UNITED STATES
                       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, 2001

                                       OR

[ ]    TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE  SECURITIES
       EXCHANGE ACT OF 1934

                        For the transition period from to


                         Commission file number 0-17549

                            CNL INCOME FUND IV, LTD.
             (Exact name of registrant as specified in its charter)

           Florida                                        59-2854435
  (State or other jurisdiction of         (I.R.S. Employer Identification No.)
  incorporation or organization)

                             450 South Orange Avenue
                           Orlando, Florida 32801-3336
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 540-2000

          Securities registered pursuant to Section 12 (b) of the Act:

         Title of each class:          Name of exchange on which registered:
             None                              Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:

              Units of limited partnership interest ($500 per Unit)
                                (Title of class)

         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 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. No [x]

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant:  The  registrant  registered  an offering of 60,000 units of limited
partnership  interest  (the  "Units") on Form S-11 under the  Securities  Act of
1933, as amended. Since no established market for such Units exists, there is no
market value for such Units. Each Unit was originally sold at $500 per Unit.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None

<PAGE>


                                     PART I


Item 1.  Business

         CNL Income Fund IV, Ltd. (the  "Registrant" or the  "Partnership") is a
limited  partnership  which was  organized  pursuant to the laws of the State of
Florida on November 18, 1987. The general partners of the Partnership are Robert
A.  Bourne,  James  M.  Seneff,  Jr.  and  CNL  Realty  Corporation,  a  Florida
corporation (the "General Partners").  Beginning on May 6, 1988, the Partnership
offered  for  sale up to  $30,000,000  in  limited  partnership  interests  (the
"Units") (60,000 Units at $500 per Unit) pursuant to a registration statement on
Form S-11 under the Securities Act of 1933, as amended.  The offering terminated
on  December  30,  1988,  as of which  date the  maximum  offering  proceeds  of
$30,000,000   had  been  received  from  investors  who  were  admitted  to  the
Partnership as limited partners (the "Limited Partners").

         The  Partnership  was organized to acquire both newly  constructed  and
existing  restaurant  properties,  as well as properties upon which  restaurants
were to be  constructed  (the  "Properties"),  which  are  leased  primarily  to
operators  of  selected   national  and  regional   fast-food  and  family-style
restaurant  chains (the  "Restaurant  Chains").  Net proceeds to the Partnership
from its  offering of Units,  after  deduction  of  organizational  and offering
expenses,  totalled  $26,550,000,  and  were  used  to  acquire  40  Properties,
including  interests  in five  Properties  owned by joint  ventures in which the
Partnership  is a  co-venturer.  During the year ended  December 31,  1994,  the
Partnership sold its Property in York, Pennsylvania, and reinvested the majority
of the net sales proceeds in two Checkers  Properties,  consisting of only land,
located in Miami,  Florida,  and Douglasville,  Georgia. The remaining net sales
proceeds  were  used  to pay  Partnership  liabilities.  The  lessee  of the two
Properties  consisting of only land owns the buildings currently on the land and
has the right,  if not in default under the lease,  to remove the buildings from
the land at the end of the lease terms. During the year ended December 31, 1995,
the  Partnership  sold its  Property  in  Hastings,  Michigan,  and during  1996
reinvested  the net sales  proceeds  in a  Property  located in  Clinton,  North
Carolina,  with affiliates of the General Partners as  tenants-in-common.  Also,
during the year ended  December 31, 1996, the  Partnership  sold its Property in
Tampa,  Florida,  and  reinvested  the  majority of the net sales  proceeds in a
Boston Market in Richmond,  Virginia.  During the year ended  December 31, 1997,
the  Partnership  sold its Property in  Douglasville,  Georgia.  During the year
ended  December 31, 1998,  the  Partnership  sold its  Properties in Fort Myers,
Florida and Union  Township,  Ohio and distributed the majority of the net sales
proceeds to the limited partners as a special distribution.  In addition, during
the year ended December 31, 1998, the  Partnership  sold a Property in Leesburg,
Florida  and  reinvested  the  majority  of the net  sales  proceeds  in a joint
venture, Warren Joint Venture, to purchase and hold one restaurant Property, and
sold a Property in Naples,  Florida. During 1999, the Partnership reinvested the
net sales proceeds received from the sale of the Property in Naples,  Florida in
a Property in Zephryhills,  Florida,  with affiliates of the General Partners as
tenants-in-common. During the year ended December 31, 2000, the Partnership sold
its Properties in Temple Terrace and Punta Gorda,  Florida,  Topeka,  Kansas and
Detroit,  Michigan and distributed the majority of the net sales proceeds to the
limited  partners  as special  distributions  in 2000 and 2001.  During the year
ended  December 31,  2001,  the  Partnership  sold its  Properties  in Palm Bay,
Florida and Corpus Christi,  Texas and distributed the majority of the net sales
proceeds to the limited partners as a special  distribution.  As a result of the
above  transactions,   as  of  December  31,  2001,  the  Partnership  owned  32
Properties. The 32 Properties include interests in six Properties owned by joint
ventures in which the Partnership is a co-venturer and two Properties owned with
affiliates  of the  General  Partners  as  tenants-in-common.  In January  2002,
Titusville  Joint  Venture sold its Property and the  Partnership  and the joint
venture  partner  liquidated  the joint venture.  Generally,  the Properties are
leased on a triple-net  basis with the lessees  responsible  for all repairs and
maintenance, property taxes, insurance and utilities.

         The  Partnership  will hold its Properties  until the General  Partners
determine that the sale or other  disposition of the Properties is  advantageous
in view of the Partnership's investment objectives.  In deciding whether to sell
Properties, the General Partners will consider factors such as potential capital
appreciation,  net cash flow and  federal  income  tax  considerations.  Certain
lessees also have been granted options to purchase Properties,  generally at the
Property's  then fair market  value after a specified  portion of the lease term
has elapsed.  The  Partnership has no obligation to sell all or any portion of a
Property  at any  particular  time,  except as may be  required  under  property
purchase options granted to certain lessees.

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with CNL American Properties Fund, Inc. ("APF"), pursuant to which the
Partnership  would be merged with and into a subsidiary  of APF (the  "Merger").
APF is a real estate investment trust whose primary business is the ownership of
restaurant properties leased on a long-term,  "triple-net" basis to operators of
national and regional restaurant chains. Under the Agreement and Plan of Merger,
APF was to issue shares of its common stock as consideration  for the Merger. On
March 1, 2000,  the General  Partners and APF  announced  that they had mutually
agreed to terminate the Agreement and Plan of Merger. The agreement to terminate
the  Agreement  and Plan of Merger  was based,  in large  part,  on the  General
Partners'  concern  that,  in light of market  conditions  relating  to publicly
traded  real  estate  investment  trusts,  the  value  of  the  transaction  had
diminished.  As a result of such  diminishment,  the General Partners ability to
unequivocally  recommend  voting for the  transaction,  in the exercise of their
fiduciary duties, had become questionable.

Leases

         Although there are variations in the specific terms of the leases,  the
following  is  a  summarized   description  of  the  general  structure  of  the
Partnership's  leases. The leases of the Properties owned by the Partnership and
joint ventures in which the Partnership is a co-venturer and Properties owned as
tenants-in-common  with affiliates of the General  Partners  provide for initial
terms,  ranging from five to 20 years (the average  being 17 years),  and expire
between 2002 and 2019. Generally, the leases are on a triple-net basis, with the
lessees responsible for all repairs and maintenance,  property taxes,  insurance
and  utilities.  The leases of the  Properties  provide for minimum  base annual
rental payments  (payable in monthly  installments)  ranging from  approximately
$20,300 to $130,300. Generally, the leases provide for percentage rent, based on
sales in excess of a specified amount, to be paid annually. In addition, some of
the leases provide that  commencing in the sixth lease year the percentage  rent
will be an amount equal to the greater of the percentage rent  calculated  under
the lease  formula or a  specified  percentage  (ranging  from  one-half  to two
percent) of the purchase price.

         Generally,  the  leases  of the  Properties  provide  for  two to  four
five-year  renewal  options  subject  to the same  terms and  conditions  as the
initial lease.  Lessees of 26 of the  Partnership's 32 Properties also have been
granted options to purchase Properties at the Property's then fair market value,
after a specified portion of the lease term has elapsed.  Fair market value will
be determined  through an appraisal by an independent  appraisal firm. Under the
terms of certain leases,  the option purchase price may equal the  Partnership's
original cost to purchase the Property  (including  acquisition  costs),  plus a
specified percentage from the date of the lease or a specified percentage of the
Partnership's purchase price, if that amount is greater than the Property's fair
market value at the time the purchase option is exercised. Additionally, certain
leases  provide the lessee an option to purchase up to a 49 percent  interest in
the  Property,  after a specified  portion of the lease term has elapsed,  at an
option  purchase  price  similar to those  described  above,  multiplied  by the
percentage  interest in the  Property  with respect to which the option is being
exercised.

         The leases also  generally  provide that, in the event the  Partnership
wishes to sell the Property  subject to the lease,  the  Partnership  must first
offer the  lessee  the right to  purchase  the  Property  on the same  terms and
conditions,  and for the same  price,  as any offer  which the  Partnership  has
received for the sale of the Property.

         During 1998,  the tenant of the Property in Richmond,  Virginia,  filed
for bankruptcy  and in June 2000,  rejected the lease relating to this Property.
In December 2000, the Partnership entered into a new lease for this Property. In
connection  therewith,  the  tenant  agreed  to pay for all costs  necessary  to
convert this Property into a different  concept.  Rents commenced in March 2001.
The  lease  terms  for  this  Property  are   substantially   the  same  as  the
Partnership's other leases, as described above.

         In  addition,  in 2001,  the former lease for the Property in Streator,
Illinois,  which was scheduled to expire in December 2002, was terminated by the
Partnership and the tenant. In connection  therewith,  the Partnership  received
lease  termination  income in  consideration  for the Partnership  releasing the
tenant from its  obligations  under the lease.  The  Partnership  re-leased this
Property to a new tenant with terms  substantially the same as the Partnership's
other  leases.  Rents due under the new lease are lower than rents due under the
previous lease; therefore,  the Partnership expects that rental income in future
periods will remain at reduced  amounts.  However,  the general  partners do not
anticipate  that any  decrease in rental  income  relating to the new lease will
have a  material  adverse  affect on the  Partnership's  financial  position  or
results of operations.

Major Tenants

         During 2001, two lessees of the Partnership,  Shoney's,  Inc. and Tampa
Foods,  L.P., each contributed more than ten percent of the Partnership's  total
rental and earned income  (including the  Partnership's  share of the rental and
earned income from Properties  owned by joint ventures and Properties owned with
affiliates  of the General  Partners as  tenants-in-common).  As of December 31,
2001,  Shoney's,  Inc. was the lessee under leases relating to four restaurants,
and  Tampa  Foods,  L.P.  was the  lessee  relating  to two  restaurants.  It is
anticipated  that, based on the minimum rental payments  required by the leases,
Shoney's, Inc. and Tampa Foods, L.P., each will continue to contribute more than
ten percent of the  Partnership's  total  rental and earned  income in 2002.  In
addition, four Restaurant Chains, Shoney's,  Denny's, Pizza Hut, and Wendy's Old
Fashioned Hamburger  Restaurants  ("Wendy's"),  each accounted for more than ten
percent of the  Partnership's  total rental and earned income in 2001 (including
the Partnership's share of the rental and earned income from Properties owned by
joint ventures and Properties  owned with affiliates of the General  Partners as
tenants-in-common). In 2002, it is anticipated that these four Restaurant Chains
each will  continue to account for more than ten percent of the total rental and
earned  income  to which  the  Partnership  is  entitled  under the terms of the
leases. Any failure of these lessees or these Restaurant Chains could materially
affect the  Partnership's  income if the  Partnership  is unable to re-lease the
Property in a timely  manner.  No single tenant or group of  affiliated  tenants
lease Properties with an aggregate carrying value in excess of 20 percent of the
total assets of the Partnership.

Joint Venture and Tenancy in Common Arrangements

         The Partnership  has entered into the following  separate joint venture
arrangements, each to purchase and hold one Property: Holland Joint Venture with
CNL Income Fund II,  Ltd.,  Titusville  Joint  Venture with CNL Income Fund III,
Ltd.,  Cocoa Joint  Venture with CNL Income Fund V, Ltd.,  Auburn Joint  Venture
with CNL Income Fund VI, Ltd.,  Kingsville  Real Estate  Joint  Venture with CNL
Income Fund XII,  Ltd.,  and Warren Joint  Venture with CNL Income Fund VI, Ltd.
Each of the CNL Income Funds is an  affiliate  of the General  Partners and is a
limited partnership organized pursuant to the laws of the state of Florida.

         Each joint venture  arrangement  provides for the  Partnership  and its
joint venture  partners to share in all costs and benefits  associated  with the
joint venture in accordance  with their  respective  percentage  interest in the
joint venture.  The Partnership  has a 51% interest in Holland Joint Venture,  a
26.6%  interest  in  Titusville  Joint  Venture,  a 57%  interest in Cocoa Joint
Venture,  a 96.1%  interest  in  Auburn  Joint  Venture,  a 68.87%  interest  in
Kingsville  Real  Estate  Joint  Venture and a 35.71%  interest in Warren  Joint
Venture.  The  Partnership  and its joint venture  partners are also jointly and
severally liable for all debts,  obligations and other  liabilities of the joint
venture.

         Each joint venture has an initial term of  approximately  5 to 20 years
and, after the expiration of the initial term,  continues in existence from year
to year unless  terminated at the option of either joint venturer or by an event
of  dissolution.  Events of dissolution  include the  bankruptcy,  insolvency or
termination  of any  joint  venturer,  sale of the  Property  owned by the joint
venture and mutual agreement of the Partnership and its joint venture partner to
dissolve the joint venture.

         The Partnership shares management control of each joint venture equally
with affiliates of the General Partners.  The joint venture agreements  restrict
each venturer's  ability to sell,  transfer or assign its joint venture interest
without  first  offering it for sale to its joint venture  partner,  either upon
such terms and  conditions  as to which the venturers may agree or, in the event
the venturers cannot agree, on the same terms and conditions as any offer from a
third party to purchase such joint venture interest.

         Net cash flow from  operations  of Holland  Joint  Venture,  Titusville
Joint Venture, Cocoa Joint Venture, Auburn Joint Venture, Kingsville Real Estate
Joint Venture,  and Warren Joint Venture is distributed 51%, 26.6%,  57%, 96.1%,
68.87%,  and  35.71%,  respectively,  to the  Partnership  and  the  balance  is
distributed  to  each of the  other  joint  venture  partners.  Any  liquidation
proceeds,  after paying joint venture debts and liabilities and funding reserves
for  contingent  liabilities,  will be  distributed  first to the joint  venture
partners with positive  capital account  balances in proportion to such balances
until the capital  account  balances equal zero, and thereafter in proportion to
each joint venture partner's percentage interest in the joint venture.

         In January 2002,  Titusville  Joint Venture,  in which the  Partnership
owned a 73.4%  interest,  sold its  Property  to an  unrelated  third  party for
approximately   $180,000  and  received  net  sales  proceeds  of  approximately
$165,600,  resulting in a gain of $4,900 to the joint venture.  In addition,  in
January  2002,  the  Partnership  and  the  joint  venture  partner   liquidated
Titusville Joint Venture and the Partnership  received its pro rata share of the
liquidation proceeds. No gain or loss was recorded relating to the liquidation.

         In addition to the above joint venture  arrangements,  the  Partnership
entered  into an  agreement to hold a Property in Clinton,  North  Carolina,  as
tenants-in-common,  with CNL Income Fund VI, Ltd.,  CNL Income Fund X, Ltd., and
CNL Income Fund XV, Ltd.,  affiliates of the General Partners;  and an agreement
to hold a Property  in  Zephyrhills,  Florida,  as  tenants-in-common,  with CNL
Income Fund XVII,  Ltd., an affiliate of the General  Partners.  The  agreements
provide  for the  Partnership  and the  affiliates  to share in the  profits and
losses of the Properties in proportion to each party's percentage interest.  The
Partnership  owns a 53 percent  and 76 percent  interest  in the  Properties  in
Clinton,  Tennessee  and  Zephyrhills,   Florida,  respectively.   Each  of  the
affiliates is a limited partnership  organized pursuant to the laws of the state
of Florida.  The tenancy in common agreements  restrict each co-tenant's ability
to sell, transfer,  or assign its interest in the tenancy in common's Properties
without first offering it for sale to the remaining parties to the agreement.

         The use of joint venture and tenancy in common  arrangements allows the
Partnership  to fully invest its available  funds at times at which it would not
have  sufficient  funds to purchase an additional  property,  or at times when a
suitable  opportunity to purchase an additional  property is not available.  The
use of joint  venture  and  tenancy in common  arrangements  also  provides  the
Partnership  with  increased  diversification  of its portfolio  among a greater
number of properties. In addition,  tenancy in common arrangements may allow the
Partnership  to defer the gain for federal  income tax purposes upon the sale of
the property if the proceeds are reinvested in an additional property.

Certain Management Services

         CNL APF Partners,  LP, an affiliate of the General  Partners,  provides
certain  services  relating to management of the  Partnership and its Properties
pursuant to a management  agreement with the Partnership.  Under this agreement,
CNL APF  Partners,  LP (the  "Advisor") is  responsible  for  collecting  rental
payments,  inspecting  the  Properties  and  the  tenants'  books  and  records,
assisting the  Partnership  in  responding  to tenant  inquiries and notices and
providing  information to the Partnership about the status of the leases and the
Properties.  The Advisor also assists the General  Partners in  negotiating  the
leases.  For these  services,  the  Partnership has agreed to pay the Advisor an
annual  fee  equal to one  percent  of the sum of  gross  rental  revenues  from
Properties  wholly owned by the  Partnership  plus the  Partnership's  allocable
share of gross  revenues  of  joint  ventures  in  which  the  Partnership  is a
co-venturer,  but not in excess of  competitive  fees for  comparable  services.
Under the management agreement, the management fee is subordinated to receipt by
the Limited  Partners of an aggregate,  ten percent,  cumulative,  noncompounded
annual  return on their  adjusted  capital  contributions  (the  "10%  Preferred
Return"),  calculated in accordance with the Partnership's  limited  partnership
agreement (the "Partnership Agreement").

         During 2000,  CNL Fund Advisors,  Inc.  assigned its rights in, and its
obligations  under,  the management  agreement  with the  Partnership to CNL APF
Partners,  LP All of the  terms  and  conditions  of the  management  agreement,
including the payment of fees, as described above, remain unchanged.

         The management agreement continues until the Partnership no longer owns
an interest in any Properties unless terminated at an earlier date upon 60 days'
prior notice by either party.

Competition

         The fast-food and family-style  restaurant business is characterized by
intense  competition.  The restaurants on the Partnership's  Properties  compete
with  independently  owned  restaurants,  restaurants which are part of local or
regional chains, and restaurants in other well-known national chains,  including
those offering different types of food and service.



<PAGE>


Employees

         The  Partnership   has  no  employees.   The  officers  of  CNL  Realty
Corporation and the officers and employees of APF, the parent company of CNL APF
Partners,  LP, perform certain  services for the Partnership.  In addition,  the
General  Partners  have  available to them the  resources  and  expertise of the
officers and employees of CNL Financial  Group,  Inc., a diversified real estate
company,  and its  affiliates,  who may also  perform  certain  services for the
Partnership.


Item 2.  Properties

         As of December 31, 2001, the Partnership owned 32 Properties. Of the 32
Properties, 24 are owned by the Partnership in fee simple, six are owned through
joint  venture  arrangements  and two are  owned  through  a  tenancy  in common
arrangement.  See  Item 1.  Business  - Joint  Venture  and  Tenancy  in  Common
Arrangements.  The Partnership is not permitted to encumber its Properties under
the terms of its  partnership  agreement.  Reference  is made to the Schedule of
Real Estate and  Accumulated  Depreciation  for a listing of the  Properties and
their  respective  costs,  including  acquisition  fees and certain  acquisition
expenses.

Description of Properties

         Land. The Partnership's  Property sites range from approximately 14,100
to 98,800  square  feet  depending  upon  building  size and  local  demographic
factors.  Sites  purchased  by  the  Partnership  are  in  locations  zoned  for
commercial use which have been reviewed for traffic patterns and volume.

         The following table lists the Properties owned by the Partnership as of
December 31, 2001 by state. More detailed information  regarding the location of
the  Properties  is  contained  in the  Schedule of Real Estate and  Accumulated
Depreciation for the year ended December 31, 2001.

                     State                      Number of Properties
                     -----                      --------------------

                     Alabama                             3
                     Florida                             6
                     Illinois                            2
                     Indiana                             3
                     Maryland                            1
                     Massachusetts                       1
                     Michigan                            3
                     Mississippi                         1
                     North Carolina                      1
                     Ohio                                1
                     Tennessee                           1
                     Texas                               6
                     Virginia                            2
                     Washington, D.C.                    1
                                                  -----------------

                     Total Properties                    32
                                                  =================

         Buildings.  Each of the Properties owned by the Partnership  includes a
building that is one of a Restaurant  Chain's  approved  designs.  However,  the
building located on one Checkers Property is owned by the tenant, while the land
parcel is owned by the  Partnership.  In  addition,  the  Property  in  Maywood,
Illinois  was leased to two tenants and each  operate  one  separate  restaurant
chain. The buildings  generally are rectangular and are constructed from various
combinations  of stucco,  steel,  wood,  brick and tile.  The sizes of buildings
owned by the Partnership  range from  approximately  1,200 to 6,800 square feet.
All buildings on Properties  are  freestanding  and  surrounded by paved parking
areas.   Buildings  are  suitable  for  conversion  to  various  uses,  although
modifications may be required prior to use for other than restaurant operations.
As of December 31, 2001,  the  Partnership  had no plans for  renovation  of the
Properties.  Depreciation  expense is computed for  buildings  and  improvements
using the straight line method using  depreciable lives of 31.5 and 39 years for
federal income tax purposes.

         As of December 31, 2001, the aggregate cost of the Properties  owned by
the Partnership and joint ventures  (including  Properties owned through tenancy
in common  arrangements)  for federal  income tax purposes was  $15,047,560  and
$6,039,412, respectively.

         The following table lists the Properties owned by the Partnership as of
December 31, 2001 by Restaurant Chain.

               Restaurant Chain                 Number of Properties
               ----------------                 --------------------

               Arby's                                    3
               Captain D's                               2
               Checkers                                  1
               Denny's                                   4
               Dunkin Donuts                             1
               Golden Corral                             2
               IHOP                                      1
               Jack in the Box                           1
               KFC                                       1
               Pizza Hut                                 5
               Shoney's                                  3
               Taco Bell                                 1
               Waffle House                              1
               Wendy's                                   2
               Other                                     5
                                                ---------------------

               Total Chains on Properties                33
                                                =====================

         The General Partners consider the Properties to be well-maintained  and
sufficient for the Partnership's operations.

         The General Partners believe that the Properties are adequately covered
by  insurance.  In  addition,  the General  Partners  have  obtained  contingent
liability and property coverage for the Partnership.  This insurance is intended
to reduce the Partnership's  exposure in the unlikely event a tenant's insurance
policy lapses or is insufficient to cover a claim relating to the Property.

         Leases.  The Partnership leases the Properties to operators of selected
national and regional fast-food restaurant chains. The leases are generally on a
long-term  "triple  net"  basis,  meaning  that the  tenant is  responsible  for
repairs,  maintenance,  property taxes,  utilities and insurance.  Generally,  a
lessee is required, under the terms of its lease agreement, to make such capital
expenditures as may be reasonably  necessary to refurbish  buildings,  premises,
signs  and  equipment  so  as  to  comply  with  the  lessee's  obligations,  if
applicable,  under the  franchise  agreement  to reflect the current  commercial
image of its Restaurant  Chain.  These capital  expenditures  are required to be
paid by the lessee during the term of the lease.  The terms of the leases of the
Properties owned by the Partnership are described in Item 1. Business - Leases.

         At December 31, 2001,  2000,  1999, 1998, and 1997, the Properties were
97%, 94%, 97%, 97%, and 93% occupied,  respectively. The following is a schedule
of the average rent per property for the years ended December 31:

<TABLE>
<CAPTION>

 <c>
                                       2001              2000               1999             1998              1997
                                   --------------    --------------     -------------    -------------     -------------

Rental Revenues (1)(2)               $ 1,976,264       $ 2,255,228       $ 2,640,100      $ 2,544,386       $ 2,596,455
Properties (2)                                31                32                37               36                37
Average Rent per Property            $    63,750       $    70,476       $    71,354      $    70,677       $    70,174

</TABLE>

<PAGE>


(1)      Rental income  includes the  Partnership's  share of rental income from
         the  Properties  owned  through  joint  venture  arrangements  and  the
         Properties  owned  through  tenancy  in  common  arrangements.   Rental
         revenues have been adjusted,  as applicable,  for any amounts for which
         the Partnership has established a provision for doubtful accounts.

(2)      Excludes  Properties  that were vacant at December 31, and that did not
         generate rental revenues during the year ended December 31.

         The following is a schedule of lease expirations for leases in place as
of December 31, 2001 for the next ten years and thereafter.

<TABLE>
<CAPTION>
<S> <c>
                                                                                     Percentage of
             Expiration Year          Number             Annual Rental               Gross Annual
                                     of Leases              Revenues                 Rental Income
             -----------------    ----------------    ---------------------    --------------------------

              2002                              1               $   18,630                   0.96%
              2003                              1                   29,618                   1.53%
              2004                              1                   33,058                   1.71%
              2005                             --                       --                      --
              2006                             --                       --                      --
              2007                             --                       --                      --
              2008                             14                  836,223                  43.23%
              2009                              4                  344,144                  17.79%
              2010                              1                   72,803                   3.76%
              2011                              3                  187,970                   9.72%
              Thereafter                        7                  411,706                  21.30%
                                        ----------        -----------------           -------------
              Total (1)                        32             $  1,934,152                 100.00%
                                        ==========        =================           =============
</TABLE>

(1)      Excludes one Property which was vacant at December 31, 2001.

         Leases  with Major  Tenants.  The terms of each of the leases  with the
Partnership's  major  tenants as of December  31,  2001 (see Item 1.  Business -
Major  Tenants),  are  substantially  the  same as  those  described  in Item 1.
Business - Leases.

         Shoney's,  Inc.  leases three Shoney's  restaurants and one Captain D's
restaurant.  The initial  term of each lease is 20 years  (expiring in 2008) and
average minimum base rent is approximately  $67,900 (ranging from  approximately
$46,400 to $81,300).

         Tampa Foods, L.P. leases one Wendy's Old Fashioned Hamburger Restaurant
and one  Green  Tea  Restaurant.  The  initial  term of each  lease  is 20 years
(expiring  in 2008) and  average  minimum  base rent is  approximately  $101,300
(approximately $108,000 and $94,600, respectively).


Item 3.  Legal Proceedings

         Neither the  Partnership,  nor its General Partners or any affiliate of
the General Partners,  nor any of their respective  Properties,  is party to, or
subject to, any material pending legal proceedings.


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

         Not applicable.



<PAGE>


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

(a) As of March 15, 2002, there were 2,904 holders of record of the Units. There
is no public  trading  market for the Units,  and it is not  anticipated  that a
public  market for the Units will  develop.  During 2001,  Limited  Partners who
wished to sell their Units may have  offered the Units for sale  pursuant to the
Partnership's  distribution reinvestment plan (the "Plan"), and Limited Partners
who wished to have their  distributions used to acquire additional Units (to the
extent  Units were  available  for  purchase)  may have done so pursuant to such
Plan. The General  Partners have the right to prohibit  transfer of Units.  From
inception  through  December  2000,  the  price  paid for any  Unit  transferred
pursuant to the Plan  ranged from  $405.10 to $475 per Unit.  During  2001,  due
primarily to the sales of  Properties,  the price paid for any Unit  transferred
pursuant  to the  Plan  was  $357.40  per  Unit.  The  price  paid  for any Unit
transferred  other than pursuant to the Plan was subject to  negotiation  by the
purchasers and the selling Limited  Partner.  The Partnership will not redeem or
repurchase Units.

         The following table reflects,  for each calendar quarter, the high, low
and average  sales prices for transfers of Units during 2001 and 2000 other than
pursuant to the Plan, net of commissions.

<TABLE>
<CAPTION>

 <c>
                                                     2001 (1)                              2000 (1)
                                        -----------------------------------    ----------------------------------
                                          High         Low        Average       High         Low        Average
                                        ----------   --------    ----------    --------    --------    ----------
      First Quarter                         $ 324      $ 207         $ 249       $ 365       $ 365         $ 365
      Second Quarter                          400        253           303         353         353           353
      Third Quarter                           298        248           281         328         185           317
      Fourth Quarter                          287        216           241         433         140           348
</TABLE>

(1)  A total of 458 and 262 Units were  transferred  other than  pursuant to the
     Plan for the years ended December 31, 2001 and 2000, respectively.

         The capital  contribution  per Unit was $500.  All cash  available  for
distribution  will be distributed  to the partners  pursuant to the provision of
the Partnership Agreement.

         For the  years  ended  December  31,  2001 and  2000,  the  Partnership
declared cash distributions of $3,147,894 and $5,050,000,  respectively,  to the
Limited Partners.  Distributions for the year ended December 31, 2001,  included
$1,050,000  in special  distributions,  as a result of the  distribution  of net
sales proceeds from the sale of several Properties.  These special distributions
were  effectively  a return of a portion of the  Limited  Partners'  investment,
although,  in accordance  with the Partnership  Agreement,  $989,873 was applied
toward the Limited Partners' 10% Preferred Return and the balance of $60,127 was
treated as a return of capital for purposes of calculating the Limited Partners'
10% Preferred  Return.  As a result of the return of capital,  the amount of the
Limited Partners, invested capital contributions (which generally is the Limited
Partners' capital contributions,  less distributions from the sale of a Property
that are  considered to be a return of capital) was  decreased;  therefore,  the
amount of the Limited Partners' invested capital  contributions on which the 10%
Preferred Return is calculated was lowered  accordingly.  Distributions  for the
year  ended  December  31,  2000  included  $2,800,000  and as a  result  of the
distribution  of the net  sales  proceeds  from  the sale of the  Properties  in
Detroit,  Michigan,  and Temple Terrace and Punta Gorda, Florida, to the Limited
Partners.  This amount was applied toward the Limited  Partners'  cumulative 10%
Preferred  Return.  The reduced number of Properties  for which the  Partnership
receives rental payments  reduced the  Partnership's  revenues.  The decrease in
Partnership  revenues,  combined with the fact that a significant portion of the
Partnership's  expenses  are fixed in nature,  resulted  in a  decrease  in cash
distributions  to the Limited  Partners in the quarters ended September 2001 and
2000. No amounts  distributed  to the partners for the years ended  December 31,
2000, are required to be or have been treated by the  Partnership as a return of
capital  for  purposes of  calculating  the  Limited  Partners'  return on their
adjusted capital  contributions.  No distributions have been made to the General
Partners to date.  As  indicated in the chart below,  these  distributions  were
declared  at the  close of each of the  Partnership's  calendar  quarters.  This
amount includes monthly  distributions  made in arrears for the Limited Partners
electing to receive such distributions on this basis.

                Quarter Ended                  2001             2000
                -------------------        -------------    -------------
                March 31                      $ 975,000        $ 600,000
                June 30                         525,000          600,000
                September 30                  1,123,947        3,325,000
                December 31                     523,947          525,000

         The  Partnership  intends to  continue  to make  distributions  of cash
available  for  distribution  to the  Limited  Partners  on a  quarterly  basis,
although  the  General  Partners,  in their  sole  discretion,  may elect to pay
distributions monthly.

(b)   Not applicable


Item 6.  Selected Financial Data

<TABLE>
<CAPTION>

 <c>
                                         2001           2000            1999            1998            1997
                                     -------------- --------------  --------------  --------------  --------------
Year ended December 31:
   Revenues (1)                        $ 2,047,310    $ 2,189,760     $ 2,602,057     $ 2,285,696     $ 2,531,385
   Net income (2)                        1,089,094      2,078,310       1,827,359       1,821,449       1,720,668
   Cash distributions
      declared (3)                       3,147,894      5,050,000       2,400,000       3,633,748       2,760,000
   Net income per Unit (2)                   18.15          34.64           30.15           30.15           28.42
   Cash distributions declared
      per Unit                               52.46          84.17           40.00           60.56           46.00

At December 31:
   Total assets                        $15,542,775    $17,616,159     $20,828,319     $21,189,833     $23,309,888
   Partners' capital                    14,736,869     16,795,669      19,767,359      20,340,000      22,152,299
</TABLE>

(1)  Revenues  include  equity in earnings  (losses) of joint ventures.

(2)  Net income for the years ended  December  31,  2001,  2000 and 1997 include
     $120,872,  $92,397  and  $6,652,  respectively,  from losses on the sale of
     assets and $178,817, $439,132 and $70,337, respectively, for provisions for
     write-down of assets.  Net income for the years ended December 31, 2000 and
     1998 includes $1,134,692 and $226,024, respectively, from gains on the sale
     of assets.

(3)  Distributions  for the years ended December 31, 2001, 2000 and 1998 include
     special distributions to the Limited Partners of $1,050,000, $2,800,000 and
     $1,233,748,  respectively, in net sales proceeds from the sale of two, four
     and two Properties in 2001, 2000 and 1998, respectively.

         The above selected  financial  data should be read in conjunction  with
the financial statements and related notes contained in Item 8. hereof.


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

         The  Partnership  was  organized on November  18, 1987,  to acquire for
cash,  either  directly  or  through  joint  venture  arrangements,  both  newly
constructed  and  existing  restaurant  Properties,  as well as land upon  which
restaurant  Properties  were to be  constructed,  which are leased  primarily to
operators  of  selected   national  and  regional   fast-food  and  family-style
Restaurant Chains.  Substantially all of the leases are triple-net leases,  with
the lessees  generally  responsible  for all repairs and  maintenance,  property
taxes,  insurance and utilities.  As of December 31, 2001, the Partnership owned
32 Properties, either directly or indirectly through joint venture or tenancy in
common arrangements.


Capital Resources

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
Partnership  generated cash from  operations  (which includes cash received from
tenants, distributions from joint ventures and interest received, less cash paid
for expenses) of  $1,768,652,  $1,827,107,  and  $2,401,313,  respectively.  The
decreases in cash from  operations  during 2001, as compared to 2000, and during
2000,  as  compared  to 1999,  were  primarily a result of changes in income and
expenses,  as  described  in  "Results of  Operations"  below and changes in the
Partnership's working capital.

         Other  sources and uses of capital  included the  following  during the
years ended December 31, 2001, 2000, and 1999.

         In January 1999, the  Partnership  invested the net sales proceeds from
the sale of its  Property  in  Naples,  Florida in a  Property  in  Zephyrhills,
Florida, with an affiliate of the General Partners as tenants-in-common for a 76
percent interest in the Property.  A portion of the transaction  relating to the
sale of the Property in Naples,  Florida and the  reinvestment  of the net sales
proceeds  qualified as a like-kind  exchange  transaction for federal income tax
purposes.

         In June 2000, the Partnership sold its Property in Detroit, Michigan to
the tenant  for  $1,095,000  and  received  net sales  proceeds  of  $1,089,325,
resulting in a gain of approximately  $552,600. In connection with the sale, the
Partnership  incurred a deferred,  subordinated,  real estate disposition fee of
$32,850.  In addition,  in July 2000,  the  Partnership  sold its  Properties in
Temple  Terrace,  Florida  and  Punta  Gorda,  Florida,  to a  third  party  for
$2,353,583 resulting in a gain of approximately $582,100. In connection with the
sales, the Partnership  incurred deferred  subordinated real estate  disposition
fees of $70,068. In October 2000, the Partnership  distributed $2,800,000 of the
net sales proceeds from the sales of these Properties as a special  distribution
to the Limited Partners, as described below, and used the remaining net proceeds
to pay Partnership  liabilities.  The Partnership distributed amounts sufficient
to enable the Limited Partners to pay federal and state income taxes, if any (at
a level reasonably assumed by the General Partners), resulting from the sales.

         In November 2000, the Partnership  sold its Property in Topeka,  Kansas
to a third party for $500,000 and received net sales  proceeds of  approximately
$496,400,  resulting in a loss of approximately  $92,400. In connection with the
sale, the Partnership incurred a deferred, subordinated, real estate disposition
fee of $15,000. In January 2001, the Partnership distributed $450,000 of the net
sales proceeds from the sale of this Property as a special  distribution  to the
Limited Partners, as described below, and used the remaining net proceeds to pay
Partnership  liabilities.  The  Partnership  distributed  amounts  sufficient to
enable the Limited  Partners to pay federal and state income taxes, if any (at a
level reasonably assumed by the General Partners), resulting from the sale.

         During 2001, the  Partnership  sold its  Properties in Corpus  Christi,
Texas, and Palm Bay,  Florida,  and received net sales proceeds of approximately
$679,900,  resulting in losses of $120,872.  In  connection  with the sale,  the
Partnership  incurred  deferred,  real estate  disposition  fees of $21,023.  In
October 2001,  the  Partnership  distributed  $600,000 of the net sales proceeds
from the sales of these  Properties  as a special  distribution  to the  Limited
Partners,  as  described  below,  and used the  remaining  net  proceeds  to pay
Partnership  liabilities.  The  Partnership  distributed  amounts  sufficient to
enable the Limited  Partners to pay federal and state income taxes, if any (at a
level reasonably assumed by the General Partners), resulting from the sales.

         None of the Properties owned by the Partnership,  or the joint ventures
or tenancy in common arrangements in which the Partnership owns an interest,  is
or may be  encumbered.  Under its  partnership  agreement,  the  Partnership  is
prohibited from borrowing for any purpose;  provided,  however, that the General
Partners or their affiliates are entitled to reimbursement,  at cost, for actual
expenses  incurred by the General  Partners or their affiliates on behalf of the
Partnership.  Affiliates of the General Partners from time to time incur certain
operating  expenses  on behalf  of the  Partnership  for  which the  Partnership
reimburses the affiliates without interest.

         In January 2002,  Titusville  Joint Venture,  in which the  Partnership
owned a 26.6%  interest,  sold its  Property  to an  unrelated  third  party for
approximately   $180,000  and  received  net  sales  proceeds  of  approximately
$165,600,  resulting in a gain of $4,900 to the joint venture.  In addition,  in
January  2002,  the  Partnership  and  the  joint  venture  partner   liquidated
Titusville Joint Venture and the Partnership  received its pro rata share of the
liquidation  proceeds. No gain or loss was recorded relating to the liquidation.
The Partnership  intends to use the  liquidation  proceeds to pay liabilities of
the Partnership.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments such as
demand deposit accounts at commercial  banks,  certificates of deposit and money
market accounts with less than a 90-day maturity date, pending the Partnership's
use of such funds to pay Partnership  expenses or to make  distributions  to the
partners.  At December 31, 2001, the Partnership  had $645,220  invested in such
short-term  investments,  as compared to  $1,366,871  at December 31, 2000.  The
decrease in the amount invested in short-term  investments at December 31, 2001,
as compared to December 31, 2000, is primarily  attributable  to the Partnership
distributing  the net  sales  proceeds  it  received  from the 2000  sale of the
Property in Topeka,  Kansas,  as described  above.  As of December 31, 2001, the
average  interest rate earned on the rental income  deposited in demand  deposit
accounts at commercial banks was 3.2% annually.  The funds remaining at December
31,  2001,  will be used  to pay  distributions  and  other  liabilities  of the
Partnership.

Short-Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The General Partners believe that the leases will continue to generate cash flow
in excess of operating expenses.

         Due to low  operating  expenses  and  ongoing  cash flow,  the  General
Partners do not believe that  working  capital  reserves  are  necessary at this
time.  In  addition,  because the leases for the  Partnership's  Properties  are
generally on a triple-net  basis, it is not anticipated that a permanent reserve
for  maintenance  and repairs will be  established  at this time. To the extent,
however,  that the Partnership  has  insufficient  funds for such purposes,  the
General Partners will contribute to the Partnership an aggregate amount of up to
one percent of the offering proceeds for maintenance and repairs.

         The General  Partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of the operating  expenses of the  Partnership,  to the extent
that  the  General  Partners   determine  that  such  funds  are  available  for
distribution.  Based on current and anticipated  future cash from operations and
for the years ended December 31, 2001 and 2000, net sales proceeds from the sale
of Properties, the Partnership declared distributions to the Limited Partners of
$3,147,894,  $5,050,000,  and $2,400,000, for the years ended December 31, 2001,
2000, and 1999,  respectively.  This represents distributions of $52.46, $84.16,
and $40 per  Unit for the  years  ended  December  31,  2001,  2000,  and  1999,
respectively.  Distributions  for the year ended  December  31,  2001,  included
$1,050,000  in special  distributions,  as a result of the  distribution  of net
sales proceeds from the sale of several Properties.  These special distributions
were  effectively  a return of a portion of the  Limited  Partners'  investment,
although,  in accordance  with the Partnership  agreement,  $989,873 was applied
toward the Limited Partners' 10% Preferred Return and the balance of $60,127 was
treated as a return of capital for purposes of calculating the Limited Partners'
10% Preferred  Return.  As a result of the return of capital,  the amount of the
Limited Partners' invested capital contributions (which generally is the Limited
Partners' capital contributions,  less distributions from the sale of a Property
that are  considered to be a return of capital) was  decreased;  therefore,  the
amount of the Limited Partners' invested capital  contributions on which the 10%
Preferred Return is calculated was lowered  accordingly.  Distributions  for the
year  ended  December  31,  2000  included  $2,800,000,   as  a  result  of  the
distribution  of a  portion  of net  sales  proceeds  from the  sale of  several
Properties.  The special distributions were effectively a return of a portion of
the Limited Partners'  investment,  although, in accordance with the Partnership
agreement,  they were applied to the Limited  Partners' unpaid preferred return.
The reduced  number of  Properties  for which the  Partnership  receives  rental
payments  reduced  the  Partnership's  revenues.  The  decrease  in  Partnership
revenues, combined with the fact that a significant portion of the Partnership's
expenses are fixed in nature,  resulted in a decrease in cash  distributions  to
the Limited Partners  commencing the quarters ended September 30, 2001 and 2000.
No distributions  were made to the General Partners for the years ended December
31, 2001, 2000 and 1999. No amounts  distributed to the Limited Partners for the
years ended  December 31, 2000 and 1999, are required to be or have been treated
by the  Partnership  as a return of capital  for  purposes  of  calculating  the
Limited   Partners'  return  on  their  adjusted  capital   contributions.   The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the Limited Partners on a quarterly basis.

         As of  December  31, 2001 and 2000,  the  Partnership  owed  affiliates
$4,841 and $8,556,  respectively,  for  operating  expenses and  accounting  and
administrative  services.  As of March 15, 2002, the  Partnership had reimbursed
the  affiliates all such amounts.  In addition,  during the years ended December
31, 2001 and 2000, the Partnership incurred $21,023 and $118,458,  respectively,
in real estate  disposition fees due to an affiliate as a result of its services
in connection with the sale of several  Properties.  The payment of such fees is
deferred until the Limited Partners have received the sum of their 10% Preferred
Return and their adjusted capital contributions.

         During 2000, the General  Partners waived their right to receive future
distributions  from the Partnership,  including both  distributions of operating
cash flow and  distributions  of  liquidation  proceeds,  to the extent that the
cumulative amount of such distributions  would exceed the balance in the General
Partners'  capital  account as of December  31, 1999.  Accordingly,  the General
Partners were not allocated any net income and did not receive any distributions
during the years ended December 31, 2001 and 2000.

         Amounts  payable to other  parties,  including  distributions  payable,
decreased to $615,921 at December 31, 2001,  from $647,813 at December 31, 2000.
The  decrease in  liabilities  at December 31, 2001,  was  partially  due to the
amounts of transaction  costs relating to the proposed  Merger with CNL American
Properties  Fund, Inc.  ("APF"),  as described below in "Termination of Merger".
Total  liabilities at December 31, 2001, to the extent they exceed cash and cash
equivalents,  will be paid from anticipated  future cash from operations,  or in
the event the General Partners elect to make additional capital contributions or
loans, from the future General Partners' capital contributions or loans.

Long-Term Liquidity

         The  Partnership  has no long-term  debt or other  long-term  liquidity
requirements.

Critical Accounting Policies

         The  Partnership's  leases are  accounted  for under the  provisions of
Statement of Accounting Standard No. 13, "Accounting for Leases" ("FAS 13"), and
have been  accounted  for using  either the direct  financing  or the  operating
method.  FAS 13 requires  management to estimate the economic life of the leased
property,  the residual  value of the leased  property and the present  value of
minimum lease payments to be received from the tenant.  In addition,  management
assumes  that all  payments  to be  received  under its leases are  collectible.
Changes in  management's  estimates or assumption  regarding  collectibility  of
lease  payments  could  result  in a change in  accounting  for the lease at the
inception of the lease.

         The Partnership  accounts for its  unconsolidated  joint ventures using
the equity method of accounting. Under generally accepted accounting principles,
the equity method of accounting is  appropriate  for entities that are partially
owned by the  Partnership,  but for which  operations of the investee are shared
with other partners.  The  Partnership's  joint venture  agreements  require the
consent of all partners on all key  decisions  affecting  the  operations of the
underlying Property.

         Management  reviews its  Properties and  investments in  unconsolidated
entities  periodically  (no less than once per  year)  for  impairment  whenever
events or changes in  circumstances  indicate  that the  carrying  amount of the
assets may not be recoverable through operations.  Management determines whether
impairment in value has occurred by comparing the estimated future  undiscounted
cash flows, including the residual value of the Property, with the carrying cost
of the  individual  Property.  If an  impairment  is  indicated,  the assets are
adjusted to their fair value.



<PAGE>


Results of Operations

         During 1999 and 2000, the Partnership  owned and leased 30 wholly owned
Properties (including four Properties which were sold in 2000). During 2001, the
Partnership  owned and leased 26 wholly  owned  Properties  (including  two sold
Properties).  In addition,  during 1999,  2000 and 2001, the  Partnership  was a
co-venturer  in six  separate  joint  ventures  that each  owned and  leased one
Property  and  owned one  Property  with  affiliates  as  tenants-in-common.  In
addition,  during 1999,  2000,  and 2001, the  Partnership  owned and leased one
additional   Property,   with  an   affiliate  of  the  General   Partners,   as
tenants-in-common.  As of December  31,  2001,  the  Partnership  owned,  either
directly or through joint venture  arrangements,  32  Properties,  which are, in
general,  subject to long-term,  triple-net leases. The leases of the Properties
provide for minimum base annual rental amounts (payable in monthly installments)
ranging from $20,300 to $130,300.  Generally,  the leases provide for percentage
rent  based on sales in excess of a  specified  amount to be paid  annually.  In
addition,  some of the leases  provide that,  commencing in the sixth lease year
the  percentage  rent will be an amount  equal to the greater of the  percentage
rent calculated under the lease formula or a specified  percentage (ranging from
one-half to two percent) of the purchase price.  For further  description of the
Partnership's  leases and Properties,  see Item 1. Business - Leases and Item 2.
Properties, respectively.

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
Partnership earned  $1,542,156,  $1,860,652 , and $2,132,891,  respectively,  in
rental  income from  operating  leases and earned  income from direct  financing
leases from its wholly owned Properties  described above. The decrease in rental
and earned income during 2001 and 2000,  each as compared to the previous  year,
was partially  attributable to the sales of various  Properties  during 2001 and
2000.  During 1999, the Partnership used the net sales proceeds from the sale of
a Property in Naples,  Florida to acquire one Property in Zephryhills,  Florida,
held as tenants-in-common  with affiliates of the General Partners, as described
above in "Capital Resources." In addition, during 2001 and 2000, the Partnership
distributed  a  portion  of the net  sales  proceeds  from the  sale of  several
Properties  to the Limited  Partners,  as described in  "Short-Term  Liquidity."
Rental and earned  income are expected to remain at reduced  amounts as a result
of  distributing  the net  sales  proceeds  from  the  2001  and  2000  sales of
Properties to the Limited Partners.

         The decrease in rental and earned  rental  income during the year ended
December  31,  2001,  as  compared  to the year ended  December  31,  2000,  was
partially attributable to the fact that during the year ended December 31, 2000,
the Partnership collected and recognized as income approximately $39,000 in past
due rental amounts from the guarantor of the original  tenant of the Property in
Palm Bay,  Florida.  No such  amounts  were  collected  during  the years  ended
December 31, 2001 and 1999. The original  tenant vacated the Property in October
1997.  In February  1998,  the  Partnership  entered into a new lease with a new
tenant  for  this  Property,  who  then  vacated  the  Property  in May 2000 and
discontinued making rental payments. As a result,  rental, earned and contingent
rental income decreased by approximately  $72,200 during the year ended December
31, 2001.  In August 2001,  the  Partnership  sold this  Property,  as described
above, in "Capital  Resources."  Rental and earned rental income are expected to
remain at reduced  amounts as a result of  distributing  the net sales  proceeds
from the sale of this Property to the Limited Partners.

         Rental and earned income also decreased by approximately $20,100 during
the year ended  December 31, 2001 due to the fact that the  Partnership  entered
into a new lease  relating to the  Property in  Streator,  Illinois.  The former
lease for the Property in Streator,  Illinois,  which was scheduled to expire in
December 2002, was terminated by the  Partnership and the tenant during the year
ended  December 31, 2001.  In connection  therewith,  the  Partnership  received
approximately  $67,100  in lease  termination  income in  consideration  for the
Partnership  releasing  the tenant  from its  obligations  under the lease.  The
Partnership  re-leased  this  Property to a new tenant.  Rents due under the new
lease  are  lower  than  rents due under  the  previous  lease;  therefore,  the
Partnership  expects that rental income in future periods will remain at reduced
amounts.  However,  the General  Partners do not anticipate that any decrease in
rental income  relating to the new lease will have a material  adverse affect on
the Partnership's financial position or results of operations.

         In October  1998,  the tenant of one Boston Market  Property  filed for
bankruptcy, and in June 2000, rejected the lease relating to this Property. As a
result, the tenant discontinued making rental payments on the rejected lease. In
December  2000, the  Partnership  entered into a new lease with a new tenant for
this Property for which rental payments commenced in March 2001. The decrease in
rental and earned  rental  income  during the year ended  December  31, 2001 was
partially  offset by an increase in rental and earned  income as a result of the
Partnership entering into this new lease.

         For the years ended December 31, 2001,  2000, and 1999, the Partnership
also earned $81,550, $24,545, and $126,521,  respectively,  in contingent rental
income from the  Partnership's  Properties.  The increase in  contingent  rental
income 2001, as compared to 2000,  and the decrease  during 2000, as compared to
1999 was  partially  attributable  to  fluctuations  in gross  sales for certain
restaurant  Properties  whose leases  require the payment of  contingent  rental
income.

         For the years ended December 31, 2001,  2000, and 1999, the Partnership
also  recognized  income  of  $278,224,  $234,317  and  $303,223,  respectively,
attributable  to net income earned by joint ventures in which the Partnership is
a co-venturer. During 1997, the tenant of the Property owned by Titusville Joint
Venture vacated the Property and ceased operations. For the years ended December
31, 2001,  2000, and 1999,  Titusville  Joint Venture (in which the  Partnership
owns a 26.6% interest in the profits and losses of the joint  venture)  incurred
expenses,  which are fixed in nature,  such as real estate taxes,  insurance and
maintenance.  Titusville  Joint Venture had previously  recorded a provision for
write-down  of assets  relating to this  Property  prior to 1999.  In  addition,
during 2001 and 2000, the joint venture  established  additional  provisions for
write-down  of assets for its Property for  approximately  $73,600 and $227,100,
respectively.  The provisions  represented the difference between the Property's
carrying values at December 31, 2001 and 2000,  respectively,  and the estimated
net  realizable  value of the  Property.  Titusville  Joint  Venture  has ceased
collection  efforts on past due amounts.  During January 2002, the joint venture
sold this  Property,  as described  above,  in "Capital  Resources."  Net income
earned by joint ventures is expected to remain at reduced amounts as a result of
distributing  the  majority  of net  sales  proceeds  received  to  the  Limited
Partners.

         During the year  ended  December  31,  2001,  two of the  Partnership's
lessees,  Shoney's,  Inc. and Tampa Foods,  L.P., each contributed more than ten
percent of the  Partnership's  total  rental and earned  income  (including  the
Partnership's share of the rental and earned income from six Properties owned by
joint ventures and two Properties  owned with affiliates of the General Partners
as  tenant-in-common).  As of December 31, 2001,  Shoney's,  Inc. was the lessee
under leases relating to four restaurants,  and Tampa Foods, L.P. was the lessee
relating to two restaurants. It is anticipated that, based on the minimum rental
payments required by the leases, Shoney's, Inc. and Tampa Foods, L.P., each will
continue to contribute more than ten percent of the  Partnership's  total rental
income during 2002. In addition,  during the year ended December 31, 2001,  four
Restaurant Chains, Denny's,  Shoney's, Pizza Hut and Wendy's, each accounted for
more than ten  percent of the  Partnership's  total  rental  and  earned  income
(including  the  Partnership's  share of the rental and earned  income  from six
Properties  owned by joint ventures and two Properties  owned with affiliates of
the General  Partners as  tenants-in-common).  In 2002, it is  anticipated  that
these four  Restaurant  Chains  each will  continue to account for more than ten
percent of the total rental income to which the  Partnership  is entitled  under
the terms of the leases. Any failure of these lessees or these Restaurant Chains
could materially affect the Partnership's  income if the Partnership is not able
to re-lease the Properties in a timely manner.

         During  the  years  ended  December  31,  2001,  2000,  and  1999,  the
Partnership also earned $78,307, $70,246 and $39,422,  respectively, in interest
and other  income.  The increase in interest  and other  income  during 2001 and
2000,  each as compared to the previous year, was due to interest  earned on the
net sales proceeds received from the sale of Properties described above, pending
distribution  to  the  Limited  Partners,  as  described  above  in  "Short-Term
Liquidity."

         Operating expenses,  including  depreciation and amortization  expense,
and provision for write-down of assets, were $837,344, $1,153,745, and $774,698,
for the years ended  December 31, 2001,  2000,  and 1999,  respectively.  During
2000,  the  Partnership  established a provision for write-down of assets in the
amount of $400,442,  including  $12,830 in previously  accrued rental income for
the Property in Palm Bay, Florida.  The tenant of this Property  defaulted under
the terms of its lease and vacated the Property.  The accrued  rental income was
the accumulated amount of non-cash accounting adjustments previously recorded in
order to recognize  future  scheduled  rent  increases as income evenly over the
term  of the  lease.  The  provision  represented  the  difference  between  the
Property's  carrying value , including the accumulated accrued rental income, at
December 31, 2000, and the general partners'  estimated net realizable value for
this Property. During the year ended December 31, 2001, the Partnership recorded
an additional  provision for  write-down of assets of $178,817.  The increase in
the  provision  represented  the  difference  between the carrying  value of the
Property  at June  30,  2001,  and the  estimated  net  realizable  value of the
Property  based on a sales  contract  with an  unrelated  third  party.  No such
provision was established  during 1999. As a result of the sale of the Property,
as described above in "Capital Resources," the Partnership  recognized a loss of
approximately $27,100 during the year ended December 31, 2001.

         In addition,  during 2000,  the  Partnership  recorded a provision  for
write-down of assets of $38,691 in previously  accrued rental income relating to
the property located in Richmond,  Virginia.  In October 1998, the tenant of one
Boston Market Property filed for  bankruptcy,  and in June 2000,  rejected,  the
lease relating to this Property.  As a result,  the tenant  discontinued  making
rental  payments  on the  rejected  lease.  The  accrued  rental  income was the
accumulated amount of non-cash  accounting  adjustments  previously  recorded in
order to recognize  future  scheduled  rent  increases as income evenly over the
term of the lease. The provision represented the difference between the carrying
value of the property,  including the accumulated accrued rental income, and the
general  partners'  estimated net realizable value of the property.  In December
2000, the Partnership entered into a new lease, as described above.

         The decrease in operating  expenses for 2001, as compared to 2000,  was
partially due to, and the increase in 2000,  as compared to 1999,  was partially
offset by, a reduction in depreciation  expense due to the sale of Properties in
2000 and 2001. In addition,  the decrease in operating  expenses during 2001, as
compared to 2000,  and the increase in 2000,  as compared to 1999 was  partially
offset,  due to the fact that during the years ended December 31, 2000 and 1999,
the Partnership  incurred  $36,493 and $142,244 in transaction  costs related to
the general  partners  retaining  financial and legal advisors to assist them in
evaluating  and  negotiating  the proposed  merger with CNL American  Properties
Fund,  Inc.  ("APF").  On March 1, 2000,  the general  partners and APF mutually
agreed to terminate the merger.  No such expenses were incurred  during the year
ended December 31, 2001.

         The increase in 2000,  as compared to 1999,  was  partially  due to the
Partnership  expensing  the balance of  unamortized  lease  costs,  during 2000,
relating  to the  Partnership's  Property  in Palm Bay,  Florida,  for which the
tenant  defaulted  under the  terms of its  lease  agreement.  The  decrease  in
operating expenses during the year ended December 31, 2001, was partially offset
by an increase in the costs incurred for  administrative  expenses for servicing
the Partnership and its Properties, as permitted by the Partnership agreement.

         As a result of the sale of the Property in Corpus  Christi,  Texas,  as
described above in "Capital  Resources,"  the  Partnership  recognized a loss of
approximately $93,800 during the year ended December 31, 2001.

         As  a  result  of  the  sale  of  three  Properties  during  2000,  the
Partnership recognized a total gain of $1,134,692 during the year ended December
31,  2000.  In  addition,  as a result of the sale of the  Property  in  Topeka,
Kansas, the Partnership recognized a loss of $92,397 for the year ended December
31, 2000. No Properties were sold during 1999.

         The  restaurant  industry,  as a  whole,  has  been  one  of  the  many
industries  affected  by  the  general  slowdown  in  the  economy.   While  the
Partnership has experienced  some losses due to the financial  difficulties of a
limited number of restaurant operators, the General Partners remain confident in
the overall  performance  of the  fast-food  and family style  restaurants,  the
concepts that  comprise the majority of the  Partnership's  portfolio.  Industry
data shows that these restaurant concepts continue to outperform and remain more
stable than higher-end  restaurants,  which have been more adversely affected by
the slowing economy.

         The  Partnership's  leases  as of  December  31,  2001,  are  generally
triple-net  leases and  contain  provisions  that the General  Partners  believe
mitigate  the adverse  effect of  inflation.  Such  provisions  include  clauses
requiring the payment of percentage rent based on certain restaurant sales above
a specified  level and/or  automatic  increases in based rent at specified times
during the term of the lease.  Inflation,  overall,  has had a minimal effect on
results of operations of the Partnership.  Continued inflation may cause capital
appreciation of the  Partnership's  Properties.  Inflation and changing  prices,
however,  also may have an adverse impact on the sales of the restaurants and on
potential capital appreciation of the Properties.

         In December 1999, the Securities and Exchange  Commission  released SAB
101, which provides the staff's view in applying generally  accepted  accounting
principles  to  selected  revenue  recognition  issues.  SAB  101  requires  the
Partnership  to defer  recognition  of certain  percentage  rental  income until
certain defined  thresholds are met. The  Partnership  adopted SAB 101 beginning
January 1, 2000. Implementation of SAB 101 did not have a material impact on the
Partnership's results of operations.

         In July 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141 "Business  Combinations" (FAS 141) and
Statement  of  Financial  Accounting  Standards  No.  142  "Goodwill  and  Other
Intangible  Assets" (FAS 142). The  Partnership has reviewed both statements and
has determined  that both FAS 141 and FAS 142 do not apply to the Partnership as
of December 31, 2001.

         In October  2001,  the  Financial  Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standards  No.  144  "Accounting  for  the
Impairment or Disposal of Long-Lived  Assets" (FAS 144). This statement requires
that a long-lived asset be tested for recoverability  whenever events or changes
in circumstances  indicate that its carrying amount may not be recoverable.  The
carrying  amount of a long-lived  asset is not recoverable if it exceeds the sum
of the  undiscounted  cash flows  expected to result  from the use and  eventual
disposition of the asset.  The assessment is based on the carrying amount of the
asset  at the  date it is  tested  for  recoverability.  An  impairment  loss is
recognized  when the  carrying  amount of a  long-lived  asset  exceeds its fair
value.  If an  impairment  is  recognized,  the  adjusted  carrying  amount of a
long-lived asset is its new cost basis. The adoption of FAS 144 did not have any
effect on the  partnership's  recording of impairment  losses as this  Statement
retained  the  fundamental  provisions  of  FAS  No.  121  "Accounting  for  the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."

Termination of Merger

         On March 11, 1999, the  Partnership  entered into an Agreement and Plan
of Merger with APF,  pursuant to which the Partnership  would be merged with and
into a subsidiary of APF.  Under the  Agreement  and Plan of Merger,  APF was to
issue shares of its common stock as  consideration  for the Merger.  On March 1,
2000, the General  Partners and APF announced  that they had mutually  agreed to
terminate  the  Agreement  and Plan of Merger.  The  agreement to terminate  the
Agreement and Plan of Merger was based, in large part, on the General  Partners'
concern that,  in light of market  conditions  relating to publicly  traded real
estate  investment  trusts,  the value of the transaction  had diminished.  As a
result of such  diminishment,  the General  Partners'  ability to  unequivocally
recommend voting for the transaction, in the exercise of their fiduciary duties,
had become questionable.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         Not applicable.


Item 8.  Financial Statements and Supplementary Data




<PAGE>


                            CNL INCOME FUND IV, LTD.

                         (A Florida Limited Partnership)



                                    CONTENTS
                                    --------




                                                                  Page
                                                                  ----

Report of Independent Certified Public Accountants                 18

Financial Statements:

    Balance Sheets                                                 19

    Statements of Income                                           20

    Statements of Partners' Capital                                21

    Statements of Cash Flows                                    22-23

    Notes to Financial Statements                               24-40



<PAGE>



               Report of Independent Certified Public Accountants





To the Partners
CNL Income Fund IV, Ltd.


In our opinion,  the accompanying  balance sheets and the related  statements of
income,  of partners'  capital and of cash flows present fairly, in all material
respects,  the financial position of CNL Income Fund IV, Ltd. (a Florida limited
partnership)  at December 31, 2001 and 2000,  and the results of its  operations
and its cash flows for each of the three years in the period ended  December 31,
2001 in conformity with accounting  principles  generally accepted in the United
States  of  America.  In  addition,  in our  opinion,  the  financial  statement
schedules listed in the index appearing under item 14(a)(2)  present fairly,  in
all  material  respects,   the  information  set  forth  therein  when  read  in
conjunction with the related financial  statements.  These financial  statements
and financial  statement  schedules are the  responsibility of the Partnership's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules based on our audits. We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which 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,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.




/s/ PricewaterhouseCoopers LLP

Orlando, Florida
February 8, 2002





<PAGE>





                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>

 <c>


                                                                                        December 31,
                                                                                2001                   2000
                                                                        ------------------     ------------------
                               ASSETS
Land and buildings on operating leases, net                                    $ 11,106,349           $ 12,385,122
Net investment in direct financing leases                                           323,935                339,689
Investment in joint ventures                                                      3,108,042              3,197,510
Cash and cash equivalents                                                           645,220              1,366,871
Receivables, less allowance for doubtful
   accounts of $301,517 in 2000                                                      51,516                 45,144
Due from related parties                                                              4,574                 15,226
Accrued rental income                                                               269,464                250,635
Other assets                                                                         33,675                 15,962
                                                                          ------------------     ------------------
                                                                               $ 15,542,775           $ 17,616,159
                                                                          ==================     ==================

                 LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses                                             $  10,252              $  45,070
Accrued and escrowed real estate taxes payable                                       48,654                 48,508
Distributions payable                                                               523,947                525,000
Due to related parties                                                              189,985                172,677
Rents paid in advance and deposits                                                   33,068                 29,235
                                                                          ------------------     ------------------
        Total liabilities                                                           805,906                820,490


Partners' capital                                                                14,736,869             16,795,669
                                                                          ------------------     ------------------

                                                                               $ 15,542,775           $ 17,616,159
                                                                          ==================     ==================

</TABLE>
                See accompanying notes to financial statements.

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>

 <c>
                                                                            Year Ended December 31,
                                                                  2001               2000                1999
                                                             ----------------   ----------------    ----------------
Revenues:
   Rental income from operating leases                           $ 1,506,977        $ 1,781,392         $ 2,009,987
   Earned income from direct financing leases                         35,179             79,260             122,904
   Contingent rental income                                           81,550             24,545             126,521
   Lease termination income                                           67,073                 --                  --
   Interest and other income                                          78,307             70,246              39,422
                                                             ----------------   ----------------    ----------------
                                                                   1,769,086          1,955,443           2,298,834
                                                             ----------------   ----------------    ----------------
Expenses:
   General operating and administrative                              225,125            168,539             146,650
   Provision for doubtful accounts                                    10,792             12,685                  --
   Professional services                                              40,403             46,673              36,759
   Real estate taxes                                                  29,281             30,731              21,468
   State and other taxes                                              30,350             15,479              17,426
   Depreciation and amortization                                     322,576            404,013             410,151
   Provision for write-down of assets                                178,817            439,132                  --
   Transaction costs                                                      --             36,493             142,244
                                                             ----------------   ----------------    ----------------
                                                                     837,344          1,153,745             774,698
                                                             ----------------   ----------------    ----------------
Income Before Gain (Loss) on Sale of Assets
   and Equity in Earnings of Joint Ventures                          931,742            801,698           1,524,136

Gain (Loss) on Sale of Assets                                       (120,872 )        1,042,295                  --

Equity in Earnings of Joint Ventures                                 278,224            234,317             303,223
                                                             ----------------   ----------------    ----------------

Net Income                                                       $ 1,089,094        $ 2,078,310         $ 1,827,359
                                                             ================   ================    ================

Allocation of Net Income:
   General partners                                                  $    --            $    --           $  18,273
   Limited partners                                                1,089,094          2,078,310           1,809,086
                                                             ----------------   ----------------    ----------------
                                                                 $ 1,089,094        $ 2,078,310         $ 1,827,359
                                                             ================   ================    ================

Net Income per Limited Partner Unit                                $   18.15          $   34.64           $   30.15
                                                             ================   ================    ================

Weighted Average Number of Limited
   Partner Units Outstanding                                          60,000             60,000              60,000
                                                             ================   ================    ================

</TABLE>

                See accompanying notes to financial statements.

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                         STATEMENTS OF PARTNERS' CAPITAL

                  Years Ended December 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>

 <c>
                                     General Partners                        Limited Partners
                             ----------------------------- ----------------------------------------------------------
                                             Accumulated                                 Accumulated   Syndication
                             Contributions    Earnings     Contributions  Distributions    Earnings        Costs         Total
                             --------------- ------------- -------------- -------------- ------------ -------------- --------------

Balance, December 31, 1998       $  557,804     $  211,274   $ 30,000,000 $ (28,841,711) $ 21,852,633  $ (3,440,000) $ 20,340,000

   Distributions to limited
      partners ($40 per
      limited partner unit)              --             --             --    (2,400,000)           --            --    (2,400,000 )
   Net income                            --         18,273             --            --     1,809,086            --     1,827,359
                             --------------- ------------- -------------- -------------- ------------ -------------- --------------

Balance, December 31, 1999          557,804        229,547     30,000,000   (31,241,711)   23,661,719    (3,440,000)   19,767,359

   Distributions to limited
      partners ($84 per
       limited partner unit)             --             --             --    (5,050,000)           --            --    (5,050,000 )
   Net income                            --             --             --            --     2,078,310            --     2,078,310
                             --------------- ------------- -------------- -------------- ------------ -------------- --------------

Balance, December 31, 2000          557,804        229,547     30,000,000   (36,291,711)   25,740,029    (3,440,000)   16,795,669

   Distributions to limited
      partners ($52 per
       limited partner unit)             --             --        (60,127)   (3,087,767)           --            --    (3,147,894 )
   Net income                            --             --             --            --     1,089,094            --     1,089,094
                             --------------- ------------- -------------- -------------- ------------ -------------- --------------

Balance, December 31, 2001       $  557,804     $  229,547   $ 29,939,873 $ (39,379,478) $ 26,829,123  $ (3,440,000) $ 14,736,869
                             =============== ============= ============== ============== ============ ============== ==============

</TABLE>

                See accompanying notes to financial statements.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

 <c>
                                                                          Year Ended December 31,
                                                                2001                2000               1999
                                                           ----------------    ----------------   ----------------

Increase (Decrease) in Cash and Cash
   Equivalents:

      Cash Flows from Operating Activities:
        Cash received from tenants                            $ 1,667,646         $ 1,972,961        $ 2,186,946
        Distributions from joint ventures                         367,692             368,819            367,317
        Cash paid for expenses                                   (337,465  )         (569,192  )        (181,668  )
        Interest received                                          70,779              54,519             28,718
                                                           ----------------    ----------------   ----------------
           Net cash provided by operating
              activities                                        1,768,652           1,827,107          2,401,313
                                                           ----------------    ----------------   ----------------

      Cash Flows from Investing Activities:
        Proceeds from sale of assets                              679,894           3,939,271                 --
        Investment in joint ventures                                   --                  --           (533,200  )
        Decrease in restricted cash                                    --                  --            533,598
        Payment of lease costs                                    (21,250  )               --            (15,600  )
                                                           ----------------    ----------------   ----------------
           Net cash provided by (used in) investing
              activities                                          658,644           3,939,271            (15,202  )
                                                           ----------------    ----------------   ----------------

      Cash Flows from Financing Activities:
        Distributions to limited partners                      (3,148,947  )       (5,125,000  )      (2,400,000  )
                                                           ----------------    ----------------   ----------------
           Net cash used in financing activities               (3,148,947  )       (5,125,000  )      (2,400,000  )
                                                           ----------------    ----------------   ----------------

Net Increase (Decrease) in Cash and Cash
   Equivalents                                                   (721,651  )          641,378            (13,889  )

Cash and Cash Equivalents at Beginning of Year                  1,366,871             725,493            739,382
                                                           ----------------    ----------------   ----------------

Cash and Cash Equivalents at End of Year                       $  645,220         $ 1,366,871         $  725,493
                                                           ================    ================   ================
</TABLE>

                See accompanying notes to financial statements.

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

 <c>
                                                                          Year Ended December 31,
                                                                2001                2000               1999
                                                           ----------------    ----------------   ----------------

Reconciliation of Net Income to Net Cash
   Provided by Operating Activities:

      Net income                                              $ 1,089,094         $ 2,078,310        $ 1,827,359
                                                           ----------------    ----------------   ----------------
      Adjustments to reconcile net income to
        net cash provided by operating
        activities:
           Depreciation                                           320,213             376,013            405,488
           Amortization                                             2,363              28,000              4,663
           Provision for doubtful accounts                         10,792              12,685                 --
           Provision for write-down of assets                     178,817             439,132                 --
           Loss (gain) on sale of assets                          120,872          (1,042,295  )              --
           Equity in earnings of joint ventures,
              net of distributions                                 89,468             134,502             64,094
           Decrease (increase) in receivables                     (17,164  )           83,846           (113,323  )
           Decrease (increase) in due from related
              parties                                              10,652             (15,226  )              --
           Decrease in net investment in direct
              financing leases                                     15,754              31,769             41,994
           Decrease (increase) in accrued rental
              income                                              (18,829  )          (16,153  )         (34,542  )
           Decrease (increase) in other assets                      1,174                 452             (5,547  )
           Increase (decrease) in accounts
              payable and accrued expenses                        (34,818  )          (46,004  )          86,571
           Increase (decrease) in accrued and
              escrowed real estate taxes                              146             (15,077  )          26,853
           Increase (decrease) in due to related
              parties                                              (3,715  )         (187,290  )          92,531
           Increase (decrease) in rents paid in
              advance and deposits                                  3,833             (35,557  )           5,172
                                                           ----------------    ----------------   ----------------
                Total adjustments                                 679,558            (251,203  )         573,954
                                                           ----------------    ----------------   ----------------

Net Cash Provided by Operating Activities                     $ 1,768,652         $ 1,827,107        $ 2,401,313
                                                           ================    ================   ================

Supplemental Schedule of Non-Cash Investing
   and Financing Activities:

      Deferred real estate disposition fees incurred
        and unpaid at December 31                              $   21,023          $  118,458            $    --
                                                           ================    ================   ================

      Distributions declared and unpaid at
        December 31                                            $  523,947          $  525,000         $  600,000
                                                           ================    ================   ================
</TABLE>

                See accompanying notes to financial statements.
<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies:
         -------------------------------

         Organization  and Nature of Business - CNL Income  Fund IV,  Ltd.  (the
         "Partnership") is a Florida limited  partnership that was organized for
         the purpose of acquiring both newly constructed and existing restaurant
         properties,  as well as properties  upon which  restaurants  were to be
         constructed,  which are leased  primarily  to operators of national and
         regional fast-food and family-style restaurant chains.

         The general partners of the Partnership are CNL Realty Corporation (the
         "Corporate  General  Partner"),  James M.  Seneff,  Jr.  and  Robert A.
         Bourne.  Mr.  Seneff and Mr.  Bourne are also 50%  shareholders  of the
         Corporate General Partner. The general partners have responsibility for
         managing the day-to-day operations of the Partnership.

         Real  Estate  and  Lease  Accounting  -  The  Partnership  records  the
         acquisition of land and buildings at cost,  including  acquisition  and
         closing  costs.  Land and buildings  are generally  leased to unrelated
         third  parties on a triple-net  basis,  whereby the tenant is generally
         responsible  for  all  operating  expenses  relating  to the  property,
         including  property  taxes,  insurance,  maintenance  and repairs.  The
         leases are  accounted  for using  either the  direct  financing  or the
         operating methods. Such method are described below:

                  Direct  financing  method - The leases accounted for using the
                  direct  financing  method are recorded at their net investment
                  (which at the inception of the lease generally  represents the
                  cost of the asset) (Note 4).  Unearned  income is deferred and
                  amortized  to income  over the lease  terms so as to produce a
                  constant  periodic  rate of  return on the  Partnership's  net
                  investment in the leases.

                  Operating  method - Land and  building  leases  accounted  for
                  using the  operating  method are recorded at cost,  revenue is
                  recognized as rentals are earned and  depreciation  is charged
                  to operations as incurred.  Buildings are  depreciated  on the
                  straight-line  method over their estimated  useful lives of 30
                  years.  When  scheduled  rentals  vary  during the lease term,
                  income is recognized on a straight-line basis so as to produce
                  a constant periodic rent over the lease term commencing on the
                  date the property is placed in service.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1.       Significant Accounting Policies - Continued:
         -------------------------------------------

                  Accrued  rental  income  represents  the  aggregate  amount of
                  income  recognized  on a  straight-line  basis  in  excess  of
                  scheduled rental payments to date.  Whenever a tenant defaults
                  under  the  terms  of its  lease,  or  events  or  changes  in
                  circumstance  indicate  that the  tenant  will not  lease  the
                  property  through the end of the lease term,  the  Partnership
                  either  reserves or reverses  the  cumulative  accrued  rental
                  income balance.

         When  the  properties  are  sold,  the  related  cost  and  accumulated
         depreciation  for operating  leases and the net  investment  for direct
         financing leases,  plus any accrued rental income, are removed from the
         accounts and gains or losses from sales are  reflected  in income.  The
         general  partners of the Partnership  review  properties for impairment
         whenever events or changes in circumstances  indicate that the carrying
         amount of the assets may not be  recoverable  through  operations.  The
         general partners  determine whether an impairment in value has occurred
         by comparing the estimated future  undiscounted  cash flows,  including
         the  residual  value of the  property,  with the  carrying  cost of the
         individual  property.  If an impairment  is  indicated,  the assets are
         adjusted to their fair value.  Although the general  partners have made
         their best estimate of these factors based on current conditions, it is
         reasonably  possible  that  changes  could occur in the near term which
         could adversely affect the general  partners' best estimate of net cash
         flows  expected to be generated  from its  properties  and the need for
         asset impairment write-downs.

         When the  collection  of amounts  recorded as rental or other income is
         considered  to be  doubtful,  an  adjustment  is made to  increase  the
         allowance for doubtful accounts,  which is netted against  receivables,
         although  the  Partnership  continues  to  pursue  collection  of  such
         amounts.  If amounts are subsequently  determined to be  uncollectible,
         the  corresponding  receivable and allowance for doubtful  accounts are
         decreased accordingly.

         Investment in Joint Ventures - The Partnership's investments in Holland
         Joint Venture,  Titusville Joint Venture,  Cocoa Joint Venture,  Auburn
         Joint  Venture,  Kingsville  Real Estate  Joint  Venture,  Warren Joint
         Venture,  and properties in Clinton,  North  Carolina and  Zephyrhills,
         Florida, held as tenants-in-common,  are accounted for using the equity
         method since each joint venture  agreement  requires the consent of all
         partners  on  all  key  decisions   affecting  the  operations  of  the
         underlying property.




<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1. Significant Accounting Policies - Continued:
   -------------------------------------------

         Cash and Cash Equivalents - The Partnership considers all highly liquid
         investments  with a maturity of three months or less when  purchased to
         be cash  equivalents.  Cash  and cash  equivalents  consist  of  demand
         deposits at commercial  banks and money market funds (some of which are
         backed by government  securities).  Cash equivalents are stated at cost
         plus accrued interest, which approximates market value.

         Cash  accounts  maintained  on  behalf  of the  Partnership  in  demand
         deposits  at  commercial  banks  and  money  market  funds  may  exceed
         federally insured levels;  however, the Partnership has not experienced
         any losses in such accounts.

         Lease Costs - Other  assets  include  brokerage  fees  associated  with
         negotiating  new leases which are  amortized  over the terms of the new
         leases using the straight-line method.

         Income Taxes - Under  Section 701 of the  Internal  Revenue  Code,  all
         income,  expenses and tax credit items flow through to the partners for
         tax  purposes.  Therefore,  no  provision  for federal  income taxes is
         provided in the accompanying  financial statements.  The Partnership is
         subject to certain state taxes on its income and property.

         Additionally,  for tax  purposes,  syndication  costs are  included  in
         Partnership equity and in the basis of each partner's  investment.  For
         financial  reporting  purposes,  syndication  costs are netted  against
         partners' capital and represent a reduction of Partnership equity and a
         reduction in the basis of each partner's investment. See "Income Taxes"
         footnote for a  reconciliation  of net income for  financial  reporting
         purposes to net income for federal income tax purposes.

         Use of Estimates - The general  partners of the Partnership have made a
         number of estimates and assumptions relating to the reporting of assets
         and liabilities and the disclosure of contingent assets and liabilities
         to prepare these  financial  statements in  conformity  with  generally
         accepted  accounting  principles.  The more significant areas requiring
         the use of  management  estimates  relate to the allowance for doubtful
         accounts  and future  cash flows  associated  with  long-lived  assets.
         Actual results could differ from those estimates.

         Reclassification   -  Certain  items  in  the  prior  years'  financial
         statements  have been  reclassified  to conform  to 2001  presentation.
         These reclassifications had no effect on total partners' capital or net
         income.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


1. Significant Accounting Policies - Continued:
   -------------------------------------------

         Staff  Accounting  Bulletin No. 101 ("SAB 101") - In December 1999, the
         Securities and Exchange Commission released SAB 101, which provides the
         staff's view in applying  generally accepted  accounting  principles to
         selected revenue  recognition  issues. SAB 101 requires the Partnership
         to defer recognition of certain  percentage rental income until certain
         defined  thresholds are met. The Partnership  adopted SAB 101 beginning
         January  1,  2000.  Implementation  of SAB 101 did not have a  material
         impact on the Partnership's results of operations.

         Statement of  Financial  Accounting  Standards  No. 141 ("FAS 141") and
         Statement of Financial  Accounting  Standards  No. 142 ("FAS 142") - In
         July 2001, the Financial Accounting Standards Board issued Statement of
         Financial  Accounting  Standards  No. 141 "Business  Combinations"  and
         Statement of Financial Accounting Standards No. 142 "Goodwill and Other
         Intangible  Assets." The  Partnership  has reviewed both statements and
         has  determined  that  both  FAS 141 and  FAS 142 do not  apply  to the
         Partnership as of December 31, 2001.

         Statement of Financial  Accounting  Standards  No. 144 ("FAS 144") - In
         October 2001, the Financial Accounting Standards Board issued Statement
         of  Financial   Accounting   Standards  No.  144  "Accounting  for  the
         Impairment or Disposal of Long-Lived  Assets." This statement  requires
         that a long-lived asset be tested for recoverability whenever events or
         changes in  circumstances  indicate that its carrying amount may not be
         recoverable.   The  carrying  amount  of  a  long-lived  asset  is  not
         recoverable  if it  exceeds  the  sum of the  undiscounted  cash  flows
         expected to result from the use and eventual  disposition of the asset.
         The assessment is based on the carrying amount of the asset at the date
         it is tested for recoverability.  An impairment loss is recognized when
         the carrying amount of a long-lived asset exceeds its fair value. If an
         impairment is recognized,  the adjusted carrying amount of a long-lived
         asset is its new cost basis.  The  adoption of FAS 144 did not have any
         effect on the  partnership's  recording  of  impairment  losses as this
         Statement   retained  the   fundamental   provisions  of  FAS  No.  121
         "Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
         Assets to be Disposed of."



<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


2.       Leases:
         ------

         The  Partnership  leases its land or land and  buildings  primarily  to
         operators  of  national  and  regional   fast-food   and   family-style
         restaurants.  The  leases are  accounted  for under the  provisions  of
         Statement of Financial  Accounting  Standards No. 13,  "Accounting  for
         Leases." The leases  generally  are  classified  as  operating  leases;
         however,  some leases have been classified as direct financing  leases.
         For the leases  classified  as direct  financing  leases,  the building
         portions of the property  leases are accounted for as direct  financing
         leases while the land portion of these leases are operating leases. The
         majority  of the leases are for 15 to 20 years and  provide for minimum
         and  contingent  rentals.  In addition,  the tenant  generally pays all
         property  taxes and  assessments,  fully  maintains  the  interior  and
         exterior of the  building  and carries  insurance  coverage  for public
         liability,  property  damage,  fire and  extended  coverage.  The lease
         options  generally  allow  tenants  to renew the leases for two to four
         successive  five-year  periods subject to the same terms and conditions
         as the initial lease. Most leases also allow the tenant to purchase the
         property  at fair market  value after a specified  portion of the lease
         has elapsed.

3.       Land and Buildings on Operating Leases:
         --------------------------------------

         Land and  buildings on operating  leases  consisted of the following at
         December 31:

                                              2001            2000
                                         --------------  ---------------

          Land                             $ 5,768,381      $ 6,237,393
          Buildings                          9,027,177        9,981,376
                                         --------------  ---------------
                                            14,795,558       16,218,769
          Less accumulated depreciation     (3,689,209 )     (3,833,647 )
                                         --------------  ---------------

                                          $ 11,106,349     $ 12,385,122
                                         ==============  ===============

         In June 2000, the Partnership sold its property in Detroit, Michigan to
         the  tenant  for   $1,095,000   and  received  net  sales  proceeds  of
         $1,089,325,   resulting  in  a  gain  of  approximately   $552,600.  In
         connection  with  the  sale,  the  Partnership   incurred  a  deferred,
         subordinated, real estate disposition fee of $32,850 (see Note 8).


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:
         --------------------------------------------------

         In July 2000, the  Partnership  sold its properties in Temple  Terrace,
         Florida  and Punta  Gorda,  Florida,  to a third  party for  $2,353,583
         resulting in a gain of approximately  $582,100.  In connection with the
         sales, the Partnership  incurred  deferred,  subordinated,  real estate
         disposition fees of $70,608 (see Note 8).

         In November 2000, the Partnership  sold its property in Topeka,  Kansas
         to a third  party for  $500,000  and  received  net sales  proceeds  of
         approximately  $496,400,  resulting in a loss of approximately $92,400.
         In  connection  with the sale,  the  Partnership  incurred a  deferred,
         subordinated, real estate disposition fee of $15,000 (see Note 8).

         As of December  31,  2000,  the  Partnership  recorded a provision  for
         write-down  of assets of $38,691 in  previously  accrued  rental income
         relating to the  property  located in  Richmond,  Virginia.  In October
         1998, the tenant of one Boston Market  Property  filed for  bankruptcy,
         and in June 2000, rejected,  the lease relating to this Property.  As a
         result, the tenant  discontinued making rental payments on the rejected
         lease. The accrued rental income was the accumulated amount of non-cash
         accounting adjustments previously recorded in order to recognize future
         scheduled  rent  increases as income evenly over the term of the lease.
         The provision  represented the difference between the carrying value of
         the property,  including the accumulated accrued rental income, and the
         general partners' estimated net realizable value of the property.

         As of December  31,  2000,  the  Partnership  recorded a provision  for
         write-down  of assets of  $400,442,  including  $12,830  in  previously
         accrued rental income,  relating to the property in Palm Bay,  Florida.
         The tenant of this property  filed for bankruptcy and ceased payment of
         rents under the terms of its lease agreement. The accrued rental income
         was  the  accumulated   amount  of  non-cash   accounting   adjustments
         previously  recorded  in  order  to  recognize  future  scheduled  rent
         increases as income  evenly over the term of the lease.  The  provision
         represented the difference  between the carrying value of the property,
         including the accumulated  accrued rental income,  at December 31, 2000
         and the  general  partners'  estimated  net  realizable  value  for the
         property.  During 2001,  the  Partnership  increased  the  provision by
         $178,817 to $579,259. The adjusted provision represented the difference
         between  the  carrying  value of the  property at June 30, 2001 and the
         estimated net sales  proceeds from the sale of the property  based on a
         sales  contract  with an  unrelated  third party.  In August 2001,  the
         Partnership  sold the  property  and  received  net sales  proceeds  of
         approximately $289,894, resulting in a loss of

<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


3.       Land and Buildings on Operating Leases - Continued:
         --------------------------------------------------

         approximately  $27,100.  In connection  with the sale, the  Partnership
         incurred a  deferred,  subordinated,  real  estate  disposition  fee of
         $9,323 (see Note 8).

         In June 2001,  the  Partnership  sold its  property in Corpus  Christi,
         Texas to the  tenant  and  received  net sales  proceeds  of  $390,000,
         resulting in a loss of  approximately  $93,800.  In connection with the
         sale, the  Partnership  incurred a deferred  subordinated,  real estate
         disposition fee of $11,700 (see Note 8).

         The following is a schedule of the future  minimum lease payments to be
         received on noncancellable operating leases at December 31, 2001:

                  2002                            $ 1,477,516
                  2003                              1,457,983
                  2004                              1,462,475
                  2005                              1,475,155
                  2006                              1,478,925
                  Thereafter                        5,766,309
                                            ------------------

                                                 $ 13,118,363
                                           ==================

         Since  lease  renewal  periods  are  exercisable  at the  option of the
         tenant, the above table only presents future minimum lease payments due
         during  the  initial  lease  terms.  In  addition,  this table does not
         include any amounts for future contingent rentals which may be received
         on the leases based on a percentage of the tenant's gross sales.



<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


4.       Net Investment in Direct Financing Leases:
         -----------------------------------------

         The  following  lists the  components  of the net  investment in direct
         financing leases at December 31:

<TABLE>
<CAPTION>
<S> <c>
                                                                         2001                 2000
                                                                   -----------------    -----------------

                   Minimum lease payments receivable                     $  379,048            $ 429,981
                   Estimated residual values                                114,886              114,886
                   Less unearned income                                    (169,999 )           (205,178 )
                                                                   -----------------    -----------------

                   Net investment in direct financing
                      leases                                             $  323,935           $  339,689
                                                                   =================    =================
</TABLE>

         During 2000, the Partnership sold its property in Punta Gorda, Florida,
         for  which  the  building  portion  had  been  classified  as a  direct
         financing lease. In connection therewith, the gross investment (minimum
         lease  payments  receivable  and  the  estimated  residual  value)  and
         unearned income relating to the building were removed from the accounts
         and the gain from the sale of the property was reflected in income (see
         Note 3).

         The  following  is a schedule of future  minimum  lease  payments to be
         received on direct financing leases at December 31, 2000:

                             2002                          $   53,568
                             2003                              53,568
                             2004                              53,568
                             2005                              53,568
                             2006                              53,568
                             Thereafter                       111,208
                                                     -----------------

                                                           $  379,048
                                                     =================

         The above table does not include  future  minimum  lease  payments  for
         renewal  periods or for contingent  rental payments that may become due
         in future periods (see Note 3).


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


5.       Investment in Joint Ventures:
         ----------------------------

         As of December 31, 2001, the Partnership had a 51%, 26.6%,  57%, 96.1%,
         68.87%,  and 35.71% interest in the profits and losses of Holland Joint
         Venture,  Titusville Joint Venture,  Cocoa Joint Venture,  Auburn Joint
         Venture, Kingsville Real Estate Joint Venture and Warren Joint Venture,
         respectively,  and a 53 percent and 76 percent  interest in the profits
         and losses of properties in Clinton,  North  Carolina and  Zephyrhills,
         Florida,  held as  tenants-in-common  with  affiliates  of the  general
         partners.  The remaining  interests in these joint ventures are held by
         affiliates  of the  Partnership  which have the same general  partners.
         Holland Joint Venture,  Titusville Joint Venture,  Cocoa Joint Venture,
         Auburn Joint  Venture,  Kingsville  Real Estate Joint  Venture,  Warren
         Joint Venture and the Partnership and affiliates, as tenants-in-common,
         each owns and leases one property to an operator of national  fast-food
         or family-style restaurants.

         As of  December  31,  2000,  Titusville  Joint  Venture,  in which  the
         Partnership  owns a  26.6%  interest,  had  recorded  a  provision  for
         write-down of assets of $499,383.  During 1997, the tenant of the joint
         venture's  property  vacated  and  ceased  operations.   The  provision
         represented  the difference  between the carrying value of the property
         at December 31, 2000 and the  estimated  net  realizable  value for the
         property.  During the year ended  December 31, 2001,  the joint venture
         increased the provision by $73,570 to $572,954.  The adjusted provision
         represented  the difference  between the carrying value of the property
         at December 31, 2001 and the estimated net sales proceeds from the sale
         of the property based on a sales contract with an unrelated third party
         (see Note 11).



<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


5.       Investment in Joint Ventures - Continued:
         ----------------------------------------

         The  following  presents  the  joint  ventures'   combined,   condensed
         financial information at December 31:

                                                     2001           2000
                                                 --------------  -------------

             Land and buildings on operating
                leases, net                        $ 4,672,053    $ 4,866,583
             Net investment in direct financing
                lease                                  343,619        358,308
             Cash                                       24,547         32,143
             Receivables                                23,086         20,345
             Accrued rental income, less
                allowance for doubtful accounts        161,143        165,097
             Other assets                                3,111          3,252
             Liabilities                                21,941         56,461
             Partners' capital                       5,205,618      5,389,267
             Revenues                                  613,956        606,228
             Provision for write-down of assets        (73,570 )     (227,093 )
             Net income                                387,441        222,879

         The  Partnership  recognized  income  totaling  $278,224,  $234,317 and
         $303,223  for the  years  ended  December  31,  2001,  2000  and  1999,
         respectively, from these joint ventures.

6.       Allocations and Distributions:
         -----------------------------

         From inception through December 31, 1999, generally, all net income and
         net losses of the Partnership, excluding gains and losses from the sale
         of property,  were allocated 99 percent to the limited partners and one
         percent to the general  partners.  From inception  through December 31,
         1999,  distributions  of net cash  flow  were  made 99  percent  to the
         limited  partners  and one percent to the general  partners;  provided,
         however, that the one percent of net cash flow to be distributed to the
         general partners was subordinated to receipt by the limited partners of
         an aggregate, ten percent,  cumulative,  noncompounded annual return on
         their adjusted capital contributions (the "10% Preferred Return").



<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


6.       Allocations and Distributions:
         -----------------------------

         From inception through December 31, 1999, generally, net sales proceeds
         from the sale of properties not in liquidation of the  Partnership,  to
         the extent distributed,  were distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         general partners then received,  to the extent previously  subordinated
         and unpaid,  a one percent  interest in all prior  distributions of net
         cash flow and a return of their  capital  contributions.  Any remaining
         sales proceeds were  distributed 95 percent to the limited partners and
         five percent to the general partners.

         Any  gain  from  the  sale  of a  property  not in  liquidation  of the
         Partnership was, in general,  allocated in the same manner as net sales
         proceeds are distributable. Any loss from the sale of a property not in
         liquidation of the Partnership  was, in general,  allocated first, on a
         pro rata basis,  to partners  with  positive  balances in their capital
         accounts;  and thereafter,  95 percent to the limited partners and five
         percent to the general partners.

         Generally,  net sales  proceeds from a liquidating  sale of properties,
         will be used in the following order: (i) first to pay and discharge all
         of  the  Partnership's   liabilities  to  creditors,  (ii)  second,  to
         establish  reserves that may be deemed necessary for any anticipated or
         unforeseen liabilities or obligations of the Partnership,  (iii) third,
         to pay all of the Partnership's liabilities, if any, to the general and
         limited partners,  (iv) fourth,  after allocations of net income, gains
         and/or  losses,  to distribute  to the partners  with positive  capital
         accounts  balances,  in  proportion  to such  balances,  up to  amounts
         sufficient  to  reduce  such  positive   balances  to  zero,   and  (v)
         thereafter, any funds remaining shall then be distributed 95 percent to
         the limited partners and five percent to the general partners.

         Effective  January 1, 2000, the general  partners waived their right to
         receive  future  distributions  from the  Partnership,  including  both
         distributions  of operating cash flow and  distributions of liquidation
         proceeds,   to  the  extent   that  the   cumulative   amount  of  such
         distributions would exceed the balance in the general partners' capital
         account as of December  31,  1999.  Accordingly,  for years  commencing
         January  1,  2000 and  after,  the  Partnership's  net  income  will be
         allocated entirely among the limited partners.  However,  if losses are
         allocated to the general  partners in a year, an amount of income equal
         to the sum of such losses may be allocated  to the general  partners in
         succeeding years. Accordingly,  the general partners were not allocated
         any net income and did not receive any  distributions  during the years
         ended December 31, 2001 and 2000.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


6.       Allocations and Distributions - Continued:
         -----------------------------------------

         During each of the years ended  December 31, 2001,  2000, and 1999, the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,147,894, $5,050,000, and $2,400,000, respectively. Distributions for
         the year ended  December 31,  2000,  included  $2,800,000  in a special
         distribution,  as a result of the  distribution  of net sales  proceeds
         from the sale of the  properties  in Temple  Terrace  and Punta  Gorda,
         Florida and  Detroit,  Michigan.  This  amount was  applied  toward the
         limited  partners' 10%  Preferred  Return.  Distributions  for the year
         ended December 31, 2001, included $1,050,000 in special  distributions,
         as a result of the distributions of net sales proceeds from the sale of
         several  properties.  These special  distributions  were  effectively a
         return of a portion of the limited partners'  investment,  although, in
         accordance with the Partnership agreement,  $989,873 was applied toward
         the limited  partners' 10% Preferred  Return and the balance of $60,127
         was treated as a return of capital  for  purposes  of  calculating  the
         limited  partners 10%  Preferred  Return.  As a result of the return of
         capital,   the  amount  of  the  limited  partners'   invested  capital
         contributions   (which  generally  is  the  limited  partners'  capital
         contributions,  less distributions from the sale of a property that are
         considered  to be a return of capital) was  decreased;  therefore,  the
         amount of the limited partners' invested capital contributions on which
         the 10% Preferred  Return is  calculated  was lowered  accordingly.  No
         distributions have been made to the general partners to date.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


7.       Income Taxes:
         ------------

         The following is a reconciliation of net income for financial reporting
         purposes to net income for federal  income tax  purposes  for the years
         ended December 31:

<TABLE>
<CAPTION>

 <c>
                                                                  2001             2000            1999
                                                              -------------    -------------   -------------

              Net income for financial reporting
                 purposes                                      $ 1,089,094      $ 2,078,310     $ 1,827,359

              Depreciation for tax reporting purposes less
                 than (in excess of) of depreciation for             6,102           (3,055 )        (8,171 )
                 financial reporting purposes

              Provision for write-down of assets                   178,817          439,132              --

              Direct financing leases recorded as
                 operating leases for tax reporting
                 purposes                                           15,754           31,769          41,995

              Gain on sale of assets for financial
                 reporting purposes less than (in excess
                 of) gain for tax reporting purposes              (576,193 )         89,247              --

              Capitalization (deduction) of transaction
                 costs for tax reporting purposes                       --         (160,530 )       142,244

              Equity in earnings of joint ventures
                 for financial reporting purposes less
                 than (in excess of) equity in earnings
                 of joint ventures for tax reporting
                 purposes                                           20,451           73,569         (76,060 )

              Allowance for doubtful accounts                     (301,517 )         86,488         (43,612 )

              Accrued rental income                                (18,829 )        (16,153 )       (34,542 )

              Rents paid in advance                                 (1,772 )        (11,518 )       (14,327 )
                                                              -------------    -------------   -------------

              Net income for federal income tax
                 purposes                                       $  411,907      $ 2,607,259     $ 1,834,886
                                                              =============    =============   =============

</TABLE>


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


8.       Related Party Transactions:
         --------------------------

         One of the individual general partners, James M. Seneff, Jr., is one of
         the principal  shareholders of CNL Holdings,  Inc. The other individual
         general partner, Robert A. Bourne, serves as President and Treasurer of
         CNL Group,  Inc., a wholly owned  subsidiary of CNL Holdings,  Inc. CNL
         APF Partners,  LP (the  "Advisor") is a wholly owned  subsidiary of CNL
         American  Properties  Fund, Inc.  ("APF").  CNL Fund Advisors,  Inc., a
         majority owned subsidiary of CNL Financial Group,  Inc. until it merged
         with  and  into  APF  effective   September  1,  1999,  served  as  the
         Partnership's  advisor  until it  assigned  its rights and  obligations
         under a  management  agreement  with  the  Partnership  to the  Advisor
         effective   July  1,  2000.  The   individual   general   partners  are
         stockholders and directors of APF.

         The Advisor  provides  certain  services  relating to management of the
         Partnership and its properties pursuant to a management  agreement with
         the Partnership. In connection therewith, the Partnership agreed to pay
         the Advisor an annual,  noncumulative,  subordinated  management fee of
         one percent of the sum of gross revenues from  properties  wholly owned
         by the  Partnership  and the  Partnership's  allocable  share  of gross
         revenues from joint ventures, but not in excess of competitive fees for
         comparable  services.  These fees are  incurred  payable only after the
         limited  partners receive their 10% Preferred  Return.  Due to the fact
         that these fees are  noncumulative,  if the limited  partners  have not
         received  their  10%  Preferred  Return  in  any  particular  year,  no
         management  fees will be due or payable  for such year.  As a result of
         such threshold, no management fees were incurred during the years ended
         December 31, 2001, 2000 and 1999.

         The Advisor is also entitled to receive a deferred,  subordinated, real
         estate disposition fee, payable upon the sale of one or more properties
         based on the lesser of one-half of a competitive real estate commission
         or  three  percent  of the  sales  price  if  the  Advisor  provides  a
         substantial amount of services in connection with the sale. However, if
         the net sales  proceeds are  reinvested in a replacement  property,  no
         such  real  estate   disposition  fees  will  be  incurred  until  such
         replacement   property  is  sold  and  the  net  sales   proceeds   are
         distributed.  The  payment  of  the  real  estate  disposition  fee  is
         subordinated to the receipt by the limited  partners of their aggregate
         10% Preferred Return,  plus their adjusted capital  contributions.  For
         the years ended  December 31, 2001 and 2000, the  Partnership  incurred
         $21,023 and $118,458,  respectively,  in deferred,  subordinated,  real
         estate  disposition  fees as a result  of the sales of  properties.  No
         deferred,  subordinated, real estate disposition fees were incurred for
         the year ended December 31, 1999.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


8.       Related Party Transactions - Continued:
         ---------------------------------------

         During  the  years  ended  December  31,  2001,   2000  and  1999,  the
         Partnership's  advisor  and  its  affiliates  provided  accounting  and
         administrative  services  to the  Partnership  on a  day-to-day  basis,
         including  services  during 2000 and 1999  relating to the proposed and
         terminated merger.  The Partnership  incurred  $152,529,  $88,356,  and
         $107,553  for the  years  ended  December  31,  2001,  2000  and  1999,
         respectively, for such services.

         The due to related parties consisted of the following at December 31:

                                                    2001            2000
                                                  ------------   -------------

             Due to the Advisor:
                Accounting and administrative
                   services                          $  4,841        $  3,556
                 Deferred, subordinated real
                   estate disposition fee             185,144         164,121
                 Other                                     --           5,000
                                                  ------------   -------------

                                                    $ 189,985       $ 172,677
                                                  ============   =============

9. Concentration of Credit Risk:
   ----------------------------

         The  following  schedule  presents  total rental and earned income from
         individual  lessees,  each  representing  more than ten  percent of the
         Partnership's   total   rental  and  earned   income   (including   the
         Partnership's share of rental and earned income from joint ventures and
         the properties held as tenants-in-common with affiliates of the general
         partners) for each of the years ended December 31:

                                        2001           2000          1999
                                     -------------  ------------  -------------

                 Shoney's, Inc.          $279,529      $313,115       $347,088
                 Tampa Foods, L.P.        203,277           N/A            N/A




<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


9.       Concentration of Credit Risk - Continued:
         ----------------------------------------

         In addition,  the following  schedule  presents total rental and earned
         income from individual  restaurant chains,  each representing more than
         ten  percent  of the  Partnership's  total  rental  and  earned  income
         (including  the  Partnership's  share of total rental and earned income
         from joint ventures and the properties held as  tenants-in-common  with
         affiliates  of the  general  partners)  for  each  of the  years  ended
         December 31:

                                          2001          2000           1999
                                      --------------  ------------  ------------

            Wendy's Old Fashioned
               Hamburger Restaurants      $ 330,682     $ 386,618      $442,195
            Shoney's                        232,325       327,448       466,964
            Pizza Hut                       212,266           N/A           N/A
            Denny's                         127,024       236,184           N/A

         The  information   denoted  by  N/A  indicates  that  for  each  period
         presented,  the  tenant and the chain did not  represent  more than ten
         percent of the Partnership's total rental and earned income.

         Although  the  Partnership's   properties  are  geographically  diverse
         throughout the United States and the  Partnership's  lessees  operate a
         variety of  restaurant  concepts,  default  by any of these  lessees or
         restaurant chains could significantly  impact the results of operations
         of the Partnership.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 2001, 2000, and 1999


10.      Selected Quarterly Financial Data:
         ---------------------------------

         The following table presents  selected  unaudited  quarterly  financial
         data for each full quarter during the years ended December 31, 2001 and
         2000:

<TABLE>
<CAPTION>

 <c>
              2001 Quarter               First            Second            Third            Fourth             Year
         ------------------------    --------------    -------------     -------------    --------------    --------------

         Revenue (1)                      $536,330         $479,605          $533,855          $497,520       $ 2,047,310
         Net income                        302,122           42,616           376,751           367,605         1,089,094
         Net income per
             limited partner
             unit                             5.04             0.71              6.27              6.13             18.15
         '
              2000 Quarter               First            Second            Third            Fourth             Year
         ------------------------    --------------    -------------     -------------    --------------    --------------

         Revenue (1)                      $661,494         $610,497          $484,190          $433,579       $ 2,189,760
         Net income                        430,730          487,937           890,412           269,231         2,078,310
         Net income per
             limited partner
             unit                             7.11             8.27             14.73              4.53             34.64
</TABLE>

         (1)      Revenues include equity in earnings of joint ventures.

         (2)      Revenues  have been  adjusted to  reclassify  any reversals of
                  accrued  rental income to provisions for write-down of assets.
                  This reclassification had no effect on total net income.

11.      Subsequent Event:
         ----------------

         In January 2002,  Titusville  Joint Venture,  in which the  Partnership
         owned a 26.6%  interest,  sold its property to an unrelated third party
         for   approximately   $180,000  and  received  net  sales  proceeds  of
         approximately  $165,600,  resulting  in a gain of  $4,900  to the joint
         venture.  In addition,  in January 2002, the  Partnership and the joint
         venture partner liquidated Titusville Joint Venture and the Partnership
         received  its pro rata share of the  liquidation  proceeds.  No gain or
         loss was recorded relating to the liquidation.




<PAGE>



Item 9.  Changes in and  Disagreements  with  Accountants  on Accounting  and
         Financial Disclosure

         None.


                                    PART III

Item 10. Directors and Executive Officers of the Registrant

         The General Partners of the Registrant are James M. Seneff, Jr., Robert
A.  Bourne  and CNL  Realty  Corporation,  a Florida  corporation.  The  General
Partners  manage  and  control  the  Partnership's   affairs  and  have  general
responsibility   and  the  ultimate  authority  in  all  matters  affecting  the
Partnership's  business.  The  Partnership  has  available  to it the  services,
personnel and experience of CNL Fund Advisors,  Inc., CNL Financial Group,  Inc.
and their affiliates, all of which are affiliates of the General Partners.

         James M. Seneff, Jr., age 55. Since 1971, Mr. Seneff has been active in
the  acquisition,  development,  and  management  of real estate  projects  and,
directly or through an  affiliated  entity,  has served as a general  partner or
co-venturer in over 100 real estate  ventures.  These ventures have involved the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment  complexes,  hotels, and other real estate. Mr. Seneff has
served as Director and Chairman of the Board of CNL  American  Properties  Fund,
Inc. ("APF"),  a public,  unlisted real estate investment trust, since 1994. Mr.
Seneff served as Chief  Executive  Officer of APF from 1994 through August 1999,
and has served as Co-Chief  Executive  Officer of APF since  December  2000. Mr.
Seneff served as Chairman of the Board and Chief  Executive  Officer of CNL Fund
Advisors,  Inc.,  formerly  the  Partnership's  advisor,  until it merged with a
wholly-owned  subsidiary  of APF  in  September  1999,  and in  June  2000,  was
re-elected  to those  positions  of CNL Fund  Advisors,  Inc.  Mr.  Seneff  is a
principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
Group,  Inc., a diversified  real estate company,  and has served as a Director,
Chairman of the Board and Chief Executive  Officer of CNL Financial Group,  Inc.
since its formation in 1980. CNL Financial  Group,  Inc. is the parent  company,
either directly or indirectly through subsidiaries, of CNL Real Estate Services,
Inc., CNL Capital Markets, Inc., CNL Investment Company and CNL Securities Corp.
Mr. Seneff also serves as a Director,  Chairman of the Board and Chief Executive
Officer of CNL  Hospitality  Properties,  Inc., a public,  unlisted  real estate
investment trust, as well as, CNL Hospitality  Corp., its advisor.  In addition,
he serves as a Director,  Chairman of the Board and Chief  Executive  Officer of
CNL Retirement Properties, Inc., a public, unlisted real estate investment trust
and its advisor,  CNL Retirement Corp. Since 1992, Mr. Seneff has also served as
a Director,  Chairman of the Board and Chief Executive Officer of Commercial Net
Lease Realty,  Inc., a public real estate investment trust that is listed on the
New York Stock Exchange.  Mr. Seneff has also served as a Director,  Chairman of
the Board and Chief Executive  Officer of CNL Securities  Corp.  since 1979; CNL
Investment  Company  since  1990;  and  CNL  Institutional  Advisors,   Inc.,  a
registered investment advisor for pension plans, since 1990. Mr. Seneff formerly
served  as a  Director  of First  Union  National  Bank of  Florida,  N.A.,  and
currently serves as the Chairman of the Board of CNL Bank. Mr. Seneff previously
served on the Florida State Commission on Ethics and is a former member and past
Chairman of the State of Florida Investment  Advisory Council,  which recommends
to the Florida Board of Administration  investments for various Florida employee
retirement  funds.  The Florida  Board of  Administration,  Florida's  principal
investment advisory and money management agency, oversees the investment of more
than $60 billion of retirement funds. Mr. Seneff received his degree in Business
Administration from Florida State University in 1968.

         Robert A.  Bourne,  age 54. Mr.  Bourne has  participated  as a general
partner  or  co-venturer  in over  100  real  estate  ventures  involved  in the
financing,  acquisition,   construction,  and  leasing  of  restaurants,  office
buildings,  apartment  complexes,  hotels,  and other real estate. Mr. Bourne is
Director of the Board of Directors of APF. Mr. Bourne served as President of APF
from 1994 through  February 1999. He also served as Treasurer from February 1999
through  August 1999 and from May 1994 through  December 1994. He also served in
various  executive  positions with CNL Fund  Advisors,  Inc. prior to its merger
with a  wholly-owned  subsidiary of APF  including,  President from 1994 through
September 1997, and Director from 1994 through August 1999. Mr. Bourne serves as
President and Treasurer of CNL Financial Group, Inc.; Director, Vice Chairman of
the Board,  President  and  Treasurer  of CNL  Hospitality  Properties,  Inc., a
public,  unlisted  real estate  investment  trust;  as well as,  Director,  Vice
Chairman of the Board,  President and Treasurer of CNL  Hospitality  Corp.,  its
advisor. In addition, Mr. Bourne serves as Director, Vice Chairman of the Board,
President and Treasurer of CNL Retirement Properties,  Inc., a public,  unlisted
real  estate  investment  trust;  as well as, a Director,  Vice  Chairman of the
Board,  President and Treasurer of its advisor,  CNL Retirement Corp. Mr. Bourne
also serves as a Director of CNL Bank.  He has served as a Director  since 1992,
Vice Chairman of the Board since  February  1996,  Secretary and Treasurer  from
February 1996 through 1997, and President from July 1992 through  February 1996,
of Commercial  Net Lease  Realty,  Inc., a public real estate  investment  trust
listed on the New York Stock  Exchange.  Mr.  Bourne  also  serves as  Director,
President  and Treasurer for various  affiliates  of CNL Financial  Group,  Inc.
including,  CNL Investment  Company,  CNL Securities Corp. and CNL Institutional
Advisors,  Inc., a registered  investment  advisor for pension plans. Mr. Bourne
began his career as a certified public accountant employed by Coopers & Lybrand,
Certified  Public  Accountants,  from 1971 through  1978,  where he attained the
position  of Tax  Manager in 1975.  Mr.  Bourne  graduated  from  Florida  State
University in 1970 where he received a B.A. in Accounting, with honors.

         Curtis B.  McWilliams,  age 46. Mr.  McWilliams  has served as Co-Chief
Executive  Officer of APF since  December  2000 and  previously  served as Chief
Executive  Officer from  September  1999  through  December  2000.  Prior to the
acquisition of CNL Fund Advisors,  Inc., Mr.  McWilliams  served as President of
APF from  February  1999 until  September  1999.  From February 1998 to February
1999, he served as Executive  Vice President of APF. Mr.  McWilliams  joined CNL
Financial  Group,  Inc. in April 1997 and served as an Executive  Vice President
from October 1997 until September 1999. In addition,  Mr.  McWilliams  served as
President of CNL Fund Advisors, Inc. and CNL Financial Services, Inc. from April
1997 until the acquisition of such entities by wholly-owned  subsidiaries of APF
in September  1999.  From September 1983 through March 1997, Mr.  McWilliams was
employed by Merrill  Lynch & Co. The  majority of his career at Merrill  Lynch &
Co.  was in the  Investment  Banking  division  where he  served  as a  Managing
Director.  Mr.  McWilliams  received  a  B.S.E.  in  Chemical  Engineering  from
Princeton University in 1977 and a Master of Business Administration degree with
a concentration in finance from the University of Chicago in 1983.

         Steven  D.  Shackelford,  age  38.  Mr.  Shackelford  was  promoted  to
Executive Vice President of APF in June 2000. He served as Senior Vice President
from September 1999 until his promotion in June 2000. Mr. Shackelford has served
as Chief  Financial  Officer  since January 1997 and has served as Secretary and
Treasurer of APF since September 1999. He also served as Chief Financial Officer
of CNL Fund Advisors,  Inc. from September  1996 to September  1999.  From March
1995 to July 1996, Mr.  Shackelford  was a senior manager in the national office
of Price  Waterhouse LLP where he was responsible  for advising  foreign clients
seeking to raise capital and a public listing in the United States.  From August
1992 to March  1995,  he was a  manager  in the  Paris,  France  office of Price
Waterhouse, serving several multi-national clients. Mr. Shackelford was an audit
staff and  senior  from  1986 to 1992 in the  Orlando,  Florida  office of Price
Waterhouse.  Mr.  Shackelford  received a Bachelor of Arts degree in Accounting,
with honors, and a Master of Business  Administration  degree from Florida State
University and is a certified public accountant.


Item 11.  Executive Compensation

         Other than as  described in Item 13, the  Partnership  has not paid and
does not intend to pay any executive compensation to the General Partners or any
of their affiliates.  There are no compensatory plans or arrangements  regarding
termination of employment or change of control.


<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management

         As of March 15,  2002,  no person was known to the  Registrant  to be a
beneficial owner of more than five percent of the Units.

         The following  table sets forth,  as of March 15, 2002,  the beneficial
ownership interests of the General Partners in the Registrant.


<TABLE>
<CAPTION>

 <c>
                    Title of Class                           Name of Partner                 Percent of Class
                    --------------                           ---------------                 ----------------

           General Partnership Interests                James M. Seneff, Jr.                           45%
                                                        Robert A. Bourne                               45%
                                                        CNL Realty Corporation                         10%
                                                                                                   --------
                                                                                                      100%
                                                                                                   ========
</TABLE>

         Neither the General  Partners,  nor any of their  affiliates,  owns any
interest in the Registrant, except as noted above.




<PAGE>


Item 13.    Certain Relationships and Related Transactions

         The  table  below   summarizes  the  types,   recipients,   methods  of
computation and amounts of compensation,  fees and distributions paid or payable
by the  Partnership  to the General  Partners and their  affiliates for the year
ended  December 31, 2001,  exclusive of any  distributions  to which the General
Partners or their  affiliates  may be entitled by reason of their  purchase  and
ownership of Units.

<TABLE>
<CAPTION>

 <c>
                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

Reimbursement  to affiliates for       Operating  expenses are reimbursed at       Accounting and administra
operating expenses                     the  lower  of  cost  or  90%  of the       -tive services: $152,529
                                       prevailing  rate at which  comparable
                                       services  could have been obtained in
                                       the     same     geographic     area.
                                       Affiliates  of the  General  Partners
                                       from  time  to  time  incur   certain
                                       operating  expenses  on behalf of the
                                       Partnership     for     which     the
                                       Partnership       reimburses      the
                                       affiliates without interest.

Annual, subordinated man               One  percent  of  the  sum  of  gross       $-0-
-agement fee to affiliates             operating  revenues  from  Properties
                                       wholly owned by the Partnership plus
                                       the Partnership's allocable share of
                                       gross revenues of joint ventures in
                                       which    the    Partnership    is   a
                                       co-venturer, subordinated to certain
                                       minimum returns to the Limited
                                       Partners. The management fee will
                                       not exceed competitive fees for
                                       comparable   services.   Due  to  the
                                       fact    that     these    fees    are
                                       non-cumulative, if the Limited
                                       Partners have not received  their 10%
                                       Preferred Return in any particular
                                       year, no management  fees will be due
                                       or payable for such year.




<PAGE>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

Deferred,    subordinated   real       A deferred,  subordinated real estate       $21,023
estate  disposition  fee payable       disposition  fee,  payable  upon sale
to affiliates.                         of  one  or  more  Properties,  in an
                                       amount  equal  to the  lesser  of (i)
                                       one-half of a competitive real
                                       estate commission, or (ii) three
                                       percent of the sales price of such
                                       Property or Properties. Payment of
                                       such  fee   shall  be  made  only  if
                                       affiliates of the General Partners
                                       provide a substantial amount of
                                       services in connection with the sale
                                       of a Property or Properties and
                                       shall be subordinated to certain
                                       minimum returns to the Limited
                                       Partners.  However,  if the net sales
                                       proceeds   are    reinvested   in   a
                                       replacement Property, no such real
                                       estate disposition fee will be
                                       incurred until such replacement
                                       Property is sold and the net sales
                                       proceeds are distributed.

General   Partners'    deferred,       A deferred,  subordinated share equal       $-0-
subordinated       share      of       to   one   percent   of   Partnership
Partnership net cash flow              distributions   of  net  cash   flow,
                                       subordinated to certain minimum
                                       returns to the Limited Partners.

General   Partners'    deferred,       A deferred,  subordinated share equal       $-0-
subordinated       share      of       to  five   percent   of   Partnership
Partnership  net sales  proceeds       distributions   of  such  net   sales
from  a  sale  or  sales  not in       proceeds,   subordinated  to  certain
liquidation of the Partnership         minimum   returns   to  the   Limited
                                       Partners


<PAGE>



                                                                                          Amount Incurred
      Type of Compensation                                                                 For the Year
         and Recipient                         Method of Computation                  Ended December 31, 2001
---------------------------------      --------------------------------------      ------------------------------

General   Partners'   share   of       Distributions  of net sales  proceeds       $-0-
Partnership  net sales  proceeds       from   a    sale    or    sales    of
from  a   sale   or   sales   in       substantially      all     of     the
liquidation of the Partnership         Partnership's    assets    will    be
                                       distributed in the following order
                                       or priority: (i) first, to pay all
                                       debts   and    liabilities   of   the
                                       Partnership    and    to    establish
                                       reserves; (ii) second, to Partners
                                       with positive capital account
                                       balances, determined after the
                                       allocation  of net income,  net loss,
                                       gain and loss, in proportion to such
                                       balances, up to amounts sufficient
                                       to reduce such balances to zero; and
                                       (iii) thereafter, 95% to the Limited
                                       Partners and 5% to the General Partners.



</TABLE>



<PAGE>


                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a) The following documents are filed as part of this report.

         1.   Financial Statements

                  Report of Independent Certified Public Accountants

                  Balance Sheets at December 31, 2001 and 2000

                  Statements  of Income for the years ended  December  31, 2001,
                  2000 and 1999

                  Statements of Partners'  Capital for the years ended  December
                  31, 2001, 2000 and 1999

                  Statements  of Cash  Flows for the years  ended  December  31,
                  2001, 2000 and 1999

                  Notes to Financial Statements

         2.   Financial Statement Schedules

                  Schedule II - Valuation and Qualifying  Accounts for the years
                  ended December 31, 2001, 2000 and 1999

                  Schedule  III - Real Estate and  Accumulated  Depreciation  at
                  December 31, 2001

                  Notes  to  Schedule   III  -  Real   Estate  and   Accumulated
                  Depreciation at December 31, 2001

                  All other Schedules are omitted as the required information is
                  inapplicable  or is presented in the  financial  statements or
                  notes thereto.

         3.   Exhibits

                  3.1      Certificate of Limited Partnership of CNL Income Fund
                           IV, Ltd.  (Included as Exhibit 3.1 in Amendment No. 1
                           to  Registration  Statement No. 33-20249 on Form S-11
                           and incorporated herein by reference.)

                  3.2      Amended and Restated  Agreement  and  Certificate  of
                           Limited  Partnership  of CNL  Income  Fund  IV,  Ltd.
                           (Included  as Exhibit 3.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1994,
                           and incorporated herein by reference.)

                  4.1      Certificate of Limited Partnership of CNL Income Fund
                           IV, Ltd.  (Included as Exhibit 3.1 in Amendment No. 1
                           to  Registration  Statement No. 33-20249 on Form S-11
                           and incorporated herein by reference.)

                  4.2      Amended and Restated  Agreement  and  Certificate  of
                           Limited  Partnership  of CNL  Income  Fund  IV,  Ltd.
                           (Included  as Exhibit 3.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1994,
                           and incorporated herein by reference.)

                  10.1     Property  Management  Agreement  (Included as Exhibit
                           10.1 to Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  March   31,   1994,   and
                           incorporated herein by reference.)

                  10.2     Assignment of Property Management  Agreement from CNL
                           Investment Company to CNL Income Fund Advisors,  Inc.
                           (Included as Exhibit 10.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 30, 1995,
                           and incorporated herein by reference.)

                  10.3     Assignment of Property Management  Agreement from CNL
                           Income Fund Advisors, Inc. to CNL Fund Advisors, Inc.
                           (Included as Exhibit 10.3 to Form 10-K filed with the
                           Securities and Exchange  Commission on April 1, 1996,
                           and incorporated herein by reference.)

                  10.4     Assignment  of  Management  Agreement  from  CNL Fund
                           Advisors,  Inc. to CNL APF Partners, LP. (Included as
                           Exhibit  10.4 to Form 10-Q filed with the  Securities
                           and  Exchange  Commission  on  August  9,  2001,  and
                           incorporated herein by reference.)

     (b) The  Registrant  filed no reports  on Form 8-K  during the period  from
         October 1, 2001 through December 31, 2001.






<PAGE>




                                   SIGNATURES



         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 26th day of
March, 2002.


                          CNL INCOME FUND IV, LTD.

                          By:        CNL REALTY CORPORATION
                                     General Partner

                                     /s/ Robert A. Bourne
                                     ----------------------------------------
                                     ROBERT A. BOURNE, President



                          By:        ROBERT A. BOURNE
                                     General Partner


                                     /s/ Robert A. Bourne
                                     ----------------------------------------
                                     ROBERT A. BOURNE



                          By:        JAMES M. SENEFF, JR.
                                     General Partner


                                     /s/ James M. Seneff, Jr.
                                     ----------------------------------------
                                     JAMES M. SENEFF, JR.







<PAGE>





         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

 <C>

             Signature                                    Title                                    Date
             ---------                                    -----                                    ----

     /s/ Robert A. Bourne                 President, Treasurer and Director                March 26, 2002
     ---------------------------          (Principal Financial and Accounting
     Robert A. Bourne                     Officer)


     /s/ James M. Seneff, Jr.             Chief Executive Officer and Director             March 26, 2002
     ---------------------------          (Principal Executive Officer)
     James M. Seneff, Jr.

</TABLE>


<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  Years Ended December 31, 2001, 2000, and 1999


<TABLE>
<CAPTION>
<S> <c>
                                                     Additions                           Deductions
                                          ---------------------------------    -------------------------------
                                                                                                          Collected
                                                                                                          or Deter-
                                   Balance at       Charged to       Charged to           Deemed          mined to       Balance
                                    Beginning       Costs and           Other           Uncollec-          be Col-       at End
  Year          Description          of Year         Expenses         Accounts            tible           lectible       of Year
----------    -----------------   --------------  ---------------  ----------------    -------------     ------------  ------------

  1999        Allowance for
                  doubtful
                  accounts (a)        $ 258,641          $    --        $   18,765 (b)    $   7,167 (c)     $ 55,210     $ 215,029
                                  ==============  ===============  ================    =============     ============  ============

  2000        Allowance for
                  doubtful
                  accounts (a)        $ 215,029       $   28,953        $  153,383 (b)       $   --         $ 95,848     $ 301,517
                                  ==============  ===============  ================    =============     ============  ============

  2001        Allowance for
                  doubtful
                  accounts (a)        $ 301,517       $   10,792        $   16,339 (b)    $ 309,608 (c)     $ 19,040        $   --
                                  ==============  ===============  ================    =============     ============  ============
</TABLE>


(a)  Deducted from receivables on the balance sheet.

(b)  Reduction of rental and other income.

(c)  Amounts written off as uncollectible.


<PAGE>

                           CNL INCOME FUND IV, LTD.
                        (A Florida Limited Partnership)

            SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                            December 31, 2001

<TABLE>
<CAPTION>

                                                                       Costs Capitalized
                                                                         Subsequent to
                                                   Initial Cost           Acquisition
                                           -------------------------  -------------------
                             Encum-                     Buildings and Improve-    Carrying
                             brances          Land       Improvements   ments     Costs
                            ----------     -----------  ------------  ----------  -------

 <c>
Properties the Partnership
  has Invested in Under
  Operating Leases:

    Arby's Restaurants:
      Winchester, Indiana       -            $287,769             -    $567,785        -
      Portland, Indiana         -             187,928             -     657,931        -

    Captain D's Restaurants:
      Alexander City, Alabama   -             120,210       279,689           -        -
      Oak Ridge, Tennessee      -             169,951       281,686           -        -

    Checkers Drive-In Restaurant:
      Miami, Florida            -             174,336             -           -        -

    Chipper's Grill Restaurant:
          Streator, Illinois    -             161,616       650,934           -        -

    Denny's Restaurants:
      Marion, Ohio              -             135,407       334,665           -        -
      Dundee, Michigan          -             251,650             -     372,278        -

    Golden Corral Family
      Steakhouse Restaurants:
          Franklin, Indiana     -             107,560       586,375           -        -

    Green Tea Restaurant:
      Tampa, Floridaa, Florida  -             476,755       368,405           -        -

    Jack in the Box Restaurant:
      San Antonio, Texas        -             352,957             -     368,702        -

    Pizza Hut Restaurants:
      Memphis, Texas            -              26,510       231,874           -        -
      Carthage, Texas           -              40,444       232,823           -        -
      Crystal City, Texas       -               8,826       178,570           -        -
      Sequin, Texas             -              63,708       184,279           -        -
      Washington, D.C.          -             191,737             -           -        -

    Shoney's Restaurants:
      Alexander City, Alabama   -             202,438       428,406           -        -
      Brookhaven, Mississippi   -             312,574       452,601           -        -
      Auburn, Alabama           -             363,432       426,123           -        -

    Taco Bell Restaurant:
      Edgewood, Maryland        -             440,355             -     523,478        -

    The Vitamin Shoppe:
      Richmond, Virginia                      504,169       522,025           -        -



                                                                       Costs Capitalized
                                                                          Subsequent to
                                                  Initial Cost            Acquisition
                                           -------------------------  -------------------
                             Encum-                     Buildings and Improve-    Carrying
                             brances          Land       Improvements   ments     Costs
                            ----------     -----------  ------------  ----------  -------

    Wendy's Old Fashioned
           Hamburger Restaurants:
                Mechanicsville, -irginia      346,627       502,117           -        -
                Tampa, Florida  -             530,456       432,958           -        -

    Other Restaurants:
                Maywood, Illinoi- (i)         310,966             -     443,473        -
                                           -----------  ------------  ----------  -------

                                           $5,768,381    $6,093,530   $2,933,647       -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
   Which the Partnership has a
   51% Interest and has
   Invested in Under an
   Operating Lease:

      Denny's Restaurant:
           Holland, Michigan    -            $295,987             -    $780,451        -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
    Which the Partnership has
    a 26.6% Interest and has
    Invested in Under an
    Operating Lease:

      Po Folks Restaurant:
           Titusville, Florida (-)           $271,350             -    $750,985        -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
   Which the Partnership has a
   57% Interest and has Invested
   in Under an Operating Lease:

      Waffle House Restaurant:
           Cocoa, Florida                    $183,229      $192,857           -        -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
   Which the Partnership has a
   35.71% Interest and has
   Invested in Under an
   Operating Lease:

      IHOP Restaurant:
           Warren, Michigan     -            $507,965      $889,080           -        -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
   Which the Partnership has a
   96.1% Interest and has
   Invested in Under an
   Operating Lease:

      KFC Restaurant:
           Auburn, Massachusetts-            $484,362             -           -        -
                                           ===========  ============  ==========  =======




                                                                        Costs Capitalized
                                                                          Subsequent to
                                                 Initial Cost              Acquisition
                                           -------------------------  -------------------
                             Encum-                     Buildings and Improve-    Carrying
                             brances          Land       Improvements   ments     Costs
                            ----------     -----------  ------------  ----------  -------
Property of Joint Venture in
   Which the Partnership has
   a 68.87% Interest and has
   Invested in Under an
   Operating Lease:

      Denny's Restaurant:
           Kingsville, Texas (k)-            $270,189             -    $243,326        -
                                           ===========  ============  ==========  =======

Property in Which the
   Partnership has a 53%
   Interest as Tenants-in-
   Common and has Invested
   in Under an Operating Lease:

      Golden Corral Family
           Steakhouse Restaurant:
               Clinton, North Ca-olina       $138,382      $676,588           -        -
                                           ===========  ============  ==========  =======

Property in Which the Partnership
   has a 76% Interest as Tenants-
   in-Common and has Invested in
   Under an Operating Lease:

      Arby's Restaurant:
          Zephyrhills, Florida  -            $260,146      $441,434           -        -
                                           ===========  ============  ==========  =======

Properties the Partnership has
    Invested in Under Direct
    Financing Leases:

      Pizza Hut Restaurant:
           Washington, D. C.    -                   -      $459,543           -        -
                                           ===========  ============  ==========  =======

Property of Joint Venture in
    Which the Partnership has a
    96.1% Interest and has Invested
    in Under a Direct Financing
    Lease:

      KFC Restaurant:
           Auburn, Massachusetts-                   -             -    $434,947        -
                                           ===========  ============  ==========  =======





    Net Cost Basis at Which                                               Life on Which
  Carried at Close of Period (c)                                          Depreciation in
---------------------------------------                Date               Latest Income
               Buildings and             Accumulated  of Con-   Date       Statement is
    Land       Improvements   Total      Depreciation structioAcquired       Computed
-------------  -----------  -----------  -----------  ------  ---------    ------------





    $287,769     $567,785     $855,554     $218,882   1988     07/88           (b)
     187,928      657,931      845,859      242,064   1989     11/88           (b)


     120,210      279,689      399,899      121,428   1988     12/88           (b)
     169,951      281,686      451,637      122,321   1988     12/88           (b)


     174,336            -      174,336           (g)    -      06/94           (g)


     161,616      650,934      812,550      289,304   1988     08/88           (b)


     135,407      334,665      470,072      106,737   1989     10/88           (h)
     251,650      372,278      623,928      163,389   1988     10/88           (b)



     107,560      586,375      693,935      263,869   1988     06/88           (b)


     476,755      368,405      845,160      159,717   1987     12/88           (b)


     352,957      368,702      721,659      157,723   1989     11/88           (b)


      26,510      231,874      258,384      102,733   1985     09/88           (b)
      40,444      232,823      273,267      103,154   1981     09/88           (b)
       8,826      178,570      187,396       79,117   1981     09/88           (b)
      63,708      184,279      247,987       81,645   1974     09/88           (b)
     191,737           (f)     191,737            -   1986     01/89           (d)


     202,438      428,406      630,844      185,995   1988     12/88           (b)
     312,574      452,601      765,175      196,540   1988     12/88           (b)
     363,432      426,123      789,555      185,042   1988     12/88           (b)


     440,355      523,478      963,833      224,659   1989     10/88           (b)


     504,169      522,025    1,026,194       87,052   1996     12/96           (b)











       Net Cost Basis at Which                                             Life on Which
    Carried at Close of Period (c)                                        Depreciation in
---------------------------------------                Date                Latest Income
               Buildings and             Accumulated  of Con-   Date       Statement is
    Land       Improvements   Total      Depreciation structioAcquired       Computed
-------------  -----------  -----------  -----------  ------  ---------    ------------



     346,627      502,117      848,744      218,979   1988     12/88           (b)
     530,456      432,958      963,414      187,702   1984     12/88           (b)


     310,966      443,473      754,439      191,157   1988     09/88           (b)
-------------  -----------  -----------  -----------

  $5,768,381   $9,027,177   $14,795,558  $3,689,209
=============  ===========  ===========  ===========








    $295,987     $780,451   $1,076,438     $342,531   1988     10/87           (b)
=============  ===========  ===========  ===========








     $85,235     $364,146     $449,381     $288,670   1988     10/87           (b)
=============  ===========  ===========  ===========








    $183,229     $192,857     $376,086      $77,198   1986     12/89           (b)
=============  ===========  ===========  ===========








    $507,965     $889,080   $1,397,045      $97,677   1996     09/98           (b)
=============  ===========  ===========  ===========








    $484,362           (f)    $484,362           (d)  1989     03/90           (d)
=============               ===========  ===========











  Net Cost Basis at Which                                                  Life on Which
  Carried at Close of Period (c)                                          Depreciation in
---------------------------------------               Date                 Latest Income
               Buildings and             Accumulated  of Con-   Date       Statement is
    Land       Improvements   Total      Depreciation structioAcquired       Computed
-------------  -----------  -----------  -----------  ------  ---------    ------------







    $150,742     $243,326     $394,068      $38,421   1988     10/88           (d)
=============  ===========  ===========  ===========









    $138,382     $676,588     $814,970     $133,932   1996     01/96           (b)
=============  ===========  ===========  ===========







    $260,146     $441,434     $701,580      $43,448   1990     01/99           (b)
=============  ===========  ===========  ===========






           -           (f)          (f)          (d)  1986     01/89           (d)
=============








           -           (f)          (f)          (d)  1989     03/90           (d)
=============


</TABLE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 2001


(a)  Transactions in real estate and accumulated depreciation during 2000, 1999,
     and 1998 are summarized as follows:

<TABLE>
<CAPTION>

 <c>
                                                                                           Accumulated
                                                                           Cost            Depreciation
                                                                      ----------------   -----------------
         Properties the Partnership has Invested
           in Under Operating Leases:

              Balance, December 31, 1998                                 $ 19,231,068        $  3,744,609
              Depreciation expense                                                 --             405,488
                                                                      ----------------   -----------------

              Balance, December 31, 1999                                   19,231,068           4,150,097
              Dispositions                                                 (2,624,687 )          (692,463 )
              Provision for write-down of assets                             (387,612 )                --
              Depreciation expense                                                 --             376,013
                                                                      ----------------   -----------------

              Balance, December 31, 2000                                   16,218,769           3,833,647
              Dispositions                                                 (1,244,394 )          (464,651 )
              Provisions for write-down of assets                            (178,817 )                --
              Depreciation expense                                                 --             320,213
                                                                      ----------------   -----------------

              Balance, December 31, 2001                                 $ 14,795,558        $  3,689,209
                                                                      ================   =================

         Property of Joint Venture in Which the Partnership has
           a 51% Interest and has Invested in Under an
           Operating Lease:

              Balance, December 31, 1998                                 $  1,076,438         $   264,486
              Depreciation expense                                                 --              26,015
                                                                      ----------------   -----------------

              Balance, December 31, 1999                                    1,076,438             290,501
              Depreciation expense                                                 --              26,015
                                                                      ----------------   -----------------

              Balance, December 31, 2000                                    1,076,438             316,516
              Depreciation expense                                                 --              26,015
                                                                      ----------------   -----------------

              Balance, December 31, 2001                                 $  1,076,438         $   342,531
                                                                      ================   =================
</TABLE>


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

   NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION CONTINUED

                                December 31, 2001


<TABLE>
<CAPTION>

 <c>
                                                                                            Accumulated
                                                                            Cost            Depreciation
                                                                       ----------------   -----------------
          Property of Joint Venture in Which the Partnership
            has a 26.6% Interest and has Invested in Under
            an Operating Lease:

               Balance, December 31, 1998                                  $   750,045         $   245,306
               Depreciation expense                                                 --              17,624
                                                                       ----------------   -----------------

               Balance, December 31, 1999                                      750,045             262,930
               Depreciation expense                                                 --              16,936
               Provision for write-down of assets (i)                         (227,094 )                --
                                                                       ----------------   -----------------

               Balance, December 31, 2000                                      522,951             279,866
               Depreciation expense                                                 --               8,804
               Provision for write-down of assets (i)                          (73,570 )                --
                                                                       ----------------   -----------------

               Balance, December 31, 2001                                  $   449,381         $   288,670
                                                                       ================   =================

          Property of Joint Venture in Which the Partnership has
            a 57% Interest and has Invested in Under an
            Operating Lease:

               Balance, December 31, 1998                                  $   376,086         $    57,911
               Depreciation expense                                                 --               6,429
                                                                       ----------------   -----------------

               Balance, December 31, 1999                                      376,086              64,340
               Depreciation expense                                                 --               6,429
                                                                       ----------------   -----------------

               Balance, December 31, 2000                                      376,086              70,769
               Depreciation expense                                                 --               6,429
                                                                       ----------------   -----------------

               Balance, December 31, 2001                                  $   376,086         $    77,198
                                                                       ================   =================
</TABLE>


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

  NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 2001


<TABLE>
<CAPTION>
<S> <c>
                                                                                            Accumulated
                                                                            Cost            Depreciation
                                                                       ----------------   -----------------
          Property of Joint Venture in Which the Partnership has
            a 35.71% Interest and has Invested in Under an
            Operating Lease:

               Balance, December 31, 1998                                 $  1,397,045          $    8,769
               Depreciation expense                                                 --              29,636
                                                                       ----------------   -----------------

               Balance, December 31, 1999                                    1,397,045              38,405
               Depreciation expense                                                 --              29,636
                                                                       ----------------   -----------------

               Balance, December 31, 2000                                    1,397,045              68,041
               Depreciation expense                                                 --              29,636
                                                                       ----------------   -----------------

               Balance, December 31, 2001                                 $  1,397,045         $    97,677
                                                                       ================   =================

          Property of Joint Venture in Which the Partnership has
            a 96.1% Interest and has Invested in Under an
            Operating Lease:

               Balance, December 31, 1998                                  $   484,362            $     --
               Depreciation expense (d)                                             --                  --
                                                                       ----------------   -----------------

               Balance, December 31, 1999                                      484,362                  --
               Depreciation expense (d)                                             --                  --
                                                                       ----------------   -----------------

               Balance, December 31, 2000                                      484,362                  --
               Depreciation expense (d)                                             --                  --
                                                                       ----------------   -----------------

               Balance, December 31, 2001                                  $   484,362            $     --
                                                                       ================   =================
</TABLE>


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

  NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 2001

<TABLE>
<CAPTION>
<S> <c>

                                                                                         Accumulated
                                                                         Cost            Depreciation
                                                                   -----------------   -----------------
       Property of Joint Venture in Which the Partnership has
         a 68.87% Interest and has Invested in Under an
         Operating Lease:

            Balance, December 31, 1998 (j)                              $   150,742            $     --
            Reclassified from net investment in direct
                financing lease (h)                                         243,326                  --
            Depreciation expense                                                 --              12,807
                                                                   -----------------   -----------------

            Balance, December 31, 1999 (j)(h)                               394,068              12,807
            Depreciation expense                                                 --              12,807
                                                                   -----------------   -----------------

            Balance, December 31, 2000 (j)(h)                               394,068              25,614
            Depreciation expense                                                 --              12,807
                                                                   -----------------   -----------------

            Balance, December 31, 2001 (j)(h)                           $   394,068         $    38,421
                                                                   =================   =================

       Property in Which the Partnership has a 53% Interest
         as Tenants-in-Common and has Invested in Under
         an Operating Lease:

            Balance, December 31, 1998                                  $   814,970         $    66,273
            Depreciation expense                                                 --              22,553
                                                                   -----------------   -----------------

            Balance, December 31, 1999                                      814,970              88,826
            Depreciation expense                                                 --              22,553
                                                                   -----------------   -----------------

            Balance, December 31, 2000                                      814,970             111,379
            Depreciation expense                                                 --              22,553
                                                                   -----------------   -----------------

            Balance, December 31, 2001                                  $   814,970         $   133,932
                                                                   =================   =================
</TABLE>


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

  NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 2001


<TABLE>
<CAPTION>
<S> <C>
                                                                                         Accumulated
                                                                         Cost            Depreciation
                                                                   -----------------   -----------------

       Property in Which the Partnership has a 76% Interest
         as Tenants-in-Common and has Invested in Under
         an Operating Lease:

            Balance, December 31, 1998                                     $     --            $     --
            Acquisition                                                     701,580                  --
            Depreciation expense                                                 --              13,532
                                                                   -----------------   -----------------

            Balance, December 31, 1999                                      701,580              13,532
            Depreciation expense                                                 --              15,202
                                                                   -----------------   -----------------

            Balance, December 31, 2000                                      701,580              28,734
            Depreciation expense                                                 --              14,714
                                                                   -----------------   -----------------

            Balance, December 31, 2001                                  $   701,580         $    43,448
                                                                   =================   =================

</TABLE>

(b)  Depreciation  expense is computed for buildings and improvements based upon
     estimated lives of 30 years.

(c)  As of December 31, 2001, the aggregate cost of the Properties  owned by the
     Partnership  and  joint  ventures  for  federal  income  tax  purposes  was
     $15,047,560 and $6,039,412,  respectively. All of the leases are treated as
     operating leases for federal income tax purposes.

(d)  The portion of the lease  relating to the building  has been  recorded as a
     direct  financing  lease. The cost of the building has been included in the
     net investment in direct financing leases,  therefore,  depreciation is not
     applicable.

(e)  The  restaurant  on the Property in Maywood,  Illinois,  was converted to a
     Dunkin Donuts restaurant and a Holsum Bread bakery in 1993.

(f)  Certain  components  of the lease  relating to land and building  have been
     recorded as a direct financing lease. Accordingly,  costs relating to these
     components are not shown.

(g)  The building  portion of this  Property is owned by the tenant;  therefore,
     depreciation is not applicable.

(h)  Effective  January  1,  1999,  the lease  for this  Property  was  amended,
     resulting in the  reclassification  of the building portion of the lease as
     an  operating  lease.  The  building  was  recorded at net book value as of
     January  1,  1999,  and  depreciated  over  remaining   estimated  life  of
     approximately 19 years.


<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)

  NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED

                                December 31, 2001


(i)  The undepreciated cost of the Property in Titusville,  Florida, was written
     down to net realizable value due to an anticipated impairment in value. The
     Partnership   recognized  the   impairment  by  recording   provisions  for
     write-down of assets in the amount of $125,251 and $147,039 at December 31,
     1998 and December 31, 1997, respectively. During 1997, the operator of this
     Property  vacated the Property and ceased  operations.  The  impairment  at
     December  31,  1998,  represented  the  difference  between the  Property's
     carrying value and the estimated net realizable  value of the Property.  No
     additional   impairment  was  recorded   during  1999.   During  2000,  the
     Partnership  recognized an  additional  impairment by recording a provision
     for  write-down  of assets in the  amount of  $227,094.  During  2001,  the
     Partnership  recognized an  additional  impairment by recording a provision
     for write-down of assets in the amount of $73,570. The cost of the Property
     presented on this  schedule is the net cost basis at which the Property was
     carried at December 31, 2001, including the provisions for loss on assets.

(j)  The  undepreciated  cost of the Property in Kingsville,  Texas, was written
     down to net realizable value due to an anticipated impairment in value. The
     Partnership   recognized  the  impairment  by  recording  a  provision  for
     write-down  of assets in the amount of $119,447 at December 31,  1998.  The
     tenant of this  Property  experienced  financial  difficulties  and  ceased
     payment of rents under the terms of their lease  agreement.  The impairment
     at December 31, 1998,  represented  the  difference  between the Property's
     carrying value at December 31, 1998, and the estimated net realizable value
     of the Property. During 1999, the joint venture re-leased the Property to a
     new tenant,  resulting in the  reclassification  of the building portion of
     the lease as an  operating  lease.  The  building  was recorded at net book
     value as of January 15, 1999,  and  depreciated  over the remaining life of
     approximately 19 years. The cost of land for this the Property presented on
     this  schedule is the net cost basis at which the  Property  was carried at
     December 31, 2001, including the provision for write-down of assets.