SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

[X]  Annual report  pursuant to Section 13 or 15(d) of the Securities  Exchange
     Act of 1934 for the fiscal year ended December 31, 2005

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

                         Commission file number 33-80849

                      Capital Preferred Yield Fund-IV, L.P.
             (Exact name of registrant as specified in its charter)


         Delaware                                       84-1331690
  (State of organization)                (I.R.S. Employer Identification Number)

7901 Southpark Plaza, Ste.107, Littleton, Colorado                   80120
      (Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (303) 268-6550

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X      No
                                      ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, 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. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).    Yes     X No

State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.


                        Exhibit Index Appears on Page 34

                               Page 1 of 40 Pages
<PAGE>
Item 1.   Business
          --------

Capital Preferred Yield Fund-IV, L.P., a Delaware limited partnership (the
"Partnership"), was organized on December 18, 1995 and is engaged in the
business of owning and leasing equipment. CAI Equipment Leasing V Corp.
("CAIEL-V"), a Colorado corporation, is the general partner of the Partnership.
CAIEL-V was a wholly owned subsidiary of Capital Associates, Inc. ("CAI") until
September 12, 2000, the date it was purchased in its entirety by Mishawaka
Leasing Company, Inc. ("MLC"). CAI discontinued its operations on December 15,
2000 and filed Chapter 11 Bankruptcy on October 15, 2001.

Capital Associates International, Inc. ("CAII"), a wholly owned subsidiary of
CAI, was the Class B limited partner of the Partnership prior to September 12,
2000. In exchange for its Class B limited partner interest, CAII contributed
$500,000 (i.e., $10,000 for each $1,000,000 contribution to the Partnership made
by the Class A limited partners) to the Partnership making it the largest single
investor in the Partnership. The contributions of CAII were made simultaneously
with the purchase of equipment by the Partnership. MLC became the Class B
limited partner as of September 12, 2000.

The Partnership's overall investment objectives are to (i) raise the maximum
allowable capital from investors for investment in accordance with the
Partnership's investment objectives described in the Prospectus; (ii) invest
such capital and related indebtedness in a diversified portfolio of equipment
subject to leases to creditworthy businesses with terms ranging from two to
seven years; (iii) if funds are available for distribution, make monthly cash
distributions to the Class A and Class B limited partners during the
reinvestment period (a period that ended approximately June 30, 2002); (iv)
re-invest all available undistributed cash from operations and cash from sales
in additional equipment during the reinvestment period to increase the
Partnership's portfolio of revenue-generating equipment, provided that suitable
equipment can be identified and acquired; and (v) sell or otherwise dispose of
the Partnership's equipment and other assets in an orderly manner during the
liquidation period (which began in 2002) and promptly distribute cash from sales
thereof to the partners.

Since its formation, the Partnership acquired equipment of various types under
lease to third parties on short-term leases (generally five years or less). All
of the equipment was either (i) arranged by MLC to be acquired by the
Partnership from third parties, or (ii) purchased by CAII directly from
manufacturers or from other independent third parties and sold to the
Partnership. The equipment is generally comprised of transportation and
industrial equipment, office furniture and equipment, and computer and
peripheral equipment, among others. The Partnership entered its liquidation
period, as defined in the Partnership Agreement, in July 2002. During the
liquidation period, purchases of equipment will cease (other than for prior
commitments or for equipment upgrades). The Partnership is required to dissolve
and distribute all of its assets no later than December 31, 2007. However, the
general partner anticipates that all equipment will be sold and the Partnership
will be liquidated by December 2006. The Partnership has not yet adopted a
formal plan of liquidation and, as such, the financial statements have been
prepared on a going-concern basis.

The Partnership may assign the rentals from leases to financial institutions, or
acquire leases subject to such assignments, at fixed interest rates on a
nonrecourse basis. The proceeds of this nonrecourse debt financing will be
utilized to finance the purchase of equipment under lease or to invest in
additional equipment under lease. In the event of default by a lessee, the
financial institution has a first lien on the underlying leased equipment with
no further recourse against the Partnership. Cash proceeds from such financings,
or financings assumed in the acquisition of leases, are recorded on the balance
sheet as discounted lease rentals. As lessees make payments to financial
institutions, leasing revenue and interest expense are recorded.

                                       2
<PAGE>
The Partnership leases equipment to investment grade lessees in diverse
industries including the material handling, telecommunications and manufacturing
industries. The majority of the Partnership's total equipment under lease is
leased to investment grade lessees. Pursuant to the Partnership Agreement, an
investment grade lessee is a company (i) with a net worth in excess of
$100,000,000 (and no debt issues that are rated); or (ii) with a credit rating
of not less than Baa as determined by Moody's Investor Services, Inc. or
comparable credit rating, as determined by another recognized credit rating
service; or (iii) a lessee, all of whose lease payments have been
unconditionally guaranteed or supported by a letter of credit issued by a
company meeting one of the above requirements. The Partnership limits its credit
risk through selective use of nonrecourse debt financing of future lease
rentals, as described above.

The Partnership only acquires equipment that is on lease at the time of
acquisition. After the initial term of its lease, each item of equipment is
expected to provide additional investment income from its re-lease or sale. Upon
expiration of the initial lease, the Partnership attempts to re-lease or sell
the equipment to the existing lessee. If a re-lease or sale to the lessee cannot
be negotiated, the Partnership will attempt to lease or sell the equipment to a
third party.

The Partnership's business is not subject to seasonal variations.

The ultimate rate of return on leases depends, in part, on the general level of
interest rates at the time the leases are originated as well as future equipment
values and on-going lessee creditworthiness. Because leasing is an alternative
to financing equipment purchases with debt, lease rates tend to rise and fall
with interest rates (although lease rate movements generally lag interest rate
changes in the capital markets). The amount of future distributions to the
partners will depend, in part, on future interest rates.

The Partnership has no employees. Prior to September 12, 2000, the general
partner relied upon the services of CAII for origination of leases,
administrative and accounting services, and remarketing of leases and equipment,
among other services related to the Partnership's assets. Since September 12,
2000, the general partner has contracted with MLC to provide the above services.
Many of the management and administrative personnel of MLC formerly worked for
CAII and serviced the Partnership's leases. The general partner is entitled to
receive certain fees and expense reimbursements in connection with the
performance of these services and is responsible for paying MLC. See Item 10 of
this Report, "Directors and Executive Officers of the Partnership" and Item 13
of this Report, "Certain Relationships and Related Transactions".

The Partnership competes in the leasing marketplace as a lessor with a
significant number of other companies, including equipment manufacturers,
leasing companies and financial institutions. The Partnership competes mainly on
the basis of the expertise of its general partner in remarketing equipment,
terms offered in its transactions, pricing and service. Although the Partnership
does not account for a significant percentage of the leasing market, the general
partner believes that the Partnership's marketing strategies and financing
capabilities and remarketing expertise enable it to compete effectively in the
equipment leasing and remarketing markets.

The Partnership leases equipment to seventy-five lessees. One lessee, General
Motors Corporation, accounted for approximately 25% of total revenue of the
Partnership in 2005. The same lessee accounted for approximately 20% of total
revenue of the Partnership during 2004. There have been no new leases with this
lessee since the Partnership entered the liquidation period in 2002.

                                       3
<PAGE>
Item 1A.   Risk Factors
           ------------

Risks Related to Our Business

Distributions to partners will be impacted by interest rates and on-going lessee
creditworthiness

The ultimate rate of return on leases depends, in part, on the general level of
interest rates at the time the leases are originated as well as on on-going
lessee creditworthiness. Because leasing is an alternative to financing
equipment purchases with debt, lease rates, and in the case of re-leases after
the initial lease, tend to rise and fall with interest rates (although lease
rate movements generally lag interest rate changes in the capital markets). The
amount of future distributions to the partners will depend, in part, on on-going
lessee creditworthiness and future interest rates.

Distributions to partners will be impacted by future equipment values

The ultimate rate of return on leases depends, in part, on future equipment
values. These values are typically realized after the initial lease term is
completed and are realized through the re-lease or sale of equipment. As such,
distributions to partners will be impacted by future equipment values.

Distributions  to partners  will be impacted by the value  realized in the final
liquidation of the partnership

The Partnership will continue until December 31, 2007 unless terminated earlier
in accordance with the terms of the Partnership Agreement. All equipment owned
by the Partnership is expected to be sold and the Partnership liquidated in
2006. As such, distributions to partners will be impacted by the amount realized
from the sale of equipment and leases upon liquidation.


Actual results could differ from the estimates and assumptions used to prepare
our financial statements .

In order to prepare financial statements in conformity with accounting
principles generally accepted in the United States of America, we are required
to make estimates and assumptions as of the date of the financial statements
which affect the reported values of our assets, liabilities, revenues and
expenses, and disclosures of contingent assets and liabilities. Areas requiring
significant estimates by us include:

     o    Allowances for losses of accounts receivable

     o    Residual value impairments

     o    Future rental streams from leases


Risks Related to Market For Partnership Units

Absence of a public market may prevent you from selling your partnership units.

There is no public market for partnership units and none is expected to develop.
Due to certain redemption limitations described in the partnership agreement,
the partnership may not have the ability to redeem partnership units upon
request.

                                       4
<PAGE>
Risks Related to Regulatory Compliance

Our costs may increase as a result of complying with regulatory requirements

Evolving regulation of corporate governance and public disclosure may result in
additional expenses and continuing uncertainty. Changing laws, regulations and
standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002 ("SOX") and related SEC regulations, are creating
uncertainty for public companies. We continually evaluate and monitor
developments with respect to new and proposed rules and cannot predict or
estimate the amount of the additional costs we may incur or the timing of such
costs.


Item 1B.   Unresolved Staff Comments
           -------------------------

We do not currently have any unresolved written comments from the Staff of the
SEC regarding our periodic or current reports under the Securities Exchange Act
of 1934.

Item 2.   Properties
          ----------

Per the Partnership Agreement, the Partnership does not own or lease any
physical properties other than the equipment discussed in Item 1 "Business," of
this Report, which is incorporated herein by reference.


Item 3.   Legal Proceedings
          -----------------

Neither the Partnership nor any of the Partnership's equipment is the subject of
any material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

No matters were submitted to a vote of the limited partners of the Partnership,
through the solicitation of proxies or otherwise, during the fourth quarter
ended December 31, 2005.

Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters
         -------

(a)  The Partnership's Class A limited partner units, Class B interest and
     general partner interest are not publicly traded. There is no established
     public trading market for such units and interests and none is expected to
     develop.

(b)  At December 31, 2005, there were 2,268 Class A limited partners.

(c)  Distributions
     -------------

     During 2005, the Partnership made twelve (12) distributions (a portion of
     which constituted a return of capital) to Class A limited partners as
     follows:

                                       5
<PAGE>
Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters, continued
         ------------------
                                             Distributions Per
                                              $100 Investment
     For the              Payment           (computed on              Total
   Period Ended           Made During       weighted average)     Distributions
------------------       -------------      -----------------     -------------

December 31, 2004         January 2005          $ 0.987           $   475,524
January 31, 2005          February 2005           1.676               807,185
February 28, 2005         March 2005              0.434               209,265
March 31, 2005            April 2005              0.671               323,298
April 30, 2005            May 2005                1.516               730,229
May 31, 2005              June 2005               0.838               403,851
June 30, 2005             July 2005               0.593               285,443
July 31, 2005             August 2005             0.577               278,146
August 31, 2005           September 2005          0.537               258,676
September 30, 2005        October 2005            0.544               262,108
October 31, 2005          November 2005           0.397               191,457
November 30, 2005         December 2005           0.402               193,775
                                                -------           -----------
                                                $  9.17           $ 4,418,957
                                                =======           ===========

     Distributions may be characterized for tax, accounting and economic
     purposes as a return of capital, a return on capital or a portion of both.
     The portion of each cash distribution by a partnership that exceeds its net
     income for the fiscal period may be deemed a return of capital for
     accounting purposes. However, the total percentage of a partnership's
     return on capital over its life can only be determined after all residual
     cash flows (which include proceeds from the re-leasing and sale of
     equipment) have been realized at the termination of the Partnership.

     Distributions for the month ended December 31, 2005, totaling $266,683,
     were paid to the Class A limited partners during January 2006.
     Distributions to the general partner and Class B limited partner during
     2005 are discussed in Item 13 of this Report, "Certain Relationships and
     Related Transactions."

     The general partner believes the Partnership will generate sufficient cash
     flows from operations during 2006, to (1) meet current operating
     requirements, and (2) make cash distributions to the Class A limited
     partners in accordance with the Partnership Agreement. Distributions during
     the liquidation period will be based upon cash availability and will vary.
     All distributions are expected to be a return of capital for economic and
     accounting purposes.

                                       6
<PAGE>
Item 5.  Market for the Partnership's Common Equity and Related Stockholder
         ------------------------------------------------------------------
         Matters, continued
         -------


(c)  Distributions, continued

     During 2004, the Partnership  made twelve (12)  distributions (a portion of
     which  constituted  a return of  capital)  to Class A limited  partners  as
     follows:
                                            Distributions Per
                                            $100 Investment
     For the               Payment           (computed on               Total
  Period Ended           Made During       weighted average)       Distributions
------------------      ------------       ----------------       -------------

December 31, 2003       January 2004            $ 0.543            $   262,248
January 31, 2004        February 2004             0.877                423,547
February 28, 2004       March 2004                0.029                 13,917
March 31, 2004          April 2004                0.635                306,323
April 30, 2004          May 2004                  0.827                399,393
May 31, 2004            June 2004                 0.582                281,026
June 30, 2004           July 2004                 0.933                450,260
July 31, 2004           August 2004               1.633                788,097
August 31, 2004         September 2004            1.028                496,014
September 30, 2004      October 2004              2.180              1,052,289
October 31, 2004        November 2004             0.960                463,545
November 30, 2004       December 2004             0.864                417,231
                                                -------            -----------
                                                $ 11.09            $ 5,353,890
                                                =======            ===========

     The following represents annual and cumulative distributions per Class A
     limited partner unit, as described in note 1 to Notes to Financial
     Statements.

                       Distribution Amount                Distribution %
                        per $100 Class A                 per $100 Class A
                       Limited Partner Unit            Limited Partner Unit
 Payment                 (computed on                     (computed on
Made During             weighted average)              weighted average)(1)
-----------           ---------------------            ---------------------

  1996                   $   7.72                            11.0%
  1997                      10.50                            10.5%
  1998                      10.50                            10.5%
  1999                      10.50                            10.5%
  2000                      10.50                            10.5%
  2001                      10.50                            10.5%
  2002                      12.29                            12.3%
  2003                      14.33                            14.3%
  2004                      11.09                            11.1%
  2005                       9.17                             9.2%
                         --------
                         $ 107.10

                                       7
<PAGE>
     (1)  Cumulative distributions, as described in note 1 to Notes to Financial
          Statements, began May 1996.

Item 6.   Selected Financial Data
          -----------------------

The following selected financial data relates to the years ended December 31,
2005 through 2001. The data should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto appearing with Item 8
herein.

<TABLE>
<CAPTION>
                                                         2005           2004            2003           2002            2001
                                                         ----           ----            ----           ----            ----

<S>                                                 <C>            <C>            <C>             <C>            <C>
Total revenue                                       $ 8,430,336    $ 12,153,605   $ 15,236,917    $ 18,312,824   $ 19,133,203
Net income (loss)                                     1,335,471       1,521,275        789,369         124,816       (112,651)
Net income (loss) per weighted average  Class A
  limited partner unit outstanding                         2.66            3.00           1.49            0.11          (0.33)
Total assets                                          9,882,543      17,938,287     30,409,653      48,015,520     46,912,390
Discounted lease rentals                              4,472,322       9,545,679     17,582,086      28,582,334     20,141,516
Distributions declared to partners                    4,265,900       5,623,600      5,889,529       7,056,442      5,250,559
Distributions declared per weighted average
  Class A limited partner unit outstanding                 8.74           11.53          11.96           14.27          10.50
</TABLE>



Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations
          ---------------------

I.   Results of Operations

Critical Accounting Policies

The Partnership's accounting for leases falls under guidelines that have been
substantially unchanged since the inception of the partnership. For operating
leases, revenue is recorded on a straight-line basis over the lease term, and
depreciation is recorded on a straight-line basis over the lease term to an
amount equal to the estimated residual value at the lease termination date. For
direct finance leases, revenue and amortization to the estimated residual value
at the lease termination date are recorded using the interest method (i.e.
similar to amortization of a home mortgage).

For both types of leases, two critical assumptions include the probability of
future contractual rent collections and an estimate of future residual value.
The general partner must make judgments when evaluating both of these
assumptions before entering into a lease.

Additionally, the general partner performs quarterly assessments of the carrying
value of its assets, including future contractual rent collections and an
estimate of future residual value. Recovery of an asset is measured by a
comparison of the carrying amount of the asset to future net cash flows expected
to be generated by the asset. When estimating future contractual rent
collections, the general partner considers the then current credit quality of
the lessee. When estimating future residuals, the general partner considers all
relevant facts regarding the equipment and the lessee, including, for example,
the likelihood that the lessee will re-lease or purchase the equipment. If an
impairment loss is indicated, the loss recognized in the quarter is measured by
the amount the carrying value of an asset exceeds its estimated future net
discounted cash flows.

                                       8
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations, continued
          ---------------------

On a per lease basis, future reported results could differ considerably from
expected results as conditions arise that significantly affect these two
critical assumptions. However, the general partner believes that on a portfolio
basis, the likelihood of materially different reported results is minimized (but
not removed entirely) because in the normal course of business the Partnership
a) assigns certain future rents on a nonrecourse basis to financial institutions
for an up-front cash payment and b) attempts to keep the Partnership's portfolio
diversified as to lessee and equipment type concentrations. Should the
contractual rents not be collected or estimated future residual values not be
realized, operating results would be directly impacted.

Operating Results

Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing condensed categories and analyses of
changes in those condensed categories derived from the Statements of Operations:

<TABLE>
<CAPTION>
                                                    Years Ended December 31,                   Years Ended December 31,
                                                    ------------------------                   ------------------------
                                           2005           2004           Change         2004           2003          Change
                                           ----           ----           ------         ----           ----          ------
<S>                                    <C>            <C>            <C>            <C>            <C>            <C>
Leasing margin                         $ 1,746,393    $ 2,326,846    $  (580,453)   $ 2,326,846    $ 1,692,757    $   634,089
Equipment sales margin                     561,582        586,719        (25,137)       586,719        563,679         23,040
Interest income                             11,446          6,833          4,613          6,833          6,786             47
Management fees to general partner        (179,974)      (266,858)        86,884       (266,858)      (354,944)        88,086
Direct services from general partner      (142,490)      (327,146)       184,656       (327,146)      (279,544)       (47,602)
General and administrative expenses       (469,211)      (456,658)       (12,553)      (456,658)      (506,365)        49,707
Provision for losses                      (192,275)      (348,461)       156,186       (348,461)      (333,000)       (15,461)
                                       -----------    -----------    -----------    -----------    -----------    -----------
  Net income                           $ 1,335,471    $ 1,521,275    $  (185,804)   $ 1,521,275    $   789,369    $   731,906
                                       ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>

The Partnership entered its liquidation period in 2002, as defined in the
Partnership Agreement, and will not purchase equipment in future periods.
Furthermore, during future periods, initial leases will expire and the equipment
will be remarketed (i.e., re-leased or sold). As a result, both the size of the
Partnership's leasing portfolio and the amount of total revenue will decline
("portfolio runoff").

Leasing Margin

Leasing margin consists of the following:

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                         --------------------------------------------
                                             2005            2004             2003
                                             ----            ----             ----
<S>                                    <C>              <C>              <C>
Operating lease rentals                $  7,741,018     $ 11,311,474     $ 14,215,088
Direct finance lease income                 116,290          248,579          451,364
Depreciation                             (5,155,423)      (8,264,058)     (11,354,415)
Remarketing sharing expenses               (465,447)            --               --
Interest on discounted lease rentals       (490,045)        (969,149)      (1,619,280)
                                       ------------     ------------     ------------
      Leasing margin                   $  1,746,393     $  2,326,846     $  1,692,757
                                       ============     ============     ============

Leasing margin ratio                             22%              20%              12%
</TABLE>

                                       9
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations, continued
          ---------------------

Operating lease rentals and depreciation decreased for the year ended December
31, 2005 compared to the year ended December 31, 2004 primarily due to a
decrease in the average net book value of the operating lease portfolio.
Operating lease rentals and depreciation decreased for the year ended December
31, 2004 compared to the year ended December 31, 2003 primarily due to a
decrease in the average net book value of the operating lease portfolio.

Direct finance lease income decreased for the years ended December 31, 2005 and
2004 primarily due to portfolio runoff.

Interest expense on discounted lease rentals decreased for the years ended
December 31, 2005 and 2004 due to a decrease in the average balance of
discounted lease rentals outstanding.

Leasing margin and leasing margin ratio vary due to changes in the portfolio
including, among other things, the mix of operating leases versus direct finance
leases, the average maturity of operating leases in the portfolio, the
percentage of leases in the portfolio that have entered their remarketing stage
and/or gone on month-to-month rental terms, and the amount of discounted lease
rentals financing the portfolio. Leasing margin increased from 2003 to 2004 due
to the continued aging of the leasing portfolio. This aging will increase
margins as interest expense will decline due to the use of the effective
interest method on the amortization of discounted lease rentals. The leasing
margin decreased from 2004 to 2005 due to the impact of remarketing sharing
expenses discussed below and an increase in the number of terminating leases,
offset by the continued aging of the leasing portfolio. The leasing margin ratio
increased in 2005 over 2004, and 2004 over 2003 primarily due to the continued
aging of the leasing portfolio.

The Partnership has entered into remarketing agreements with an unaffiliated
third party, whereby that party provides remarketing services to the Partnership
in exchange for profit sharing once the Partnership has reached certain
thresholds, usually relating to rents or revenues received on re-marketed or
sold equipment after the expiration of the initial lease term. During the year
ended December 31, 2005, the Partnership reached its first threshold and was
required to begin paying profit sharing proceeds on the remarketing agreements.
The profit sharing proceeds incurred during the year ended December 31, 2005
were $465,447 and are recorded in the accompanying statements of income as
remarketing sharing.

The ultimate profitability of the Partnership's leasing transactions is
dependent in part on interest rates at the time the leases are originated,
future equipment values, and on-going lessee creditworthiness. Because leasing
is an alternative to financing equipment purchases with debt, lease rates tend
to rise and fall with interest rates.

Equipment Sales Margin

Equipment sales margin from remarketing consists of the following:

                                            Years Ended December 31,
                              --------------------------------------------------
                                  2005               2004               2003
                                  ----               ----               ----
Equipment sales revenue       $ 2,057,340        $ 2,536,973        $ 2,437,783
Cost of equipment sales        (1,495,758)        (1,950,254)        (1,874,104)
                              -----------        -----------        -----------
Equipment sales margin        $   561,582        $   586,719        $   563,679
                              ===========        ===========        ===========

                                       10
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations, continued
          ---------------------

Equipment sales margin fluctuates based upon the composition of equipment
available for sale. Currently, the Partnership is in its liquidation period (as
defined in the Partnership Agreement). Initial leases are expiring and the
equipment is either being re-leased or sold to the lessee or a third party.
Equipment sales margin varies with the number and dollar amount of equipment
leases that mature in a particular period and the current market value for
specific equipment and residual value estimates.

Interest Income

Interest income varies due to (1) the amount of cash available for investment
(pending distribution or equipment purchases) and (2) the interest rate on such
invested cash.

Expenses

Management fees to the general partner are earned on gross rents received and
will fluctuate due to variances in cash flow and the size of the Partnership's
portfolio. Management fees paid to the general partner decreased from 2004 to
2005 and from 2003 to 2004 due to portfolio run-off.

Direct services from the general partner decreased in 2005 compared to 2004 due
to Management's efforts in 2004 to prepare to implement Section 404 of the
Sarbanes-Oxley Act of 2002. Direct services from the general partner increased
in 2004 compared to 2003 primarily due to Sarbanes-Oxley.

General and administrative expenses increased in 2005 compared to 2004 primarily
due to an increase in audit fees and an increase in state business taxes paid in
2005. General and administrative expenses decreased in 2004 compared to 2003
primarily due to the purchase of upgraded computer hardware and software and the
related consulting costs for the conversion in 2003.

The Partnership has entered into remarketing agreements with an unaffiliated
third party, whereby that party provides remarketing services to the Partnership
in exchange for profit sharing once the Partnership has reached certain
thresholds, usually relating to rents or revenues received on re-marketed or
sold equipment after the expiration of the initial lease term. During the year
ended December 31, 2005, the Partnership reached its first threshold and was
required to begin paying profit sharing proceeds on the remarketing agreements.
The profit sharing proceeds incurred during the year ended December 31, 2005
were $465,447 and are recorded in the accompanying statements of income as
remarketing sharing.

Provision for Losses

The realization of greater than the carrying value of equipment (which occurs
when the equipment is remarketed subsequent to initial lease termination) is
reported as equipment sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment is recorded as provision for losses.

Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including, for example, the likelihood that the lessee will re-lease or purchase
the equipment. The nature of the Partnership's leasing activities is such that
it has credit exposure and residual value exposure and will incur losses from
those exposures in the ordinary course of business. The Partnership

                                       11
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations, continued
          ---------------------

performs quarterly assessments of the estimated residual value of its assets to
identify any other-than-temporary losses in value that, if any, are also
recorded as provision for losses.

The provision for losses recorded during 2005 related to the following:
     o    $137,000 related to decreases in the estimated future residual values
          of on-lease equipment
     o    $55,275 related to the future residual value of equipment returned to
          the Partnership

The provision for losses recorded during 2004 related to the following:
     o    $302,500 related to decreases in the estimated future residual values
          of on-lease equipment
     o    $179,050 related to the future residual value of equipment returned to
          the Partnership
     o    ($133,089) received as bankruptcy settlement for previously written
          off residual values

The provision for losses recorded during 2003 related to the following:
     o    $288,500 related to decreases in the estimated future residual values
          of on-lease equipment
     o    $224,500 related to the future residual value of equipment returned to
          the Partnership
     o    ($180,000) adjustment made to reduce reserve for uncollectible
          accounts.

II.       Liquidity and Capital Resources
          -------------------------------

During July 2002, the Partnership entered its liquidation period, as defined in
the Partnership Agreement. Consequently, material purchases of equipment subject
to leases (except for prior commitments or equipment upgrades) have ceased. As a
result, during future periods, both the size of the Partnership's leasing
portfolio and the amount of leasing revenue will decline.

The Partnership funds its operating activities principally with cash from rents,
discounted lease rentals (nonrecourse debt), interest income, and sales of
off-lease equipment. Available cash and cash reserves of the Partnership are
invested in short-term government securities pending the acquisition of
equipment or distribution to the partners.

During 2005, 2004 and 2003, the Partnership declared distributions to the Class
A limited partners of $4,210,116, $5,567,364 and $5,795,900, respectively, of
which $266,683 was paid during January 2006. A portion of such distributions is
expected to constitute a return of capital. Distributions may be characterized
for tax, accounting and economic purposes as a return of capital, a return on
capital or a portion of both. The portion of each cash distribution by a
partnership that exceeds its net income for the fiscal period may be deemed a
return of capital for accounting purposes. However, the total percentage of a
partnership's return on capital over its life can only be determined after all
residual cash flows (which include proceeds from the re-leasing and sales of
equipment) have been realized at the termination of the Partnership.

The general partner believes the Partnership will generate sufficient cash flows
from operations during 2006, to (1) meet current operating requirements, (2)
make cash distributions to both the Class A and Class B limited partners in
accordance with the Partnership Agreement. Distributions during the liquidation
period will be based upon cash availability and will vary. All distributions are
expected to be a return of capital for economic and accounting purposes.

                                       12
<PAGE>
Item 7.   Management's Discussion and Analysis of Financial Condition and
          -----------------------------------------------------------------
          Results of Operations, continued
          ---------------------

III.   New Accounting Pronouncements
       -----------------------------

No new accounting pronouncements are expected that will have a significant
impact on the Partnership.

IV.   "Safe Harbor" Statement Under the Private Securities Litigation Reform Act
      --------------------------------------------------------------------------
      of 1995
      -------

The statements contained in this report which are not historical facts may be
deemed to contain forward-looking statements with respect to events, the
occurrence of which involve risks and uncertainties, and are subject to factors
that could cause actual future results to differ both adversely and materially
from currently anticipated results, including, without limitation; the level of
lease acquisitions; realization of residual values; customer credit risk;
competition from other lessors, specialty finance lenders or banks; and the
availability and cost of financing sources. Certain specific risks associated
with particular aspects of the Partnership's business are discussed in detail
throughout Parts I and II when and where applicable.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
          ----------------------------------------------------------

The Partnership's leases with equipment users are non-cancelable and have lease
rates which are fixed at lease inception. The Partnership finances its leases,
in part, with discounted lease rentals at a fixed rate debt. Consequently, the
Partnership has limited interest rate risk or other market risk exposure.




                                       13
<PAGE>
Item 8.  Financial Statements and Supplementary Data
         -------------------------------------------

         Index to Financial Statements and Financial Statement Schedule

                                                                           Page
                                                                          Number
                                                                          ------
         Financial Statements
         --------------------

             Report of Independent Registered Public Accounting Firm          15

             Balance Sheets at December 31, 2005 and 2004                     16

             Statements of Operations for the years ended December 31,
             2005, 2004 and 2003                                              17

             Statements of Partners' Capital for the years ended December
             31, 2005, 2004 and 2003                                          18

             Statements of Cash Flows for the years ended December 31,
             2005, 2004 and 2003                                              19

             Notes to Financial Statements                                 20-27


         Financial Statement Schedule
         ----------------------------

             Report of Independent Registered Public Accounting Firm on
                         Schedule                                             28

             Schedule II - Valuation and Qualifying Accounts                  29



                                       14
<PAGE>
             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------


The Partners
Capital Preferred Yield Fund-IV, L.P.:

We have audited the accompanying balance sheets of Capital Preferred Yield
Fund-IV, L.P. as of December 31, 2005 and 2004, and the related statements of
operations, partners' capital, and cash flows for each of the years in the
three-year period ended December 31, 2005. These financial statements are the
responsibility of the Partnership's management. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 Capital Preferred Yield
Fund-IV, L.P. as of December 31, 2005 and 2004, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 2005, in conformity with United States generally accepted
accounting principles.




                                               /s/KPMG LLP
                                               -----------
                                               KPMG LLP

Denver, Colorado
March 10, 2006

                                       15
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.

                                 BALANCE SHEETS
                           December 31, 2005 and 2004

                                     ASSETS
<TABLE>
<CAPTION>
                                                                            2005        2004
                                                                        ----------   -----------
<S>                                                                    <C>           <C>
Cash and cash equivalents                                              $ 1,000,558   $ 1,208,737
Accounts receivable, net of allowance for losses
     of $19,237 in 2005 and $22,019 in 2004                                 90,784        77,014
Prepaid insurance                                                           25,177         5,040
Equipment held for sale                                                    148,566       123,223
Net investment in direct finance leases                                  1,198,399     2,630,701
Leased equipment, net                                                    7,419,059    13,893,572
                                                                       -----------   -----------

     Total assets                                                      $ 9,882,543   $17,938,287
                                                                       ===========   ===========

                       LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
     Accounts payable and accrued liabilities                          $   449,101   $   420,549
     Payables to affiliates                                                250,429       116,570
     Rents received in advance                                                   -         7,129
     Distributions payable to partners                                     270,450       476,952
     Discounted lease rentals                                            4,472,322     9,545,679
                                                                       -----------   -----------

     Total liabilities                                                   5,442,302    10,566,879
                                                                       -----------   -----------

Partners' capital:
     General partner                                                             -             -
     Limited partners:
         Class A 500,000 units authorized; 481,590 and 481,790 units
           issued and outstanding in 2005 and 2004, respectively         4,192,369     7,123,337
         Class B                                                           247,872       248,071
                                                                       -----------   -----------

              Total partners' capital                                    4,440,241     7,371,408
                                                                       -----------   -----------

              Total liabilities and partners' capital                  $ 9,882,543   $17,938,287
                                                                       ===========   ===========
</TABLE>
                 See accompanying notes to financial statements.

                                       16
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.

                            STATEMENTS OF OPERATIONS
              For the Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                2005         2004          2003
                                             ----------   -----------   -----------

<S>                                         <C>           <C>           <C>
Revenue:
     Operating lease rentals                $ 7,741,018   $11,311,474   $14,215,088
     Direct finance lease income                116,290       248,579       451,364
     Equipment sales margin                     561,582       586,719       563,679
     Interest income                             11,446         6,833         6,786
                                            -----------   -----------   -----------

         Total revenue                        8,430,336    12,153,605    15,236,917
                                            -----------   -----------   -----------

Expenses:
     Depreciation                             5,155,423     8,264,058    11,354,415
     Management fees to general partner         179,974       266,858       354,944
     Direct services from general partner       142,490       327,146       279,544
     General and administrative                 469,211       456,658       506,365
     Provision for losses                       192,275       348,461       333,000
     Remarketing sharing                        465,447          --            --
     Interest on discounted lease rentals       490,045       969,149     1,619,280
                                            -----------   -----------   -----------

         Total expenses                       7,094,865    10,632,330    14,447,548
                                            -----------   -----------   -----------

Net income                                  $ 1,335,471     1,521,275   $   789,369
                                            ===========   ===========   ===========

Net income allocated:
     To the general partner                 $    42,659   $    56,236   $    58,629
     To the Class A limited partners          1,279,886     1,450,389       723,433
     To the Class B limited partner              12,926        14,650         7,307
                                            -----------   -----------   -----------
                                            $ 1,335,471   $ 1,521,275   $   789,369
                                            ===========   ===========   ===========

Net income per weighted average Class A
     limited partner unit outstanding       $      2.66   $      3.00   $      1.49
                                            ===========   ===========   ===========

Weighted average Class A limited partner
     units outstanding                          481,666       482,680       484,493
                                            ===========   ===========   ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       17
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.

                         STATEMENTS OF PARTNERS' CAPITAL
                     For the Years Ended December 31, 2005,
                                  2004 and 2003

<TABLE>
<CAPTION>
                                                           Class A
                                                          Limited          Class A         Class B
                                           General        Partners         Limited         Limited
                                           Partner         Units           Partners        Partner         Total
                                           -------         -----           --------        -------         -----
<S>                                    <C>                 <C>         <C>             <C>             <C>
Partners' capital, December 31, 2002   $       --           484,601    $ 16,376,581    $    261,114    $ 16,637,695

Redemptions                                    --              (140)         (5,856)           --            (5,856)
Net income                                   58,629            --           723,433           7,307         789,369
Distributions declared to partners           58,629)           --        (5,795,900)        (35,000)     (5,889,529)
                                       ------------    ------------    ------------    ------------    ------------

Partners' capital, December 31, 2003           --           484,461      11,298,258         233,421      11,531,679

Redemptions                                    --            (2,671)        (57,946)           --           (57,946)
Net income                                   56,236            --         1,450,389          14,650       1,521,275
Distributions declared to partners          (56,236)           --        (5,567,364)           --        (5,623,600)
                                       ------------    ------------    ------------    ------------    ------------
Partners' capital, December 31, 2004           --           481,790       7,123,337         248,071       7,371,408

Redemptions                                    --              (200)           (738)           --              (738)
Net income                                   42,659            --         1,279,886          12,926       1,335,471
Distributions declared to partners          (42,659)           --        (4,210,116)        (13,125)     (4,265,900)
                                       ------------    ------------    ------------    ------------    ------------

Partners' capital, December 31, 2005   $       --           481,590    $  4,192,369    $    247,872    $  4,440,241
                                       ============    ============    ============    ============    ============
</TABLE>

                 See accompanying notes to financial statements.

                                       18
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                            STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
                                                                 2005            2004            2003
                                                             -------------------------------------------
<S>                                                         <C>             <C>             <C>
Cash flows from operating activities:
Net income                                                  $  1,335,471    $  1,521,275    $    789,369
   Adjustments to reconcile net income to net cash
   provided by operating activities:
       Depreciation                                            5,155,423       8,264,058      11,354,415
       Provision for losses, excluding recoveries                192,275         481,550         333,000
       Proceeds, net of gains on equipment sales               1,386,533       1,809,286       1,759,515
       Recovery of investment in direct finance leases         1,132,464       2,148,602       2,991,903
       Other                                                        --            (8,747)        (70,312)
   Changes in assets and liabilities:
       (Increase) decrease  in accounts receivable, net          (13,770)        120,992         241,513
       Increase in prepaid insurance                             (20,137)           --              --
       Increase (decrease) in accounts payable
           and accrued liabilities                                28,552        (409,865)       (233,778)
       Increase (decrease) in payables to affiliates             133,859         (49,673)        (42,555)
       Decrease in rents received in advance                      (7,129)        (30,467)        (59,822)
                                                             ------------    ------------    ------------
Net cash provided by operating activities                      9,323,541      13,847,011      17,063,248
                                                             -----------    ------------    ------------

Cash flows from financing activities:
   Principal payments on discounted lease rentals             (5,058,580)     (7,992,166)    (11,284,845)
   Redemptions of Class A limited partner units                     (738)        (57,946)         (5,856)
   Distributions to partners                                  (4,472,402)     (5,408,283)     (7,052,977)
                                                            ------------    ------------    ------------
Net cash used in financing activities                         (9,531,720)    (13,458,395)    (18,343,678)
                                                            ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents            (208,179)        388,616      (1,280,430)
Cash and cash equivalents at beginning of year                 1,208,737         820,121       2,100,551
                                                            -----------    ------------     ------------

Cash and cash equivalents at end of year                    $  1,000,558    $  1,208,737    $    820,121
                                                            ============    ============    ============


Supplemental disclosure of cash flow information:
   Interest paid on discounted lease rentals                $    490,045    $    969,149    $  1,619,280
Supplemental disclosure of noncash investing and
   financing activities:
   Discounted lease rental obligation relieved related to
       Early termination of leases                          $     14,777               -    $     48,459
</TABLE>

                 See accompanying notes to financial statements.

                                       19
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                          NOTES TO FINANCIAL STATEMENTS

1.     Organization and Summary of Significant Accounting Policies
       -----------------------------------------------------------

       a)  Organization

       Capital Preferred Yield Fund-IV, L.P. (the "Partnership") was organized
       on December 18, 1995 as a limited partnership under the laws of the State
       of Delaware pursuant to an Agreement of Limited Partnership (the
       "Partnership Agreement"). The Partnership was formed for the purpose of
       acquiring and leasing a diversified portfolio of equipment to
       unaffiliated third parties. The Partnership will continue until December
       31, 2007 unless terminated earlier in accordance with the terms of the
       Partnership Agreement. All equipment owned by the Partnership is expected
       to be sold and the Partnership liquidated in 2006. The Partnership has
       not yet adopted a formal plan of liquidation and, as such, the financial
       statements have been prepared on a going-concern basis. The general
       partner of the Partnership is CAI Equipment Leasing V Corp., a wholly
       owned subsidiary of Mishawaka Leasing Company, Inc. ("MLC").

       The general partner manages the Partnership, including investment of
       funds, purchase and sale of equipment, lease negotiation and other
       administrative duties. The Partnership initially sold 500,000 Class A
       limited partner units to 2,345 investors at a price of $100 per Class A
       limited partner unit.

       MLC is the Class B limited partner. The Class B limited partner
       contributed cash, upon acquisition of equipment, in an amount equal to 1%
       of gross offering proceeds received from the sale of Class A limited
       partner units.

       b)   Use of Estimates

       The preparation of financial statements in conformity with accounting
       principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. For leasing
       entities, this includes the estimate of residual values and impairment,
       as discussed below. Actual results could differ from those estimates.

       c)  Partnership Allocations

       Cash Distributions

       During the Reinvestment Period (as defined in the Partnership Agreement),
       available cash was distributed to the partners as follows:

       First, 1.0% to the general partner and 99.0% to the Class A limited
       partners (on a pari passu basis) until the Class A limited partners
       receive annual, non-compounded cumulative distributions equal to 10.5% of
       their contributed capital.

       Second, 1.0% to the general partner and 99.0% to the Class B limited
       partner (on a pari passu basis) until the Class B limited partner
       receives annual non-compounded distributions equal to 10.5% of its
       contributed capital.

                                       20
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

1.     Organization and Summary of Significant Accounting Policies, continued
       -----------------------------------------------------------

       Partnership Allocations, continued

       Cash Distributions, continued
       ------------------

       Third, any remaining available cash will be reinvested or distributed to
       the partners as specified in the Partnership Agreement.

       After the Reinvestment Period (i.e. the liquidation period as defined in
       the Partnership Agreement), available cash will be distributed to the
       partners as follows:

       First, in accordance with the first and second allocations during the
       Reinvestment Period as described above.

       Second, 99.0% to the Class A limited partners and 1.0% to the general
       partner (on a pari passu basis), until the Class A limited partners
       achieve Payout (as defined in the Partnership Agreement).

       Third, 99.0% to the Class B limited partner, 1.0% to the general partner
       (on a pari passu basis), until the Class B limited partner achieves
       Payout (as defined in the Partnership Agreement).

       Fourth, 99.0% to the Class A and Class B limited partners (as a class)
       (on a pari passi basis) and 1.0% to the general partner, until the Class
       A and Class B limited partners receive cash distributions equal to 170%
       of their capital contributions.

       Thereafter, 90% to the Class A and Class B limited partners (as a class)
       (on a pari passu basis) and 10% to the general partner.

       Federal Income Tax Basis Profits and Losses
       -------------------------------------------

       There are several special allocations that precede the general
       allocations of profits and losses to the partners for federal income tax
       purposes. The most significant special allocations are as follows:

       First, commissions and expenses paid in connection with the sale of Class
       A limited partner units are allocated 1.0% to the general partner and
       99.0% to the Class A limited partners.

       Second, depreciation relating to Partnership equipment and any losses
       resulting from the sale of equipment are generally allocated 1.0% to the
       general partner and 99.0% to the limited partners (shared 99.0%/1.0% by
       the Class A and Class B limited partners, respectively) until the
       cumulative amount of such depreciation and such losses allocated to each
       limited partner equals such limited partner's contributed capital reduced
       by commissions and other expenses paid in connection with the sale of
       Class A limited partner units allocated to such partner. Thereafter, gain
       on sale of equipment, if any, will be allocated to the general partner in
       an amount equal to the sum of depreciation and loss on sale of equipment
       previously allocated to the general partner.

                                       21
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

1.     Organization and Summary of Significant Accounting Policies, continued
       -----------------------------------------------------------

       Partnership Allocations, continued

       Federal Income Tax Basis Profits and Losses, continued
       -------------------------------------------

       Third, notwithstanding anything in the Partnership Agreement to the
       contrary, and before any other allocation is made, items of income and
       gain for the current year (or period) shall be allocated to the general
       partner to the extent of any deficit balance existing in the general
       partner's capital account as of the close of the immediately preceding
       year, in order to restore the balance in the general partner's capital
       account to zero.

       After giving effect to special allocations, profits (as defined in the
       Partnership Agreement) are first allocated in proportion to, and to the
       extent of, any previous losses, in reverse chronological order and
       priority. Any remaining profits are allocated in the same order and
       priority as cash distributions.

       After giving effect to special allocations, losses (as defined in the
       Partnership Agreement) are allocated in proportion to, and to the extent
       of, any previous profits, in reverse chronological order and priority.
       Any remaining losses are allocated 1.0% to the general partner and 99.0%
       to the limited partners (shared 99.0%/1.0% by the Class A and Class B
       limited partners, respectively).

       Financial Reporting - Profits and Losses
       ----------------------------------------

       For financial reporting purposes, net income (loss) is generally
       allocated to the partners in a manner consistent with the allocation of
       cash distributions. Differences between the allocation of net income
       (loss) and cash distributions are considered in the final allocation
       under the Partnership Agreement.

       d)  Impairment of Long-Lived Assets

       In accordance with Statement of Financial Accounting Standards No. 144,
       "Accounting for the Impairment or Disposal of Long-Lived Assets",
       long-lived assets, such as property, plant, and equipment, and purchased
       intangibles subject to amortization, are reviewed for impairment whenever
       events or changes in circumstances indicate that the carrying amount of
       an asset may not be recoverable. Recoverability of assets to be held and
       used is measured by a comparison of the carrying amount of an asset to
       estimated undiscounted future cash flows expected to be generated by the
       asset. If the carrying amount of an asset exceeds its estimated
       undiscounted future cash flows, an impairment charge is recognized for
       the amount by which the carrying amount of the asset exceeds the fair
       value of the asset. Assets to be disposed of are separately presented in
       the balance sheet and reported at the lower of the carrying amount or
       fair value less costs to sell, and are no longer depreciated. The assets
       and liabilities of a disposal group classified as held for sale are
       presented separately in the appropriate asset and liability sections of
       the balance sheet.

                                       22
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

      1.  Organization and Summary of Significant Accounting Policies, continued
          -----------------------------------------------------------

       e)  Lease Accounting

       Statement of Financial Accounting Standards No. 13, "Accounting for
       Leases", requires that a lessor account for each lease by the direct
       finance, sales-type or operating lease method. The Partnership currently
       utilizes the direct finance and operating lease methods for all the
       Partnership's equipment under lease. Direct finance leases are defined as
       those leases that transfer substantially all of the benefits and risks of
       ownership of the equipment to the lessee. Operating leases are defined as
       any lease that is not a capital lease. These are generally used for
       short-term leases of equipment in which the lessee can acquire the use of
       equipment for a fraction of the useful life of the asset. For all types
       of leases, the determination of profit considers the estimated value of
       the equipment at lease termination, referred to as the residual value.
       After the inception of a lease, the Partnership may engage in financing
       of lease receivables on a nonrecourse basis (i.e., "nonrecourse debt" or
       "discounted lease rentals") and/or equipment sale transactions to reduce
       or recover its investment in the equipment.

       The Partnership's accounting methods and their financial reporting
       effects are described below.

       f)  Net Investment in Direct Finance Leases ("DFLs")

       The cost of the equipment, including acquisition fees paid to the general
       partner, is recorded as net investment in DFLs on the accompanying
       balance sheets. Leasing revenue, which is recognized over the term of the
       lease, consists of the excess of lease payments plus the estimated
       residual value over the equipment's cost. Earned income is recognized
       monthly to provide a constant yield and is recorded as direct finance
       lease income on the accompanying statements of operations. Residual
       values are established at lease inception equal to the estimated value to
       be received from the equipment following termination of the initial lease
       as determined by the general partner. In estimating such values, the
       general partner considers all relevant information regarding the
       equipment and the lessee.


                                       23
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

       1. Organization and Summary of Significant Accounting Policies, continued
          -----------------------------------------------------------

       g)  Equipment on Operating Leases ("OLs")

       The cost of equipment, including acquisition fees paid to the general
       partner, is recorded as leased equipment in the accompanying balance
       sheets and is depreciated on a straight-line basis over the lease term to
       an amount equal to the estimated residual value at the lease termination
       date. Leasing revenue consists principally of monthly rents and is
       recognized as operating lease rentals in the accompanying statements of
       operations. Residual values are established at lease inception equal to
       the estimated value to be received from the equipment following
       termination of the initial lease as determined by the general partner. In
       estimating such values, the general partner considers all relevant
       information and circumstances regarding the equipment and the lessee.
       Because revenue, depreciation expense and the resultant profit margin
       before interest expense are recorded on a straight-line basis, and
       interest expense on discounted lease rentals (discussed below) is
       recorded on the interest method, lower returns are realized in the early
       years of the term of an OL and higher returns in later years.

       h)  Nonrecourse Discounting of Future Lease Rentals

       The Partnership may assign the future lease rentals to financial
       institutions, or acquire leases subject to such assignments, at fixed
       interest rates on a nonrecourse basis. In return for such assigned future
       rentals, the Partnership receives the discounted value of the rentals in
       cash. In the event of default by a lessee, the financial institution has
       a first lien on the underlying leased equipment, with no further recourse
       against the Partnership. Cash proceeds from such financings, or the
       assumption of such financings, are recorded as discounted lease rentals
       on the accompanying balance sheets. As lessees make payments to financial
       institutions, leasing revenue and interest expense are recorded.

       i)  Transactions Subsequent to Initial Lease Termination

       After the initial term of equipment under lease expires, the equipment is
       either sold or re-leased to the existing lessee or another third party.
       The remaining net book value of equipment sold is removed and gain or
       loss recorded when equipment is sold. The accounting for re-leased
       equipment is consistent with the accounting described under "Net
       Investment in Direct Financing Leases" and "Equipment on Operating
       Leases" discussed above.

       j)  Income Taxes

       No provision for income taxes has been made in the financial statements
       because taxable income or loss is recorded in the tax return of the
       individual partners.

       k)    Cash Equivalents

       The Partnership considers short-term, highly liquid investments that are
       readily convertible to known amounts of cash to be cash equivalents. Cash
       equivalents of approximately $629,000 and $1,152,000 at December 31, 2005
       and 2004 respectively, are comprised of investments in a mutual fund
       which invests solely in U.S. Government treasury bills having maturities
       of 90 days or less.

                                       24
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

1.     Organization and Summary of Significant Accounting Policies, continued
        -----------------------------------------------------------


       l)    Equipment Held for Sale

       Equipment held for sale, recorded at the lower of cost or market value
       expected to be realized, consists of equipment previously leased to end
       users which has been returned to the Partnership following lease
       expiration.

       m)    Net Income (Loss) Per Class A Limited Partner Unit

       Net income (loss) per Class A limited partner unit is computed by
       dividing the net income (loss) allocated to the Class A limited partners
       by the weighted average number of Class A limited partner units
       outstanding during the period.


2.     Net Investment in Direct Finance Leases
       ---------------------------------------

       The components of the net investment in direct finance leases as of
       December 31, were:

                                                         2005          2004
                                                         ----          ----
       Minimum lease payments receivable            $   938,897    $ 2,215,506
       Estimated residual values                        295,362        646,098
       Unearned income                                  (35,860)      (230,903)
                                                    -----------    -----------
              Total                                 $ 1,198,399    $ 2,630,701
                                                    ============   ===========

3.     Leased Equipment, net
       ---------------------

       The Partnership's investment in equipment on operating leases by major
       classes as of December 31, were:

                                                        2005           2004
                                                   ------------   ------------
       Transportation and industrial equipment     $ 20,814,904   $ 29,505,079
       Computers and peripherals                        884,504      1,145,854
       Office furniture and equipment                   649,818        649,818
       Other                                          3,842,251      6,784,743
                                                    -----------   -------------
                                                     26,191,477     38,085,494
       Accumulated depreciation                     (18,772,418)   (24,191,922)
                                                    -----------   ------------
                                                   $  7,419,059   $ 13,893,572
                                                   ============   ============

       Depreciation expense for 2005, 2004 and 2003 was $5,155,423, $8,264,058
       and $11,354,415, respectively.

                                       25
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

4.     Future Minimum Lease Payments
       -----------------------------

       Future minimum lease payments receivable from non-cancelable leases as of
       December 31, 2005 are as follows:

       Years Ending December 31,      Direct Finance Leases     Operating Leases
       -------------------------      ---------------------     ----------------

               2006                      $   859,474              $  2,760,421
               2007                           79,423                 1,083,845
                                         -----------              ------------
                        Total            $   938,897              $  3,844,266
                                         ===========              ============

5.     Discounted Lease Rentals
       ------------------------

       Discounted lease rentals outstanding at December 31, 2005 bear interest
       at rates primarily ranging between 6% and 10%. Aggregate maturities of
       such nonrecourse obligations are:

       Years Ending December 31,
       -------------------------

                  2006                                $ 3,363,880
                  2007                                  1,108,442
                                                      -----------
                                                      $ 4,472,322

6.     Transactions With the General Partner and Affiliates
       ----------------------------------------------------

       Origination Fee and Evaluation Fee
       ----------------------------------

       The general partner earns a fee equal to 3.5% of the purchase price of
       equipment acquired by the Partnership (up to a maximum cumulative amount
       as specified in the Partnership Agreement), 1.5% of which represents
       compensation for selecting, negotiating and consummating the acquisition
       of the equipment and 2% of which represents reimbursement for services
       rendered in connection with evaluating the suitability of the equipment
       and the creditworthiness of the lessees. No origination and evaluation
       fees were paid during 2005 or 2004.

       Management Fees to General Partner
       ----------------------------------

       The general partner earns management fees for services performed in
       connection with managing the Partnership's equipment equal to 2% of gross
       rentals received as permitted under terms of the Partnership Agreement.
       The general partner earned approximately $180,000, $267,000 and $355,000
       of management fees during 2005, 2004, and 2003, respectively.

                                       26
<PAGE>
                      Capital Preferred Yield Fund-IV, L.P.
                    NOTES TO FINANCIAL STATEMENTS, continued

6.     Transactions With the General Partner and Affiliates (continued)
       ----------------------------------------------------

       Direct Services from General Partner
       ------------------------------------

       The general partner and its affiliates provide accounting, investor
       relations, billing, collecting, asset management, and other
       administrative services to the Partnership. The Partnership reimburses
       the general partner for these services performed on its behalf as
       permitted under the terms of the Partnership Agreement. The Partnership
       recorded approximately $142,500, $327,000 and $280,000 of direct services
       from the general partner during 2005, 2004 and 2003, respectively.

       Payables to Affiliates
       ----------------------

       Payables to affiliates of approximately $250,500 and $116,500 at December
       31, 2005 and 2004, respectively, consist of $11,000 for direct services
       from general partner, $13,000 for management fees to general partner, and
       $226,500 for reimbursable general and administrative expenses in 2005
       which includes accruals for payments due for profit sharing proceeds and
       property taxes which will be paid in the first quarter of 2006; and
       $26,000 for direct services from general partner, $12,000 for management
       fees to general partner, and $78,500 for reimbursable general and
       administrative expenses in 2004.

7.     Remarketing Agreement
       ---------------------

       The Partnership has entered into remarketing agreements with an
       unaffiliated third party, whereby that party provides remarketing
       services to the Partnership in exchange for profit sharing once the
       Partnership has reached certain thresholds, usually relating to rents
       received on re-marketed or sold equipment after the expiration of the
       initial lease term. During the year ended December 31, 2005, the
       Partnership reached its first threshold and was required to begin paying
       profit sharing payments on the remarketing agreements. The profit sharing
       payments incurred during the year ended December 31, 2005 were $465,447
       and are recorded in the accompanying statements of opeartions as
       remarketing sharing.

8.     Concentration of Credit Risk
       ----------------------------

       The majority of the Partnership's equipment under lease was leased to
       investment grade companies. Pursuant to the Partnership Agreement, an
       investment grade lessee is a company (i) with a net worth in excess of
       $100,000,000 (and no debt issues that are rated), or (ii) with a credit
       rating of not less than Baa as determined by Moody's Investor Services,
       Inc. or comparable credit rating as determined by another recognized
       credit rating service; or (iii) a lessee, all of whose lease payments
       have been unconditionally guaranteed or supported by a letter of credit
       issued by a company meeting one of the above requirements. The
       Partnership limits its credit risk through selective use of nonrecourse
       discounting of future lease rentals as discussed above.

       The Partnership leases equipment to a significant number of lessees. One
       lessee accounted for approximately 25% of total revenue during 2005 and
       20% in 2004.

       The Partnership's cash balance is maintained with a high credit quality
       financial institution. At times, such balances may be in excess of the
       Federal Deposit Insurance Company (FDIC) insurance limit due to the
       receipt of lockbox amounts that have not cleared the presentment bank
       (generally for less than two days). As the funds become available, they
       are invested in a money market mutual fund.

                                       27
<PAGE>



            Report of Independent Registered Public Accounting Firm



The Partners
Capital Preferred Yield Fund-IV, L.P.:

Under date of March 10, 2006, we reported on the balance sheets of Capital
Preferred Yield Fund-IV, L.P. as of December 31, 2005 and 2004, and the related
statements of operations, partners' capital, and cash flows for each of the
years in the three-year period ended December 31, 2005, which are included in
the Partnership's annual report on Form 10-K for the year ended December 31,
2005. In connection with our audits of the aforementioned financial statements,
we also audited the related financial statement Schedule II - Valuation and
Qualifying Accounts. This financial statement schedule is the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.



                                    /s/KPMG LLP
                                    -----------
                                       KPMG LLP

Denver, Colorado
March 10, 2006


                                       28
<PAGE>
                      CAPITAL PREFERRED YIELD FUND-IV, L.P.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended December 31, 2005, 2004 and 2003

<TABLE>
<CAPTION>
       COLUMN A             COLUMN B           COLUMN C              COLUMN D      COLUMN E
---------------------      ----------      ----------------      --------------    --------
                           Balance at         Additions                             Balance
                           Beginning      Charged(Reversed)                         at End
Classification             of Year          to Expenses          Deductions (1)     of Year
--------------             ----------     -----------------      --------------    ---------

<S>                        <C>              <C>                    <C>              <C>
    2005
    ----
Allowance for losses:
   Accounts receivable     $  22,019        $     300              $  3,082         $ 19,237

    2004
    ----
Allowance for losses:
  Accounts receivable      $  16,607        $   0,353              $  4,941         $ 22,019


   2003
   ----
Allowance for losses:
  Accounts receivable      $ 267,443        $(180,000)             $ 70,836         $ 16,607
</TABLE>


    (1) Principally charge-offs against the established allowances.



    See accompanying report of independent registered public accounting firm.

                                       29
<PAGE>
Item 9.  Changes in and Disagreements with Accountants on Accounting and
         ---------------------------------------------------------------
         Financial Disclosure
         --------------------

None.

Item 9A.  Controls and Procedures
          -----------------------

Within 90 days prior to the date of this annual report, an evaluation was
performed under the supervision and with the participation of the general
partner's management, including the President and Director, and the Principal
Financial Officer, of the effectiveness of the design and operation of the
Partnership's disclosure controls and procedures. Based on that evaluation, the
general partner's management, including the President and Director, and the
Principal Financial Officer, concluded that the Partnership's disclosure
controls and procedures are effective in timely alerting them to material
information relating to the Partnership required to be included in the
Partnership's periodic SEC reports. There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect internal controls subsequent to the date of their evaluation.

Item 9B.  Other Information
          -----------------

No form 8-Ks were filed during the year ended December 31, 2005.

Item 10.  Directors and Executive Officers of the Partnership
          ---------------------------------------------------

The Partnership has no officers and directors. The general partner manages and
controls the affairs of the Partnership and has general responsibility and
authority in all matters affecting its business. Information concerning the
directors and executive officers of the general partner is as follows:

                          CAI Equipment Leasing V Corp.

         Name                       Positions Held
         ----                       --------------
     John F. Olmstead               President and Director
     Mary M. Ebele                  Principal Financial Officer

John F. Olmstead, age 61, has been President of Mishawaka Leasing Company, Inc.
since its formation in September 2000. He was Senior Vice President of CAII from
December 1988, until June 2000. He has served as Chairman of the Board for
Neo-kam Industries, Inc., Matchless Metal Polish Company, Inc. and ACL, Inc.
since 1983. He has over 30 years of experience holding various positions of
responsibility in the leasing industry. Mr. Olmstead holds a Bachelor of Science
degree from Indiana University and a Juris Doctorate degree from Indiana Law
School.

Mary M. Ebele, age 43, has been with Mishawaka Leasing Co. as a Lease Accountant
since its formation in September 2000. She worked in a similar capacity at CAI
from August 1999 until November 2000. She assumed the position of Principal
Financial Officer in December 2004. She holds a Bachelor of Arts degree from the
State University of New York at Potsdam and is currently pursuing a second
degree from Metro State College in Denver, Colorado.

                                       30
<PAGE>
Item 11.  Executive Compensation
          ----------------------

No compensation was paid by the Partnership to any officers or directors of the
general partner. See Item 13 of this Report, "Certain Relationships and Related
Transactions" for a description of the compensation and fees paid to the general
partner and its affiliates by the Partnership during 2005.

Item 12. Security Ownership of Certain Beneficial Owners and Management
         --------------------------------------------------------------

     (a) As of the date hereof, no person is known by the Partnership to be the
         beneficial owner of more than 5% of the Class A limited partner units
         of the Partnership. The Partnership has no directors or officers, and
         neither the general partner nor the Class B limited partner of the
         Partnership own any Class A limited partner units.

         MLC is the Class B limited partner.

         CAI Equipment Leasing V Corp. is the general partner.

         The names and addresses of the general partner and the Class B limited
         partner are as follows:

         General Partner

         CAI Equipment Leasing V Corp.
         7901 Southpark Plaza
         Suite 107
         Littleton, Colorado 80120

         Class B Limited Partner
         -----------------------

         Mishawaka Leasing Company, Inc.
         7901 Southpark Plaza
         Suite 107
         Littleton, Colorado 80120

     (b) No directors or officers of the general partner or the Class B limited
         partner owned any Class A limited partner units as of December 31,
         2005.

     (c) The Partnership knows of no arrangements, the operation of which may at
         a subsequent date result in a change in control of the Partnership.

Item 13. Certain Relationships and Related Transactions
         ----------------------------------------------

The general partner and its affiliates receive certain types of compensation,
fees or other distributions in connection with the operations of the
Partnership.

Following is a summary of the amounts paid or payable to the general partner and
its affiliates during 2005:

                                       31
<PAGE>
                        Acquisition and Operating Stages


Acquisition Fee and Acquisition Cost Reimbursement
--------------------------------------------------

The general partner receives a fee equal to 3.5% of the purchase price of
equipment sold to the Partnership, 1.5% of which represents compensation for
selecting, negotiating and consummating the acquisition of the equipment and 2%
of which represents reimbursement for services rendered in connection with
evaluating the suitability of the equipment and the creditworthiness of lessees.
There were no origination and evaluation fees in 2005.


Management Fees
---------------

The general partner receives management fees as compensation for services
rendered in connection with managing the Partnership's equipment equal to 2% of
gross rentals received. Such fees totaled $179,974 for 2005 and $266,858 for
2004.


Accountable General and Administrative Expenses
-----------------------------------------------

The general partner is entitled to reimbursement of certain expenses paid on
behalf of the Partnership that are incurred in connection with the Partnership's
operations. Such reimbursable expenses totaled $142,490 during 2005 and $327,146
during 2004.

Additionally, the general partner is allocated 1% of Partnership cash
distributions and net income relating to its general partner interest in the
Partnership. Distributions and net income allocated to the general partner
totaled $42,659 for 2005 and $56,236 for 2004. Net income allocated to the Class
B limited partner totaled $12,926 during 2005 and $14,650 during 2004.

Item 14. Principal Accounting Fees and Services
         --------------------------------------

Audit Fees
----------

Fees paid to the principal accountant for the audit of the annual financial
statements and review of financial statements included in Form 10-Q totaled
$81,000 in 2005 and $63,750 in 2004.

Fees paid to the principal accountant for tax compliance, tax advice, and tax
planning totaled $47,548 for 2005 and $54,750 for 2004.

                                       32
<PAGE>
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
         ---------------------------------------------------------------

         (a)
         and
         (d) The following documents are filed as part of this Report:

               1.   Financial Statements: (Incorporated by reference to Item 8
                    of this Report, "Financial Statements and Supplementary
                    Data").

          (b)  The Partnership did not file any reports on Form 8-K during the
               quarter ended December 31, 2005.

          (c)  Exhibits required to be filed.

               Exhibit
               Number                             Exhibit Name

               4.1* Capital Preferred Yield Fund-IV Limited Partnership
                    Agreement

               4.2* First Amendment to Limited Partnership Agreement dated
                    November 23, 1996

               4.3* Amended and Restated Agreement of Limited Partnership of
                    Capital Preferred Yield Fund-IV, L.P.

               99.1 Certification by John F. Olmstead pursuant to 18 U.S.C.
                    Section 1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.

               99.2 Certification by Mary M. Ebele pursuant to 18 U.S.C. Section
                    1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.



               *    Not filed herewith. In accordance with Rule 12b-32 of the
                    General Rules and Regulations under the Securities Exchange
                    Act of 1934, reference is made to the document previously
                    filed with the Commission.


                                       33
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:  March 30, 2006             Capital Preferred Yield Fund-IV, L.P.

                                   By: CAI Equipment Leasing V Corporation

                                   By: /s/John F. Olmstead
                                       -------------------------------------
                                       John F. Olmstead
                                       President and Director

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 general partner
of the Partnership and in the capacities indicated on March 30, 2006.

Signature                                            Title
---------                                            -----

/s/John F. Olmstead
-------------------
John F. Olmstead                             President and Director




                                       34


<PAGE>
                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated:  March 30, 2006             Capital Preferred Yield Fund-IV, L.P.

                                   By: CAI Equipment Leasing V Corporation

                                   By: /s/Mary M. Ebele
                                       -------------------------------------
                                       Mary M. Ebele
                                       Principal Financial 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 general partner
of the Partnership and in the capacities indicated on March 30, 2006.

Signature                                            Title
---------                                            -----

/s/Mary M. Ebele
-----------------
Mary M. Ebele                              Principal Financial Officer



                                       35
<PAGE>
CERTIFICATION

I, John F. Olmstead, President and Director of CAI Equipment Leasing IV Corp.,
the General Partner of Capital Preferred Yield Fund-III, L.P. (the
"Partnership"), certify that:

     1. I have reviewed this report on Form 10-K of the Partnership;

     2. Based on my knowledge, this report does not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Partnership as
of, and for, the periods presented in this report;

     4. The Partnership's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have:

               a. Designed such disclosure controls and procedures, or caused
          such disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          Partnership, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report in being prepared;

               b. Evaluated the effectiveness of the Partnership's disclosure
          controls and procedures and presented in this report our conclusions
          about the effectiveness of the disclosure controls and procedures, as
          of the end of the period covered by this report based on such
          evaluation; and

               c. Disclosed in this report any change in the Partnership's
          internal control over financial reporting that occurred during the
          Partnership's most recent fiscal quarter (the Partnership's fourth
          fiscal quarter in the case of an annual report) that has materially
          affected, or is reasonably likely to materially affect, the
          Partnership's internal control over financial reporting; and

     5. The Partnership's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the Partnership's auditors and the audit committee of the Partnership's board of
directors (or persons performing the equivalent functions):

               a. All significant deficiencies and material weaknesses in the
          design or operation of internal control over financial reporting which
          are reasonably likely to adversely affect the Partnership's ability to
          record, process, summarize and report financial information; and

               b. Any fraud, whether or not material, that involves management
          or other employees who have a significant role in the Partnership's
          internal controls over financial reporting.

                                      /s/John F. Olmstead
                                      -------------------
                                      President and Director
                                  (Principal Executive Officer)
                                          March 30, 2006

                                       36

<PAGE>
CERTIFICATION

I, Mary M. Ebele, Principal Financial Officer of CAI Equipment Leasing IV Corp.,
the General Partner of Capital Preferred Yield Fund-III, L.P. (the
"Partnership"), certify that:

     1. I have reviewed this report on Form 10-K of the Partnership;

     2. Based on my knowledge, this report does not contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Partnership as
of, and for, the periods presented in this report;

     4. The Partnership's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Partnership and have:

          a. Designed such disclosure controls and procedures, or caused such
     disclosure controls and procedures to be designed under our supervision, to
     ensure that material information relating to the Partnership, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report in being
     prepared;

          b. Evaluated the effectiveness of the Partnership's disclosure
     controls and procedures and presented in this report our conclusions about
     the effectiveness of the disclosure controls and procedures, as of the end
     of the period covered by this report based on such evaluation; and

          c. Disclosed in this report any change in the Partnership's internal
     control over financial reporting that occurred during the Partnership's
     most recent fiscal quarter (the Partnership's fourth fiscal quarter in the
     case of an annual report) that has materially affected, or is reasonably
     likely to materially affect, the Partnership's internal control over
     financial reporting; and

     5. The Partnership's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the Partnership's auditors and the audit committee of the Partnership's board of
directors (or persons performing the equivalent functions):

          a. All significant deficiencies and material weaknesses in the design
     or operation of internal control over financial reporting which are
     reasonably likely to adversely affect the Partnership's ability to record,
     process, summarize and report financial information; and

          b. Any fraud, whether or not material, that involves management or
     other employees who have a significant role in the Partnership's internal
     controls over financial reporting.

                                            /s/ Mary M. Ebele
                                            -----------------
                                                Mary M. Ebele
                                         Principal Financial Officer
                                                March 30, 2006

                                       37