U NITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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





FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2008





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





Commission
File Number:  333-108057





COMMONWEALTH
INCOME & GROWTH FUND V


(Exact
name of registrant as specified in its charter)





Pennsylvania
            65-1189593(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification Number)





Brandywine
Bldg. One, Suite 200


2 Christy
Drive


Chadds
Ford, PA 19317


(Address,
including zip code, of principal executive offices)





(610)
594-9600


(Registrant’s
telephone number including area code)





Indicate
by check mark whether the registrant (i) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (ii) has been subject to such filing requirements for
the past 90 days: YES  TNO   ̈





Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definition of "accelerated filer,
“large accelerated filer" and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):





Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈
            Smaller
      reporting company T


(Do not check if a
smaller reporting company.)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).      YES   ̈NO T









1





FORM
10-Q


MARCH
31, 2008





TABLE OF CONTENTS





PART
      IItem 1.
            Financial Statements
            3Item 2.
            Management's Discussion and Analysis of Financial Condition
      and Results of Operations
            11Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            13Item 4T.
            Controls and Procedures
            13PART
      IIItem 1.
            Legal Proceedings
            13Item 1 A.
            Risk Factors
            14Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            14Item 3.
            Defaults Upon Senior Securities
            14Item 4.
            Submission of Matters to a Vote of Securities
      Holders
            14Item 5.
            Other Information
            14Item 6.
            Exhibits
            14





2


Part
I. FINANCIAL INFORMATION


Item
1. Financial Statements





Commonwealth
      Income & Growth Fund VCondensed Balance SheetMarch
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)AssetsCash
      and cash equivalents
            
            $
            3,716,460
            
            
            $
            4,114,953Lease
      income receivable, net of reserves of  $42,800 as
    ofMarch
      31, 2008 and December 31, 2007
            
            
            239,700
            
            
            
            211,207Other
      receivable, Commonwealth Capital Corp.
            
            
            157,728
            
            
            
            55,740Other
      receivable, General Partner
            
            
            18,553
            
            
            
            -Other
      receivable, affiliated limited partnerships
            
            
            -
            
            
            
            1,903Prepaid
      expenses
            
            
            15,041
            
            
            
            1,7454,147,482
            
            
            
            4,385,548Computer
      equipment, at cost
            
            
            21,785,487
            
            
            
            21,299,239Accumulated
      depreciation
            
            
            (9,265,742
            )
            
            
            (7,919,040
            )12,519,745
            
            
            
            13,380,199Equipment
      acquisition costs and deferred expenses, net of accumulated
              amortization
      of $527,332 and $449,553 at March 31, 2008 and
              December
      31, 2007
            
            
            405,969
            
            
            
            463,248Prepaid
      acquisition fees, General Partner
            
            
            227,436
            
            
            
            247,936633,405
            
            
            
            711,184Total
      Assets
            
            $
            17,300,632
            
            
            $
            18,476,931Liabilities
      and Partners' CapitalLiabilitiesAccounts
      payable
            
            $
            11,808
            
            
            $
            292,491Accounts
      payable, General Partner
            
            
            -
            
            
            
            9,734Other
      accrued expenses
            
            
            -
            
            
            
            2,182Unearned
      lease income
            
            
            486,096
            
            
            
            157,032Notes
      payable
            
            
            2,639,039
            
            
            
            3,134,218Total
      liabilities
            
            
            3,136,943
            
            
            
            3,595,657Partners'
      CapitalGeneral
      partner
            
            
            1,000
            
            
            
            1,000Limited
      partners
            
            
            14,162,689
            
            
            
            14,880,274Total
      Partners' Capital
            
            
            14,163,689
            
            
            
            14,881,274Total
      Liabilities and Partners' Capital
            
            $
            17,300,632
            
            
            $
            18,476,931




see
accompanying notes to condensed financial statements





3




Table of
Contents


Commonwealth
      Income & Growth Fund VCondensed
      Statements of OperationsThree
      months EndedMarch
      31,2008
            
            
            2007(unaudited)RevenueLease
            
            $
            1,827,678
            
            
            $
            1,378,282Interest
      and other
            
            
            28,670
            
            
            
            74,481Total
      revenue
            
            
            1,856,348
            
            
            
            1,452,763ExpensesOperating,
      excluding depreciation
            
            
            373,474
            
            
            
            286,222Equipment
      management fee, General Partner
            
            
            86,305
            
            
            
            68,914Interest
            
            
            43,294
            
            
            
            28,062Depreciation
            
            
            1,363,141
            
            
            
            1,039,228Amortization
      of equipment acquisition costs and deferred expenses
            
            
            77,779
            
            
            
            58,913Loss
      on sale of computer equipment
            
            
            4,966
            
            
            
            -Total
      expenses
            
            
            1,948,959
            
            
            
            1,481,339Net
      (loss)
            
            $
            (92,611
            )
            
            $
            (28,576
            )Net
      (loss) allocated to limited partners
            
            $
            (98,861
            )
            
            $
            (34,826
            )Net
      (loss) per equivalent limited partnership unit
            
            $
            (0.08
            )
            
            $
            (0.03
            )Weighted
      average number of equivalent limited partnership units outstanding during
      the period
            
            
            1,249,951
            
            
            
            1,249,951




see accompanying notes to condensed
financial statements


4




Table of
Contents





Commonwealth
      Income & Growth Fund VCondensed
      Statements of Partners’ CapitalFor
      the Three Months ended March 31, 2008(unaudited)General
            
            
            LimitedPartner
            
            
            Partner
            
            
            General
            
            
            LimitedUnits
            
            
            Units
            
            
            Partner
            
            
            Partners
            
            
            TotalBalance,
      January 1, 2008
            
            
            50
            
            
            
            1,249,951
            
            
            $
            1,000
            
            
            $
            14,880,274
            
            
            $
            14,881,274Net
      income (loss)
            
            
            -
            
            
            
            -
            
            
            
            6,250
            
            
            
            (98,861
            )
            
            
            (92,611
            )Distributions
            
            
            -
            
            
            
            -
            
            
            
            (6,250
            )
            
            
            (618,724
            )
            
            
            (624,974
            )Balance,
      March 31, 2008
            
            
            50
            
            
            
            1,249,951
            
            
            $
            1,000
            
            
            $
            14,162,689
            
            
            $
            14,163,689


see
accompanying notes to condensed financial statements


5




Table of
Contents




Commonwealth
      Income & Growth Fund VCondensed
      Statements of Cash FlowThree
      Months EndedMarch
      31,2008
            
            
            2007(unaudited)Net
      cash provided by operating activities
            
            $
            734,134
            
            
            $
            1,311,737Capital
      expenditures
            
            
            (512,509
            )
            
            
            (887,764
            )Prepaid
      acquisition fees
            
            
            20,500
            
            
            
            32,097Net
      proceeds from the sale of computer equipment
            
            
            4,856
            
            
            
            -Equipment
      acquisition fees paid to General Partner
            
            
            (20,500
            )
            
            
            (58,463
            )Net
      cash (used in) provided by investing activities
            
            
            (507,653
            )
            
            
            914,130Distributions
      to partners
            
            
            (624,974
            )
            
            
            (624,974
            )Debt
      Placement fees paid to General Partner
            
            
            -
            
            
            
            (5,738
            )Net
      cash (used in) financing activities
            
            
            (624,974
            )
            
            
            (630,712
            )Net
      decrease in cash and cash equivalents
            
            
            (398,493
            )
            
            
            (233,105
            )Cash
      and cash equivalents, beginning of period
            
            
            4,114,953
            
            
            
            7,071,792Cash
      and cash equivalents, end of period
            
            $
            3,716,460
            
            
            $
            6,838,687





see
accompanying notes to condensed financial statements


6


Table of
Contents





NOTES
TO CONDENSED FINANCIAL STATEMENTS





1.
Business





Commonwealth
Income & Growth Fund V (the “Partnership”) is a limited partnership
organized in the Commonwealth of Pennsylvania on May 19, 2003.  The
Partnership offered for sale up to 1,250,000 units of the limited partnership at
the purchase price of $20 per unit (the “Offering”).  The Partnership
reached the minimum amount in escrow and commenced operations on March 14,
2005.  As of February 24, 2006, the Partnership was fully
subscribed.





The
Partnership used the proceeds of the Offering to acquire, own and lease various
types of information technology (I.T.) equipment and other similar capital
equipment, which is leased primarily to U.S. corporations and
institutions.  Commonwealth Capital Corp. (“CCC”), on behalf of the
Partnership and other affiliated partnerships, acquires computer equipment
subject to associated debt obligations and lease agreements and allocates a
participation in the cost, debt and lease revenue to the various partnerships
based on certain risk factors.





The
Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc.
(the “General Partner”), a Pennsylvania corporation which is an indirect wholly
owned subsidiary of CCC.  CCC is a member of the Investment Program
Association (IPA), Financial Planning Association (FPA), and the Equipment
Leasing and Finance Association (ELFA).  Approximately ten years after
the commencement of operations, the Partnership intends to sell or otherwise
dispose of all of its computer equipment, make final distributions to partners
and to dissolve.  Unless sooner terminated, the Partnership will
continue until December 31, 2015.





2.
Summary of Significant Accounting Policies





Recent
Accounting Pronouncements





Management’s
assessment of the following accounting pronouncements has changed since
disclosed in its Form 10K for December 31, 2007.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Liabilities, including an amendment of FASB Statement No.
115” (“SFAS No. 159”).
SFAS No. 159 permits entities to choose, at specified election dates, to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. Unrealized gains and losses
will be reported on items for which the fair value option has been elected in
earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of SFAS No. 157 “Fair Value
Measurements” (“SFAS No. 157”).  As of January 1, 2008 the Partnership
adopted SFAS No. 159.  The Partnership has not elected the fair value
option for any financial assets or liabilities.





In
September 2006, the FASB issued Statement of Financial Accounting Standards 157,
“Fair Value Measurements” (“SFAS 157”), which provides guidance on
measuring the fair value of assets and liabilities. SFAS 157 applies to other
accounting pronouncements that require or permit assets or liabilities to be
measured at fair value but does not expand the use of fair value to any new
circumstances. This standard also requires additional disclosures in both annual
and quarterly reports. SFAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and will be adopted by the
Partnership in the first quarter of its fiscal year 2008.   In
February 2008, the FASB issued two Staff Positions on SFAS 157:
(1) FASB Staff Position No. FAS 157-1 (FAS 157-1), “Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or
Measurement Under Statement 13,” and (2) FASB Staff Position
No. FAS 157-2 (FAS 157-2),“Effective Date of FASB Statement
No 157.” FAS 157-1 excludes FASB Statement No. 13, Accounting for Leases, as
well as other accounting pronouncements that address fair value measurements on
lease classification or measurement under Statement 13, from SFAS 157’s
scope. FAS157-2 partially defers Statement 157’s effective date.  As of
January 1, 2008 the Partnership partially adopted SFAS No. 157 for all financial
assets.  Adoption of this pronouncement did not impact the financial
statements of the Partnership at March 31, 2008.





7


Table of
Contents




Basis
of Presentation





The
financial information presented as of any date other than December 31, 2007 has
been prepared from the books and records without audit.  Financial
information as of December 31, 2007 has been derived from the audited financial
statements of the Partnership, but does not include all disclosures required by
generally accepted accounting principles to be included in audited financial
statements.  In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
financial information for the periods indicated, have been
included.  For further information regarding the Partnership’s
accounting policies, refer to the financial statements and related notes
included in the Partnership’s annual report on Form 10-K for the year ended
December 31, 2007.  Operating results for the three months ended March
31, 2008 are not necessarily indicative of financial results that may be
expected for the full year ended December 31, 2008.





Long-Lived
Assets





The
Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable.  The
Partnership determines whether an impairment exists by estimating the
undiscounted cash flows to be generated by each asset.  If the
estimated undiscounted cash flows are less than the carrying value of the asset,
then an impairment exists.  The amount of the impairment is determined
based on the difference between the carrying value and the fair
value.  Fair value is determined based on estimated discounted cash
flows to be generated by the asset.  The Partnership determined that
no impairment existed as of March 31, 2008 and March 31, 2007.





Depreciation
on computer equipment for financial statement purposes is based on the
straight-line method over estimated useful lives of four years.





Net
Income (Loss) Per Equivalent Limited Partnership Unit





The net
income (loss) per equivalent limited partnership unit is computed based upon net
income (loss) allocated to the limited partners and the weighted average number
of equivalent units outstanding during the period.





3.
Computer Equipment





The
Partnership is the lessor of equipment under operating leases with periods
ranging from 11 to 36 months.  In general, associated costs such as
repairs and maintenance, insurance and property taxes are paid by the
lessee.





Through
March 31, 2008, the Partnership has only entered into operating
leases.  Lease revenue is recognized on the monthly straight-line
basis which is generally in accordance with the terms of the operating lease
agreements.  The company’s leases do not contain any step-rent
provisions or escalation clauses nor are lease revenues adjusted based on any
index.





Remarketing
fees are paid to the leasing companies from which the Partnership purchases
leases.  These are fees that are earned by the leasing companies when
the initial terms of the lease have been met and the equipment is re-leased or
sold.  The General Partner believes that this strategy adds value
since it entices the leasing company to "stay with the lease" for potential
extensions, remarketing or sale of equipment.  This strategy
potentially minimizes any conflicts the leasing company may have with a
potential new lease and will potentially assist in maximizing overall portfolio
performance.  The remarketing fee is tied into lease performance
thresholds and is factored in the negotiation of the fee.  Remarketing
fees incurred in connection with lease extensions are accounted for as operating
costs.  Remarketing fees incurred in connection with the sale of
computer equipment are included in our gain or loss calculations.  For
the three months ended March 31, 2008 remarketing fees were incurred in the
amount of approximately $3,000.  No remarketing fees were
incurred for the three months ended March 31, 2007.





The
Partnership’s share of the computer equipment in which it participates with
other partnerships at March 31, 2008 and December 31, 2007 was approximately
$8,693,000 and $8,381,000, respectively, which is included in the Partnership’s
fixed assets on its balance sheet.  The total cost of the equipment
shared by the Partnership with other partnerships at March 31, 2008 and December
31, 2007 was approximately $19,172,000 and $17,371,000,
respectively.  The Partnership’s share of the outstanding debt
associated with this equipment at March 31, 2008 and December 31, 2007 was
$1,456,000 and $1,683,000, respectively.  The total outstanding debt
at March 31, 2008 and December 31, 2007 was $2,745,000 and $3,187,000,
respectively.






8


Table of
Contents






The
following is a schedule of future minimum rentals on noncancellable operating
leases at March 31, 2008:


AmountNiNine
      months ending December 31, 2008
            
            $
            4,848,685Year
      ended December 31, 2009
            
            
            3,383,955Year
      ended December 31, 2010
            
            
            436,992Year
      ended December 31, 2011
            
            
            8,481$
            8,678,113




4.
Related Party Transactions





Receivables/Payables





As of
March 31, 2008, the Partnership’s related party receivables and payables are
short term, unsecured, and non-interest bearing.





Reimbursable
Expenses





The
General Partner and its affiliates are entitled to reimbursement by the
Partnership for the cost of supplies and services obtained and used by the
General Partner in connection with the administration and operation of the
Partnership from third parties unaffiliated with the General
Partner.  In addition, the General Partner and its affiliates are
entitled to reimbursement for certain expenses incurred by the General Partner
and its affiliates in connection with the administration and operation of the
Partnership.  During the three months ended March 31, 2008 and 2007,
the Partnership recorded approximately $376,000 and $163,000, respectively, for
reimbursement of expenses to the General Partner.





Offering
Costs





Offering
costs are payments for selling commissions, dealer manager fees, professional
fees and other offering expenses relating to the syndication of the
Partnership’s units.  Selling commissions are 8% of the partners’
contributed capital and dealer manager fees are 2% of the partners’ contributed
capital.  These costs have been deducted from partnership capital in
the accompanying financial statements.





Equipment
Acquisition Fee





The
General Partner is entitled to be paid an equipment acquisition fee of 4% of the
purchase price of each item of equipment purchased as compensation for the
negotiation of the acquisition of the equipment and lease thereof or sale under
a conditional sales contract.  For the three months ended March 31,
2008 and 2007, equipment acquisition fees of approximately $20,000 and $58,000,
respectively, were earned bythe
General Partner.




Debt
Placement Fee





As
compensation for arranging term debt to finance the acquisition of equipment by
the Partnership, the General Partner is paid a fee equal to 1% of such
indebtedness; provided, however, that such fee shall be reduced to the extent
the Partnership incurs such fees to third parties, unaffiliated with the General
Partner or the lender, with respect to such indebtedness and no such fee will be
paid with respect to borrowings from the General Partner or its
affiliates.  There were no debt placement fees earned by the General
Partner for the three months ended March 31, 2008.  For the three
months ended March 31, 2007 debt placement fees of approximately $6,000, were
earned by the General Partner.





Equipment
Management Fee





The
General Partner is entitled to be paid a monthly fee equal to the lesser of (i)
the fees which would be charged by an independent third party for similar
services for similar equipment or (ii) the sum of (a) two percent of (1) the
gross lease revenues attributable to equipment which is subject to full payout
net leases which contain net lease provisions plus (2) the purchase price paid
on conditional sales contracts as received by the Partnership and (b) 5% of the
gross lease revenues attributable to equipment which is subject to operating and
capital leases.  For the three months ended March 31, 2008, and 2007,
equipment management fees of approximately $86,000, and $69,000, respectively,
were earned by the General Partner.







9


Table of
Contents




Equipment
Liquidation Fee





With
respect to each item of equipment sold by the General Partner (other than in
connection with a conditional sales contract), a fee equal to the lesser of (i)
50% of the competitive equipment sale commission or (ii) three percent of the
sales price for such equipment is payable to the General Partner.  The
payment of such fee is subordinated to the receipt by the limited partners of
the net disposition proceeds from such sale in accordance with the Partnership
Agreement.  Such fee will be reduced to the extent any liquidation or
resale fees are paid to unaffiliated parties.  For the three months
ended March 31, 2008, equipment liquidation fees of approximately $200 were
earned by the General Partner.  For the three months ended March 31,
2007 there were no equipment liquidation fees earned by the General
Partner.





5.
Notes Payable





Notes
payable consisted of the following:




March
      31, 2008
              
              
              December
      31, 2007Installment
      notes payable to banks; interest ranging from 4.65% to 6.3%, due in
      monthly installments ranging from $1,095 to $14,239, including interest,
      with final payments from February through October 2008.
              
              $
              165,772
              
              
              $
              275,143Installment
      notes payable to banks; interest ranging from 5.85% to 6.2% due in monthly
      installments ranging from $8,945 to $134,671, including interest, with
      final payments from January through October 2009.
              
              
              2,001,668
              
              
              
              2,337,462Installment
      note payable to bank; interest ranging from 5.40% to 5.85%, due in monthly
      installments ranging from $23,643 to $31,661, including interest, with
      final payments from January 2010 through October 2010.
              
              
              471,599
              
              
              
              521,613$
              2,639,039
              
              
              $
              3,134,218
  These
notes are secured by specific computer equipment and are nonrecourse liabilities
of the Partnership.  Aggregate maturities of notes payable for each of
the periods subsequent to March 31, 2008 are as follows:





AmountNine
      months ending December 31, 2008
            
            $
            1,351,859Year
      ended December 31, 2009
            
            
            1,171,402Year
      ended December 31, 2010
            
            
            115,778$
            2,639,039




6.
Supplemental Cash Flow Information





Other
noncash activities included in the determination of net loss are as
follows:





Three
      months ended March 31,
            
            2008
            
            
            2007Lease
      income, net of interest expense on notes payable realized as a result of
      direct payment of principal by lessee to bank
            
            $
            495,179
            
            
            $
            325,292





No
interest or principal on notes payable was paid by the Partnership because
direct payment was made by lessee to the bank in lieu of collection of lease
income and payment of interest and principal by the Partnership.





10


Table of
Contents




Noncash investing and financing
activities include the following:




Three
      months ended March 31,
              
              2008
              
              
              2007Debt
      assumed in connection with purchase of computer equipment
              
              $
              -
              
              
              $
              573,817Equipment
      acquisition fees earned by General Partner upon purchase of equipment from
      prepaid acquisition fees
              
              $
              20,500
              
              
              $
              32,097


Item 2: Management’s Discussion and Analysis of Financial Condition
and Results of Operations





FORWARD
LOOKING STATEMENTS





Certain
statements within this Quarterly Report on Form 10-Q may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (“PSLRA”). These statements are being made
pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe
harbor” provisions of the PSLRA, and, other than as required by law, we assume
no obligation to update or supplement such statements. Forward-looking
statements are those that do not relate solely to historical fact. They include,
but are not limited to, any statement that may predict, forecast, indicate or
imply future results, performance, achievements or events. You can identify
these statements by the use of words such as “may,” “will,” “could,”
“anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project”
and variations of these words or comparable words or phrases of similar meaning.
These forward-looking statements reflect our current beliefs and expectations
with respect to future events and are based on assumptions and are subject to
risks and uncertainties and other factors outside our control that may cause
actual results to differ materially from those projected.





CRITICAL
ACCOUNTING POLICIES





The
Partnership's discussion and analysis of its financial condition and results of
operations are based upon its financial statements which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires the Partnership to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. The Partnership bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.





The
Partnership believes that its critical accounting policies affect its more
significant judgments and estimates used in the preparation of its financial
statements.





COMPUTER
EQUIPMENT




Commonwealth
Capital Corp., on behalf of the Partnership and other affiliated partnerships,
acquires computer equipment subject to associated debt obligations and lease
revenue and allocates a participation in the cost, debt and lease revenue to the
various partnerships based on certain risk factors. Depreciation on computer
equipment for financial statement purposes is based on the straight-line method
over estimated useful lives of four years.





11


Table of
Contents




REVENUE
RECOGNITION





Through
March 31, 2008, the Partnership has only entered into operating
leases.  Lease revenue is recognized on a monthly straight-line basis
which is generally in accordance with the terms of the operating lease
agreement. The Partnership’s leases do not contain any step-rent provisions or
escalation clauses nor are lease revenues adjusted based on any
index.





The
Partnership reviews a customer’s credit history before extending credit and
establishes a provision for uncollectible accounts receivable based upon the
credit risk of specific customers, historical trends and other
information.





LONG-LIVED
ASSETS





The
Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable.  The
Partnership determines whether an impairment exists by estimating the
undiscounted cash flows to be generated by each asset.  If the
estimated undiscounted cash flows are less than the carrying value of the asset,
an impairment exists.  The amount of the impairment is determined
based on the difference between the carrying value and the fair
value.  Fair value is determined based on estimated discounted cash
flows to be generated by the asset.  The Partnership determined that
no impairment existed as of March 31, 2008 and March 31, 2007.





LIQUIDITY
AND CAPITAL RESOURCES





The
Partnership’s primary source of capital for the three months ended March 31,
2008 and 2007 was cash provided by operating activities of approximately
$734,000 and $1,312,000, respectively.  During the three months ended
March 31, 2008 and 2007, equipment was purchased in the amount of approximately
$513,000 and $887,000, respectively, and distributions were paid in the amount
of approximately $625,000 for each period.





The
Partnership intends to invest approximately $2,500,000 in additional equipment
for the remainder of 2008.  The acquisition of this equipment will be
funded by debt financing and cash flows from lease rental payments.





For the
three months ended March 31, 2008, the Partnership generated cash flows from
operating activities in the amount of approximately $734,000, which includes a
net loss of approximately $93,000, and depreciation and amortization expenses of
approximately $1,441,000.  Other non-cash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of approximately $495,000.




For the
three months ended March 31, 2007, the Partnership generated cash flows from
operating activities in the amount of $1,312,000, which includes a net loss of
approximately $29,000, and depreciation and amortization expenses of
approximately $1,098,000.  Other non-cash activities included in the
determination of net income include direct payments lessees to banks of
approximately $325,000.





The
Partnership's investment strategy of acquiring computer equipment and generally
leasing it under “triple-net leases” to operators who generally meet specified
financial standards minimizes the Partnership's operating
expenses.  As of March 31, 2008, the Partnership had future minimum
rentals on non-cancelable operating leases of approximately $4,849,000 for the
balance of the year ending December 31, 2008 and approximately $3,829,000
thereafter.  As of March 31, 2008, the outstanding debt was
approximately $2,639,000 with interest rates ranging from 4.65% to 6.3%, and
will be payable through October 2010.





The
Partnership’s cash from operations is expected to continue to be adequate to
cover all operating expenses, liabilities, and preferred distributions to
Partners during the next 12-month period.  If available cash flow or
net disposition proceeds are insufficient to cover the Partnership expenses and
liabilities on a short and long term basis, the Partnership will attempt to
obtain additional funds by disposing of or refinancing equipment, or by
borrowing within its permissible limits.  The Partnership may, from
time to time, reduce the distributions to its Partners if it deems
necessary.  Since the Partnership’s leases are on a “triple-net”
basis, no reserve for maintenance and repairs is considered
necessary.




12


Table of
Contents




RESULTS
OF OPERATIONS





Three months ended March 31,
2008 compared to Three months ended March 31, 2007





For the
three months ended March 31, 2008, the Partnership recognized revenue of
approximately $1,856,000 and expenses of approximately $1,949,000, resulting in
a net loss of approximately $93,000.  For the three months ended March
31, 2007, the Partnership recognized revenue of approximately $1,453,000 and
expenses of approximately $1,481,000, resulting in net loss of approximately
$28,000.





Lease
income increased by 33% to approximately $1,828,000 for the three months ended
March 31, 2008, from approximately $1,378,000 for the three months ended March
31, 2007.  This increase was primarily due to more lease agreements
commencing versus lease agreements ending, during the three months ended March
31, 2008.





Operating
expenses, excluding depreciation, primarily consist of accounting, legal,
outside service fees and reimbursement of expenses to CCC for administration and
operation of the Partnership.  The expenses increased 32% to
approximately $1,949,000 for the three months ended March 31, 2008, from
$1,481,000 for the three months ended March 31, 2007.  This increase
is primarily attributable to an increase in other Limited Partner expenses,
which was partially offset by a decrease in accounting fees, and outside office
services.





The
equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee increased 25% to approximately $86,000 for the three months ended
March 31, 2008, from $69,000 for the three months ended March 31, 2007, which is
consistent with the increase in lease income.





Depreciation
and amortization expenses consist of depreciation on computer equipment and
amortization of equipment acquisition fees. These expenses increased 31% to
approximately $1,441,000 for the three months ended March 31, 2008, from
$1,098,000 for the three months ended March 31, 2007. This increase was due to
the acquisition of new equipment associated with the purchase of new
leases.




Item3.Quantitative and
Qualitative Disclosures About Market Risk


N/A





Item 4T.  Controls and Procedures





Our
management, under the supervision and with the participation of the principal
executive officer and principal financial offer, have evaluated the
effectiveness of our controls and procedures related to our reporting and
disclosure obligations as of March 31, 2008 which is the end of the period
covered by this Quarterly Report on Form 10-Q.  Based on that
evaluation, the principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures are effective to
provide that (a) material information relating to us, including our consolidated
affiliates is made known to these officers by us and our consolidated
affiliates’ other employees, particularly material information related to the
period for which this periodic report is being prepared; and (b) this
information is recorded, processed, summarized, evaluated and reported, as
applicable, within the time periods specified in the rules and forms promulgated
by the Securities and Exchange Commission.  There have been no
significant changes in the General Partner’s internal controls or in other
factors that could significantly affect our disclosure controls and procedures
in the first quarter of 2008 or subsequent to the date of the
evaluation.





Part
II:   OTHER INFORMATION




Item
1.                                Legal
Proceedings





In April
2007, our lessee Quick Loan Funding, Inc. began defaulting on its lease
payments.  From April 2007 through the first quarter of 2008 we attempted
several times to collect payment of outstanding lease payments and to recover
the equipment from this lessee. On April 2, 2008, we filed suit in the Superior
Court of Orange County, California (Docket No. 30-2008-00104785) against Quick
Loan Funding, Inc. and its owner, Daniel Sadek, to recover the unpaid lease
payments, late fees and the equipment. The suit is in its initial stages and we
cannot predict the outcome with any reasonable certainty at this
time.  To date, the Partnership has recorded a reserve against all
outstanding rentals in the amount of approximately $43,000.  The
Partnership has not experienced any significant changes related to this matter
during the first quarter of 2008.  Prior to the first quarter of 2008,
the Partnership had impaired these assets by approximately 15%.




13


Table of
Contents






Item
1A.                   Risk
Factors





N/A





Item
2.                                UnregisteredSales of Equity Securities and Use of Proceeds





N/A





Item
3.                                Defaults Upon
Senior Securities





N/A


Item
4.                                Submissionof
Matters to a Vote of Securities Holders





N/A





Item
5.                                OtherInformation





N/A





Item
6.                                Exhibits




31.1 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL
EXECUTIVE OFFICER


31.2THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL
FINANCIAL OFFICER


32.1 SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE
OFFICER


32.2 SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL
OFFICER





SIGNATURE





Pursuant
to the requirements 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.





COMMONWEALTH
      INCOME & GROWTH FUND VBY:
      COMMONWEALTH INCOME & GROWTH FUND, INC., General
    Partner





May 14,
      2008
              By:/s/ Kimberly A.
      SpringsteenDate
              Kimberly
      A. SpringsteenChief
      Executive Officer/s/  Lynn A.
      FranceschinaLynn
      A. FranceschinaExecutive
      Vice President, Chief Operating Officer




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