UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
   FORM
10-K
 
 T 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, 2008 or
 
  ̈ 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
 (Exact
name of registrant as specified in its charter)
 
 Pennsylvania
              23-3080409(State
      or other jurisdiction ofincorporation
      or organization)
              (I.R.S.
      Employer Identification Number)
 
 Brandywine
One, Suite 200
 2 Christy
Drive, Chadds Ford PA 19317
 (Address,
including zip code, of principal executive offices)
 
 (610)
594-9600
 (Registrant’s
telephone number including area code)
 
 Securities
registered pursuant to Section 12(b) of the Act:
 
 Title
      of each class
                Name
      of exchange onwhich
      registeredNone
                N/A
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Units of Limited Partnership
Interest
 (Title
of Class)
 Indicate
by check mark if the registrant is a well-known seasoned issuer, (as defined in
Rule 405 of the Act):  YES  ̈     NO
T
   Indicate
by checkmark if the registrant is not required to file to file reports pursuant
to Section-13 or Section-15(d) of the Act. YES  ̈     NO
T
  Indicate
by check mark whether the registrant (i) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (ii) has been subject to such filing requirements for
the past 90 days: YES T     NO
 ̈
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, to the best of Registrant’s knowledge,
in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K: YES T     NO
 ̈
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "accelerated filer,” “large accelerated filer" and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer o
              Smaller
      reporting company TDo
      not check if a smaller reporting company.
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act): YES o     NO
T
  State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the Registrant’s most recently completed second fiscal
quarter:  N/A
  Documents
incorporated by reference:  None
 
 
 
 
 
 
  
 
 FORM
10-K
 DECEMBER
31, 2008
 
 TABLE
OF CONTENTS
 
 PART
      IItem
      1.
                      Business
                      3Item
      1A.
                      Risk
      Factors
                      11Item
      1B.
                      Unresolved
      Staff Comments
                      11Item
      2.
                      Properties
                      11Item
      3.
                      Legal
      Proceedings
                      11Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      11PART
      IIItem
      5.
                      Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                      11Item
      6.
                      Selected
      Financial Data
                      15Item
      7.
                      Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      15Item
      7A.
                      Quantitative
      and Qualitative Disclosures About Market Risk
                      20Item
      8.
                      Financial
      Statements and Supplementary Data
                      20Item
      9.
                      Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                      20Item
      9A.
                      Controls
      and Procedures
                      20Item
      9A (T).
                      Controls
      and Procedures
                      20Item
      9B.
                      Other
      Information
                      21PART
      IIIItem
      10.
                      Directors
      and Executive Officers of the Registrant
                      21Item
      11.
                      Executive
      Compensation
                      25Item
      12.
                      Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                      25Item
      13.
                      Certain
      Relationships and Related Transactions and Director
      Independence
                      26Item
      14.
                      Principal
      Accountant Fees and Services
                      31PART
      IVItem
      15.
                      Exhibits
      and Financial Statement Schedules
                      32Index
      to Exhibits
   
  Forward-Looking
Statements
  From time
to time, we and our representatives may provide information, whether orally or
in writing, including certain statements in this Annual Report on Form 10-K,
which are deemed to be “forward-looking” within the meaning of the Private
Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These
forward-looking statements reflect our current beliefs and expectations with
respect to future events and are based on assumptions and are subject to risks
and uncertainties and other factors outside our control that may cause actual
results to differ materially from those projected.
  The words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and
similar expressions, as they relate to us, are intended to identify
forward-looking statements. Such statements reflect our current views with
respect to future events and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated,
expected or intended or using other similar expressions. We do not intend to
update these forward-looking statements, except as required by law.
  In
accordance with the provisions of the Litigation Reform Act, we are making
investors aware that such forward-looking statements, because they relate to
future events, are by their very nature subject to many important factors that
could cause actual results to differ materially from those contemplated by the
forward-looking statements contained in this Annual Report on Form 10-K, any
exhibits to this Form 10-K and other public statements we make. Such factors
include, but are not limited to: the outcome of litigation and regulatory
proceedings to which we may be a party; actions of competitors; changes and
developments affecting our industry; quarterly or cyclical variations in
financial results; development of new products and services; interest rates and
cost of borrowing; our ability to maintain and improve cost efficiency of
operations; changes in foreign currency exchange rates; changes in economic
conditions, political conditions, trade protection measures, licensing
requirements and tax matters in the foreign countries in which we do business;
reliance on third parties for manufacturing of products and provision of
services; and other factors that are set forth in  the “Legal
Proceedings” section, the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section and other sections of this Annual
Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
 
 PART
I
 
 ITEM
1:                      BUSINESS
 
 GENERAL
 
 Commonwealth
Income and Growth Fund IV (“CIGF4”) was formed on May 15, 2002 under the
Pennsylvania Revised Uniform Limited Partnership Act.  The Partnership
offered $15,000,000 of units of Limited Partnership to the public on October 19,
2002.  The Partnership raised the minimum capital required
($1,150,000) and commenced operations on July 8, 2002.  The
Partnership was fully subscribed and terminated its offering of units on
September 15, 2003 with 749,950 units ($14,967,729) sold.
 
 See “The
Glossary” below for the definition of selected terms not otherwise defined in
the text of this report.
   
 
 PRINCIPAL
INVESTMENT OBJECTIVES
 
 The
Partnership was formed for the purpose of acquiring various types of equipment,
including computer information technology (I.T.) and other similar capital
equipment.  The Partnership utilized the net proceeds of the offering
to purchase IBM and IBM compatible computer I.T. and other similar capital
equipment.  The Partnership has utilized retained proceeds and debt
financing (not in excess of 30% of the aggregate cost of the equipment owned or
subject to conditional sales contract by the Partnership at the time the debt is
incurred) to purchase additional equipment.  The Partnership acquires
and leases equipment principally to U.S. corporations and other institutions
pursuant to operating leases.  The Partnership retains the flexibility
to enter into full payout net leases and conditional sales contracts, but has
not done so.
 
 The
Partnership’s principal investment objectives are to:
 
 (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.
 
 Limited
Partners do not have the right to vote on or otherwise approve or disapprove any
particular investment to be made by the Partnership.
 
 Although
the Partnership generally acquires new equipment, the Partnership may purchase
used equipment.   Generally, equipment is acquired from
manufacturers, distributors, leasing companies, agents, owner-users,
owner-lessors, and other suppliers upon terms that vary depending upon the
equipment and supplier involved.   Manufacturers and distributors
usually furnish a limited warranty against defects in material and workmanship
and some purchase agreements for equipment provide for service and replacement
of parts during a limited period.   Equipment purchases are also
made through lease brokers and on an ad hoc basis to meet the needs of a
particular lessee.
 
 As of
December 31, 2008, all equipment purchased by the Partnership is subject to an
operating lease or an operating lease was already entered into with a third
party when the Partnership acquired an item of equipment. The Partnership may
also engage in sale/leaseback transactions, pursuant to which the Partnership
would purchase equipment from companies that would then immediately lease the
equipment from the Partnership.   The Partnership may also
purchase equipment which is leased under full payout net leases or sold under
conditional sales contracts at the time of acquisition or the Partnership may
enter into a full payout net lease or conditional sales contract with a third
party when the Partnership acquires an item of equipment.
 
 The
Partnership may enter into arrangements with one or more manufacturers pursuant
to which the Partnership purchases from such manufacturers equipment that has
previously been leased directly by the manufacturer to third parties (“vendor
leasing agreements”).   The Partnership and manufacturers may
agree to obtain nonrecourse loans to the Partnership from the manufacturers, to
finance the acquisition of equipment.  Such loans would be secured
only by the specific equipment financed and the receivables due to the
manufacturers from users of such equipment.  It is expected that the
manufacturers of equipment will provide maintenance, remarketing and other
services for the equipment subject to such agreements.  As of December
31, 2008, the Partnership has not entered into any such agreements.
 
 The
General Partner has the discretion, consistent with its fiduciary duty, to
change the investment objectives of the Partnership if it determines that such a
change is in the best interest of the Limited Partners and so long as such a
change is consistent with the Partnership Agreement.   The
General Partner will notify the Limited Partners if it makes such a
determination to change the Partnership’s investment objectives.
 
  
 
  TYPES
OF EQUIPMENT
 
 Computer Information Technology
Equipment.  Computer Information Technology (I.T.) equipment
consists of devices used to convey information into and out of a central
processing unit (or “mainframe”) of a computer system, such as tape drives, disk
drives, tape controllers, disk controllers, printers, terminals and related
control units, all of which are in some way related to the process of storing,
retrieving, and processing information by computer.
 
 Computer
technology has developed rapidly in recent years and is expected to continue to
do so.   Technological advances have permitted continued
reductions in the cost of computer processing capacity, thereby permitting
applications not economically feasible a few years ago.   Much of
the older IBM and IBM compatible computer I.T. equipment has not been retired
from service, because software is generally interchangeable between older and
newer equipment and older equipment are capable of performing many of the same
functions as newer equipment.   The General Partner believes,
historically, that the values of I.T. equipment have been affected less
dramatically by changes in technology than have the values of central processing
units.   An equipment user who upgrades to a more advanced
central processor generally can continue to use his existing I.T.
equipment.   I.T. equipment nevertheless is subject to declines
in value as new, improved models are developed and become
available.   Technological advances and other factors, discussed
below in Management’s Discussion and Analysis, have at times caused dramatic
reductions in the market prices of older models of I.T. equipment from the
prices at which they were originally introduced.
 
 Other
Equipment-Restrictions.  The Partnership generally acquires
computer I.T. equipment such as tape drives, disk drives, tape controllers, disk
controllers, printers, terminals and related control units, all of which are in
some way related to the process of storing, retrieving and processing
information by computer.  The General Partner is also authorized to
cause the Partnership to invest in other types of data processing,
telecommunication or medical technology equipment.  The Partnership
may not invest in any of such other types of equipment (i) to the extent that
the purchase price of such equipment, together with the aggregate purchase price
of all such other types of equipment then owned by the Partnership, is in excess
of 25% of the total cost of all of the assets of the Partnership at the time of
the Partnership’s commitment to invest therein and (ii) unless the General
Partner determines that such purchase is in the best economic interest of the
Partnership at the time of the purchase and, in the case of non-IBM compatible
I.T. equipment, that such equipment is comparable in quality to similar IBM or
IBM compatible equipment.  There can be no assurance that any
equipment investments can be found which meet this
standard.  Accordingly, there can be no assurance that investments of
this type will be made by the Partnership.
   
   DIVERSIFICATION
 
 Diversification
is generally desirable to minimize the effects of changes in specific
industries, local economic conditions or similar risks.  However, the
extent of the Partnership’s diversification, in the aggregate and within each
category of equipment, depends in part upon the financing which can be assumed
by the Partnership or borrowed from third parties on satisfactory
terms.  The Partnership’s policy not to borrow on a recourse basis
will further limit its financing options.  Diversification also
depends on the availability of various types of equipment.  Through
December 31, 2008, the Partnership has acquired a diversified equipment
portfolio, which it has leased to 22 different companies located throughout
the United States.
  The
equipment types comprising the portfolios at December 31, 2008 are as
follows:
 
 Equipment
      Type
                        Approximate
      %Servers
                        22%Workstations
                        18%Datacom
                        8%Printers
                        7%Tape
      libraries
                        1%Storage
                        5%Audio
      visual
                        5%Telecom
                        34%Total
                        100%
 
 During
the operational stage of the Partnership, the Partnership may not at any one
point in time lease (or sell pursuant to a conditional sales contract) more than
25% of the equipment to a single person or affiliated group of
persons.
 
 DESCRIPTION
OF LEASES
 
 The
Partnership generally purchases only equipment that is subject to a lease or for
which a lease or similar agreement will be entered into contemporaneously with
the consummation of the Partnership’s acquisition of the
equipment.  The General Partner leases most of the equipment purchased
by the Partnership to third parties pursuant to operating
leases.  Operating leases are relatively short-term (12 to 48 month)
leases under which the aggregate noncancellable rental payments during the
original term of the lease are not sufficient to permit the lessor to recover
the purchase price of the subject equipment.  The equipment may also
be leased pursuant to full payout net leases.  Full payout net leases
are leases under which the aggregate noncancellable rental payments during the
original term of the lease are at least sufficient to recover the purchase price
of the subject equipment.  It is anticipated that the Partnership will
enter into few, if any, full payout net leases.  The General Partner
may also enter into conditional sales contracts for equipment.  A
conditional sales contract generally provides that the noncancellable payments
to the seller over the term of the contract are sufficient to recover the
investment in such equipment and to provide a return on such
investment.  Under a conditional sales contract, the seller reserves
title to and retains a security interest in, the equipment until the purchase
price of the equipment is paid.   As of December 31, 2008, the
Partnership has not entered into any full payout net leases or conditional sales
contracts for equipment and does not presently intend to do so.
 
 In
general, the terms of the Partnership’s leases, whether the equipment is leased
pursuant to an operating lease or a full payout net lease, depend upon a variety
of factors, including:  the desirability of each type of lease from
both an investment and a tax point of view; the relative demand among lessees
for operating or full payout net leases; the type and use of equipment and its
anticipated residual value; the business of the lessee and its credit rating;
the availability and cost of financing; regulatory considerations; the
accounting treatment of the lease sought by the lessee or the Partnership; and
competitive factors.
 
 An
operating lease generally represents a greater risk to the Partnership than a
full payout net lease, because in order to recover the purchase price of the
subject equipment and earn a return on such investment, it is necessary to renew
or extend the operating lease, lease the equipment to a third party at the end
of the original lease term, or sell the equipment.  On the other hand,
the term of an operating lease is generally much shorter than the term of a full
payout net lease, and the lessor is thus afforded an opportunity under an
operating lease to re-lease or sell the subject equipment at an earlier stage of
the equipment’s life cycle than under a full payout net lease.  Also,
the annual rental payments received under an operating lease are ordinarily
higher than those received under a full payout net lease.
 
 The
Partnership’s policy is to generally enter into “triple net leases” (or the
equivalent, in the case of a conditional sales contract) which typically provide
that the lessee or some other party bear the risk of physical loss of the
equipment; pay taxes relating to the lease or use of the equipment; maintain the
equipment; indemnify the Partnership-lessor against any liability suffered by
the Partnership as the result of any act or omission of the lessee or its
agents; maintain casualty insurance in an amount equal to the greater of the
full value of the equipment and a specified amount set forth in the lease; and
maintain liability insurance naming the Partnership as an additional insured
with a minimum coverage which the General Partner deems
appropriate.  In addition, the Partnership may purchase “umbrella”
insurance policies to cover excess liability and casualty losses, to the extent
deemed practicable and advisable by the General Partner.  As of
December 31, 2008, all leases that have been entered into are “triple net
leases”.
  
 
  The
General Partner has not established any standards for lessees to whom it will
lease equipment and, as a result, there is not an investment restriction
prohibiting the Partnership from doing business with any
lessees.  However, a credit analysis of all potential lessees is
undertaken by the General Partner to determine the lessee’s ability to make
payments under the proposed lease.  The General Partner may refuse to
enter into an agreement with a potential lessee based on the outcome of the
credit analysis.
 
 The terms
and conditions of the Partnership’s leases, or conditional sales contracts, are
each determined by negotiation and may impose substantial obligations upon the
Partnership.  Where the Partnership assumes maintenance or service
obligations, the General Partner generally causes the Partnership to enter into
separate maintenance or service agreements with manufacturers or certified
maintenance organizations to provide such services.  Such agreements
generally require annual or more frequent adjustment of service
fees.  As of December 31, 2008, the Partnership has not entered into
any such agreements.
 
 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 a factor in the negotiation of the
fee.
 
 BORROWING
POLICIES
 
 The
General Partner, at its discretion, may cause the Partnership to incur debt in
the maximum aggregate amount of 30% of the aggregate cost of the equipment
owned, or subject to conditional sales contracts (except that the partnership
may not incur any indebtedness to acquire equipment until the net proceeds of
the offering are fully invested, or committed to investment, in equipment). The
Partnership incurs only non-recourse debt, which is secured by equipment and
lease income therefrom.  Such leveraging permits the Partnership to
increase the aggregate amount of its depreciable assets, and, as a result,
potentially increases both its lease revenues and its federal income tax
deductions above the levels that would be achieved without
leveraging.  There is no limit on the amount of debt that may be
incurred in connection with the acquisition of any single item of
equipment.  Any debt incurred is fully amortized over the term of the
initial lease or conditional sales contract to which the equipment securing the
debt is subject.  The precise amount borrowed by the Partnership
depends on a number of factors, including the types of equipment acquired by the
Partnership; the creditworthiness of the lessee; the availability of suitable
financing; and prevailing interest rates.  The Partnership is flexible
in the degree of leverage it employs, within the permissible
limit.  There can be no assurance that credit will be available to the
Partnership in the amount or at the time desired or on terms considered
reasonable by the General Partner.  As of December 31, 2008, the
aggregate nonrecourse debt outstanding of approximately $295,000 was 5.0% of the
aggregate cost of the equipment owned.
 
 The
Partnership may purchase some items of equipment without leverage.  If
the Partnership purchases an item of equipment without leverage and thereafter
suitable financing becomes available, it may then obtain the financing, secure
the financing with the purchased equipment to the extent practicable and invest
any proceeds from such financing in additional items of equipment, or it may
distribute some or all of such proceeds to the Limited Partners.  Any
such later financing will be on terms consistent with the terms applicable to
borrowings generally.  As of December 31, 2008, the Partnership has
not exercised this option.
 
 The
General Partner may cause the Partnership to borrow funds, to the fullest extent
practicable, at interest rates fixed at the time of
borrowing.  However, the Partnership may borrow funds at rates that
vary with the “prime” or “base” rate.  If lease revenues were fixed, a
rise in the “prime” or “base” rate would increase borrowing costs and reduce the
amount of the Partnership’s income and cash available for
distribution.  Therefore, the General Partner is permitted to borrow
funds to purchase equipment at fluctuating rates only if the lease for such
equipment provides for fluctuating rental payments calculated on a similar
basis.
 
 Any
additional debt incurred by the Partnership must be
nonrecourse.  Nonrecourse debt means that the lender providing the
funds can look for security only to the equipment pledged as security and the
proceeds derived from leasing or selling such equipment.  Neither the
Partnership nor any Partner (including the General Partner) would be liable for
repayment of any nonrecourse debt.
 
 Loan
agreements may also require that the Partnership maintain certain reserves or
compensating balances and may impose other obligations upon the
Partnership.  Moreover, since a significant portion of the
Partnership’s revenues from the leasing of equipment will be reserved for
repayment of debt, the use of financing reduces the cash, which might otherwise
be available for distributions until the debt has been repaid and may reduce the
Partnership’s cash flow over a substantial portion of the Partnership’s
operating life.  As of December 31, 2008, the Partnership had not
entered into any such agreements.
 
 
   The
General Partner and any of its affiliates may, but are not required to, make
loans to the Partnership on a short-term basis.  If the General
Partner or any of its affiliates makes such a short-term loan to the
Partnership, the General Partner of affiliate may not charge interest at a rate
greater than the interest rate charged by unrelated lenders on comparable loans
for the same purpose in the same locality.  In no event is the
Partnership required to pay interest on any such loan at an annual rate greater
than three percent over the “prime rate’ from time to time announced by PNC
Bank, Philadelphia, Pennsylvania.  All payments of principal and
interest on any financing provided by the General Partner or any of its
affiliates are due and payable by the Partnership within 12 months after the
date of the loan.
 
 REFINANCING
POLICIES
 
 Subject
to the limitations set forth in “Borrowing Policies” above, the Partnership may
refinance its debt from time to time.  With respect to a particular
item of equipment, the General Partner will take into consideration such factors
as the amount of appreciation in value, if any, to be realized, the possible
risks of continued ownership, and the anticipated advantages to be obtained for
the Partnership, as compared to selling such equipment.  As of
December 31, 2008, the Partnership has no such debt.
 
 Refinancing,
if achievable, may permit the Partnership to retain an item of equipment and at
the same time to generate additional funds for reinvestment in additional
equipment or for distribution to the Limited Partners.
 
 LIQUIDATION
POLICIES
 
 The
General Partner intends to cause the Partnership to begin disposing of its
equipment in approximately January 2012.  Notwithstanding the
Partnership’s objective to sell all of its assets and dissolve by December 31,
2012, the General Partner may at any time cause the Partnership to dispose of
all its equipment and, dissolve the Partnership upon the approval of Limited
Partners holding a majority in interest of units.
 
 Particular
items of equipment may be sold at any time if, in the judgment of the General
Partner, it is in the best interest of the Partnership to do so.  The
determination of whether particular items of Partnership equipment should be
sold or otherwise disposed of is made by the General Partner after consideration
of all relevant factors (including prevailing general economic conditions,
lessee demand, the General Partner’s views of current and future market
conditions, the cash requirements of the Partnership, potential capital
appreciation, cash flow and federal income tax considerations), with a view
toward achieving the principal investment objectives of the
Partnership.  As partial payment for equipment sold, the Partnership
may receive purchase money obligations secured by liens on such
equipment.
 
 MANAGEMENT
OF EQUIPMENT
 
 Equipment
management services for the Partnership’s equipment are provided by the General
Partner and its affiliates and by persons employed by the General
Partner.  Such services will consist of collection of income from the
equipment, negotiation and review of leases, conditional sales contracts and
sales agreements, releasing and leasing-related services, payment of operating
expenses, periodic physical inspections and market surveys, servicing
indebtedness secured by equipment, general supervision of lessees to assure that
they are properly utilizing and operating equipment, providing related services
with respect to equipment, supervising, monitoring and reviewing services
performed by others in respect to equipment and preparing monthly equipment
operating statements and related reports.
   
   COMPETITION
 
 The
equipment leasing industry is highly competitive.  The Partnership
competes with leasing companies, equipment manufacturers and their affiliated
financing companies, distributors and entities similar to the Partnership
(including other programs sponsored by the General Partner), some of which have
greater financial resources than the Partnership and more experience in the
equipment leasing business than the General Partner.  Other leasing
companies and equipment manufacturers, their affiliated financing companies and
distributors may be in a position to offer equipment to prospective lessees on
financial terms, which are more favorable, that those which the Partnership can
offer.  They may also be in a position to offer trade-in privileges,
software, maintenance contracts and other services, which the Partnership may
not be able to offer.  Equipment manufacturers and distributors may
offer to sell equipment on terms (such as liberal financing terms and exchange
privileges), which will afford benefits to the purchaser similar to those
obtained through leases.  As a result of the advantages, which certain
of its competitors may have, the Partnership may find it necessary to lease its
equipment on a less favorable basis than certain of its
competitors.
 
 The
dominant firms in the computer marketplace are Dell, IBM, Hewlett Packard, Sun
Microsystems and Cisco.  Because of the substantial resources and
dominant position of these companies, revolutionary changes with respect to
computer systems, pricing, marketing practices, technological innovation and the
availability of new and attractive financing plans could occur at any
time.  Significant action in any of these areas by these firms might
materially adversely affect the partnership’s business or that of the other
manufacturers with whom the General Partner might negotiate purchase and other
agreements.  Any adverse affect on these manufacturers could be
reflected in the overall return realized by the Partnership on equipment from
those manufacturers.
 
 INVESTMENTS
 
 Through
March 10, 2009, the Partnership has purchased, or has made the commitment to
purchase, the following equipment:
 
 Lessee
                  MFG
                  EQ Category Descripton
                  List Price
                  Purchase Price
                  Monthly Payment
                  Lease Term in MonthsAlliant
      Techsystems
                  Dell
                  Graphic
      Workstations
                  $64,694.97
                  $39,593.32
                  $1,082.99
                  36Alliant
      Techsystems
                  Dell
                  Laptops
                  $8,164.31
                  $5,599.47
                  $278.33
                  12Alliant
      Techsystems
                  Dell
                  Laptops
                  $21,581.55
                  $22,013.19
                  $1,094.18
                  15Alliant
      Techsystems
                  Dell
                  Laptops
                  $6,891.77
                  $5,764.28
                  $859.56
                  15Alliant
      Techsystems
                  Dell
                  Desktops
      - Tier 1
                  $46,821.77
                  $39,161.73
                  $5,839.70
                  15Alliant
      Techsystems
                  Konica
                  Standard
      Office Printers
                  $50,661.57
                  $31,004.94
                  $848.08
                  36Alliant
      Techsystems
                  KonicaMinolta
                  Multifunction
      Printers
                  $39,364.00
                  $30,113.46
                  $823.69
                  36Allserve
      Systems (A)
                  Nortel
                  Telecom
                  $643,385.00
                  $418,200.00
                  $12,423.00
                  36Allserve
      Systems (A)
                  Nortel
                  Telecom
                  $1,114,155.00
                  $724,200.00
                  $21,513.00
                  36Allserve
      Systems (A)
                  Motorola
                  Telecom
                  $643,385.00
                  $418,200.00
                  $12,423.00
                  36Allserve
      Systems (A)
                  Nortel
                  Telecom
                  $1,114,153.00
                  $724,200.00
                  $21,513.00
                  36Allserve
      Systems (A)
                  Nortel
                  Telecom
                  $548,778.00
                  $503,778.00
                  $14,965.17
                  36Allstate
      Insurance Company
                  Sun
                  High
      End Sun Servers
                  $9,191.08
                  $5,680.09
                  $167.04
                  31America
      Online
                  Sun
                  Small
      Sun Servers
                  $57,284.94
                  $44,991.59
                  $1,198.90
                  36Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $1,922.33
                  $1,764.70
                  $50.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,292.39
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,292.39
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,162.63
                  $1,764.70
                  $50.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,292.39
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,292.39
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,292.39
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $20,337.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $1,922.33
                  $1,764.70
                  $50.00
                  35Charleston Area Medical Center
                  Konica
      Minolta
                  Multifunction
      Printers
                  $4,479.05
                  $4,111.77
                  $116.50
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $6,497.50
                  $5,964.71
                  $169.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,037.68
                  $1,870.59
                  $53.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $5,497.89
                  $5,047.06
                  $143.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $2,465.40
                  $2,011.77
                  $57.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $5,497.89
                  $5,047.06
                  $143.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $1,922.33
                  $1,764.70
                  $50.00
                  35Charleston Area Medical Center
                  Canon
                  Multifunction
      Printers
                  $4,575.17
                  $4,200.00
                  $119.00
                  35Columbia University
                  HP
                  Small
      HP/Compaq Servers
                  $29,857.14
                  $17,054.40
                  $445.31
                  36Convergys
                  Sun
                  Small
      Sun Servers
                  $18,249.60
                  $14,268.89
                  $375.20
                  34Daimler
      Chrysler
                  HP
                  Engineering
      Workstations
                  $100,466.54
                  $56,361.73
                  $1,478.67
                  36Daimler
      Chrysler
                  Visara
                  Engineering
      Workstations
                  $120,833.33
                  $73,950.00
                  $1,900.95
                  36Daimler
      Chrysler
                  HP
                  Engineering
      Workstations
                  $42,370.00
                  $25,930.44
                  $680.29
                  36Daimler
      Chrysler
                  Visara
                  Desktops
      - Tier 2
                  $1,280,418.00
                  $831,621.61
                  $21,931.98
                  36Daimler
      Chrysler
                  Visara
                  Datacom
      - Other
                  $510,350.00
                  $126,466.23
                  $3,335.24
                  36Daimler
      Chrysler
                  Visara
                  Datacom
      - Other
                  $550.00
                  $357,508.73
                  $9,428.42
                  36Daimler
      Chrysler
                  Visara
                  Datacom
      - Other
                  $106,125.00
                  $68,981.58
                  $1,819.22
                  36Daimler
      Chrysler
                  Mplus
                  Standard
      Office Printers
                  $4,598.00
                  $4,220.99
                  $170.91
                  24Daimler
      Chrysler
                  Intermec
                  Standard
      Office Printers
                  $5,245.00
                  $4,814.98
                  $194.96
                  24GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $25,756.71
                  $18,390.29
                  $479.68
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $2,922.92
                  $1,937.90
                  $50.55
                  35GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $21,115.29
                  $15,076.31
                  $393.24
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $14,076.86
                  $10,050.88
                  $262.16
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $31,197.14
                  $22,274.76
                  $581.00
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36GE
      Aviation
                  Itronix
                  Laptops
                  $7,038.43
                  $5,025.44
                  $131.08
                  36Geico
                  HP
                  Small
      HP/Compaq Servers
                  $426,098.35
                  $282,503.21
                  $7,365.41
                  36Geico
                  HP
                  Small
      HP/Compaq Servers
                  $42,137.05
                  $33,090.20
                  $842.82
                  36Geico
                  IBM
                  Small
      IBM Servers
                  $342,637.00
                  $179,389.31
                  $5,024.08
                  33Geico
                  HP
                  Midrange
      HP Servers
                  $73,925.61
                  $50,520.76
                  $1,315.53
                  36Geico
                  HP
                  Blade
      Servers: All MFG
                  $93,521.25
                  $64,866.35
                  $1,694.58
                  36Geico
                  Panasonic
                  Laptops
                  $137,250.00
                  $60,479.69
                  $2,132.91
                  24Geico
                  Dell
                  Desktops
      - Tier 1
                  $7,525.00
                  $3,629.27
                  $117.39
                  27Geico
                  HP
                  Datacom
      - Cisco
                  $91,839.08
                  $52,135.24
                  $1,449.22
                  33Geico
                  HP
                  Digital
      Storage
                  $70,727.49
                  $40,626.72
                  $1,225.05
                  30Geico
                  HP
                  Digital
      Storage
                  $153,773.13
                  $80,436.48
                  $2,429.61
                  30Hertz
                  HP
                  High
      End HP Servers
                  $281,835.00
                  $186,855.32
                  $4,717.18
                  36IST
      Management Services
                  KonicaMinolta
                  Multifunction
      Printers
                  $5,117.78
                  $4,698.12
                  $148.27
                  35IST
      Management Services
                  Konica
                  Multifunction
      Printers
                  $5,071.67
                  $4,655.79
                  $146.93
                  35IST
      Management Services
                  KonicaMinolta
                  Multifunction
      Printers
                  $8,057.78
                  $7,397.04
                  $233.44
                  35IST
      Management Services
                  KonicaMinolta
                  Multifunction
      Printers
                  $2,987.22
                  $2,742.27
                  $86.55
                  35IST
      Management Services
                  KonicaMinolta
                  Multifunction
      Printers
                  $2,018.89
                  $1,853.34
                  $58.49
                  35IST
      Management Services
                  KonicaMinolta
                  Multifunction
      Printers
                  $8,701.11
                  $7,987.62
                  $252.08
                  35IST
      Management Services
                  Fujitsu
                  Scanners
                  $11,467.89
                  $10,527.52
                  $328.73
                  35JC
      Penney
                  HP
                  Small
      HP/Compaq Servers
                  $51,891.00
                  $38,870.99
                  $1,397.24
                  24Kaiser
      Foundation
                  IBM
                  Digital
      Storage
                  $640,240.00
                  $143,012.98
                  $3,587.29
                  36NBC
      Universal
                  Avid
                  Graphic
      Workstations
                  $4,278.71
                  $3,185.93
                  $107.24
                  24NBC
      Universal
                  Avid
                  Digital
      Storage
                  $128,926.15
                  $85,478.04
                  $2,178.85
                  36Northrop
      Grumman
                  CipherOptics
                  Datacom
      - Other
                  $9,295.48
                  $5,838.46
                  $152.30
                  36Northrop
      Grumman
                  IBM
                  Digital
      Storage
                  $161,992.86
                  $57,831.45
                  $1,502.49
                  36Principal
      Financial Group
                  NexPress
                  High
      Volume and Specialized Printers
                  $453,167.00
                  $375,061.15
                  $8,850.35
                  37Qwest
      Communications International
                  Stratus
                  Misc
      High End Servers
                  $154,193.00
                  $104,128.16
                  $3,101.11
                  36Raytheon
                  HP
                  Engineering
      Workstations
                  $84,075.00
                  $50,743.98
                  $1,333.72
                  36Raytheon
                  HP
                  Engineering
      Workstations
                  $91,149.60
                  $56,824.02
                  $1,493.52
                  36Raytheon
                  HP
                  Desktops
      - Tier 1
                  $56,196.00
                  $55,752.02
                  $1,615.47
                  31Refco
      Group
                  Compaq
                  Small
      HP/Compaq Servers
                  $254,352.00
                  $165,328.75
                  $4,739.00
                  36Refco
      Group
                  Compaq
                  Small
      HP/Compaq Servers
                  $303.00
                  $196,948.85
                  $5,751.00
                  36Salesforce.com
                  SUN
                  Tape
      Libraries
                  $4,925.80
                  $4,371.16
                  $114.75
                  35Thomson
      Consumer
                  Christie
                  Audio
      Visual
                  $666,440.00
                  $433,189.76
                  $11,486.25
                  36Weight
      Watchers
                  Compaq
                  Small
      HP/Compaq Servers
                  $180,516.00
                  $165,713.28
                  $4,552.00
                  36Weight
      Watchers
                  Adic
                  Tape
      Libraries
                  $120,774.00
                  $110,870.94
                  $3,125.00
                  36Xerox
                  Dell
                  Dell
      Servers
                  $14,823.00
                  $11,376.38
                  $410.80
                  24Xerox
                  NetApp
                  Digital
      Storage
                  $14,121.00
                  $9,738.76
                  $384.81
                  22
 
 (A) – See
discussion of Legal Proceedings at Item 3.
   
 
  RESERVES
 
 Because
the Partnership’s leases are on a “triple-net” basis, no permanent reserve for
maintenance and repairs has been established from the offering
proceeds.  However, the General Partner, in its sole discretion, may
retain a portion of the cash flow and net disposition proceeds available to the
Partnership for maintenance, repairs and working capital.  There are
no limitations on the amount of cash flow and net disposition proceeds that may
be retained as reserves.   Since no reserve will be established,
if available cash flow of the Partnership is insufficient to cover the
Partnership’s operating expenses and liabilities, it may be necessary for the
Partnership to obtain additional funds by refinancing its equipment or
borrowing. The Partnership’s operating expenses decreased approximately $31,000
during 2008 and cash flow was sufficient to cover all expenses and
liabilities.
 
 GENERAL
RESTRICTIONS
 
 Under the
Partnership Agreement, the Partnership is not permitted, among other things,
to:
 
 (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.
  The
General Partner has also agreed in the Partnership Agreement to use its best
efforts to assure that the Partnership shall not be deemed an “investment
company” as such term is detained in the Investment Company Act of
1940.
  The
General Partner and its affiliates may engage in other activities, whether or
not competitive with the Partnership.  The Partnership Agreement
provides, however, that neither the General Partner nor any of its affiliates
may receive any rebate or “give up” in connection with the Partnership’s
activities or participate in reciprocal business arrangements that circumvent
the restrictions in the Partnership Agreement against dealings with
affiliates.
  EMPLOYEES
  The
Partnership had no employees in 2008 and received administrative and other
services from a related party, Commonwealth Capital Corp. (CCC), which had 91
employees as of December 31, 2008.
   
   ITEM
1A:                      RISK
FACTORS
 
 Changes
in economic conditions could materially and negatively affect our
business.
 
 Our
business is directly impacted by factors such as economic, political, and market
conditions, broad trends in industry and finance, legislative and regulatory
changes, changes in government monetary and fiscal policies, and inflation, all
of which are beyond our control.  A deterioration in economic
conditions, whether caused by national or local concerns, especially within our
market area, could result in the following consequences, any of which could hurt
business materially: lease delinquencies may increase; problem leases and
defaults could increase; and demand for information technology products
generally may decrease as businesses attempt to reduce expenses.
  ITEM
1B:                      UNRESOLVED
STAFF COMMENTS
  NOT
APPLICABLE
  ITEM
2:                      PROPERTIES
  NOT
APPLICABLE
  ITEM
3:                      LEGAL
PROCEEDINGS
 
 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 Allerve’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.  As of March 23, 2006, the Partnership had
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, as well as evaluated for sale or
re-lease.
 
 In
January 2007, executive management of Commonwealth Capital Corp. met with a
nationally known leasing company that has been in business for over 25 years.
This company has helped other Allserve creditors sell and/or re-lease recovered
equipment and they are currently doing an analysis of the best possible way to
bring Commonwealth’s equipment to market. As there is a great deal of this
equipment currently available, due to the size of the Allserve bankruptcy, this
process will take more time than normal.  Since August 14, 2007, the
Partnership has been in the process of reviewing the audit reports prepared by
Global Key, a third party who received and tested the equipment; and obtaining a
list of parts required in order to bring the equipment up to specifications for
sale.  It has been the intention of the Partnership to attempt to
market the equipment in the third world market once this upgrade has taken
place.  Further, the Partnership intends to offer the equipment “as
is” both domestically and internationally while soliciting a buyer (or buyers)
in order to maximize revenue.   The Partnership recorded further
impairment charges of approximately $79,000 as of December 31,
2007.
 
 The
Allserve 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 $327,000 through December 31, 2008 and had recorded cumulative
impairment charges against the equipment leased to Allserve of approximately
$724,000 through December 31, 2007.
 
 As of
December 31, 2008, the Allserve equipment had a net book value of zero. The
Partnership has not experienced any significant changes related to this matter
during 2008, and does not anticipate any further significant impact to the
Partnership’s financials statements unless, and until, the equipment can be
sold.
  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
  There is
no public market for the units nor is it anticipated that one will
develop.  As of December 31, 2008, there were 593 holders of
units.  The units are not listed on any exchange or permitted to trade
on any over-the-counter market.  In addition, there are substantial
restrictions on the transferability of units.
  
  GENERAL
LIMITATIONS
  Units
cannot be transferred without the consent of the General Partner, which may be
withheld in its absolute discretion.   The General Partner
monitors transfers of units in an effort to ensure that all transfers are within
certain safe harbors promulgated by the IRS to furnish guidance regarding
publicly traded partnerships.   These safe harbors limit the
number of transfers that can occur in any one year.  The General
Partner intends to cause the Partnership to comply with the safe harbor that
permits nonexempt transfers and redemptions of units of up to five percent of
the total outstanding interest in the Partnership’s capital or profits in any
one year.
  REDEMPTION
PROVISION
  On a
semi-annual basis, the General Partner, at its discretion, may establish an
amount for redemption, generally not to exceed two percent of the outstanding
units per year, subject to the General Partner’s good faith determination that
such redemptions will not (a) cause the Partnership to be taxed as a corporation
under Section 7704 of the Code or (b) impair the capital or operations of the
Partnership.  (The Partnership may redeem units in excess of the two
percent limitation if, in the good faith judgment of the General Partner, the
conditions imposed in the preceding sentence would remain
satisfied.)  The redemption price for units will be 105% of the
selling Limited Partner’s adjusted capital contributions attributable to the
units for sale.   Following the determination of the annual
redemption amount, redemptions will occur on a semi-annual basis and all
requests for redemption, which must be made in writing, must be on file as of
the record date in which the redemption is to occur.   The
General Partner will maintain a master list of requests for redemption with
priority being given to units owned by estates, followed by IRAs and Qualified
Plans.   All other requests will be considered in the order
received.  Redemption requests made by or on behalf of Limited
Partners who are not affiliated with the General Partner or its affiliates will
be given priority over those made by Limited Partners who are affiliated with
the General Partner or its affiliates.  All redemption requests will
remain in effect until and unless canceled, in writing, by the requesting
Limited Partner(s).
  There
will be no limitations on the period of time that a redemption request may be
pending prior to its being granted.   Limited Partners will not
be required to hold their interest in the Partnership for any specified period
prior to their making a redemption request.
  In order
to make a redemption request, Limited Partners will be required to advise the
General Partner in writing of such request.   Upon receipt of
such notification, the Partnership will provide detailed forms and instructions
to complete the request.  At December 31, 2008, the General Partner
had redeemed 550 Units.  This redemption occurred in 2005.
Subsequently, no additional Limited Partners have requested redemption of their
units.
   
  EXEMPT
TRANSFERS
  The
following seven categories of transfers are exempt transfers for purposes of
calculating the volume limitations imposed by the IRS and will generally be
permitted by the General Partner:
  (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;
  (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; and
  (7)
              transfer
      by one or more partners representing in the aggregate fifty percent (50%)
      or more of the total interests in partnership’s capital or profit in one
      transaction or a series of related
transactions.
  ADDITIONAL
RESTRICTIONS ON TRANSFER
  Limited
Partners who wish to transfer their units to a new beneficial owner are required
to pay the Partnership up to $50 for each transfer to cover the Partnership’s
cost of processing the transfer application and take such other actions and
execute such other documents as may be reasonably requested by the General
Partner.  There is no charge for re-registration of a certificate in
the event of a marriage, divorce, death, or transfer to a trust so long as the
transfer is not a result of a sale of the units.
  In
addition, the following restrictions apply to each transfer: (i) no transfer may
be made if it would cause 25% or more of the outstanding units to be owned by
benefit plans; and (ii) no transfer is permitted unless the transferee obtains
such governmental approvals as may reasonably be required by the General
Partner, including without limitation, the written consents of the Pennsylvania
Securities Commissioner and of any other state securities agency or commission
having jurisdiction over the transfer.
   
  ALLOCATION
AND DISTRIBUTION BETWEEN THE GENERAL PARTNER AND THE LIMITED
PARTNERS
  Cash
distributions, if any, are made quarterly on March 31, June 30, September 30,
and December 31, of each year.  Distributions are made 99% to the
Limited Partners and one percent to the General Partner until the Limited
Partners has received an amount equal to their Capital Contributions plus the
Priority Return; thereafter, cash distributions will be made 90% to Limited
Partners and 10% to the General Partner.  Distributions made in
connection with the liquidation of the Partnership or a Partner’s Units will be
made in accordance with the Partner’s positive capital account balance as
determined under the Partnership Agreement and Treasury
Regulations.
  The
priority return is calculated on the Limited Partners’ adjusted capital
contributions for their units.  The adjusted capital contributions
will initially be equal to the amount paid by the Limited Partners for their
units.  If distributions at any time exceed the priority return, the
excess will reduce the adjusted capital contributions, decreasing the base on
which the priority return is calculated.
  If the
proceeds resulting from the sale of any equipment are reinvested in equipment,
sufficient cash will be distributed to the Partners to pay the additional
federal income tax resulting from such sale for a Partner in a 35% federal
income tax bracket or, if lower, the maximum federal income tax rate in effect
for individuals for such taxable year.
  Generally,
the General Partner is allocated net profits equal to its cash distributions
(but not less than one percent of net profits) and the balance is allocated to
the Limited Partners.   Net profits arising from transactions in
connection with the termination or liquidation of the Partnership are allocated
in the following order: (1) First, to each Partner in an amount equal to the
negative amount, if any, of his capital account; (2) Second, an amount equal to
the excess of the proceeds which would be distributed to the Partners based on
the operating distributions to the Partners over the aggregate capital accounts
of all the Partners, to the Partners in proportion to their respective shares of
such excess, and (3) Third, with respect to any remaining net profits, to the
Partners in the same proportions as if the distributions were operating
distributions.  Net losses, if any, are in all cases allocated 99% to
the Limited Partners and one percent to the General Partner.
  Net
profits and net losses are computed without taking into account, in each taxable
year of the Partnership, any items of income, gain, loss or deduction required
to be specially allocated pursuant to Section 704(b) of the Code and the
Treasury Regulation promulgated thereunder.  No Limited Partner is
required to contribute cash to the capital of the Partnership in order to
restore a closing capital account deficit, and the General Partner has only a
limited deficit restoration obligation under the Partnership
Agreement.
  Quarterly
distributions in the following amounts were paid to the Limited Partners during
2008 and 2007:
  Quarter
      Ended
                    
                    2008
                    
                    
                    2007March
      31
                    
                    $
                    370,569
                    
                    
                    $
                    370,568June
      30
                    
                    
                    369,134
                    
                    
                    
                    370,569September
      30
                    
                    
                    185,285
                    
                    
                    
                    370,569December
      31
                    
                    
                    185,284
                    
                    
                    
                    471,476$
                    1,110,272
                    
                    
                    $
                    1,583,182
 
 
  
 ALLOCATIONS
AND DISTRIBUTIONS AMONG THE LIMITED PARTNERS
  Cash
available for distribution that is allocable to the Limited Partners is
apportioned among and distributed to them solely with reference to the number of
units owned by each as of the record date for each such
distribution.
  Net
profits, net losses and cash available for distribution allocable to the Limited
Partners is apportioned among them in accordance with the number of units owned
by each.
  In
addition, where a Limited Partner transfers units during a taxable year, the
Limited Partner may be allocated net profits for a period for which such Limited
Partner does not receive a corresponding cash distribution.
  ITEM
6:                      SELECTED
FINANCIAL DATA
  NOT
APPLICABLE
  ITEM
7:                      MANAGEMENT
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF
OPERATIONS
  CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
   The
Partnership's discussion and analysis of its financial condition and results of
operations are based upon its financial statements which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Partnership to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. The Partnership bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
  The
Partnership believes that its critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements.
  
 
  COMPUTER
EQUIPMENT
  CCC, on
behalf of the Partnership and other affiliated partnerships, acquires computer
equipment subject to associated debt obligations and lease agreements and
allocates a participation in the cost, debt and lease revenue to the various
partnerships based on certain risk factors.  Depreciation on computer
equipment for financial statement purposes is based on the straight-line method
estimated generally over useful lives of three or four years.
 
 REVENUE
RECOGNITION
  Through
December 31, 2008, 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.
 
 LONG-LIVED
ASSETS
  The
Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable.  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.  For the year ended December 31, 2008 the
Partnership determined that no impairment existed. The Partnership recorded
charges of $172,000 for the year ended December 31, 2007, 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 estimated generally over useful lives of three to four
years.
  REIMBURSABLE
EXPENSES
 
 Reimbursable
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.  For
example, if the Partnership has more investors than another program sponsored by
CCC, then higher amounts of expenses related to investor services, mailing and
printing costs will be allocated to the Partnership.  Also, while the
Partnership is in its offering stage, higher compliance costs are allocated to
it than to a program not in its offering stage, as compliance resources are
utilized to review incoming investor suitability and proper documentation. 
Finally, lease related expenses, such as due diligence, correspondence,
collection efforts and analysis staff costs, increase as programs purchase more
leases, and decrease as leases terminate and equipment is sold. All of these
factors contribute to CCC’s determination as to the amount of expenses to
allocate to the Partnership or to other sponsored programs.  For the
Partnership, all reimbursable expenses are expensed as they are
incurred.
  
 
 RECENT
ACCOUNTING PRONOUNCEMENTS
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Liabilities, including an amendment of FASB Statement No. 115”
(“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election
dates, to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. Unrealized
gains and losses will be reported on items for which the fair value option has
been elected in earnings at each subsequent reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of SFAS No.
157 “Fair Value
Measurements”.   As of January 1, 2008 the Partnership adopted SFAS
No.159. The Partnership has not elected the fair value option for any financial
assets or financial liabilities.
  In
September 2006, the FASB issued Statement of Financial Accounting Standards 157,
“Fair Value Measurements”(“SFAS 157”), which provides guidance on measuring the fair value of
assets and liabilities. SFAS 157 applies 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 also
requires additional disclosures in both annual and quarterly reports. In
February 2008, the FASB issued two Staff Positions on SFAS 157: (1) FASB Staff
Position No. FAS 157-1    (FAS 157-1), “Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That
Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13,” and (2) FASB Staff Position No. FAS
157-2 (FAS 157-2), “Effective
Date of FASB Statement No. 157.”FAS 157-1 excludes FASB Statement No.
13, Accounting for Leases, as well as other accounting pronouncements that
address fair value measurements on lease classification or measurement under
Statement 13, from SFAS 157’s scope. FAS157-2 partially defers Statement 157’s
effective date.  As of January 1, 2008 the Partnership adopted SFAS No. 157
for all financial assets.  Adoption of this pronouncement did not impact
the 2008 financial statements of the Partnership. In October 2008, the FASB
issued FSP SFAS 157-3 "Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active" ("FSP SFAS
157-3"), which is effective upon issuance for all financial statements that have
not been issued. FSP SFAS 157-3 clarifies the application of SFAS 157, in a
market that is not active. Adoption of FSP SFAS 157-3 did not impact the 2008
financial statements of the Partnership.
  LIQUIDITY
AND CAPITAL RESOURCES
 
 For the
year ended December 31, 2008, the Partnership generated cash flow from operating
activities of approximately $869,000 which includes net loss of approximately
$63,000 and depreciation and amortization expenses of approximately $706,000.
Other non-cash activities included in the determination of net income include
direct payments of lease income by lessees to banks of approximately
$279,000.  For the year ended December 31, 2007, the Partnership
generated cash flow from operating activities of approximately $1,271,000 which
includes net loss of approximately $759,000 and depreciation and amortization
expenses of approximately $1,896,000. Other non-cash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of approximately $822,000.
 
 The
Partnership’s primary source of cash for the year ended December 31, 2008 and
was cash generated from operations of approximately $869,000, proceeds from the
sale of computer equipment of approximately $234,000 and capital contributions
of approximately $18,000.  The Partnership’s primary sources of cash
for the year ended December 31, 2007 was cash generated from operations of
approximately $1,271,000 and proceeds from the sale of computer equipment of
approximately $297,000.
  The
primary uses of cash for the years ended December 31, 2008 and 2007 were for the
payment of distributions to partners of approximately $1,110,000 and $1,595,000,
respectively, acquisition fees of approximately $11,000 and $18,000
respectively, and for capital expenditures for new equipment of approximately
$102,000 and $219,000, respectively. Additional funds may be utilized to
purchase additional equipment during 2009 as available cash flow permits. 
Actual amounts to be invested are not currently known, due primarily to the
unknown impact that the Allserve litigation may have on the Partnership’s cash
flow.
  
   At
December 31, 2008 cash was held in two accounts maintained at one financial
institution. The accounts were, in the aggregate, federally insured for amounts
up to $250,000.  At December 31, 2008, the total cash balance was
approximately $190,000 and did not exceed federally insured limits of
$250,000.  At December 31, 2007 cash was held in two accounts
maintained at one financial institution. The accounts were, in the aggregate,
federally insured for amounts up to $100,000.  At December 31, 2007,
the total cash balance was approximately $123,000, which exceeded federally
insured limits of $100,000 by approximately $23,000.  The Partnership
can mitigate this risk by depositing funds with more than one institution and by
only depositing funds with major financial institutions. The Partnership has not
experienced any losses in such accounts, and believes it is not exposed to any
significant credit risk. The amount in such accounts will fluctuate throughout
2009 due to many factors, including the pace of additional revenues, equipment
acquisitions and distributions.
  The
Partnership’s investment strategy of acquiring computer equipment and generally
leasing it under triple-net leases to operators who generally meet specified
financial standards minimize the Partnership’s operating expenses.  As
of December 31, 2008, the Partnership had future minimum rentals on
noncancellable operating leases of approximately $504,000 for the year ending
2009 and approximately $129,000 thereafter. The Partnership’s outstanding
debt at December 31, 2008, was approximately $295,000, with interest rates
ranging from 5.75% to 6.25% and will be payable through July 2011.
 
 CCC, on
behalf of the Partnership and other affiliated partnerships, acquires computer
equipment subject to associated debt obligations and lease agreements and
allocates a participation in the cost, debt and lease revenue to the various
partnerships based on certain risk factors.
 
 The
Partnership’s share of the computer equipment in which it participates with
other partnerships at December 31, 2008 and December 31, 2007 was approximately
$1,323,000 and $1,128,000, respectively, which is included in the Partnership’s
fixed assets on its balance sheet.  The total cost of the equipment
shared by the Partnership with other partnerships at December 31, 2008 and
December 31, 2007 was approximately $9,888,000 and $3,886,000,
respectively.  The Partnership’s share of the outstanding debt
associated with this equipment at December 31, 2008 and December 31, 2007 was
approximately $251,000 and $265,000, respectively.  The total
outstanding debt associated with this equipment at December 31, 2008 and
December 31, 2007 was approximately $3,477,000 and $751,000,
respectively.
 
 The
Partnership had a negative working capital balance at December 31, 2008. 
This was primarily attributable to 2009 debt payments.  In an effort to
increase cash flow for the Fund, the General Partner and CCC have helped finance
distributions to Limited partners and have forgiven certain fees owed to the
General Partner.  Limited partners’ distributions during 2008 were
partially funded from CCC.  The General Partner will continue to reassess
the funding of limited partner distributions on a quarterly basis in 2009 and
will waive certain fees if Management determines it is in the best interest of
the Partnership to do so.  If available cash flow or net disposition
proceeds are insufficient to cover the Partnership expenses and liabilities on a
short and long term basis, the Partnership will attempt to obtain additional
funds by disposing of or refinancing equipment, or by borrowing within its
permissible limits.  Since the Partnership’s leases are on a triple-net
basis, no reserve for maintenance and repairs is deemed
necessary.  The Partnership’s cash from operations is expected to be
adequate to cover all operating expenses, liabilities, and distributions to
Partners during the next 12-month period.
 
 During
2008 the Partnership’s operating expenses decreased approximately $31,000 due to
enhanced operating efficiencies. If available cash flow or net disposition
proceeds are insufficient to cover the Partnership expenses and liabilities on a
short and long term basis, the Partnership will attempt to obtain additional
funds by disposing of or refinancing equipment, or by borrowing within its
permissible limits.  The Partnership may also reduce the distributions
to its Partners if it deems necessary.  Since the Partnership’s leases
are on a “triple-net” basis, no reserve for maintenance and repairs is deemed
necessary.
  
  RESULTS
OF OPERATIONS
  For the
years ended December 31, 2008 and 2007, the Partnership recognized revenue of
approximately $1,088,000 and $1,873,000, respectively, and expenses of
approximately $1,151,000 and $2,632,000 respectively, resulting in net loss of
approximately $63,000 and $759,000 in 2008 and 2007, respectively.
 
 For the
years ended December 31, 2008 and 2007, lease revenue decreased to approximately
$1,007,000 from $1,853,000, respectively. This decrease was primarily due to
more lease agreements ending versus new lease agreements being acquired during
2008.
 
 For the
years ended December 31, 2008 and 2007, the Partnership earned interest income
of approximately $81,000 and $21,000 respectively. Interest income resulted from
monies being invested in high yield checking and savings accounts pending the
Partnership’s use of such funds to purchase additional computer equipment, to
pay Partnership expenses or to make distributions to the Partners.
 
 For the
year ended December 31, 2008 the Partnership sold equipment with a net book
value of approximately $233,000 for a net gain of approximately
$100.  For the year ended December 31, 2007 the Partnership sold
equipment with a net book value of approximately $492,000 for a net loss of
approximately $194,000.
 
 For the
years ended December 31, 2008 and 2007, operating expenses, excluding
depreciation, consisted of accounting, legal, outside service fees and
reimbursement of expenses to CCC for administration and operation of the
Partnership.  The operating expenses totaled approximately $397,000
and $428,000, respectively. The decrease in 2008 was primarily attributable to a
decrease in tax and accounting fees, insurance and office service
fees.
 
 The
equipment management fee was approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases.  For
the year ended December 31, 2008 the equipment management fee was approximately
$50,000, of that amount, the General Partner chose to waive approximately
$36,000.  For the year ended December 31, 2007 the equipment
management fee was approximately $93,000, of that amount, the General Partner
chose to waive approximately $59,000.
 
 For the
years ended December 31, 2008 and 2007, interest expense was approximately
$18,000 and $37,000, respectively, as a result of leases with associated debt
obligations purchased during the year.
  Depreciation
and amortization expenses consist of depreciation on computer equipment,
impairment charges, and amortization of equipment acquisition
fees.  For the years ended December 31, 2008 and 2007 these expenses
decreased from approximately $706,000 to approximately $1,895,000 due to
equipment and acquisition fees being fully depreciated/amortized and not being
replaced with as many new purchases.
 
 The
Partnership identified specific computer equipment and associated equipment
acquisition costs, which were reevaluated due to technological
changes.  In 2008 and 2007, the Partnership determined that the
carrying amount of certain assets was greater than the undiscounted cash flows
to be generated by these assets.  For the year ended December
31,  2008 the Partnership determined that no impairment existed. The
Partnership recorded charges of $172,000 for the year ended December 31, 2007,
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 estimated generally over useful lives of three to four
years
  NET
LOSS
  For the
years ended December 31, 2008 and 2007, net loss was approximately $63,000 and
$759,000, respectively.  The changes in net loss were attributable to
the changes in revenues and expenses, and the impairment of assets associated
with Allserve, as discussed above.
  
  ITEM
7.A:                  QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK
  NOT
APPLICABLE.
  ITEM
8:                      FINANCIAL
STATEMENTS
 
 Our
financial statements for the fiscal years ended December 31, 2008 and 2007, and
the report thereon of Asher & Company, Ltd. are included in this annual
report.
  ITEM
9:                      CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL
DISCLOSURE
 
 NOT
APPLICABLE
  ITEM
9A:                   CONTROLS
AND PROCEDURES
  Our
management, under the supervision and with the participation of the principal
executive officer and principal financial officer, has evaluated the
effectiveness of our controls and procedures related to our reporting and
disclosure obligations as of December 31, 2008, which is the end of the period
covered by this Annual Report on Form 10-K.  Based on that evaluation,
the principal executive officer and principal financial officer have concluded
that our disclosure controls and procedures are sufficient to provide that (a)
material information relating to us, including our consolidated subsidiaries, is
made known to these officers by our and our consolidated subsidiaries other
employees, particularly material information related to the period for which
this periodic report is being prepared; and (b) this information is recorded,
processed, summarized, evaluated and reported, as applicable, within the time
periods specified in the rules and forms promulgated by the Securities and
Exchange Commission.
  ITEM
      9A (T):
              CONTROLS
      AND PROCEDURES
 
 Management's Report on Internal
Control over Financial Reporting.     It is the
responsibility of the General Partner to establish and maintain adequate
internal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. The
General Partner’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America. Internal control over financial reporting includes policies and
procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Partnership; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Partnership are being made
only in accordance with authorizations of management and directors of the
General Partner; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Partnership’s assets that could have a material effect on the financial
statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Management
assessed the effectiveness of the Partnership’s internal control over financial
reporting at December 31, 2008. Management based this assessment on criteria for
effective internal control over financial reporting described in “Internal
Control – Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Management’s assessment included an
evaluation of the design of the Partnership’s internal control over financial
reporting and testing of the operational effectiveness of its internal control
over financial reporting. Management reviewed the results of its assessment with
the board of directors.
 
 Based on
our assessment, management determined that, at December 31, 2008, the
Partnership maintained effective internal control over financial reporting and
the preparation of financial statements for external reporting purposes in
accordance with generally accepted accounting principles.
 
 This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Partnership’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Partnership to provide only management's
report in this annual report.
  
   ITEM
9B:                      OTHER
INFORMATION
  NONE
  ITEM
10:                      DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
  GENERAL
  The
Partnership does not have any Directors or executive officers.
  The
General Partner, a wholly owned subsidiary of Commonwealth of Delaware, Inc., a
Delaware corporation, which is in turn a wholly-owned subsidiary of CCC, a
Pennsylvania corporation, was incorporated in Pennsylvania on August 26,
1993.  The General Partner also acts as the General Partner for,
Commonwealth Income & Growth Fund III, Commonwealth Income & Growth Fund
V, Commonwealth Income & Growth Fund VI, and Commonwealth Income &
Growth Fund VII.  The principal business office of the General Partner
is Brandywine One, Suite 200, 2 Christy Drive, Chadds Ford PA 19317 and its
telephone number is 610-594-9600.  The General Partner manages and
controls the affairs of the Partnership and has sole responsibility for all
aspects of the Partnership’s operations.  The officers of the General
Partner devote such time to the affairs of the Partnership as in the opinion of
the General Partner is necessary to enable it to perform its function as General
Partner.  The officers of the General Partner are not required to
spend their full time in meeting their obligations to the
Partnership.
  The
directors and officers of the General Partner and key employees of CCC and its
subsidiary Commonwealth Capital Securities Corp. ("CCSC"), are as
follows:
  NAME
                  TITLEKimberly
      A. Springsteen-Abbott
                  Chairman
      of the Board, Chief Executive Officer and Chief Compliance Officer of
      CCC,CCSC,
      & CIGF, IncHenry
      J. Abbott
                  Director
      of CCC, CCSC & CIGF, Inc., Executive Vice President of CCSC
      andPresident
      of CCC and CIGF, Inc.William
      Pieranunzi III
                  President
      of CCSC, Director of CCC and CCSC, and Senior Vice
    PresidentOf
      CCCLynn
      A. Franceschina
                  Executive
      Vice President, Chief Operating Officer, and Director of
    CCC,CCSC
      & CIGF, Inc.Jay
      Dugan
                  Executive
      Vice President and Chief Technology Officer and Director of
      CCC,Senior
      Vice President and Chief Technology Officer of CIGF,
  Inc.Peter
      Daley
                  Director
      of CCCJames
      Pruett
                  Senior
      Vice President and Compliance Officer of CCC, CCSC, & CIGF,
      Inc.Mark
      Hershenson
                  Senior
      Vice President and Broker-Dealer Relations Manager of
  CCC,CCSC
      & CIGF, IncRichard
      G. Devlin III
                  Vice
      President and General Counsel of CCC, CCSC & CIGF,
  Inc.David
      W. Riggleman
                  Vice
      President and Portfolio Manager of CCC and CIGF, Inc.Edmond
      J. Enderle
                  Vice
      President and Controller of CCC, CCSC, & CIGF, Inc.Donna
      Abbott
                  Vice
      President and Investor Services Manager of CCC, CCSC & CIGF,
      Inc.Lisa
      Renshaw
                  Vice
      President, National Sales Manager of CCC and CIGF Inc.Joseph
      Neill
                  Vice
      President and Broker Services Manager of CCC, CCSC and CIGF,
      Inc.
 
 
   Kimberly
A. Springsteen-Abbott, Kimberly A.
Springsteen-Abbott, age 49, joined Commonwealth in 1997 as a founding registered
principal and Chief Compliance Officer of its broker/dealer, Commonwealth
Capital Securities Corp. Ms. Springsteen-Abbott is the Chief Executive Officer
and Chairman of the Board of Directors of Commonwealth Capital Corp. (the parent
corporation); Commonwealth Capital Securities Corp. (the broker/dealer); and
Commonwealth Income & Growth Fund, Inc. (the General Partner). Ms.
Springsteen-Abbott is responsible for general operations of the equipment
leasing/portfolio management side of the business. Ms. Springsteen-Abbott
oversees all CCC operations, as well as CCSC SEC/FINRA compliance. For the
broker/dealer, she oversees securities policies, company
procedures/operations.  Ms. Springsteen-Abbott oversees all corporate daily
operations and training, as well as develops long-term corporate growth
strategies. Ms. Springsteen-Abbott has over 27 years of experience in the
financial services industry, specifically in the real estate, energy and leasing
sectors of alternative investments. Ms. Springsteen-Abbott is the sole
shareholder of Commonwealth Capital Corp.  Ms. Springsteen-Abbott was
elected to the Board of Directors of the parent corporation in 1997 and has also
served as its Executive Vice President and COO.  Also in 1997, she founded
Commonwealth Capital Securities Corp., where she was elected to the Board of
Directors and appointed President, COO and Chief Compliance Officer. Her
responsibilities included business strategy, product development, broker/dealer
relations development, due diligence, and compliance.  From 1980 through
1997, Ms. Springsteen-Abbott was employed with Wheat First Butcher Singer, a
regional broker/dealer located in Richmond, Virginia.  At Wheat, she served
as Senior Vice President & Marketing Manager for the Alternative Investments
Division.  Ms. Springsteen-Abbott holds her FINRA Series 7, 63 and 39
licenses.  She is a member of the Equipment Leasing and Finance
Association, the National Equipment Finance Association (formerly, the Eastern
Association of Equipment Lessors), the Financial Planners Association, the
National Association of Equipment Leasing Brokers and has served on the Board of
Trustees for the Investment Program Association. Ms. Springsteen-Abbott is a
member of the Executive Committee and the Disaster Recovery Committee.  Ms.
Springsteen-Abbott is the wife of Henry J. Abbott.
 
 Henry J.
Abbott,
age 58, joined Commonwealth in 1998 as a Portfolio Manager.  Mr. Abbott
serves as President of CCC and CIGF, Inc., as Executive Vice President of CCSC,
and as a Director of CCC and its affiliates.  Mr. Abbott is a registered
principal of the broker/dealer.  Mr. Abbott is responsible for lease
acquisitions, equipment dispositions and portfolio review. Additionally, Mr.
Abbott is also responsible for oversight of residual valuation, due diligence,
equipment inspections, negotiating renewal and purchase options and remarketing
off-lease equipment. Mr. Abbott serves as senior member on the Disaster Recovery
Committee and the Facilities Committee, and was appointed to the Executive
Committee in 2008.  Prior to Commonwealth, Mr. Abbott has been active in
the commercial lending industry, working primarily on asset-backed transactions
for more than 30 years.  Mr. Abbott attended St. John’s University and
holds his FINRA Series 7, 63 and 24 licenses.  Mr. Abbott was a founding
partner of Westwood Capital LLC in New York, a Senior Vice President for IBJ
Schroeder Leasing Corporation and has managed a group specializing in the
provision of operating lease finance programs in the high technology
sector.  Mr. Abbott brings extensive knowledge and experience in leasing
and has managed over $1.5 billion of secured transactions. Mr. Abbott is a
member of the Equipment Leasing and Finance Association, the National Equipment
Finance Association (formerly, the Eastern Association of Equipment Lessors),
the National Association of Equipment Leasing Brokers and the Investment Program
Association.  Mr. Abbott is the husband of Kimberly A.
Springsteen-Abbott.
 
 William
Pieranunzi III, age 51, joined
Commonwealth in 2007 as President of CCSC, the broker/dealer affiliate. 
Mr. Pieranunzi also serves as a Director of CCC and CCSC.  Mr. Pieranunzi
is responsible for managing due diligence and broker/dealer development, as well
as coordination of the national marketing effort, syndication and product
development.  Mr. Pieranunzi was elected to the Board of Directors of the
parent and its affiliates on January 1, 2008.  Mr. Pieranunzi serves on the
Disaster Recovery Committee and the Website committee.  Mr. Pieranunzi
currently holds his FINRA series 22 and 63 licenses.  Prior to
Commonwealth, Mr. Pieranunzi in 2005 co-founded and was Chief Executive Officer
and President of Jing Tsai Entertainment Company, Ltd. in Foshan, Guangdong
Province, China; Foshan’s premiere entertainment company through multiple 99KTV
Store Locations.  He retains his titles and continues to serve on the board
of Jung Tsai.  Prior to that, from 1996-2004, Mr. Pieranunzi was a private
investor. From 1984-1995, Mr. Pieranunzi worked at PLM International, then a
$1.4 billion publicly traded worldwide provider of transportation equipment and
related financial services. He joined PLM as a junior wholesaler and in 1994
became Executive Vice President.  Prior to that, from 1981 to 1984 Mr.
Pieranunzi worked at Mutual Benefit Financial Services Company, the registered
broker/dealer of Mutual Benefit Life Insurance Company where he was manager of
the mutual funds and pension divisions.  Mr. Pieranunzi is a Magna Cum
Laude, Beta Gamma Sigma graduate of Boston College’s School of Management. Mr.
Pieranunzi is a member of the Equipment Leasing and Finance Association, the
Eastern Association of Equipment Lessors, the Investment Program Association,
the National Association of Equipment Leasing Brokers, and the Financial
Planners Association.
   
 
 
 Lynn Franceschina, age 37, joined Commonwealth in
2001 and serves as Executive Vice President of CCC and CIGF, Inc., Senior Vice
President of CCSC, and Chief Operations Officer and Director of CCC, CCSC, and
CIGF, Inc. and certain of its affiliates.  Ms. Franceschina is responsible
for daily operations, including oversight of all accounting, financial reporting
and tax functions, investor communications, and human resources. During the
period of March 2004 to October 2004, Ms. Franceschina was employed at
Wilmington Trust Corp. where she was part of the policies and procedures team
responsible for Sarbanes-Oxley documentation.  Prior to joining
Commonwealth, Ms. Franceschina was the Business Controls Manager for Liquent,
Inc., a leading software developer, where she was responsible for managing
corporate forecasting and analysis, as well as the budgeting for the sales and
marketing division. From 1999 to 2000, she served as a Senior Financial Analyst
for Environ Products, and from 1994 to 1999, she was a Senior Accountant with
Duquesne University.  Prior to joining Duquesne University, Ms.
Franceschina was an accountant with the public accounting firm of Horovitz,
Rudoy, & Roteman.  Ms. Franceschina is a Sigma Beta Delta graduate of
Robert Morris University, during which time she also served as treasurer of her
Alpha Chi national honor society chapter.  Ms. Franceschina holds her FINRA
Series 22, 63, and 39 licenses.  She is a member of the Disaster Recovery
Committee, the Equipment Leasing and Finance Association, Investment Program
Association, and the Institute of Management Accountants.
 
 Jay
Dugan, age 60, joined Commonwealth in 2002 and serves as Chief Technology
Officer of the parent and its affiliates. Mr. Dugan is also Executive Vice
President of CCC and Senior Vice President of CIGF, Inc.  Mr. Dugan is
responsible for the information technology vision, security, operation and
ongoing development, including network configurations, protection of corporate
assets and maximizing security and efficiency of information flow.  Prior
to Commonwealth, Mr. Dugan founded First Securities USA, a FINRA member firm, in
1988 and operated that firm through 1998. From 1999 until 2002, Mr. Dugan was an
independent due diligence consultant until he came to Commonwealth to develop
that area of the firm. Mr. Dugan attended St. Petersburg College and holds an AS
Degree in Computer Networking Technology.  Mr. Dugan is a Microsoft
Certified Systems Engineer, Microsoft Certified Database Administrator and
Comp-Tia Certified Computer Technician.  Mr. Dugan is a senior member of
the Disaster Recovery Committee, as well as oversight member of the Website
Committee.
 
 Peter
Daley, age 70, joined Commonwealth in 2006 as a director.  Mr. Daley
is an Accredited Senior Appraiser for the discipline of Machinery and Equipment
with a specialty in High-Technology for the valuation of computer
equipment.  Mr. Daley has been in the computer business since 1965, first
with IBM as a computer broker/lessor and then with Daley Marketing Corporation
(DMC), a firm he founded in July 1980 to publish reports about computer
equipment, including “Market Value Reports” and “Residual Value
Reports.”   In January 2001 Mr. Daley acquired Computer Economics,
merged DMC into CEI and in April 2005 sold the IT Management Company and created
a new company focused on the fair market value business.  Additionally, Mr.
Daley remains President of DMC Consulting Group, a separate company that
specializes in writing Appraisals, Portfolio Analysis and Property Tax Valuation
from Fair Market Value to Residual Value valuations. Mr. Daley has developed a
database of “Fair Market Value” equipment values from 1980 to the present,
utilizing a variety of reports and publications along with the DMC and CEI
Market Value Reports.  This database has been successfully used in the
valuation of computer equipment in the settlement of a number of Virginia tax
cases.  He has also previously testified in California, Minnesota,
Michigan, New York, and the Virginia Courts as an expert in the field of
valuation of computer equipment.  Mr. Daley has a full repertoire of
lectures, seminars, presentations, and publications that he has conceived and
shared with the public.  From 1994 to present he has been writing computer
appraisals and reports for Fortune 500 companies.  From 2005 to present as
president of DMC Valuations Group, Mr. Daley has been publishing, both on the
web and in print, fair market values, residual values, and manufacturer’s price
lists to existing valuation clients around the world. Mr. Daley graduated from
Pepperdine University in 1991 with a Masters of Business Administration, and
from Cal State Northridge with a Bachelor of Science in Business Administration
in 1965.  Mr. Daley is also an Accredited Senior Appraiser with the
American Society of Appraisers.
 
 Mark
Hershenson,age
43, joined Commonwealth in 2002 and serves as Senior Vice President and Broker
Dealer Relations Manager of the parent and its affiliates.  Mr. Hershenson
is responsible for management of all broker/dealer relationships, and over-sees
the Due Diligence, Marketing, and Broker Services Departments.  Prior to
Commonwealth, Mr. Hershenson served as part of a financial planning practice at
American United Life from 1999 through 2002.  He has written a book for the
Florida Insurance Commissioner on how to sell insurance products. 
Additionally, in 1991 through 1998, Mr. Hershenson served as sales trainer at
MetLife for over 100 registered representatives.  Mr. Hershenson attended
Stonehill College and holds a Bachelor’s degree in Psychology, with a
concentration in Marketing/Organizational Behaviorism and engaged in Master’s
level coursework in Financial Planning though American College.  He holds
his FINRA Series 6, 7, 39 and 63 licenses.  Mr. Hershenson is a member of
the Equipment Leasing and Finance Association and the Investment Program
Association.
    
  
 James
Pruett,
age 43, joined Commonwealth in 2002 and serves as Senior Vice President and
Compliance Officer of the parent and its affiliates, and is Secretary to the
parent’s board of directors.  Mr. Pruett is responsible for management of
regulatory policies and procedures, assisting in compliance internal audit,
associate regulatory filings, broker/dealer registrations, state and
broker/dealer financial regulatory reporting requirements.  Mr. Pruett
assists in the management of shareholder records and updates.  Mr. Pruett
is a member of the Website Committee and the Disaster Recovery Committee. 
Mr. Pruett holds his FINRA Series 22, 63 and 39 licenses.  Prior to joining
Commonwealth, Mr. Pruett served as Managing Editor/Associate Publisher for
Caliber Entertainment, a publishing and entertainment licensing company. 
Mr. Pruett’s responsibilities included oversight of production of publishing
library, as well as serving as Editor-in-Chief for all publications and
additionally served as Media Relations Liaison.  Mr. Pruett is a member of
the Equipment Leasing Association and the Investment Program
Association.
 
 Richard
G. Devlin, age 37, joined
Commonwealth in October 2006 and serves as Vice President and General
Counsel.  Mr. Devlin is responsible for all syndication and Blue Sky
activities, FINRA and SEC registrations, contract administration and general
legal matters as head of the Legal Department.  Mr. Devlin also assists
with broker-dealer compliance functions. Prior to joining Commonwealth, Mr.
Devlin was employed since December 2000 as an associate with the law firm Reed
Smith, LLP in Philadelphia, where he was responsible for all elements of public
and private securities offerings as issuer’s counsel.  Mr. Devlin has
developed programs and advised clients regarding compliance with the
Sarbanes-Oxley Act of 2002 and related corporate governance and disclosure
regulations.  Mr. Devlin has advised both foreign and domestic entities on
US securities law compliance in the context of IPOs, exchange listing, private
placements, mergers, and employee benefit plans.  In 1997 Mr. Devlin
graduated Magna Cum Laude from the University of Pittsburgh School of Law with a
Juris Doctorate and in 1994 he completed his Bachelor of Science in Business
Administration and Finance at The American University in Washington, DC. 
Mr. Devlin is admitted to the bar in New Jersey and Pennsylvania, and holds his
FINRA Series 22 and 63 Licenses.  Mr. Devlin is also a member of the
Website Committee and the Disaster Recovery Committee.
 
 David W.
Riggleman, age 46, joined Commonwealth in 2007 and serves as Vice
President and Portfolio Manager of CCC and CIGF, Inc.  Mr. Riggleman is
responsible for lease acquisitions, equipment research and evaluation, lease
pricing, portfolio analysis, and asset remarketing and disposition.  Prior
to joining Commonwealth, Mr. Riggleman served from January 2005 to July 2007 as
Vice President, Investments for Raymond James and Associates in Cumberland,
Maryland.  At Raymond James, he served as a Branch Owner in the Advisor
Select Program.  He managed branch associates in addition to managing
private client accounts with more than $75 million in assets under
management.  From July 1994 to December 2004, Mr. Riggleman was Vice
President, Investments and Branch Manager at Legg Mason.  While there, he
opened and managed a branch while also managing private client and institutional
assets with assets under management of more than $65 million.  He served as
a member of Legg Mason President’s Council in 1998 and served consecutive terms
as member of Legg Mason’s Financial Services Advisory Panel in 1999 and
2000.  From January 1987 to June 1994, he was Vice President, Investments
of Wheat First Securities, where he managed private client and institutional
assets totaling more than $40 million.  Mr. Riggleman studied Economics at
the University of Richmond, and also Business Administration at Frostburg State
University.
 
 Edmond J.
Enderle,age
62, joined Commonwealth in 2006 and serves as Vice President and
Controller.  Mr. Enderle is responsible for regulatory filings, internal
controls, budgeting, forecasting, cash flow projections and all accounting
related to syndication.  Mr. Enderle also functions as the Audit
Liaison.  Prior to Commonwealth, Mr. Enderle worked at Sunoco Logistics
Partners LP located in Philadelphia.  This company boasted $4.5 billion in
revenue, and here Mr. Enderle served as the Accounting Manager, responsible for
SEC reporting, financial accounting, reporting and analysis, preparation of
annual revenue and expense budgets and managing the monthly close process
ensuring adherence to GAAP. Mr. Enderle also conducted environmental and legal
reserve analysis, wrote, reviewed and certified various Sarbanes Oxley
procedures and system narratives, and reported to management for strategic
planning and executive presentations. Prior to Sunoco Logistics, Mr. Enderle
worked at Sunoco Inc. (GP of Sunoco Logistics an Operator of 5 Oil Refineries)
as the Accounting Manager in the Supply Chain department where his
responsibilities included management of the Crude and Refined Oil Pools,
departmental budgeting, monthly closing processes, and financial analysis and
reporting.  Mr. Enderle attended St. Josephs University in Philadelphia and
holds a BS in Accounting and also attended Widener University in Chester,
Pennsylvania and holds an MBA in Finance/Taxation
    
   
 Donnamarie
D. Abbott, age 50, joined Commonwealth in 2001 and serves as Vice
President and Investor Services Manager of the parent and its affiliates. 
Ms. Abbott is responsible for management of daily operations in Investor
Services, from pre-formation stage through issuance of investors’ final
distribution, communication, audited financial report, including fund masters,
blue sky coordination, subscription processing, distributions, transfers of
interest, redemptions, reporting and tax reporting.  Ms. Abbott is a member
of the Office Development Committee, the Website Committee and the Disaster
Recovery Committee.  Ms. Abbott holds her FINRA Series 22 and 63
licenses.  Prior to joining Commonwealth, Ms. Abbott served as a
Pennsylvania licensed realtor.  Ms. Abbott is a member of the Equipment
Leasing and Finance Association and a member of the Investment Program
Association.
  Lisa
Renshaw,
age 52, joined Commonwealth in 2006 and serves as Vice President and National
Sales Manager of CCC. Ms. Renshaw, based in Wilmington, North Carolina, brings
over twenty years of leasing experience to CCC and is responsible for
spearheading lease acquisitions efforts and is the primary liaison with Lessors
in the Eastern United States. Ms Renshaw will continue to strengthen CCC’s
relationships and customer base on the east coast. Previously, Ms. Renshaw was
employed by IBM Global Finance from 2002 to 2006 with responsibilities for
pricing lease transactions. She supported IGF sales representatives in the East
and Central region as well as third party business partners and IBM Global
Services by structuring FMV leases, upgrades, extensions, hybrids and
migrations.  Prior to IGF, Ms. Renshaw owned her own company, Carrier
Capital Resources, from 1992 to 2002, where she brokered lease transactions
between lessors and funding sources on a nationwide basis.  During this
time, Ms. Renshaw also served on the Board of Directors of the National
Equipment Finance Association (formerly, the Eastern Association of Equipment
Lessors).  Prior to 1992, Ms. Renshaw was employed by IBJ Schroeder Bank
and Trust (1987 – 1992);  PKFinans (1985-1987); Citibank (1981-1985);
Playtex (1979 to 1981); Penn Life Insurance (1977-1979); and Greenbelt CARES
(1976-1977).  Married with two children, Ms. Renshaw earned her BA in
psychology from American University, graduating Cum Laude in 1976.
 
 Joseph W.
Neill,
age 61, joined Commonwealth in January 2006 and now serves as our Broker
Services Manager. Joe is responsible for the management of all custodial
relationships, broker services in the area of product education and production
goals, wholesaler scheduling/support and the internal sales staff. Prior to
Commonwealth, he served as a Regional Vice President from 1995 until 2003 with
State Street Research, after which he spent approximately one year in
retirement. Mr. Neill then served as an insurance consultant with Amerilife from
July 2003 until July 2004. In July 2004 he joined Allstate Financial as an
investment advisor, where he worked until January 2006. He also has a broad and
diverse background in investment and insurance company operations after serving
more than 30 years in that area. Mr. Neill attended Temple University and holds
a science degree. He is a military veteran who received a Bronze
Star
 
 The
directors and officers of the General Partner are required to spend only such
time on the Partnership’s affairs as is necessary in the sole discretion of the
directors of the General Partner for the proper conduct of the Partnership’s
business.  A substantial amount of time of such directors and officers
is expected to be spent on matters unrelated to the Partnership, particularly
after the Partnership’s investments have been selected.  Under certain
circumstances, such directors and officers are entitled to indemnification from
the Partnership.
 
 The
Partnership has no audit committee financial expert, as defined in Item 401 of
Regulation S-K (17 CFR § 229.401) under the Exchange Act, serving on its audit
committee.  An audit committee is not required because the Partnership
is not a listed security (as defined by 17 CFR § 240.10A-3); therefore, no audit
committee financial expert is required.
 
 CODE
OF ETHICS
 
 In view
of the fiduciary obligation that the General Partner has to the Partnership, the
General Partner believes an adoption of a formal code of ethics is unnecessary
and would not benefit the Partnership, particularly, in light of Partnership's
limited business activities.
  ITEM
11:                      EXECUTIVE
COMPENSATION
  The
Partnership does not have any Directors or executive officers.
  ITEM
12:                      SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT
  NONE
   
   ITEM
13:                      CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
  The
following table summarizes the types, amounts and recipients of compensation to
be paid by the Partnership directly or indirectly to the General Partner and its
affiliates.  Some of these fees are paid regardless of the success or
profitability of the Partnership’s operations and investments.  While
such compensation and fees were established by the General Partner and are not
based on arm’s-length negotiations, the General Partner believes that such
compensation and fees are comparable to those that would be charged by an
unaffiliated entity or entities for similar services.  The Partnership
Agreement limits the liability of the General Partner and its affiliates to the
Partnership and the Limited Partners and provides indemnification to the General
Partner and its affiliates under certain circumstances.
  
 AMOUNT
                                      AMOUNTENTITY
      RECEIVING
                                      
                                      INCURRED
                                      INCURREDCOMPENSATION
                                      TYPE OF COMPENSATION
                                      DURING
      2008
                                      DURING
      2007The
      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 $2,000 and $7,000 has been earned by the General
      Partner relating to equipment acquired in 2008 and 2007,
      respectively. The remaining balance of approximately $61,000 will be
      earned with acquisitions in future periods.
                                      $11,000
                                      $19,000The
      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.
                                      $720,000
                                      $341,000The
      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.
                                      $
      1,700
                                      $2,000The
      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.
                                        For
      the year ended December 31, 2008 the equipment management fee was
      approximately $50,000, of that amount, the General Partner chose to waive
      approximately $36,000.  For the year ended December 31, 2007 the
      equipment management fee was approximately $93,000, of that amount, the
      General Partner chose to waive approximately $59,000.
                                      $50,000
                                      $93,000The
      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.
                                      $8,000
                                      $12,000The
      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.
                                      $---
                                      $12,000
 
  
  CONFLICTS
OF INTEREST
  The
Partnership is subject to various conflicts of interest arising out of its
relationships with the General Partner and its affiliates.  These
conflicts include the following:
  COMPETITION
WITH GENERAL PARTNER AND AFFILIATES:  COMPETITION FOR MANAGEMENT’S
TIME
  The
General Partner and its affiliate sponsor other investor programs, which are in
potential competition with the Partnership in connection with the purchase of
equipment as well as opportunities to lease and sell such
equipment.  Competition for equipment has occurred and is likely to
occur in the future.  The General Partner and its affiliates may also
form additional investor programs, which may be competitive with the
Partnership.
  If one or
more investor programs and the Partnership are in a position to acquire the same
equipment, the General Partner will determine which program will purchase the
equipment based upon the objectives of each and the suitability of the
acquisition in light of those objectives.  The General Partner will
generally afford priority to the program or entity that has had funds available
to purchase equipment for the longest period of time.  If one or more
investor programs and the Partnership are in a position to enter into lease with
the same lessee or sell equipment to the same purchaser, the General Partner
will generally afford priority to the equipment which has been available for
lease or sale for the longest period of time.
  Certain
senior executives of the General Partner and its affiliates also serve as
officers and directors of the other programs and are required to apportion their
time among these entities.  The Partnership is, therefore, in
competition with the other programs for the attention and management time of the
General Partner and affiliates.  The officers and directors of the
General Partner are not required to devote all or substantially all of their
time to the affairs of the Partnership.
  ACQUISITIONS
  CCC and
the General Partner or other affiliates of the General Partner may acquire
equipment for the Partnership provided that (i) the Partnership has insufficient
funds at the time the equipment is acquired, (ii) the acquisition is in the best
interest of the partnership and (iii) no benefit to the General Partner or its
affiliates arises from the acquisition except for compensation paid to CCC, the
General Partner or such other affiliate as disclosed in this report. CCC, the
General Partner or their affiliates will not hold equipment for more than 60
days prior to transfer to the Partnership.  If sufficient funds become
available to the Partnership within such 60 day period, such equipment may be
resold to the Partnership for a price not in excess of the sum of the cost of
the equipment to such entity and any accountable acquisition expenses payable to
third parties which are incurred by such entity and interest on the purchase
price from the date of purchase to the date of transfer to the
Partnership.  CCC, the General Partner or such other affiliate will
retain any rent or other payments received for the equipment, and bear all
expenses and liabilities, other than accountable acquisition expenses payable to
third parties with respect to such equipment, for all periods prior to the
acquisition of the equipment by the Partnership.  Except as described
above, there will be no sales of equipment to or from any affiliate of
CCC.
  
  In
certain instances, the Partnership may find it necessary, in connection with the
ordering and acquisition of equipment, to make advances to manufacturers or
vendors with funds borrowed from the General Partner for such
purpose.  The Partnership does not borrow money from the General
Partner or any of its affiliates with a term in excess of twelve
months.  Interest is paid on loans or advances (in the form of
deposits with manufacturers or vendors of equipment or otherwise) from the
General Partner of its affiliates from their own funds at a rate equal to that
which would be charged by third party financing institutions on comparable loans
from the same purpose in the same geographic area, but in no event in excess of
the General Partner’s or affiliate’s own cost of funds.  In addition,
if the General Partner or its affiliates borrow money and loan or advance it on
a short-term basis to or on behalf of the Partnership, the General Partner or
such affiliates shall receive no greater interest rate and financing charges
from the Partnership than that which unrelated lenders charge on comparable
loans.  The Partnership will not borrow money from the General Partner
or any of its affiliates for a term in excess of twelve months.
  If the
General Partner or any of its affiliates purchases equipment in its own name and
with its own funds in order to facilitate ultimate purchase by the Partnership,
the purchaser is entitled to receive interest on the funds expended for such
purchase on behalf of the Partnership.  Simple interest on any such
temporary purchases is charged on a floating rate basis not in excess of three
percent over the “prime rate” from time to time announced by PNC Bank, from the
date of initial acquisition to the date of repayment by the
Partnership/ownership transfer.
  The
Partnership does not invest in equipment limited partnerships, general
partnerships or joint ventures, except that (a) the Partnership may invest in
general partnerships or joint ventures with persons other that equipment
programs formed by the General Partner or its affiliates, which partnerships or
joint ventures own specific equipment; provided that (i) the Partnership has or
acquires a controlling interest in such ventures or partnerships, (ii) the
non-controlling interest is owned by a non-affiliated, and (iii) the are no
duplicate fees; and (b) the Partnership may invest in joint venture arrangements
with other equipment programs formed by the General Partner or its affiliates if
such action is in the best interest of all programs and if all the following
conditions are met: (i) all the programs have substantially identical investment
objectives; (ii) there are no duplicate fees; (iii) the sponsor compensation is
substantially identical in each program; (iv) the Partnership has a right of
first refusal to buy another program’s interest in a joint venture if the other
program wishes to sell equipment held in the joint venture; (v) the investment
of each program is on substantially the same terms and conditions; and (vi) the
joint venture is formed either for the purpose of effecting appropriated
diversification for the programs or for the purpose of relieving the General
Partner or its affiliates from a commitment entered into pursuant to certain
provisions of the Partnership Agreement.
  GLOSSARY
  The
following terms used in this Report shall (unless otherwise expressly provided
herein or unless the context otherwise requires) have the meanings set forth
below.
  “Acquisition
Expenses” means expenses relating to the prospective selection and acquisition
of or investment in equipment by the Partnership, whether or not actually
acquired, including, but not limited to, legal fees and expenses, travel and
communication expenses, costs of appraisal, accounting fees and expenses and
other related expenses.
  “Acquisition
Fees” means the total of all fees and commissions paid by any party in
connection with the initial purchase of equipment acquired by the Partnership.
Included in the computation of such fees or commissions shall be the equipment
acquisition fee and any commission, selection fee, construction supervision fee,
financing fee, non-recurring management fee or any fee of a similar nature,
however designated.
  “Adjusted
Capital Contributions” means capital contributions of the Limited Partners
reduced to not less than zero by any cash distribution received by the Limited
Partners pursuant to Sections 4.1 or 8.1 of the Partnership Agreement, to the
extent such distributions exceed any unpaid cumulative return as of the date
such distributions were made.
  “Affiliate”
means, when used with reference to a specified person, (i) any person, that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified person, (ii) any
person that is a director or an executive officer of, partner in, or serves in a
similar capacity to, the specified person, or any person of which the specified
person is an executive officer or partner or with respect to which the specified
person serves in a similar capacity, (iii) any person owning or controlling 10%
or more of the outstanding voting securities of such specified person, or (iv)
if such person is an officer, director or partner, any entity for which such
person acts in such capacity.
  “Capital
Account” means the separate account established for each Partner pursuant to
Section 4.1.
  
   “Capital
Contributions” means in the case of the General Partner, the total amount of
money contributed to the Partnership by the General Partner, and in the case of
Limited Partners, $20 for each unit, or where the context requires, the total
capital contributions of all the Partners.
  “Cash
Available for Distribution” means cash flow plus net disposition proceeds plus
cash funds available for distribution from Partnership reserves, less such
amounts as the General Partner, in accordance with the Partnership Agreement,
causes the Partnership to reinvest in equipment or interests therein, and less
such amounts as the General Partner, in its sole discretion, determines should
be set aside for the restoration or enhancement of Partnership
reserves.
  “Cash
Flow” for any fiscal period means the sum of (i) cash receipts from operations,
including, but not limited to, rents or revenues arising from the leasing or
operation of the equipment and interest, if any, earned on funds on deposit for
the Partnership, but not including net disposition proceeds, minus (ii) all cash
expenses and costs incurred and paid in connection with the ownership, lease,
management, use and/or operation of the equipment, including, but not limited
to, fees for handling and storage; all interest expenses paid and all repayments
of principal regarding borrowed funds; maintenance; repair costs; insurance
premiums; accounting and legal fees and expenses; debt collection expenses;
charges, assessments or levies imposed upon or against the equipment; ad
valorem, gross receipts and other property taxes levied against the equipment;
and all costs of repurchasing units in accordance with the Partnership
Agreement; but not including depreciation or amortization of fees or capital
expenditures, or provisions for future expenditures, including, without
limitation, organizational and offering expenses.
  “Code”
means the Internal Revenue Code of 1986, as amended, and as may be amended from
tine to time by future federal tax statutes.
  “Competitive
Equipment Sale Commission” means that brokerage fee paid for services rendered
in connection with the purchase or sale of equipment, which is reasonable,
customary, and competitive in light of the size, type, and location of the
equipment.
  “Conditional
Sales Contract” means an agreement to sell equipment to a buyer in which the
seller reserves title to, and retains a security interest in, the equipment
until the purchase price of the equipment is paid.
  “Equipment”
means each item of and all of the computer I.T. and other similar capital
equipment purchased, owned, operated, and/or leased by the Partnership or in
which the Partnership has acquired a direct or indirect interest, as more fully
described in the Partnership Agreement, together with all appliances, parts,
instruments, accessories, furnishings, or other equipment included therein and
all substitutions, renewals, or replacements of, and all additions,
improvements, and accessions to, any and all thereof.
  “Full
Payout Net Lease” means an initial net lease of the equipment under which the
non-cancelable rental payments due (and which can be calculated at the
commencement of the net lease) during the initial noncancelable fixed term (not
including any renewal or extension period of the lease or other contract for the
use of the equipment are at least sufficient to recover the purchase price of
the equipment.
  “General
Partner” means Commonwealth Income & Growth Fund, Inc. and any additional,
substitute or successor general partner of the Partnership.
  “Gross
Lease Revenues” means Partnership gross receipts from leasing or other operation
of the equipment, except that, to the extent the Partnership has leased the
equipment from an unaffiliated party, it shall mean such receipts less any lease
expense.
  “IRS”
means the Internal Revenue Service.
  “Limited
Partner” means a person who acquires units and who is admitted to the
Partnership as a limited partner in accordance with the terms of the Partnership
Agreement.
  
  “Net
Dispositions Proceeds” means the net proceeds realized by the Partnership from
the refinancing, sale or other disposition of equipment, including insurance
proceeds or lessee indemnity payments arising from the loss or destruction of
equipment, less such amounts as are used to satisfy Partnership
liabilities.
  “Net
Lease” means a lease or other contract under which the owner provides equipment
to a lessee or other operator in return for a payment, and the lessee assumes
all obligations and pays for the operation, repair, maintenance and insuring of
the equipment.
  “Net
Profits” or “Net Losses” shall be computed in accordance with Section 703(a) of
the Code (including all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a) (1) of the Code) for each taxable
year of the Partnership or shorter period prior to an interim closing of the
Partnership’s books with the following adjustments: (I) any income of the
Partnership that is exempt from federal income tax and not otherwise taken into
account in computing net profits and net loss pursuant to this definition shall
be added to such taxable income or shall reduce such taxable loss; (ii) any
expenditure of the Partnership described in Code Section 705(a) (2) (B) or
treated as Code Section 705(a) (2) (B) expenditures pursuant to Treasury
Regulations section 1.704-1(b) (2) (iv) (i) and not otherwise taken into account
in computing net profits and net losses pursuant to this definition shall be
subtracted from such taxable income or loss; (iii) items of income, gain, loss
and deduction specially allocated pursuant to Section 7.3 of the Partnership
Agreement shall not be included in the computation of net profits or net loss;
and if property is reflected on the books of the Partnership at a book value
that differs from the adjusted tax basis of the property in accordance with
Treasury Regulation Section 1.704-1(b) (2) (iv) (d) or (f), depreciation,
amortization, and gain or loss with respect to such property shall be determined
by reference to such book value in a manner consistent with Treasury Regulation
Section 1.704-1(b) (2) (iv) (g). The terms “net profit” or “net losses” shall
include the Partnership’s distributive share of the profit or loss of any
partnership or joint venture in which it is a partner or joint
venturer.
  “Offering”
means the initial public offering of units in the Partnership.
  “Operating
Distributions” means the quarterly distributions made to the Partners pursuant
to Article 8 of the Partnership Agreement.
  “Operating
Lease” means a lease or other contractual arrangement under which an
unaffiliated party agrees to pay the Partnership, directly or indirectly, for
the use of the equipment, and which is not a full payout net lease.
  “Organizational
and Offering Expenses” means the expenses incurred in connection with the
organization of the Partnership and in preparation of the offering, including
underwriting commissions, listing fees and advertising expenses specifically
incurred in connection with the distribution of the units.
  “Partner
(s)” means any one or more of the General Partner and the Limited
Partners.
  “Partnership”
means Commonwealth Income & Growth Fund IV, a Pennsylvania Limited
Partnership.
  “Partnership
Agreement” means that Limited Partnership Agreement of Commonwealth Income &
Growth Fund IV by and among the General Partner and the Limited Partners,
pursuant to which the Partnership is governed.
  “Person”
means an individual, partnership, limited liability company, joint venture,
corporation, trust, estate or other entity.
  “Proceeds”
means proceeds from the sale of the units.
  “Program”
means a limited or general partnership, joint venture, unincorporated
association or similar organization, other than a corporation formed and
operated for the primary purpose of investment in and the operation of or gain
from an interest in equipment.
  
  “Purchase
Price” means, with respect to any equipment, an amount equal to the sum of (i)
the invoice cost of such equipment or any other such amount paid to the seller,
(ii)  any closing, delivery and installation charges associated
therewith not included in such invoice cost and paid by or on behalf of the
Partnership, (iii) the cost of any capitalized modifications or upgrades paid by
on or behalf of the Partnership in connection with its purchase of the
equipment, and (iv) solely for purposes of the definition of full payout net
lease, the amount of the equipment acquisition fee and any other acquisition
fees.
  “Retained
Proceeds” means cash available for distribution, which instead of being
distributed to the Partners is retained by the Partnership for the purpose of
acquiring or investing in equipment.
  “Term
Debt” means debt of the Partnership with a term in excess of twelve months,
incurred with respect to acquiring or investing in equipment, or refinancing
non-term debt, but not debt incurred with respect to refinancing existing
Partnership term debt.
  “Unit”
means a Limited Partnership interest in the Partnership.
  ITEM
14:                      PRINCIPAL
ACCOUNTANT FEES AND SERVICES
 
 AUDIT
FEES
 
 The
aggregate fees billed for each of the fiscal years ended December 31, 2008 and
2007 for professional services rendered by the Partnership’s independent
registered public accounting firm for the audit of our annual financial
statements and review of the financial statements included in our Form 10-Q or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years were
$40,000 and $79,000 respectively.
 
 AUDIT-RELATED
FEES
 
 There
were no aggregate fees billed in the fiscal years ended December 31, 2008 and
2007 for assurance and related services by the Partnership’s independent
registered public accounting firm that are reasonably related to the performance
of the audit or review of the registrant's financial statements and are not
reported under the paragraph captioned "Audit Fees."
 
 TAX
FEES
 
 The
aggregate fees billed in the fiscal years ended December 31, 2008 and 2007 for
professional services rendered by the Partnership’s independent registered
public accounting firm for tax compliance; tax advice and tax planning were
approximately $9,000 and $0, respectively.
 
 ALL
OTHER FEES
 
 There
were no aggregate fees billed in the fiscal years ended December 31, 2008 and
2007 for products and services provided by the Partnership’s independent
registered public accounting firm, other than the services reported above under
other captions of this Item 14.
 
 PRE-APPROVAL
POLICIES AND PROCEDURES
 
 All audit
related services, tax planning and other services were pre-approved by the Board
of Directors of the General Partner, which concluded that the provision of such
services by the Partnership’s independent registered public accounting firm was
compatible with the maintenance of that firm's independence in the conduct of
its auditing functions. The policy of the General Partner provides for
pre-approval of these services and all audit related, tax or other services not
prohibited under Section 10A(g) of the Securities Exchange Act of 1934, as
amended to be performed for us by our independent auditors, subject to the de
minimus exception described in Section 10A(i)(1)(B) of the Exchange Act on an
annual basis and on individual engagements if minimum thresholds are
exceeded.
 
 There
were no other fees approved by the Board of Directors if the General Partner, or
paid by the Partnership during 2008, besides fees related to audit or tax
compliance.
  
  PART
IV
  ITEM
15:                      EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ONFORM 10-K
 (a)
      (1)
                Financial
      StatementsReport
      of Independent Registered Public Accounting Firm
                F-1Balance
      Sheets as of December 31, 2008 and 2007
                F-2Statements
      of Operations for the years ended December 31, 2008 and
    2007
                F-3Statements
      of Partners’ Capital for the years ended December 31, 2008 and
      2007
                F-4Statements
      of Cash Flows for the years ended December 31, 2008 and
    2007
                F-5Notes
      to Financial Statements
                F-6(a)
      (2)
                Schedules
 
 Schedules are omitted because they are
not applicable, not required, or because the requiredinformation is included in
the financial statements and notes thereto.
 
 (a)
      (3)
                Exhibits*3.1
                Certificate
      of Limited Partnership*3.2
                Agreement
      of Limited Partnership31.1
                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*Incorporated
      by reference from the Partnership’s Registration Statement on Form S-1
      (Registration No. 333-26933)
 
 SIGNATURES
 
 Pursuant to the requirements of Section
15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf on March 31, 2009 by the undersigned
thereunto duly authorized.
 
 COMMONWEALTH
      INCOME & GROWTH FUND IVBy:  COMMONWEALTH
      INCOME & GROWTH FUND,INC., General PartnerBy:  /s/ Kimberly A.
      Springsteen-AbbottKimberly
      A. Springsteen-Abbott,Chief
      Executive Officer
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on March 31, 2009.
 
 SIGNATURE
                CAPACITY/s/ Kimberly A.
      Springsteen-Abbott
                Chairman,
      Chief Executive Officer,Kimberly
      A. Springsteen-Abbott
                Commonwealth
      Income & Growth Fund,
Inc.
 
 /s/Henry J.
      Abbott
                Director,
      President,Henry
      J. Abbott
                Commonwealth
      Income & Growth Fund,
Inc.















Commonwealth
Income &
Growth Fund IV






Financial
Statements
 Years
ended December 31, 2008 and 2007















Commonwealth Income&
Growth Fund IV


Contents


Report
      of Independent Registered Public Accounting Firm
                F-1Financial
      statementsBalance
      sheets
                F-2Statements
      of operations
                F-3Statements
      of partners’ capital
                F-4Statements
      of cash flows
                F-5Notes
      to financial statements
                F-6















Report of Independent
Registered Public Accounting Firm




The
Partners
 Commonwealth
Income & Growth Fund IV
 Chadds
Ford, Pennsylvania
   We have
audited the accompanying balance sheets of Commonwealth Income & Growth Fund
IV (“Partnership”) as of December 31, 2008 and 2007, and the related statements
of operations, Partners’ capital and cash flows for each of the years in the
two-year period ended December 31, 2008. The Partnership’s management is
responsible for these financial statements. Our responsibility is to express an
opinion on these financial statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Commonwealth Income & Growth
Fund IV as of December 31, 2008 and 2007, and the results of its operations and
its cash flows for each of the years in the two year period ended December 31,
2008 in conformity with accounting principles generally accepted in the United
States of America.
  
  /s/ ASHER
& COMPANY, Ltd.
  Philadelphia,
Pennsylvania
 March 30,
2009




F-1




Commonwealth Income&
Growth Fund IV




Balance Sheets




December
      31,
                                                                                  
                                                                                  2008
                                                                                  
                                                                                  
                                                                                  2007AssetsCash
                                                                                  
                                                                                  $
                                                                                  952
                                                                                  
                                                                                  
                                                                                  $
                                                                                  91,908Lease
      income receivable, net of reserve of  $326,547 and
                                                                                    $311,137   at
      December 31, 2008 and 2007
                                                                                  
                                                                                  
                                                                                  194,452
                                                                                  
                                                                                  
                                                                                  
                                                                                  117,122Accounts
      receivable, affiliated limited partnerships
                                                                                  
                                                                                  
                                                                                  4,826
                                                                                  
                                                                                  
                                                                                  
                                                                                  25,256Refundable
      deposits
                                                                                  
                                                                                  
                                                                                  1,130
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,131Prepaid
      expenses
                                                                                  
                                                                                  
                                                                                  421
                                                                                  
                                                                                  
                                                                                  
                                                                                  115201,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  235,532Computer equipment, at
      cost
                                                                                  
                                                                                  
                                                                                  5,636,397
                                                                                  
                                                                                  
                                                                                  
                                                                                  7,435,278Accumulated
      depreciation
                                                                                  
                                                                                  
                                                                                  (4,696,535
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (5,864,450
                                                                                  )939,862
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,570,828Equipment acquisition costs and
      deferred expenses, net ofaccumulated
      amortization of $51,128 and $89,959, atDecember
      31, 2008 and 2007, respectively
                                                                                  
                                                                                  
                                                                                  25,948
                                                                                  
                                                                                  
                                                                                  
                                                                                  45,575Prepaid
      acquisition fees, General Partner
                                                                                  
                                                                                  
                                                                                  60,811
                                                                                  
                                                                                  
                                                                                  
                                                                                  63,24186,759
                                                                                  
                                                                                  
                                                                                  
                                                                                  108,816Total
      assets
                                                                                  
                                                                                  $
                                                                                  1,228,402
                                                                                  
                                                                                  
                                                                                  $
                                                                                  1,915,175Liabilities
      and Partners' CapitalLiabilitiesAccounts
      payable
                                                                                  
                                                                                  $
                                                                                  138,763
                                                                                  
                                                                                  
                                                                                  $
                                                                                  29,954Accounts
      payable, General Partner
                                                                                  
                                                                                  
                                                                                  291,603
                                                                                  
                                                                                  
                                                                                  
                                                                                  164,602Accounts
      payable, Commonwealth Capital Corp.
                                                                                  
                                                                                  
                                                                                  618,684
                                                                                  
                                                                                  
                                                                                  
                                                                                  33,860Accounts
      payable, Investor Distributions
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  370,569Unearned
      lease income
                                                                                  
                                                                                  
                                                                                  48,485
                                                                                  
                                                                                  
                                                                                  
                                                                                  47,002Notes
      payable
                                                                                  
                                                                                  
                                                                                  294,636
                                                                                  
                                                                                  
                                                                                  
                                                                                  399,677Total
      liabilities
                                                                                  
                                                                                  
                                                                                  1,392,171
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,045,664
  Partners'
      capitalGeneral
      Partner
                                    
                                    
                                    1,000
                                    
                                    
                                    
                                    1,000Limited
      Partners
                                    
                                    
                                    (164,769
                                    )
                                    
                                    
                                    868,511Total
      partners' capital
                                    
                                    
                                    (163,769
                                    )
                                    
                                    
                                    869,511Total
      liabilities and partners' capital
                                    
                                    $
                                    1,228,402
                                    
                                    
                                    $
                                    1,915,175
   see
accompanying notes to financial statements


F-2








Commonwealth Income&
Growth Fund IV
  Statements of Operations
  Years
      ended December 31,
                                                          
                                                          2008
                                                          
                                                          
                                                          2007RevenueLease
                                                          
                                                          $
                                                          1,007,188
                                                          
                                                          
                                                          $
                                                          1,852,563Interest
      and other
                                                          
                                                          
                                                          80,813
                                                          
                                                          
                                                          
                                                          20,655Gain
      on sale of computer equipment
                                                          
                                                          
                                                          81
                                                          
                                                          
                                                          
                                                          -Total
      revenue
                                                          
                                                          
                                                          1,088,082
                                                          
                                                          
                                                          
                                                          1,873,218ExpensesOperating,
      excluding depreciation
                                                          
                                                          
                                                          397,270
                                                          
                                                          
                                                          
                                                          427,766Equipment
      management fee, General Partner
                                                          
                                                          
                                                          14,635
                                                          
                                                          
                                                          
                                                          33,835Interest
                                                          
                                                          
                                                          17,762
                                                          
                                                          
                                                          
                                                          37,380Depreciation
                                                          
                                                          
                                                          673,707
                                                          
                                                          
                                                          
                                                          1,824,653Amortization
      of equipment acquisition costs and deferred expenses
                                                          
                                                          
                                                          32,411
                                                          
                                                          
                                                          
                                                          70,795Bad
      Debt Expense
                                                          
                                                          
                                                          15,410
                                                          
                                                          
                                                          
                                                          43,831Loss
      on sale of computer equipment
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          194,172Total
      expenses
                                                          
                                                          
                                                          1,151,195
                                                          
                                                          
                                                          
                                                          2,632,432Net
      (loss)
                                                          
                                                          $
                                                          (63,113
                                                          )
                                                          
                                                          $
                                                          (759,214
                                                          )Net
      (loss) allocated to limited partners
                                                          
                                                          $
                                                          (63,113
                                                          )
                                                          
                                                          $
                                                          (771,462
                                                          )Net
      (loss) per equivalent limited partnership unit
                                                          
                                                          $
                                                          (0.08
                                                          )
                                                          
                                                          $
                                                          (1.03
                                                          )Weighted
      average number of equivalentlimited
      partnership units outstanding duringthe
      year
                                                          
                                                          
                                                          749,400
                                                          
                                                          
                                                          
                                                          749,400
   see
accompanying notes to financial statements
  F-3








Commonwealth Income&
Growth Fund IV
  Statements of Partners'
Capital
  General
                    
                    
                    LimitedPartner
                    
                    
                    Partner
                    
                    
                    General
                    
                    
                    LimitedUnits
                    
                    
                    Units
                    
                    
                    Partner
                    
                    
                    Partners
                    
                    
                    TotalBalance,January 1,
      2007
                    
                    
                    50
                    
                    
                    
                    749,400
                    
                    
                    $
                    1,000
                    
                    
                    $
                    3,223,155
                    
                    
                    $
                    3,224,155Net
      income (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    12,248
                    
                    
                    
                    (771,462
                    )
                    
                    
                    (759,214
                    )Distributions
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (12,248
                    )
                    
                    
                    (1,583,182
                    )
                    
                    
                    (1,595,430
                    )Balance,December 31,
      2007
                    
                    
                    50
                    
                    
                    
                    749,400
                    
                    
                    $
                    1,000
                    
                    
                    $
                    868,511
                    
                    
                    $
                    869,511Net
      income (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (63,113
                    )
                    
                    
                    (63,113
                    )Forgiveness,
      fees
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    52,053
                    
                    
                    
                    52,053Forgiveness,
      expenses
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    70,000
                    
                    
                    
                    70,000Contributions-
      CCC
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    18,052
                    
                    
                    
                    18,052Distributions
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,110,272
                    )
                    
                    
                    (1,110,272
                    )Balance,
      December 31, 2008
                    
                    
                    50
                    
                    
                    
                    749,400
                    
                    
                    $
                    1,000
                    
                    
                    $
                    (164,769
                    )
                    
                    $
                    (163,769
                    )
   see
accompanying notes to financial statements
  F-4








Commonwealth Income&
Growth Fund IV
  Statements of Cash Flows
   Years
      ended December 31,
                                        
                                        2008
                                        
                                        
                                        2007Cash
      flows from operating activitiesNet
      (loss)
                                        
                                        $
                                        (63,113
                                        )
                                        
                                        $
                                        (759,214
                                        )Adjustments
      to reconcile net loss tonet
      cash provided by operating activitiesDepreciation
      and amortization
                                        
                                        
                                        706,118
                                        
                                        
                                        
                                        1,895,448(Gain)
      loss on sale of computer equipment
                                        
                                        
                                        (81
                                        )
                                        
                                        
                                        194,172bad
      debt expense
                                        
                                        
                                        15,410
                                        
                                        
                                        
                                        28,550Other
      noncash activities included indetermination
      of net loss
                                        
                                        
                                        (279,083
                                        )
                                        
                                        
                                        (821,702
                                        )Changes
      in assets and liabilities(Increase)
      decrease in assetsLease
      income receivable
                                        
                                        
                                        (92,740
                                        )
                                        
                                        
                                        295,451Accounts
      receivable, General Partner
                                        
                                        
                                        2,075Accounts
      receivable, affiliated limited partnerships
                                        
                                        
                                        20,129
                                        
                                        
                                        
                                        1,237Prepaid
      expenses
                                        
                                        
                                        (304
                                        )
                                        
                                        
                                        3,648(Increase)
      decrease in liabilitiesAccounts
      payable
                                        
                                        
                                        108,808
                                        
                                        
                                        
                                        (73,579
                                        )General
      Partner
                                        
                                        
                                        246,981
                                        
                                        
                                        
                                        106,235Commonwealth
      Capital Corp.
                                        
                                        
                                        573,697
                                        
                                        
                                        
                                        33,860affiliated
      limited partnerships
                                        
                                        
                                        302
                                        
                                        
                                        
                                        -Other
      accrued expenses
                                        
                                        
                                        (370,573
                                        )
                                        
                                        
                                        370,569Unearned
      lease income
                                        
                                        
                                        1,482
                                        
                                        
                                        
                                        (3,329
                                        )Net
      cash provided by operating activities
                                        
                                        
                                        869,108
                                        
                                        
                                        
                                        1,271,346
  Cash
      flows from investing activitiesCapital
      expenditures
                                                  
                                                  
                                                  (102,111
                                                  )
                                                  
                                                  
                                                  (218,742
                                                  )Prepaid
      acquisition fees
                                                  
                                                  
                                                  2,429
                                                  
                                                  
                                                  
                                                  7,287Net
      proceeds from sale of computer equipment
                                                  
                                                  
                                                  233,496
                                                  
                                                  
                                                  
                                                  297,471Equipment
      acquisition fees - General Partner
                                                  
                                                  
                                                  (11,046
                                                  )
                                                  
                                                  
                                                  (18,587
                                                  )Net
      cash provided by investing activities
                                                  
                                                  
                                                  122,768
                                                  
                                                  
                                                  
                                                  67,429Cash
      flows from financing activitiesCapital
      Contributions
                                                  
                                                  
                                                  18,052
                                                  
                                                  
                                                  
                                                  -Distributions
      to partners
                                                  
                                                  
                                                  (1,110,272
                                                  )
                                                  
                                                  
                                                  (1,595,430
                                                  )Other
      receivable, Commonwealth Capital Corp.
                                                  
                                                  
                                                  11,128
                                                  
                                                  
                                                  
                                                  165,459Debt
      placement fee to the General Partner
                                                  
                                                  
                                                  (1,740
                                                  )
                                                  
                                                  
                                                  (2,459
                                                  )Net
      cash used for financing activities
                                                  
                                                  
                                                  (1,082,832
                                                  )
                                                  
                                                  
                                                  (1,432,430
                                                  )Net
      (decrease) in cash
                                                  
                                                  
                                                  (90,956
                                                  )
                                                  
                                                  
                                                  (93,656
                                                  )Cash
      at beginning of year
                                                  
                                                  
                                                  91,908
                                                  
                                                  
                                                  
                                                  185,564Cash
      at end of year
                                                  
                                                  $
                                                  952
                                                  
                                                  
                                                  $
                                                  91,908
  see
accompanying notes to financial statements






F-5




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 is leased primarily to U.S. corporations and
institutions.  Commonwealth Capital Corp (“CCC”), on behalf of the
Partnership and other affiliated partnerships, acquires 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 factors


The
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 2007 and 2006, annual cash distributions to limited
partners were made at a rate of approximately 10% of their original contributed
capital.  Distributions during 2008 and 2007 reflect an annual return
of capital in the amount of approximately $1.48 and $2.13 respectively, per
weighted average number of limited partnership units outstanding during the
year.
 
 The
Partnership had a negative working capital balance at December 31, 2008. 
This was primarily attributable to 2009 debt payments.  In an effort to
increase cash flow for the Fund, the General Partner and CCC have helped finance
distributions to Limited partners and have forgiven certain fees owed to the
General Partner.  Limited partners’ distributions during 2008 were
partially funded from CCC.  The General Partner will continue to reassess
the funding of limited partner distributions on a quarterly basis in 2009 and
will waive certain fees if Management determines it is in the best interest of
the Partnership to do so.  If available cash flow or net disposition
proceeds are insufficient to cover the Partnership expenses and liabilities on a
short and long term basis, the Partnership will attempt to obtain additional
funds by disposing of or refinancing equipment, or by borrowing within its
permissible limits.  Since the Partnership’s leases are on a triple-net
basis, no reserve for maintenance and repairs is deemed
necessary.  The Partnership’s cash from operations is expected to be
adequate to cover all operating expenses, liabilities, and distributions to
Partners during the next 12-month period.
   F-6
 
 2.  Summary
of Significant Accounting Policies
 
 Revenue
Recognition
 
 Through
December 31, 2008, 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 Estimates
 
 The
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.
 
 Long-Lived
Assets
 
 The
Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable.  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.  For the year ended December 31, 2008 the
Partnership determined that no impairment existed. The Partnership recorded
charges of $172,000 for the year ended December 31, 2007, 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 estimated generally over useful lives of three to four
years.
 
 Intangible
Assets
 
 Equipment
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.
  F-7
  Cash
  At
December 31, 2008 cash was held in two accounts maintained at one financial
institution. The accounts were, in the aggregate, federally insured for amounts
up to $250,000.  At December 31, 2008, the total cash balance was
approximately $190,000 and did not exceed federally insured limits of
$250,000.  At December 31, 2007 cash was held in two accounts
maintained at one financial institution. The accounts were, in the aggregate,
federally insured for amounts up to $100,000.  At December 31, 2007,
the total cash balance was approximately $123,000, which exceeded federally
insured limits of $100,000 by approximately $23,000.  The Partnership
can mitigate this risk by depositing funds with more than one institution and by
only depositing funds with major financial institutions. The Partnership has not
experienced any losses in such accounts, and believes it is not exposed to any
significant credit risk. The amount in such accounts will fluctuate throughout
2009 due to many factors, including the pace of additional revenues, equipment
acquisitions and distributions.
 
 Accounts
Receivable
 
 Accounts
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
Taxes
 
 The
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
Costs
 
 Offering
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 Unit
 
 The 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
Expenses
 
 Reimbursable
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.  For
example, if the Partnership has more investors than another program sponsored by
CCC, then higher amounts of expenses related to investor services, mailing and
printing costs will be allocated to the Partnership.  Also, while the
Partnership is in its offering stage, higher compliance costs are allocated to
it than to a program not in its offering stage, as compliance resources are
utilized to review incoming investor suitability and proper documentation. 
Finally, lease related expenses, such as due diligence, correspondence,
collection efforts and analysis staff costs, increase as programs purchase more
leases, and decrease as leases terminate and equipment is sold. All of these
factors contribute to CCC’s determination as to the amount of expenses to
allocate to the Partnership or to other sponsored programs.  For the
Partnership, all reimbursable expenses are expensed as they are
incurred.
   F-8
 
 Recent
Accounting Pronouncements
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Liabilities, including an amendment of FASB Statement No. 115”
(“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election
dates, to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. Unrealized
gains and losses will be reported on items for which the fair value option has
been elected in earnings at each subsequent reporting date. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of SFAS No.
157 “Fair Value
Measurements”.   As of January 1, 2008 the Partnership adopted SFAS
No.159. The Partnership has not elected the fair value option for any financial
assets or financial liabilities.
  In
September 2006, the FASB issued Statement of Financial Accounting Standards 157,
“Fair Value Measurements”(“SFAS 157”), which provides guidance on measuring the fair value of
assets and liabilities. SFAS 157 applies 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 also
requires additional disclosures in both annual and quarterly reports. In
February 2008, the FASB issued two Staff Positions on SFAS 157: (1) FASB Staff
Position No. FAS 157-1    (FAS 157-1), “Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That
Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13,” and (2) FASB Staff Position No. FAS
157-2 (FAS 157-2), “Effective
Date of FASB Statement No. 157.”FAS 157-1 excludes FASB Statement No.
13, Accounting for Leases, as well as other accounting pronouncements that
address fair value measurements on lease classification or measurement under
Statement 13, from SFAS 157’s scope. FAS157-2 partially defers Statement 157’s
effective date.  As of January 1, 2008 the Partnership adopted SFAS No. 157
for all financial assets.  Adoption of this pronouncement did not impact
the 2008 financial statements of the Partnership. In October 2008, the FASB
issued FSP SFAS 157-3 "Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active" ("FSP SFAS
157-3"), which is effective upon issuance for all financial statements that have
not been issued. FSP SFAS 157-3 clarifies the application of SFAS 157, in a
market that is not active. Adoption of FSP SFAS 157-3 did not impact the 2008
financial statements of the Partnership.
 
 3.  Computer
Equipment
 
 The
Partnership is the lessor of equipment under operating leases with periods
generally ranging from 12 to 48 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.
 
 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, 2008 and 2007, the Partnership
paid $65,000 and $128,000, respectively.
 
 The
Partnership’s share of the computer equipment in which it participates with
other partnerships at December 31, 2008 and December 31, 2007 was approximately
$1,323,000 and $1,128,000, respectively, which is included in the Partnership’s
fixed assets on its balance sheet.  The total cost of the equipment
shared by the Partnership with other partnerships at December 31, 2008 and
December 31, 2007 was approximately $9,888,000 and $3,886,000,
respectively.  The Partnership’s share of the outstanding debt
associated with this equipment at December 31, 2008 and December 31, 2007 was
approximately $251,000 and $265,000, respectively.  The total
outstanding debt associated with this equipment at December 31, 2008 and
December 31, 2007 was approximately $3,477,000 and $751,000,
respectively.
 
 The
following is a schedule of future minimum rentals on noncancelable operating
leases at December 31, 2008:
 
 Year
      Ending December 31,
                                    
                                    Amount2009
                                    
                                    $
                                    504,4122010
                                    
                                    
                                    95,9062011
                                    
                                    
                                    33,089$
                                    633,407
 
 
 
 F-9
 
  4.  Significant
Customers
 
 Leases
exceeding 10% of lease revenue at December 31:
 
 Lessee
                    
                    2008
                    2007Lessee
      A
                    
                    15%
                    13%Lessee
      B
                    
                    14%
                    0%Lessee
      C
                    
                    10%
                    0%Total
      % of Lease Income
                    
                    39%
                    13%
 
 Lessees
exceeding 10% of net accounts receivable at December 31:
 
 Lessee
                  
                  2008
                  2007Lessee
      B
                  
                  14%
                  0%Lessee
      D
                  
                  12%
                  46%Lessee
      E
                  
                  0%
                  13%Lessee
      F
                  
                  0%
                  12%Lessee
      G
                  
                  0%
                  11%Total
      % of Accounts Receivable
                  26%
                  82%
 
 
 5.  Related
Party Transactions
 
 Reimbursable
Expenses
 
 Reimbursable
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.  For
example, if the Partnership has more investors than another program sponsored by
CCC, then higher amounts of expenses related to investor services, mailing and
printing costs will be allocated to the Partnership.  Also, while the
Partnership is in its offering stage, higher compliance costs are allocated to
it than to a program not in its offering stage, as compliance resources are
utilized to review incoming investor suitability and proper documentation. 
Finally, lease related expenses, such as due diligence, correspondence,
collection efforts and analysis staff costs, increase as programs purchase more
leases, and decrease as leases terminate and equipment is sold. All of these
factors contribute to CCC’s determination as to the amount of expenses to
allocate to the Partnership or to other sponsored programs.  For the
Partnership, all reimbursable expenses are expensed as they are incurred. During
2008 and 2007, the Partnership recorded approximately $720,000 and $341,000
respectively, for reimbursement of expenses to the General Partner.
 
 Equipment
Acquisition Fee
 
 The
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 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 $2,000 and
$7,000 has been earned by the General Partner relating to equipment acquired in
2008 and 2007, respectively. The remaining balance of approximately $61,000
will be earned with acquisitions in future periods.
 
 
 Debt
Placement Fee
 
 As
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 2008 and 2007, the Partnership paid approximately
$1,700 and $2,000, respectively, in debt placement fees to the General
Partner.
   F-10
   Equipment
Management Fee
 
 The
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.  For the year ended December 31, 2008 the equipment management
fee was approximately $50,000; of that amount, the General Partner chose to
waive approximately $36,000.  For the year ended December 31, 2007 the
equipment management fee was approximately $93,000, of that amount, the General
Partner chose to waive approximately $59,000 as determined pursuant to section
(ii) above.
 
 Re-lease
Fee
 
 As
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 (“Re-lease”), the General Partner shall receive, on
a monthly basis, a Re-lease 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
re-lease.  There were no such fees paid to the General Partner in 2008
and 2007.
 
 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 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 2008 and 2007,
the General Partner earned equipment liquidation fees of approximately $8,000
and $12,000, respectively.
 
 6.  Notes
Payable
 
 Notes
payable consisted of the following:
 
 December
      31,
                                    
                                    2008
                                    
                                    
                                    2007Installment
      notes payable tobanks;
      interest ranging from4.65%
      to 6.06%, due inmonthly
      installments rangingfrom
      $162 to $7,289, includinginterest,
      with final paymentsfrom
      January through September 2008.
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    81,042Installment
      notes payable tobanks;
      interest ranging from5.9%
      to 6.25%, due inmonthly
      installments rangingfrom
      $1,901 to $73,654, includinginterest,
      with final paymentsfrom
      January through October 2009.
                                    
                                    
                                    186,155
                                    
                                    
                                    
                                    318,634Installment
      notes payable tobanks;
      interest rate of5.75%,
      due inmonthly
      installments rangingfrom
      $2,528to $5,083includinginterest,
      with final paymentsfrom
      January through July 2011
                                    
                                    
                                    108,481
                                    
                                    
                                    
                                    -$
                                    294,636
                                    
                                    
                                    $
                                    399,676
 
 F-11
  The notes
are secured by specific computer equipment and are nonrecourse liabilities of
the Partnership.  As such, the notes do not contain any debt covenants
with which we must comply on either an annual or quarterly basis. 
Aggregate maturities of notes payable for each of the periods subsequent to
December 31, 2008 are as follows:
 
 Year
      ending December 31,
                                
                                Amount2009
                                
                                $
                                227,3932010
                                
                                
                                43,2912011
                                
                                
                                23,952$
                                294,636
 
 
 At
December 31, 2008 and 2007, the estimated fair value of our debt approximates
the carrying value of such instruments due to the interest rates on such debt
approximating current market rates.
 
 7.  Supplemental
Cash Flow Information
 
 Other
noncash activities included in the determination of net loss are as
follows:
 
 Year
      ended December 31,
                  
                  2008
                  
                  
                  2007Lease
      income, net of interest expense onnotes
      payable realized as a result of directpayment
      of principal by lessee to bank
                  
                  $
                  279,080
                  
                  
                  $
                  821,702
 
 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,
                                  
                                  2008
                                  
                                  
                                  2007Forgiveness
      of related party payables recorded as a capital
    contribution
                                  
                                  $
                                  122,053
                                  
                                  
                                  $
                                  -Debt
      assumed in connection withpurchase
      of computer equipment
                                  
                                  $
                                  174,000
                                  
                                  
                                  $
                                  246,000Prepaid
      Acquisition fees earned by the General Partner
                                  
                                  $
                                  2,429
                                  
                                  
                                  $
                                  7,286
 
 
 F-12
  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 Allerve’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.  As of March 23, 2006, the Partnership had
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, as well as evaluated for sale or
re-lease.
 
 In
January 2007, executive management of Commonwealth Capital Corp. met with a
nationally known leasing company that has been in business for over 25 years.
This company has helped other Allserve creditors sell and/or re-lease recovered
equipment and they are currently doing an analysis of the best possible way to
bring Commonwealth’s equipment to market. As there is a great deal of this
equipment currently available, due to the size of the Allserve bankruptcy, this
process will take more time than normal.  Since August 14, 2007, the
Partnership has been in the process of reviewing the audit reports prepared by
Global Key, a third party who received and tested the equipment; and obtaining a
list of parts required in order to bring the equipment up to specifications for
sale.  It has been the intention of the Partnership to attempt to
market the equipment in the third world market once this upgrade has taken
place.  Further, the Partnership intends to offer the equipment “as
is” both domestically and internationally while soliciting a buyer (or buyers)
in order to maximize revenue.   The Partnership recorded further
impairment charges of approximately $79,000 as of December 31,
2007.
 
 The
Allserve 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 $327,000 through December 31, 2008 and had recorded cumulative
impairment charges against the equipment leased to Allserve of approximately
$724,000 through December 31, 2007.
 
 As of
December 31, 2008, the Allserve equipment had a net book value of zero. The
Partnership has not experienced any significant changes related to this matter
during 2008, and does not anticipate any further significant impact to the
Partnership’s financials statements unless and until the equipment can be
sold.
 
 
 F-13
  9.  Reconciliation
of Net (Loss) Reported for Financial Reporting Purposes to Taxable income (Loss)
on the Federal Partnership Return
 
 Year
      ended December 31,
                  
                  2008
                  
                  
                  2007Net
      Loss for financial reporting purposes
                  
                  $
                  (63,113
                  )
                  
                  $
                  (759,214
                  )AdjustmentsGain
      (Loss) on sale of computer equipment
                  
                  
                  (322,877
                  )
                  
                  
                  (108,840
                  )Depreciation
                  
                  
                  (475,797
                  )
                  
                  
                  451,163Amortization
                  
                  
                  15,052
                  
                  
                  
                  28,711Unearned
      lease income
                  
                  
                  1,482
                  
                  
                  
                  (3,330
                  )Other
                  
                  
                  17,598
                  
                  
                  
                  32,234Taxable
      loss on the Federal Partnership Return
                  
                  $
                  (827,655
                  )
                  
                  $
                  (359,276
                  )
 
 
 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.
 
 10.  Quarterly
Results of Operation (Unaudited)
 
 Summarized
quarterly financial data for the year ended December 31, 2008 is as
follows:
 
 Quarter
      endedMarch
      31
                  
                  
                  June
      30
                  
                  
                  September
      30
                  
                  
                  December
      312008RevenuesLease
      and other
                  
                  $
                  294,302
                  
                  
                  $
                  253,093
                  
                  
                  $
                  301,242
                  
                  
                  $
                  239,365Gain
      (loss) on sale ofcomputer
      equipment
                  
                  
                  5,187
                  
                  
                  
                  (19,307
                  )
                  
                  
                  18,404
                  
                  
                  
                  (4,203
                  )Total
      revenues
                  
                  
                  299,489
                  
                  
                  
                  233,786
                  
                  
                  
                  319,646
                  
                  
                  
                  235,162Total
      costs and expenses
                  
                  
                  353,578
                  
                  
                  
                  338,840
                  
                  
                  
                  218,755
                  
                  
                  
                  240,022Net
      income (loss)
                  
                  $
                  (54,089
                  )
                  
                  $
                  (105,054
                  )
                  
                  $
                  100,891
                  
                  
                  $
                  (4,861
                  )Net
      income (loss) allocated to limited partners
                  
                  $
                  (54,089
                  )
                  
                  $
                  (105,054
                  )
                  
                  $
                  100,891
                  
                  
                  $
                  (4,861
                  )Income
      (loss) per limited partner unit
                  
                  $
                  (0.07
                  )
                  
                  $
                  (0.14
                  )
                  
                  $
                  0.13
                  
                  
                  $
                  0.01
 
  F-14
  Summarized
quarterly financial data for the year ended December 31, 2007 is as
follows:
  Quarter
      endedMarch
      31
                  
                  
                  June
      30
                  
                  
                  September
      30
                  
                  
                  December
      312007RevenuesLease
      and other
                  
                  $
                  676,700
                  
                  
                  $
                  471,032
                  
                  
                  $
                  383,776
                  
                  
                  $
                  321,055Gain
      on sale ofcomputer  equipment
                  
                  
                  15,106
                  
                  
                  
                  4,651
                  
                  
                  
                  234
                  
                  
                  
                  664Total
      revenues
                  
                  
                  691,806
                  
                  
                  
                  475,683
                  
                  
                  
                  384,010
                  
                  
                  
                  321,719Total
      costs and expenses
                  
                  
                  845,830
                  
                  
                  
                  716,577
                  
                  
                  
                  516,017
                  
                  
                  
                  554,008Net
      loss
                  
                  $
                  (154,024
                  )
                  
                  $
                  (240,894
                  )
                  
                  $
                  (132,007
                  )
                  
                  $
                  (232,289
                  )Net
      loss allocated to limited partners
                  
                  $
                  (157,767
                  )
                  
                  $
                  (244,637
                  )
                  
                  $
                  (135,750
                  )
                  
                  $
                  (233,308
                  )Net
      loss per limited partner unit
                  
                  $
                  (0.21
                  )
                  
                  $
                  (0.33
                  )
                  
                  $
                  (0.18
                  )
                  
                  $
                  (0.31
                  )