<PAGE>

                          AMERICAN INCOME PARTNERS IV


                American Income Partners IV-A Limited Partnership

                Annual Report to the Partners, December 31, 1996
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                     INDEX TO ANNUAL REPORT TO THE PARTNERS


                                                                           PAGE

SELECTED FINANCIAL DATA                                                      2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                         3-5

FINANCIAL STATEMENTS:

   Report of Independent Auditors                                             6

   Statement of Financial Position at December 31, 1995                       7

   Statement of Changes in Net Assets in Liquidation for the 
   Period October 1, 1996 to December 31, 1996                                8

   Statement of Operations for the Period January 1, 1996 to 
   September 30, 1996 and for the Years Ended 
   December 31, 1995 and 1994                                                 9

   Statement of Changes in Partners' Capital for the Period 
   January 1, 1996 to September 30, 1996 and for the Years Ended 
   December 31, 1995 and 1994                                                10

   Statement of Cash Flows for the Period January 1, 1996 
   to September 30, 1996
   and for the Years Ended December 31, 1995 and 1994                        11

   Notes to the Financial Statements                                      12-21

ADDITIONAL FINANCIAL INFORMATION:

   Schedule of Excess (Deficiency) of Total Cash Generated to 
   Cost of Equipment Disposed                                                23

   Statement of Cash and Distributable Cash from Operations, 
   Sales and Refinancings                                                    24

   Schedule of Costs Reimbursed to the Managing General Partner
   and its Affiliates as Required by Section 10.4 of the Amended
   and Restated Agreement and Certificate of Limited Partnership             25


                                       1
<PAGE>


                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                             SELECTED FINANCIAL DATA

     The following data should be read in conjunction with Management's
     Discussion and Analysis of Financial Condition and Results of Operations
     and the financial statements. The discussion of the 1996 results, presented
     below, incorporates the nine month operating period ended September 30,
     1996 and the three month liquidation period ended December 31, 1996.

     For each of the five years in the period ended December 31, 1996:
<TABLE>
<CAPTION>

     SUMMARY OF OPERATIONS        1996        1995        1994        1993          1992
<S>                    <C>            <C>         <C>         <C>         <C>         

     Lease revenue          $   1,040,415  $1,273,402  $1,721,134  $3,078,474  $  3,948,379

     Net income (loss)      $   1,004,807  $  878,377  $1,210,140  $  723,846  $   (280,774)

     Per Unit:
     Net income (loss)      $        1.06  $     0.93  $     1.28  $     0.76  $      (0.30)

     Cash distributions     $        4.69  $     1.50  $     2.00  $     3.75  $       3.75

     FINANCIAL POSITION

     Total assets                     -    $4,293,196  $5,117,645  $6,464,064  $ 10,469,832

     Total long-term
     obligations                      -    $   85,938  $  141,872  $  365,598  $  1,474,464

     Partners' capital                -    $3,927,765  $4,473,024  $5,161,064  $  7,996,308

</TABLE>


                                       2
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR
          ENDED DECEMBER 31, 1995 AND THE YEAR ENDED DECEMBER 31, 1995
                  COMPARED TO THE YEAR ENDED DECEMBER 31, 1994

     Results of Operations and Liquidity and Capital Resources

     American Income Partners IV-A Limited Partnership (the Partnership) was
     established in 1988 as a direct-participation equipment leasing program.
     The Partnership's principal purpose was (i) to acquire and lease a
     diversified portfolio of capital equipment to third-party lessees and (ii)
     to distribute the net cash flow realized from the Partnership's business
     operations to its Partners. The Partnership was capitalized with equity
     contributions of $23,490,000 from its Recognized Owners and $1,000 from its
     Managing General Partner. Following its inception, the Partnership acquired
     a diversified pool of capital equipment at an aggregate cost of
     $36,098,387, a significant portion of which was financed by third-party
     banks or other institutional lenders. On September 30, 1996, the
     Partnership sold substantially all of its assets and thereafter wound up
     its operations. The Partnership was dissolved on December 31, 1996.

     Organized as a limited-life entity, the Partnership was anticipated to be
     dissolved within approximately seven years of its formation. A significant
     portion of the Partnership's equipment assets, representing 73% of its
     original equipment portfolio, was sold in the ordinary course of business
     prior to September 30, 1996. On September 30, 1996, the remainder of the
     Partnership's equipment portfolio was sold to RSL Finance Limited
     Partnership II (the Buyer). Accordingly, the financial statements
     accompanying this discussion were prepared using the liquidation basis of
     accounting for the period October 1, 1996 through December 31, 1996. The
     Statement of Changes in Net Assets in Liquidation reflects the liquidation
     of assets during that period.

     A comparison of current and prior years' financial results is not presented
     because it is not considered meaningful due the dissolution of the
     Partnership and the liquidation of its assets.

     Prior to its dissolution, the Partnership's principal sources of revenue
     consisted of rental income from equipment leases and sales proceeds
     generated from the disposition of its equipment assets. Rental income was
     used first to extinguish indebtedness and second to pay the Partnership's
     management fees and operating expenses. Net cash flow from all sources,
     after satisfaction of debt service, management fees and operating expenses,
     was used to pay cash distributions to the Partners. Over its lifetime, the
     Partnership paid aggregate cash distributions of $24,037,997. In accordance
     with the Partnership's Amended and Restated Agreement and Certificate of
     Limited Partnership, the Partnership's Recognized Owners were paid 99% of
     such cash distributions, or $23,797,617 ($25.33 per unit) and the General
     Partners were paid 1% of such distributions, or $240,380. At December 31,
     1996, the Partnership had a contingency reserve balance of $478,963. These
     funds will be used to satisfy any expenses of the Partnership which may
     arise after its dissolution date. To the extent that these funds are not
     utilized for such purposes, they will be paid to the Partners according to
     their respective allocation percentages, 99%, or $474,173, representing
     $0.50 per unit, to the Recognized Owners and 1%, or $4,790, to the General
     Partners.


                                       3
<PAGE>

     During the second quarter of 1996, the Partnership engaged an investment
     adviser to solicit potential buyers for the Partnership's remaining
     equipment assets and associated lease contracts. The remarketing effort was
     undertaken jointly by 15 individual equipment leasing programs, consisting
     of the Partnership and 14 affiliated partnerships (the Other Affected
     Partnerships). Thirteen of the programs, including the Partnership, sold
     all of their equipment assets (the Liquidated Programs); and two programs
     sold only their proportionate ownership interests in certain assets owned
     jointly with one or more of the Liquidated Programs (collectively, the Sale
     Assets). Substantially all of the Partnership's equipment assets of
     material value represented partial ownership interests whereby the
     Partnership owned less than a 100% interest in the equipment it sold. The
     remaining interests in such assets were owned by one or more of the Other
     Affected Partnerships.

     On September 30, 1996, the Partnership and each of the Other Affected
     Partnerships executed individual purchase and sale agreements with the
     Buyer for all of the Sale Assets, except for one McDonnell Douglas MD-82
     aircraft leased to Northwest Airlines, Inc. (the NWA Aircraft), hereafter
     the Sales Assets, as Revised. The NWA Aircraft, in which the Partnership
     owned a proportionate interest of 18%, was purchased by the lessee pursuant
     to a separate negotiation. The Partnership realized $1,229,840 of net sale
     proceeds for the Sale Assets, as Revised and $2,347,394 for the NWA
     Aircraft. The latter included early termination rental payments of $292,524
     from the lessee. At the date of sale, the Sale Assets, as Revised and the
     NWA Aircraft had net book values of $839,271 and $2,195,994, respectively.
     In aggregate, the Partnership and the Other Affected Partnerships realized,
     prior to transaction costs, $32,997,000 for all of the Sale Assets, as
     Revised and $13,200,000 for the NWA Aircraft. Net proceeds from the NWA
     Aircraft were allocated to the owners of the NWA Aircraft according to
     their respective percentage ownership interests. Net proceeds from the Sale
     Assets, as Revised were allocated to the Partnership and to each of the
     Other Affected Partnerships based upon an apportionment of the sales price
     among all equipment comprising the Sale Assets, as Revised according to
     each asset's estimated re-sale value, as determined by an independent
     appraiser. For financial reporting purposes, the Partnership recognized a
     net gain of $249,445 in connection with both sale transactions. In
     addition, the Partnership recognized a net gain of $40,692 during the nine
     months ended September 30, 1996 from the sale of other equipment, all of
     which had been fully depreciated for financial reporting purposes at the
     date of sale.

     For the year ended December 31, 1996, the Partnership recognized lease
     revenue of $1,040,415. In addition, the Partnership earned interest income
     from temporary cash investments. Operating expenses consisted principally
     of administrative charges, professional service costs, such as legal and
     accounting fees, as well as printing, distribution, and remarketing
     expenses, including equipment storage and repairs and maintenance costs.
     Operating costs for 1996 include all identified costs anticipated to be
     incurred in connection with the Partnership's wind-up and dissolution.

     On October 10, 1996, the Managing General Partner entered into a Cross
     Partnership Agreement (the Agreement) with the general partners of certain
     of the Other Affected Partnerships participating in the sales transactions
     described above. Pursuant to the Agreement, the Partnership and each of the
     other partnerships agreed to set aside a contingency reserve for future
     liabilities. The Agreement provides that obligations of any individual
     partnership which are not associated with the sales transactions will
     directly reduce that partnership's reserve balance, whereas costs
     pertaining to the sales transactions will be allocated against the reserve
     balances of the Partnership and each of the other partnerships on a
     proportionate basis. If the reserve balance of the Partnership is depleted
     to zero, the reserve balances contributed by the other partnerships will be
     debited on a proportionate basis to cover the deficit. If the reserve
     balances of any one of the other partnerships is depleted to zero, the
     reserve balance of the Partnership and any other partnerships having a


                                       4
<PAGE>

     positive reserve balance shall be debited on a proportionate basis to cover
     the deficit. Upon termination of the Agreement, any remaining monies will
     be distributed to the partners of those partnerships with positive reserve
     balances. At December 31, 1996, the Partnership had a contingency reserve
     balance of $478,963. To the extent that this contingency reserve is not
     necessary to satisfy any unforeseen liabilities of the Partnership, it will
     be remitted to the Partners.

     The dissolution of the Partnership was recorded at the Office of the
     Secretary of State of the Commonwealth of Massachusetts on December 31,
     1996. The Partnership's business operations were concluded on that date.
     Immediately following the filing of the Partnership's 1996 Form 10-K, the
     Managing General Partner of the Partnership will file Form 15,
     Certification and Notice of Termination of Registration under Section 12(g)
     of the Securities Exchange Act of 1934 or Suspension of Duty to File
     Reports Under Sections 13 and 15(d) of the Securities Exchange Act of 1934,
     with the United States Securities and Exchange Commission.


                                       5
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

     To the Partners of American Income Partners IV-A Limited Partnership:

     We have audited the accompanying statement of financial position of
     American Income Partners IV-A Limited Partnership as of December 31, 1995,
     and the related statements of operations, changes in partners' capital, and
     cash flows for each of the two years ended December 31, 1995 and for the
     period from January 1, 1996 to September 30, 1996. In addition, we have
     audited the statement of changes in net assets in liquidation for the
     period from October 1, 1996 to December 31, 1996. 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 generally accepted auditing
     standards. 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.

     As described in Note 1 to the financial statements, the Managing General
     Partner of American Income Partners IV-A Limited Partnership approved a
     plan of liquidation on September 30, 1996, and the Partnership commenced
     liquidation shortly thereafter. As a result, the partnership has changed
     its basis of accounting for periods subsequent to September 30, 1996 from
     the going-concern basis to a liquidation basis. The liquidation was
     completed and the Partnership was dissolved on December 31, 1996.

     In our opinion, the financial statements referred to above present fairly,
     in all material respects, the financial position of American Income
     Partners IV-A Limited Partnership as of December 31, 1995, the results of
     its operations and its cash flows for each of the two years ended December
     31, 1995, and for the period from January 1, 1996 to September 30, 1996,
     and the changes in its net assets in liquidation for the period from
     October 1, 1996 to December 31, 1996, in conformity with generally accepted
     accounting principles applied on the bases described in the preceding
     paragraph.

     Our audits were conducted for the purpose of forming an opinion on the
     basic financial statements taken as a whole. The Additional Financial
     Information identified in the Index to Annual Report to the Partners is
     presented for purposes of additional analysis and is not a required part of
     the basic financial statements. Such information has been subjected to the
     auditing procedures applied in our audits of the basic financial statements
     and, in our opinion, is fairly stated in all material respects in relation
     to the basic financial statements taken as a whole.


                                                               ERNST & YOUNG LLP


     Boston, Massachusetts 
     March 7, 1997


                                       6
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                         STATEMENT OF FINANCIAL POSITION
                                DECEMBER 31, 1995



                                     ASSETS

ASSETS:
   Cash and cash equivalents                                    $       861,146
   Rents receivable, net of allowance for 
   doubtful accounts of $25,000                                          73,373
   Accounts receivable-affiliate                                        127,841
   Equipment at cost, net of accumulated 
   depreciation of $7,678,349                                         3,230,836
                                                                ---------------

         Total assets                                           $     4,293,196
                                                                ===============

                        LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
   Notes payable                                                $        85,938
   Accrued interest                                                       1,086
   Accrued liabilities                                                   20,000
   Accrued liabilities-affiliate                                         12,018
   Deferred rental income                                                 9,116
   Cash distributions payable to partners                               237,273
                                                                ---------------

         Total liabilities                                              365,431
                                                                ---------------

PARTNERS' CAPITAL (DEFICIT):
   General Partners                                                    (167,081)
   Limited Partnership Interests (939,600 Units, 
   initial purchase price of $25 each)                                4,094,846
                                                                ---------------

         Total partners' capital                                      3,927,765
                                                                ---------------

         Total liabilities and partners' capital                $     4,293,196
                                                                ===============


     The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
               FOR THE PERIOD OCTOBER 1, 1996 TO DECEMBER 31, 1996

INTEREST INCOME                                                 $        10,209

OPERATING EXPENSES-AFFILIATE                                            (14,431)

LIQUIDATING DISTRIBUTION                                               (478,963)
                                                                ---------------

NET DECREASE IN NET ASSETS IN LIQUIDATION DURING THE PERIOD            (483,185)

NET ASSETS IN LIQUIDATION, BEGINNING OF PERIOD                          483,185
                                                                ---------------

NET ASSETS IN LIQUIDATION, END OF PERIOD                        $             -
                                                                ===============


     The accompanying notes are an integral part of these financial statements.


                                       8
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                             STATEMENT OF OPERATIONS
              FOR THE PERIOD JANUARY 1, 1996 TO SEPTEMBER 30, 1996
               AND FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994



                                           FOR THE PERIOD
                                           JANUARY 1, 1996   FOR THE YEARS ENDED
                                           TO SEPTEMBER 30,     DECEMBER 31,
                                                 1996         1995        1994

INCOME:
   Lease revenue                              $1,040,415  $1,273,402  $1,721,134
   Interest income                                44,474      53,473      56,681
   Gain on sale of equipment                     290,137      80,698     322,414
                                              ----------  ----------  ----------

         Total income                          1,375,026   1,407,573   2,100,229
                                              ----------  ----------  ----------

EXPENSES:
   Depreciation                                  195,571     378,245     720,759
   Interest expense                                3,413       8,274      22,299
   Equipment management fees-affiliate            52,021      63,670      86,057
   Operating expenses-affiliate                  114,992      79,007      60,974
                                              ----------  ----------  ----------

         Total expenses                          365,997     529,196     890,089
                                              ----------  ----------  ----------

NET INCOME                                    $1,009,029  $  878,377  $1,210,140
                                              ==========  ==========  ==========

NET INCOME PER LIMITED PARTNERSHIP UNIT       $     1.06  $     0.93  $     1.28
                                              ==========  ==========  ==========

CASH DISTRIBUTIONS DECLARED PER
LIMITED PARTNERSHIP UNIT                      $     4.69  $     1.50  $     2.00
                                              ==========  ==========  ==========


     The accompanying notes are an integral part of these financial statements.


                                       9
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
              FOR THE PERIOD JANUARY 1, 1996 TO SEPTEMBER 30, 1996
               AND FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994


                                 
                                  GENERAL 
                                  PARTNERS    RECOGNIZED OWNERS
                                   AMOUNT     UNITS      AMOUNT         TOTAL

BALANCE, DECEMBER 31, 1993       $(154,748)  939,600  $ 5,315,812   $ 5,161,064

   Net income-1994                  12,101         -    1,198,039     1,210,140

   Cash distributions declared     (18,982)        -   (1,879,198)   (1,898,180)
                                 ---------   -------  -----------   -----------

BALANCE, DECEMBER 31, 1994        (161,629)  939,600    4,634,653     4,473,024

   Net income-1995                   8,784         -      869,593       878,377

   Cash distributions declared     (14,236)        -   (1,409,400)   (1,423,636)
                                 ---------   -------  -----------   -----------

BALANCE, DECEMBER 31, 1995        (167,081)  939,600    4,094,846     3,927,765

   Net income for the period
   January  1, 1996
   to September 30, 1996            10,090         -      998,939     1,009,029

   Cash distributions declared     (44,536)        -   (4,409,073)   (4,453,609)
                                 ---------   -------  -----------   -----------

BALANCE, SEPTEMBER 30, 1996      $(201,527)  939,600  $   684,712   $   483,185
                                 =========   =======  ===========   ===========


     The accompanying notes are an integral part of these financial statements.


                                       10
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                             STATEMENT OF CASH FLOWS
              FOR THE PERIOD JANUARY 1, 1996 TO SEPTEMBER 30, 1996
                 AND FOR YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
                                                      FOR THE PERIOD
                                                     JANUARY 1, 1996    FOR THE YEARS ENDED 
                                                     TO SEPTEMBER 30,     DECEMBER 31,
                                                            1996        1995          1994
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
<S>                                                       <C>           <C>           <C>    
   Net income                                         $ 1,009,029   $   878,377   $ 1,210,140
   Adjustments to reconcile net income to cash
   from operating
   activities-
     Depreciation                                         195,571       378,245       720,759
     Gain on sale of equipment                           (290,137)      (80,698)     (322,414)
     Decrease in allowance for doubtful accounts          (15,000)            -       (25,000)
   Changes in assets and liabilities-
       Decrease (increase) in-
         Rents receivable                                  88,373        28,231        (5,189)
         Due from Buyer                                   (21,367)            -             -
         Accounts receivable-affiliate                   (235,088)       21,021        77,568
       Increase (decrease) in-
         Accrued interest                                    (354)         (592)       (3,331)
         Accrued liabilities                               37,341         4,500         2,000
         Accrued liabilities-affiliate                     10,599         6,800         4,841
         Deferred rental income                            (9,116)        3,308       (22,935)
                                                      -----------   -----------   -----------

              Net cash from operating activities          769,851     1,239,192     1,636,439
                                                      -----------   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Principal payments from direct financing leases              -             -       201,035
   Proceeds from equipment sales                           40,692        89,476       332,254
                                                      -----------   -----------   -----------

              Net cash from investing activities           40,692        89,476       533,289
                                                      -----------   -----------   -----------

CASH FLOWS USED IN FINANCING ACTIVITIES:
   Principal payments-notes payable                       (25,150)      (55,934)     (361,226)
   Distributions paid                                    (711,819)   (1,660,908)   (2,313,408)
                                                      -----------   -----------   -----------

              Net cash used in financing activities      (736,969)   (1,716,842)   (2,674,634)
                                                      -----------   -----------   -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       73,574      (388,174)     (504,906)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD            861,146     1,249,320     1,754,226
                                                      -----------   -----------   -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD              $   934,720   $   861,146   $ 1,249,320
                                                      ===========   ===========   ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for interest           $     3,767   $     8,866   $    25,630
                                                      ===========   ===========   ===========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: 
 As discussed in Notes 1 and 4, the Partnership entered into a sale transaction 
 to dispose of its equipment portfolio. This transaction was closed on September
 30, 1996. The Partnership received net sales proceeds of $1,229,840, a portion
 of which was subsequently used to repay outstanding principal and interest
 of $60,788 and $732, respectively. The remainder $1,168,320, was deposited
 into an escrow account and transferred to the Partnership on October 3,
 1996.

 As discussed in Notes 1 and 4, the Partnership entered into an additional
 sale transaction to dispose of its interest in an aircraft leased to
 Northwest Airlines, Inc. This transaction was settled on September 30,
 1996. The net sales proceeds of $2,054,870 were deposited into an escrow
 account and transferred to the Partnership on October 3, 1996.

 In 1994, the Partnership capitalized $137,500 of refurbishment costs
 incurred to upgrade certain equipment all of which was financed by a
 third-party lender.

     The accompanying notes are an integral part of these financial statements.


                                       11
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

(1)  ORGANIZATION AND PARTNERSHIP MATTERS

     Organization

     The Partnership was organized as a limited partnership under the
     Massachusetts Uniform Limited Partnership Act (the Uniform Act) on June 21,
     1988, for the purpose of acquiring and leasing to third parties a
     diversified portfolio of capital equipment. Partners' capital initially
     consisted of contributions of $1,000 from the Managing General Partner (AFG
     Leasing IV Incorporated) and $100 from the Initial Limited Partner (AFG
     Assignor Corporation). On September 29, 1988, the Partnership issued
     939,600 units, representing assignments of limited partnership interests
     (the Units) to 1,372 investors. Unitholders and Limited Partners (other
     than the Initial Limited Partner) are collectively referred to as
     Recognized Owners. On December 31, 1996, the General Partners of the
     Partnership caused the Partnership's Amended and Restated Agreement and
     Certificate of Limited Partnership (the Restated Agreement, as amended) to
     be canceled by filing a Certificate of Cancellation with the Massachusetts
     Secretary under the Uniform Act. Accordingly, the Partnership was dissolved
     on December 31, 1996.

     The Partnership originally had four General Partners: AFG Leasing IV
     Incorporated, a Massachusetts corporation established in 1987 and a
     wholly-owned subsidiary of American Finance Group (AFG), a Massachusetts
     general partnership, which subsequently became Equis Financial Group
     Limited Partnership (collectively referred to herein as AFG), Daniel J.
     Roggemann, Martin F. Laughlin, and Geoffrey A. MacDonald (collectively the
     General Partners). Messrs. Roggemann and Laughlin subsequently elected to
     withdraw as Individual General Partners. AFG Leasing IV Incorporated is
     also the general partner or managing general partner of certain affiliated
     partnerships sponsored by AFG.

     Significant operations commenced September 29, 1988 when the Partnership
     made its initial equipment purchase. Pursuant to the Restated Agreement, as
     amended, Distributable Cash From Operations and Distributable Cash From
     Sales or Refinancings were allocated 99% to the Recognized Owners and 1% to
     the General Partners.

     Under the terms of a management agreement between the Partnership and
     AF/AIP Programs Limited Partnership and the terms of an identical
     management agreement between AF/AIP Programs Limited Partnership and AFG
     (collectively, the Management Agreement), management services were provided
     by AFG to the Partnership at fees which the Managing General Partner
     believed to be competitive for similar services. (Also see Note 5.)


                                       12
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(1)  ORGANIZATION AND PARTNERSHIP MATTERS (Continued)

     Organization (Continued)

     Equis Financial Group Limited Partnership (Equis) is a Massachusetts
     partnership formerly known as American Finance Group (AFG). AFG was
     established in 1988 as a Massachusetts general partnership and succeeded
     American Finance Group, Inc., a Massachusetts corporation organized in
     1980. Equis and its subsidiaries (collectively, the Company) are engaged in
     various aspects of the equipment leasing business, including Equis' role as
     Equipment Manager or Advisor to the Partnership and several other
     Direct-Participation equipment leasing programs sponsored or co-sponsored
     by AFG (the Other Investment Programs). The Company arranges to broker or
     originate equipment leases, acts as remarketing agent and asset manager,
     and provides leasing support services, such as billing, collecting and
     asset tracking.

     The general partner of Equis, with a 1% controlling interest, is Equis
     Corporation, a Massachusetts corporation owned and controlled entirely by
     Gary D. Engle, its President and Chief Executive Officer. Equis Corporation
     also owns a controlling 1% general partner interest in Equis' 99% limited
     partner, GDE Acquisition Limited Partnership (GDE LP). Equis Corporation
     and GDE LP were established in December 1994 by Mr. Engle for the sole
     purpose of acquiring the business of AFG.

     In January 1996, the Company sold certain assets of AFG relating primarily
     to the business of originating new leases, and the name "American Finance
     Group," and its acronym to a third party (the Buyer). AFG changed its name
     to Equis Financial Group Limited Partnership after the sale was concluded.
     Pursuant to terms of the sale agreements, Equis agreed not to compete with
     the Buyer's lease origination business for a period of five years; however,
     Equis is permitted to originate certain equipment leases, principally those
     involving noninvestment grade lessees and ocean-going vessels, which are
     not in competition with the Buyer. In addition, the sale agreements
     specifically reserved to Equis the rights to continue using the name
     American Finance Group and its acronym in connection with the Partnership
     and the Other Investment Programs and to continue managing all assets owned
     by the Partnership and the Other Investment Programs, including the right
     to satisfy all required equipment acquisitions utilizing either brokers or
     the Buyer. Geoffrey A. MacDonald, Chairman of Equis Corporation and Gary D.
     Engle agreed not to compete with the sold business on terms and conditions
     similar to those for the Company.


                                       13
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(1)  ORGANIZATION AND PARTNERSHIP MATTERS (Continued)

     Basis of Presentation

     On September 30, 1996, the Partnership sold all of its remaining equipment
     assets, excluding its interest in an aircraft, for $1,229,840. The entire
     remarketing effort was undertaken jointly by 15 individual equipment
     leasing programs, consisting of the Partnership and 14 affiliated
     partnerships, each of which individually executed separate purchase and
     sale agreements with RSL Finance Limited Partnership II (the Buyer) and
     certain of which entered into a collective purchase and sale agreement with
     Northwest Airlines, Inc. (NWA), to sell all or a portion of their equipment
     assets (the Sale Assets). These proceeds were first used to repay the
     entire outstanding balance due under the notes payable and the associated
     interest of $60,788 and $732, respectively. Certain of these partnerships,
     including the Partnership, sold their collective interest in a McDonnell
     Douglas MD-82 aircraft (NWA Aircraft) to NWA. The net consideration for
     this aircraft was allocated first to remaining lease rental obligations and
     second to sale proceeds. The Partnership's proportionate share of this
     consideration was $2,347,394, including $2,054,870 representing net sale
     proceeds. (See Note 5.)

     On October 15, 1996, the Partnership paid a cash distribution of $3,979,063
     of which $3,939,272 was paid to the Limited Partners and $39,791 was paid
     to the Managing General Partner. As discussed in Note 4, the Partnership
     had a contingency reserve of $478,963 at December 31, 1996.

     The Managing General Partner approved a plan of liquidation on September
     30, 1996 and commenced liquidation on October 1, 1996. On December 31,
     1996, the Managing General Partner dissolved the Partnership in accordance
     with the Restated Agreement, as amended.

     The financial statements presented have been prepared on a going-concern
     basis through September 30, 1996. Due to the dissolution of the Partnership
     requiring liquidation and distribution of its net assets, the Partnership
     changed its basis of accounting from going-concern to liquidation basis
     effective October 1, 1996. Liquidation basis requires that statements be
     prepared based on anticipated liquidating values of assets and liabilities.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Statement of Cash Flows

     The Partnership considered liquid investment instruments purchased with a
     maturity of three months or less to be cash equivalents. From time to time,
     the Partnership invested excess cash with large institutional banks in
     reverse repurchase agreements with overnight maturities. Under the terms of
     the agreements, title to the underlying securities passed to the
     Partnership. The securities underlying the agreements were book entry
     securities.


                                       14
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Revenue Recognition

     Rents were payable to the Partnership monthly, quarterly or semi-annually
     and no significant amounts were calculated on factors other than the
     passage of time. The leases were accounted for as operating leases and were
     noncancellable. Rents received prior to their due dates were deferred. The
     Partnership's entire equipment portfolio was sold on September 30, 1996. No
     future rents are due.

     Revenue from major individual lessees which accounted for 10% or more of
     lease revenue during each of the past three years is as follows:

                                                     1996      1995      1994

       Northwest Airlines, Inc.                     $555,794  $351,029  $436,986
       Gearbulk Shipowning Ltd. (formerly Kristian
       Gerhard Jebsen Skipsrederi A/S)              $190,602  $288,446  $293,386
       Building Materials Corporation of America           -  $152,033  $177,372
       Rose's Stores, Inc.                                 -         -  $190,051

     Use of Estimates

     The preparation of the financial statements in conformity with generally
     accepted accounting principles requires the use of estimates and
     assumptions that affect the amounts reported in the financial statements
     and accompanying notes. Actual results could differ from those estimates.

     Equipment on Lease

     All equipment was acquired from AFG, one of its affiliates, including other
     equipment leasing programs sponsored by AFG, or from third-party sellers.
     Equipment cost represented asset base price plus acquisition fees and was
     determined in accordance with the Restated Agreement, as amended, and
     certain regulatory guidelines. Asset base price was affected by the
     relationship of the seller to the Partnership as summarized herein. Where
     the seller of the equipment was AFG or an affiliate, asset base price was
     the lower of (i) the actual price paid for the equipment by AFG or the
     affiliate plus all actual costs accrued by AFG or the affiliate while
     carrying the equipment less the amount of all rents earned by AFG or the
     affiliate prior to selling the equipment or (ii) fair market value as
     determined by the Managing General Partner in its best judgment, including
     all liens and encumbrances on the


                                       15
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Equipment on Lease (Continued)

     equipment and other actual expenses. Where the seller of the equipment was
     a third party who did not manufacture the equipment, asset base price was
     the lower of (i) the price invoiced by the third party or (ii) fair market
     value as determined by the Managing General Partner. Where the seller of
     the equipment was a third party who also manufactured the equipment, asset
     base price was the manufacturer's invoice price, which price was considered
     to be representative of fair market value.

     Depreciation

     The Partnership's depreciation policy was intended to allocate the cost of
     equipment over the period during which it produced economic benefit. The
     principal period of economic benefit was considered to correspond to each
     asset's primary lease term, which term generally represented the period of
     greatest revenue potential for each asset. Accordingly, to the extent that
     an asset was held on primary lease term, the Partnership depreciated the
     difference between (i) the cost of the asset and (ii) the estimated
     residual value of the asset on a straight-line basis over such term. For
     purposes of this policy, estimated residual values represented estimates of
     equipment values at the date of primary lease expiration. To the extent
     that an asset was held beyond its primary lease term, the Partnership
     continued to depreciate the remaining net book value of the asset on a
     straight-line basis over the asset's remaining economic life.

     Accrued Liabilities-Affiliate

     Unpaid operating expenses paid by AFG on behalf of the Partnership were
     reported as Accrued Liabilities-Affiliate. (See Note 5.)

     Allocation of Profits and Losses

     For financial statement purposes, net income or loss was allocated to each
     Partner according to their respective ownership percentages (99% to the
     Recognized Owners and 1% to the General Partners). See Note 6 concerning
     allocation of income or loss for income tax purposes.

     Net Income and Cash Distributions Per Unit

     Net income and cash distributions per Unit were based on 939,600 Units
     outstanding during each of the three years in the period ended December 31,
     1996, and computed after allocation of the General Partners' 1% share of
     net income and cash distributions.


                                       16
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Provision for Income Taxes

     No provision or benefit from income taxes is included in the accompanying
     financial statements. The Partners are responsible for reporting their
     proportionate shares of the Partnership's taxable income or loss and other
     tax attributes on their tax returns.

(3)  INVESTMENT IN DIRECT FINANCING LEASE

     During 1994, the Partnership entered into a direct financing lease in
     connection with the remarketing of certain equipment. The Partnership
     received $205,814 of aggregate lease payments in connection with the sale
     of this equipment during the year ending December 31, 1994. For financial
     statement purposes, the Partnership recorded a gain on sale of equipment of
     $201,035 and interest income of $4,779. Interest income represented the
     difference between the aggregate lease payments received by the Partnership
     and the present value of those lease payments, calculated at the lease's
     inception using the rate of interest implicit in the lease or 5.16%.
     Ownership of the equipment was transferred to the lessee in December 1994
     upon receipt of the final lease payment.

(4)  EQUIPMENT

     At September 30, 1996, the Partnership disposed of its entire equipment
     portfolio.

     As equipment was sold to third parties, or otherwise disposed of, the
     Partnership recognized a gain or loss equal to the difference between the
     net book value of the equipment at the time of sale or disposition and the
     proceeds realized upon sale or disposition.

(5)  RELATED PARTY TRANSACTIONS

     All operating expenses incurred by the Partnership were paid by AFG on
     behalf of the Partnership and AFG was reimbursed at its actual cost for
     such expenditures. Fees and other costs incurred during each of the three
     years in the period ended December 31, 1996, which were paid or accrued by
     the Partnership to AFG or its Affiliates, are as follows:

                                                 1996         1995         1994

     Equipment management fees                 $ 52,021     $ 63,670    $ 86,057
     Administrative charges                      30,343       21,000      12,000
     Reimbursable operating expenses
     due to third parties                        99,080       58,007      48,974
                                               --------     --------    --------

         Total                                 $181,444     $142,677    $147,031
                                               ========     ========    ========


                                       17
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(5)  RELATED PARTY TRANSACTIONS (Continued)

     As provided under the terms of the Management Agreement, AFG was
     compensated for its services to the Partnership. Such services included all
     aspects of acquisition, management and sale of equipment. For acquisition
     services, AFG was compensated by an amount equal to 4.75% of Equipment Base
     Price paid by the Partnership. For management services, AFG was compensated
     by an amount equal to the lesser of (i) 5% of gross lease rental revenues
     earned by the Partnership or (ii) fees which the Managing General Partner
     reasonably believed to be competitive for similar services for similar
     equipment. Both of these fees were subject to certain limitations defined
     in the Management Agreement. As Payout was not achieved, AFG received no
     compensation for services connected to the sale of equipment under its
     subordinated remarketing agreement.

     Administrative charges represent amounts owed to AFG, pursuant to Section
     10.4 of the Restated Agreement, as amended, for persons employed by AFG who
     were engaged in providing administrative services to the Partnership.
     Reimbursable operating expenses due to third parties represent costs paid
     by AFG on behalf of the Partnership which were reimbursed to AFG.

     All equipment was purchased from AFG, one of its affiliates, including
     other equipment leasing programs sponsored by AFG, or from third-party
     sellers. The Partnership's Purchase Price was determined by the method
     described in Note 2.

     All rents and proceeds from the sale of equipment were paid directly to
     either AFG or to a lender. AFG temporarily deposited collected funds in a
     separate interest-bearing escrow account prior to remittance to the
     Partnership.

     On August 18, 1995, Atlantic Acquisition Limited Partnership (AALP), a
     newly formed Massachusetts limited partnership owned and controlled by
     certain principals of AFG, commenced a voluntary cash Tender Offer (the
     Offer) for up to approximately 45% of the outstanding units of limited
     partner interest in this Partnership and 20 affiliated partnerships
     sponsored and managed by AFG. The Offer was subsequently amended and
     supplemented in order to provide additional disclosure to unitholders;
     increase the offer price; reduce the number of units sought to
     approximately 35% of the outstanding units; and extend the expiration date
     of the Offer to October 20, 1995. Following commencement of the Offer,
     certain legal actions were initiated by interested persons against AALP,
     each of the general partners (4 in total) of the 21 affected programs, and
     various other affiliates and related parties. One action, a class action
     brought in the United States District Court for the District of
     Massachusetts (the Court) on behalf of the unitholders (Recognized Owners),
     sought to enjoin the Offer and obtain unspecified monetary damages. A
     settlement of this litigation was approved by the Court on November 15,
     1995. The Plaintiffs filed an appeal in this matter. On November 26, 1996,
     the United States Court of Appeals for the First Circuit handed down a
     decision affirming the Court's approval of


                                       18
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(5)  RELATED PARTY TRANSACTIONS (Continued)

     the settlement. A second class action, brought in the Superior Court of the
     Commonwealth of Massachusetts (the Superior Court) seeking to enjoin the
     Offer, obtain unspecified monetary damages, and intervene in the first
     class action, was dismissed by the Superior Court. The Recognized Owners of
     the Partnership tendered 80,347 units or 8.55% of the total outstanding
     units of the Partnership to AALP. In September 1996, AALP sold these units
     to Equis for $391,587.

     The remarketing effort described in Note 1 was undertaken jointly by 15
     individual equipment leasing programs, consisting of the Partnership and 14
     affiliated partnerships (Other Affected Partnerships). Thirteen of the
     programs, including the Partnership, sold all of their equipment assets
     (the Liquidated Programs); and two programs sold only their proportionate
     ownership interests in certain assets owned jointly with one or more of the
     Liquidated Programs. Substantially all of the Partnership's equipment
     assets of material value represented partial ownership interests whereby
     the Partnership owned less than a 100% interest in the equipment it sold.
     The remaining interests in such assets were owned by one or more of the
     Other Affected Partnerships.

     On September 30, 1996, the Partnership and each of the Other Affected
     Partnerships executed individual purchase and sale agreements with the
     Buyer for all of the Sale Assets, except for one McDonnell Douglas MD-82
     aircraft leased to Northwest Airlines, Inc., hereafter the Sale Assets, as
     Revised. The NWA Aircraft, in which the Partnership owned a proportionate
     interest of 18%, was purchased by the lessee pursuant to a separate
     negotiation. The Partnership realized $1,229,840 of net sale proceeds for
     the Sale Assets, as Revised and $2,347,394 for the NWA Aircraft. The latter
     included early termination rental payments of $292,524 from the lessee. At
     the date of sale, the Sale Assets, as Revised and the NWA Aircraft had net
     book values of $839,271 and $2,195,994, respectively. In aggregate, the
     Partnership and the Other Affected Partnerships realized, prior to
     transaction costs, $32,997,000 for all of the Sale Assets, as Revised and
     $13,200,000 for the NWA Aircraft. Net proceeds from the NWA Aircraft were
     allocated to the owners of the NWA Aircraft according to their respective
     percentage ownership interests. Net proceeds from the Sale Assets, as
     Revised were allocated to the Partnership and to each of the Other Affected
     Partnerships based upon an apportionment of the sales price among all
     equipment comprising the Sale Assets, as Revised according to each asset's
     estimated re-sale value, as determined by an independent appraiser.

     The Buyer is a limited partnership established to acquire the Sale Assets,
     as Revised, and has no direct affiliation with the Partnership, the Other
     Affected Partnerships, the General Partners or AFG. The sole general
     partner of the Buyer is RSL Holdings, Inc. (RSL). An affiliate of RSL
     purchased a significant limited partnership interest in a
     direct-participation equipment leasing program co-sponsored by AFG in 1992.
     AFG acquired this interest in 1993 for cash and assumption of indebtedness.
     There have been no other business dealings between the Buyer and AFG and
     their affiliates.


                                       19
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(5)  RELATED PARTY TRANSACTIONS (Continued)

     On October 10, 1996, the Managing General Partner entered into a Cross
     Partnership Agreement (the Agreement) with the general partners of certain
     of the Other Affected Partnerships participating in the sales transactions
     described above. Pursuant to the Agreement, the Partnership and each of the
     other partnerships agreed to set aside a contingency reserve for future
     liabilities. The Agreement provides that obligations of any individual
     partnership which are not associated with the sales transactions will
     directly reduce that partnership's reserve balance, whereas costs
     pertaining to the sales transactions will be allocated against the reserve
     balances of the Partnership and each of the other partnerships on a
     proportionate basis. If the reserve balance of the Partnership is depleted
     to zero, the reserve balances contributed by the other partnerships will be
     debited on a proportionate basis to cover the deficit. If the reserve
     balances of any one of the other partnerships is depleted to zero, the
     reserve balance of the Partnership and any other partnerships having a
     positive reserve balance shall be debited on a proportionate basis to cover
     the deficit. Upon termination of the Agreement, any remaining monies will
     be distributed to the partners of those partnerships with positive reserve
     balances. At December 31, 1996, the Partnership had a contingency reserve
     balance of $478,963. To the extent that this contingency reserve is not
     necessary to satisfy any unforeseen liabilities of the Partnership, it will
     be remitted to the Partners.

(6)  INCOME TAXES

     The Partnership was not a taxable entity for federal income tax purposes.
     Accordingly, no provision for income taxes was recorded in the accounts of
     the Partnership.

     For financial statement purposes, the Partnership allocated net income or
     loss to each class of partner according to their respective ownership
     percentages (99% to the Recognized Owners and 1% to the General Partners).
     This convention differed from the income or loss allocation requirements
     for income tax and Dissolution Event purposes as delineated in the Restated
     Agreement, as amended. For income tax purposes, the Partnership allocated
     net income or loss in accordance with such agreement.

     The following is a reconciliation between net income reported for financial
     statement and federal income tax reporting purposes for the years ended
     December 31, 1996, 1995 and 1994:

                                             1996         1995          1994

     Net income                           $ 1,004,807   $ 878,377   $ 1,210,140
     Financial statement depreciation in
     excess of
     (less than) tax depreciation             116,128    (177,792)       5,257
     Prepaid rental income                     (9,116)      3,308      (22,935)
     Other                                  1,775,075       8,777      115,964
                                          -----------   ---------   -----------

     Net income for federal income tax
     reporting
     purposes                             $ 2,886,894   $ 712,670  $ 1,308,426
                                          ===========   =========   ===========


                                       20
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                        NOTES TO THE FINANCIAL STATEMENTS
                                DECEMBER 31, 1996

                                   (Continued)

(6)  INCOME TAXES (Continued)

     The principal component of Other consists of the difference between the tax
     gain on equipment disposals and the financial statement gain on disposals.

     The following is a reconciliation between partners' capital reported for
     financial statement and federal income tax reporting purposes for the year
     ended December 31, 1995. A reconciliation for the year ended December 31,
     1996 has not been presented, as partners' capital for financial statement
     and federal income tax reporting purposes is zero.

        Partners' capital                               $    3,927,765

        Add back selling commissions and organization
        and offering costs                                   2,755,175

        Financial statement distributions in excess
        of tax distributions                                     2,373

        Cumulative difference between federal income
        tax and financial statement income (loss)
                                                            (2,095,598)
                                                        --------------

        Partners' capital for federal
        income tax reporting purposes                   $    4,589,715
                                                        ==============

     Financial statement distributions in excess of tax distributions and
     cumulative difference between federal income tax and financial statement
     income (loss) represent timing differences.


                                       21
<PAGE>

                        ADDITIONAL FINANCIAL INFORMATION


                                       22
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

                  SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH
                     GENERATED TO COST OF EQUIPMENT DISPOSED
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

     The Partnership classified all rents from leasing equipment as lease
     revenue. Upon expiration of the primary lease terms, equipment was sold,
     rented on a month-to-month basis or re-leased for a defined period under a
     new or extended lease agreement. The proceeds generated from selling or
     re-leasing the equipment, in addition to any month-to-month revenues,
     represented the total residual value realized for each item of equipment.
     Therefore, the financial statement gain or loss, which reflects the
     difference between the net book value of the equipment at the time of sale
     or disposition and the proceeds realized upon sale or disposition, may not
     reflect the aggregate residual proceeds realized by the Partnership for
     such equipment.

     The following is a summary of cash excess associated with equipment
     dispositions occurring during the years ended December 31, 1996, 1995 and
     1994.

                                                   1996      1995        1994
       Rents earned prior to disposal of
       equipment, net of interest charges     $13,146,236  $787,232  $2,522,596

     
       
      Sale proceeds realized upon 
      disposition of equipment                  3,325,402    89,476     533,289
                                              -----------  --------  ----------

       Total cash generated from rents and
       equipment sale proceeds                 16,471,638   876,708   3,055,885

       Original acquisition cost of equipment
       disposed                                10,909,185   732,566   2,342,498
                                              -----------  --------  ----------

       Excess of total cash generated to cost
       of equipment disposed                  $ 5,562,453  $144,142  $  713,387
                                              ===========  ========  ==========


                                       23
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP


                    STATEMENT OF CASH AND DISTRIBUTABLE CASH
                     FROM OPERATIONS, SALES AND REFINANCINGS
                      FOR THE YEAR ENDED DECEMBER 31, 1996



                                                        SALES AND
                                         OPERATIONS     REFINANCINGS   TOTAL

NET INCOME                               $  714,670    $   290,137  $ 1,004,807

ADD BACK:
   Depreciation                             195,571             -       195,571
   Decrease in allowance for
   doubtful accounts                        (15,000)            -       (15,000)
   Management fees                           52,021             -        52,021
   Book value of disposed equipment               -      3,035,265    3,035,265

LESS:
   Principal reduction of notes payable     (85,938)            -       (85,938)
                                         -----------   -----------   -----------

         Cash from operations, sales
         and refinancings                   861,324     3,325,402     4,186,726

LESS:
   Management fees                          (52,021)            -       (52,021)
                                         -----------   -----------   -----------

         Distributable cash from
         operations,
         sales and refinancings             809,303     3,325,402     4,134,705

OTHER SOURCES AND USES OF CASH:
   Cash, beginning of year                  861,146             -       861,146
   Net change in receivables and
   accruals                                 173,994             -       173,994

LESS:
   Cash distributions paid               (1,365,480)   (3,325,402)   (4,690,882)
   Liquidating distribution                (478,963)            -      (478,963)
                                         -----------   -----------   -----------

CASH, END OF YEAR                        $         -   $        -    $         -
                                         ===========   ===========   ===========


                                       24
<PAGE>

                AMERICAN INCOME PARTNERS IV-A LIMITED PARTNERSHIP

          SCHEDULE OF COSTS REIMBURSED TO THE MANAGING GENERAL PARTNER
          AND ITS AFFILIATES AS REQUIRED BY SECTION 10.4 OF THE AMENDED
          AND RESTATED AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP

                                DECEMBER 31, 1996

     For the year ended December 31, 1996, the Partnership reimbursed the
     Managing General Partner and its Affiliates for the following costs:

           Operating expenses                        $    128,218


                                       25