnership
acquires equipment in an amount
exceeding the net proceeds of the
Offering available for investment
in equipment, the fee will be paid
when such equipment is acquired.
For the year ended 2004, equipment
acquisition fees of approximately
$161,000 were earned by the
General Partner, including $80,000
which was paid to the General
Partner during 2003. For the year
ended 2005, equipment acquisition
fees of approximately $8,000 were
earned by the General Partner. The
balance of approximately $92,000
will be earned in future periods.
And for the year ended 2006,
equipment acquisition fees of
approximately $41,000 were earned
by the General Partner. The
balance of approximately $71,000
will be earned in future periods.
 F-15




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 Debt Placement FeeAs compensation for arranging term
debt to finance the acquisition of
equipment by the Partnership, the
General Partner is paid a fee
equal to 1% of such indebtedness;
provided, however, that such fee shall be reduced to the extent the
Partnership incurs such fees to
third parties, unaffiliated with
the General Partner or the lender,
with respect to such indebtedness
and no such fee will be paid with
respect to borrowings from the
General Partner or its affiliates.
During 2006, 2005, and 2004, the
Partnership paid approximately
$4,000, $10,000, and $13,000, in
debt placement fees to the General
Partner, respectively. There were
no amounts due as of December 31,
2006, 2005, and 2004.Equipment Management FeeThe General Partner is entitled to
be paid a monthly fee equal to the
lesser of (i) the fees which would
be charged by an independent third
party for similar services for
similar equipment or (ii) the sum
of (a) two percent of (1) the
gross lease revenues attributable
to equipment which is subject to
full payout net leases which
contain net lease provisions plus
(2) the purchase price paid on
conditional sales contracts as
received by the Partnership and
(b) 5% of the gross lease revenues
attributable to equipment which is
subject to operating leases.
During 2006, 2005, and 2004,
equipment management fees of
approximately $155,000, $247,000,
and $218,000 respectively, were
paid to the General Partner as
determined pursuant to section
(ii) above.Release FeeAs compensation for providing
releasing services for any
equipment for which the General
Partner has, following the
expiration of, or default under,
the most recent lease or
conditional sales contract,
arranged a subsequent lease or
conditional sales contract for the
use of such equipment to a lessee
or other party, other than the
current or most recent lessee or
other operator of such equipment
or its affiliates (Release), the
General Partner shall receive, on
a monthly basis, a Release Fee
equal to the lesser of (a) the
fees which would be charged by an
independent third party for
comparable services for comparable
equipment or (b) two percent of
gross lease revenues derived from
such Release. There were no such
fees paid to the General Partner
in 2006, 2005 and 2004.
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 Equipment Liquidation FeeWith respect to each item of equipment sold by the General Partner
(other than in connection with a conditional sales contract), a fee
equal to the lesser of (i) 50% of the competitive equipment sale
commission or (ii) three percent of the sales price for such equipment
is payable to the General Partner. The payment of such fee is
subordinated to the receipt by the limited partners of the net
disposition proceeds from such sale in accordance with the Partnership
Agreement. Such fee will be reduced to the extent any liquidation or
resale fees are paid to unaffiliated parties. During 2006, 2005, and
2004, the General Partner earned equipment liquidation fees of
approximately $20,000, $9,000, and $2,000, respectively.Accounts Receivable  Commonwealth Capital CorpAs of December 31, 2006, the Partnership has an unsecured, non-interest
bearing receivable from CCC, a related party to the Partnership, in the
amount of approximately $165,000, which originated primarily in 2003.
CCC, through its indirect subsidiaries, including the General Partner
of the Partnership, earns fees based on revenues and new lease
purchases from this fund. CCC intends to repay these receivables,
through acquisition fees, debt placement fees and reimbursement of
expenses, with a minimum amount of $10,000 per quarter, which commenced
in the quarter ended March, 2004. It is the intent of CCC and the
General Partner to repay the note by December 31, 2007. During the
year ended December 31, 2006, CCC reimbursed the Partnership
approximately $41,000.
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 6.
    
    Notes Payable
    
    Notes payable consisted of the
following:
 December 31,
    
    2006
    
    
    2005Installment notes payable to
banks; interest ranging from
4.76% to 6.00%, due in
monthly installments
ranging from $155 to
$22,902, including interest,
with final payments from
January through December
2006.
    
    $
    
    
    
    $
    261,002Installment notes payable to
banks; interest ranging from
4.29% to 7.50%, due in
monthly installments
ranging from $256 to
$13,489, including interest,
with final payments from
January through December
2007.
    
    
    424,863
    
    
    
    982,376Installment notes payable to
banks; interest ranging from
4.65% to 6.06%, due in
monthly installments
ranging from $162 to
$6,973, including interest,
with final payments from
January through December
2008.
    
    
    309,316
    
    
    
    409,688Installment notes payable to
banks; interest ranging from
5.9% to 6.25%, due in
monthly installments
ranging from $1,901 to
$15,072, including interest,
with final payments from
January through June 2009.
    
    
    241,278
    
    
    
    $
    975,457
    
    
    $
    1,653,066
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 These notes are secured by specific computer equipment and are nonrecourse
liabilities of the Partnership. Aggregate maturities of notes payable for
each of the years subsequent to December 31, 2006 are as follows:
 Year ending December 31,
    
    Amount2007
    
    $
    741,1082008
    
    
    172,0492009
    
    
    62,300$
    975,457
 7.
    
    Supplemental
    
    Other noncash activities included in the determination of net lossCash Flow
    
    are as follows:Information
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004Lease income, net of interest expense on
notes payable realized as a result of direct
payment of principal by lessee to bank
    
    $
    1,089,682
    
    
    $
    1,358,870
    
    
    $
    1,103,890
 No interest or principal on notes payable was paid by the
Partnership because direct payment was made by lessee to the
bank in lieu of collection of lease income and payment of interest
and principal by the Partnership.Noncash investing and financing activities include the following:
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004Debt assumed in connection with purchase
of computer equipment
    
    $
    412,100
    
    
    $
    976,000
    
    
    $
    1,323,000Prepaid Acquisitions fees earned by the
General Partner
    
    $
    21,140
    
    
    $
    6,650
    
    
    
    79,520
 F-19




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 8.
    
    Commitments and Contingencies
    
    In the
4th
quarter of 2005, CCC identified payment problems with Allserve Systems Corp. (Allserve), one of the Partnerships lessees. The bank
had returned a number of Allserves checks issued in October 2005. The Partnership
immediately began communication with the lessee, only to ultimately find that they filed for
protection under Chapter 11 of the United States Bankruptcy Code on November 18, 2005. The
General Partner responded to the Bankruptcy petition promptly and assertively. Counsel was
retained for the Partnership. All litigation meetings and equipment inspections were attended
by the General Partner, for purpose of identifying and tagging all assets belonging to the
Partnership. The Partnership owns either all or portions of 5 equipment leases with Allserve,
with original purchase prices of approximately $2,789,000.On January 12, 2006, the trustee filed a petition before the court
asking for the bankruptcy petition to be changed to a Chapter 7
Liquidation, due to Allserves inability to pay its ongoing bills
and the trustees belief that Allserve was not being honest in its
dealings with the Trustee. The Judge granted this request.An official creditors committee (Creditors Committee) was
organized by the Trustee in February 2006. An officer of CCC is a
member of the Creditors Committee. Other creditors affected and
represented on the creditors committee include IBM Credit LLC, DB
Zwirn and Universal Equipment Leasing. A forensic accounting firm
is being retained by the creditors committee to investigate
transfers of significant quantities of cash from Allserve accounts,
prior to its Bankruptcy petition. On March 16, 2006, the Trustee
granted stay relief to allow the Partnership and other creditors to
take possession of their assets. The Partnership recovered all of
its equipment which was subject to leases with Allserve. The
equipment was relocated to an asset management location in New
Jersey, where it was audited and tested, and evaluated for sale or
release.
 F-20




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 In January 2007, executive
management of Commonwealth Capital Corp. met with a nationally known leasing company which has helped
other Allserve creditors sell and/or re-lease recovered equipment.
They have been engaged to perform an analysis of the best possible
way to bring Commonwealths equipment to market. Management believes
there is an excess of this equipment currently available due to the
size of the Allserve bankruptcy, and as a result, management
anticipates that the sale and/or re-lease of this recovered
equipment will continue throughout 2007.The equipment leases were purchased by the Partnership between
December 2003 and December 2004. The Partnership believes there is
resale value for this equipment and will be pursuing resale and
litigation options in an attempt to maximize investors total return
on this equipment. The Partnership received lease payments up
through and including September 2005. Therefore, the Partnership
has recovered a portion of the equipments purchase price to date.
The Partnership has recorded a reserve against all outstanding
rentals in the amount of approximately $261,000 and to date has also
recorded impairment charges of approximately $645,000 to reflect the
assets at their current estimated net realizable value. The net
book value of these assets at December 31, 2006 is $376,000.
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 9.
    
    Reconciliation of Net (Loss) Reported for Financial ReportingPurposes to Taxable income (Loss) on the Federal PartnershipReturn
 Year ended December 31,
    
    2006
    
    
    2005
    
    
    2004Net (loss) for financial reporting
purposes
    
    $
    (1,919,122
    )
    
    $
    (700,240
    )
    
    $
    (341,208
    )Adjustments
Gain (Loss) on sale of computer equipment
    
    
    96,500
    
    
    
    (152
    )
    
    
    20,730Depreciation
    
    
    1,898,566
    
    
    
    2,000,090
    
    
    
    (1,243,039
    )Amortization
    
    
    122,726
    
    
    
    159,822
    
    
    
    137,343Unearned lease income
    
    
    (69,389
    )
    
    
    59,260
    
    
    
    (42,022
    )Other
    
    
    114,903
    
    
    
    649,853
    
    
    
    (36,052
    )Taxable
income (loss) on the Federal Partnership return
    
    $
    244,184
    
    
    $
    2,168,633
    
    
    $
    (1,504,248
    )
 The Adjustments  Other includes financial statement adjustments
reflected on the tax return in the subsequent year.Adjustment for gain (loss) on
sale of computer equipment is due to longer useful lives
for tax reporting purposes.
 F-22




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 10.
    
    Quarterly Results
    
    Summarized quarterly financial data for the year ended December 31, 2006 is as follows:of Operation(Unaudited)
 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312006RevenuesLease and other
    
    $
    957,141
    
    
    $
    854,846
    
    
    $
    712,860
    
    
    $
    597,917Gain (loss) on sale of
computer equipment
    
    
    (207,954
    )
    
    
    (50,115
    )
    
    
    (20,694
    )
    
    
    (23,649
    )Total revenues
    
    
    749,187
    
    
    
    804,731
    
    
    
    692,166
    
    
    
    574,268Total costs and expenses
    
    
    1,124,035
    
    
    
    1,163,770
    
    
    
    1,019,670
    
    
    
    1,432,000Net income (loss)
    
    $
    (374,848
    )
    
    $
    (359,039
    )
    
    $
    (327,503
    )
    
    $
    (857,732
    )Net (loss) allocated to limited
partners
    
    $
    (378,591
    )
    
    $
    (362,756
    )
    
    $
    (331,247
    )
    
    $
    (861,474
    )(Loss) per limited partner unit
    
    $
    (0.51
    )
    
    $
    (0.48
    )
    
    $
    (0.44
    )
    
    $
    (1.15
    )
 F-23




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##### Table of Contents



Commonwealth Income & Growth Fund IV
 Notes to Financial Statements
 Summarized quarterly financial data for the year ended December 31, 2005 is
as follows:
 Quarter endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 312005RevenuesLease and other
    
    $
    1,253,389
    
    
    $
    1,266,602
    
    
    $
    1,249,853
    
    
    $
    1,178,710Gain (loss) on sale of
computer equipment
    
    
    (8,805
    )
    
    
    (66,778
    )
    
    
    (87,697
    )
    
    
    (3,261
    )Total revenues
    
    
    1,244,584
    
    
    
    1,199,824
    
    
    
    1,162,156
    
    
    
    1,175,449Total costs and expenses
    
    
    1,212,440
    
    
    
    1,249,766
    
    
    
    1,147,389
    
    
    
    1,872,658Net (loss)
    
    $
    32,144
    
    
    $
    (49,942
    )
    
    $
    14,767
    
    
    $
    (697,209
    )Net (loss) allocated to limited
partners
    
    $
    28,396
    
    
    $
    (53,689
    )
    
    $
    11,022
    
    
    $
    (700,952
    )(Loss) per limited partner unit
    
    $
    0.04
    
    
    $
    (0.07
    )
    
    $
    0.02
    
    
    $
    (0.94
    )
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##### Table of Contents



Commonwealth Income & Growth Fund IV
 
 Supplemental Schedules
 Balance,
    
    Additions
    
    
    
    Balance,beginning
    
    charged to
    
    
    
    end ofof period
    
    operations
    
    Deductions
    
    periodAllowance for doubtful accounts:Year ended December 31, 2004
    
    $          
    
    
    
    
    
    
    
    $
    Year ended December 31, 2005
    
    $          
    
    
    260,937
    
    
    
    
    $
    260,937Year ended December 31, 2006
    
    $ 260,937
    
    
    21,650
    
    
    
    
    $
    282,587
 F-25