UNITED
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, 2009 or
 
  ̈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  T      NO   ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).YES   ̈      NO   ̈
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definition of "accelerated filer,
“large accelerated filer" and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
 
 Large
      accelerated filer  ̈
                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, 2009
 
 TABLE
OF CONTENTS
 
 PART
      IItem
      1.
                Financial
      Statements
                3Item
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                13Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                17Item
      4T.
                Controls
      and Procedures
                17PART
      IIItem
      1.
                Legal
      Proceedings
                177Item
      1 A.
                Risk
      Factors
                18Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                18Item
      3.
                Defaults
      Upon Senior Securities
                19Item
      4.
                Submission
      of Matters to a Vote of Securities Holders
                19Item
      5.
                Other
      Information
                19Item
      6.
                Exhibits
                19
 
 
 2
 Part
I. FINANCIAL INFORMATION
 Item
1. Financial Statements
 Commonwealth
      Income & Growth Fund VCondensed
      Balance SheetsMarch,
      31
                                                
                                                
                                                December
      31,2009
                                                
                                                
                                                2008(unaudited)AssetsCash
                                                
                                                $
                                                1,922,078
                                                
                                                
                                                $
                                                3,053,703Lease
      income receivable, net of reserve of $115,617  and $128,617 at
      March 31, 2009 and December 31, 2008, respectively
                                                
                                                
                                                467,391
                                                
                                                
                                                
                                                320,541Accounts
      receivable, GP
                                                
                                                
                                                18,516
                                                
                                                
                                                
                                                18,516Accounts
      receivable, CCC
                                                
                                                
                                                148,450
                                                
                                                
                                                
                                                394,435Accounts
      receivable, affiliated limited partnerships
                                                
                                                
                                                4,203
                                                
                                                
                                                
                                                300Prepaid
      expenses
                                                
                                                
                                                16,034
                                                
                                                
                                                
                                                6,4222,576,672
                                                
                                                
                                                
                                                3,793,917Computer
      equipment, at cost
                                                
                                                
                                                22,356,818
                                                
                                                
                                                
                                                21,267,794Accumulated
      depreciation
                                                
                                                
                                                (13,411,917
                                                )
                                                
                                                
                                                (12,060,593
                                                )8,944,901
                                                
                                                
                                                
                                                9,207,201Equipment
      acquisition costs and deferred expenses, net of accumulated amortization
      of $482,272 and $449,553 at
                                                  March
      31, 2009 and at December 31, 2008, respectively
                                                
                                                
                                                232,091
                                                
                                                
                                                
                                                247,773Prepaid
      acquisition Fees
                                                
                                                
                                                135,214
                                                
                                                
                                                
                                                180,205367,305
                                                
                                                
                                                
                                                427,978Total
      Assets
                                                
                                                $
                                                11,888,878
                                                
                                                
                                                
                                                13,429,096Liabilities
      and Partners' CapitalLiabilitiesAccounts
      payable
                                                
                                                $
                                                86,819
                                                
                                                
                                                $
                                                357,751Accounts
      payable, General Partner
                                                
                                                
                                                31,763
                                                
                                                
                                                
                                                41,112Accounts
      payable, Commonwealth Capital Corp.
                                                
                                                
                                                12,676
                                                
                                                
                                                
                                                35,387Other
      accrued expenses
                                                
                                                
                                                48,361
                                                
                                                
                                                
                                                11,302Unearned
      lease income
                                                
                                                
                                                322,837
                                                
                                                
                                                
                                                142,203Notes
      payable
                                                
                                                
                                                1,116,057
                                                
                                                
                                                
                                                1,551,477Total
      Liabilities
                                                
                                                
                                                1,618,513
                                                
                                                
                                                
                                                2,139,232Partners'
      CapitalGeneral
      partner
                                                
                                                
                                                1,000
                                                
                                                
                                                
                                                1,000Limited
      partners
                                                
                                                
                                                10,269,365
                                                
                                                
                                                
                                                11,288,864Total
      Partners' Capital
                                                
                                                
                                                10,270,365
                                                
                                                
                                                
                                                11,289,864Total
      Liabilities and Partners' Capital
                                                
                                                $
                                                11,888,878
                                                
                                                
                                                $
                                                13,429,096
 
 see
accompanying notes to condensed financial statements
     3
 
 Commonwealth
      Income & Growth Fund VCondensed
      Statements of OperationsThree
      Months Ended
                                              
                                              
                                              Three
      Months EndedMarch
      31,
                                              
                                              
                                              March
      31,2009
                                              
                                              
                                              2008(unaudited)
                                              
                                              
                                              (unaudited)RevenueLease
                                              
                                              $
                                              1,527,745
                                              
                                              
                                              $
                                              1,827,678Interest
      and other
                                              
                                              
                                              20,908
                                              
                                              
                                              
                                              28,670Gain
      on sale of computer equipment
                                              
                                              
                                              1,486
                                              
                                              
                                              
                                              -Total
      Revenue
                                              
                                              
                                              1,550,139
                                              
                                              
                                              
                                              1,856,348ExpensesOperating,
      excluding depreciation
                                              
                                              
                                              374,661
                                              
                                              
                                              
                                              373,474Equipment
      management fee, General Partner
                                              
                                              
                                              76,992
                                              
                                              
                                              
                                              86,305Interest
                                              
                                              
                                              21,889
                                              
                                              
                                              
                                              43,294Depreciation
                                              
                                              
                                              1,377,584
                                              
                                              
                                              
                                              1,363,141Amortization
      of equipment acquisition costs and deferred expenses
                                              
                                              
                                              60,673
                                              
                                              
                                              
                                              77,779Bad
      debt expense
                                              
                                              
                                              13,000
                                              
                                              
                                              
                                              -Loss
      on sale of computer equipment
                                              
                                              
                                              -
                                              
                                              
                                              
                                              4,966Total
      expenses
                                              
                                              
                                              1,924,799
                                              
                                              
                                              
                                              1,948,959Net
      (loss)
                                              
                                              $
                                              (374,660
                                              )
                                              
                                              $
                                              (92,611
                                              )Net
      (loss) allocated to limited partners
                                              
                                              $
                                              (380,887
                                              )
                                              
                                              $
                                              (98,861
                                              )Net
      (loss) per equivalent limited partnership unit
                                              
                                              $
                                              (0.31
                                              )
                                              
                                              $
                                              (0.08
                                              )Weighted
      average number of equivalent limited partnership units outstanding during
      the period
                                              
                                              
                                              1,245,500
                                              
                                              
                                              
                                              1,249,951
 
 
 see
accompanying notes to condensed financial statements
 
 
 
 4
 
 Commonwealth
      Income & Growth Fund VCondensed
      Statements of Partners' CapitalFor
      the three months ended March 31, 2009(unaudited)General
                      Partner
      Units
                    
                    
                    Limited
                      Partner
      Units
                    
                    
                    General
      Partner
                    
                    
                    Limited
      Partner
                    
                    
                    TotalBalance,
      January 1, 2009
                    
                    
                    50
                    
                    
                    
                    1,245,852
                    
                    
                    $
                    1,000
                    
                    
                    $
                    11,288,864
                    
                    
                    $
                    11,289,864Net
      Income (loss)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6,227
                    
                    
                    
                    (380,887
                    )
                    
                    
                    (374,660
                    )Redemptions
                    
                    
                    -
                    
                    
                    
                    (2,000
                    )
                    
                    
                    -
                    
                    
                    
                    (22,249
                    )
                    
                    
                    (22,249
                    )Distributions
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (6,227
                    )
                    
                    
                    (616,363
                    )
                    
                    
                    (622,589
                    )Balance,
      March 31, 2009
                    
                    
                    50
                    
                    
                    
                    1,243,852
                    
                    
                    $
                    1,000
                    
                    
                    $
                    10,269,365
                    
                    
                    $
                    10,270,365
 
 see
accompanying notes to condensed financial statements
 
 
 5
  
 Commonwealth
      Income & Growth Fund VCondensed
      Statements of Cash FlowThree
      Months ended
                                
                                
                                Three
      Months endedMarch
      31,
                                
                                
                                March
      31,2009
                                
                                
                                2008(unaudited)
                                
                                
                                (unaudited)Net
      cash provided by operating activities
                                
                                $
                                627,014
                                
                                
                                $
                                734,134Investing
      activities:Capital
      Expenditures
                                
                                
                                (1,124,779
                                )
                                
                                
                                (512,509
                                )Prepaid
      acquisition fees
                                
                                
                                44,991
                                
                                
                                
                                20,500Net
      proceeds from the sale of computer equipment
                                
                                
                                10,979
                                
                                
                                
                                4,856Equipment
      acquisition fees, General Partner
                                
                                
                                (44,991
                                )
                                
                                
                                (20,500
                                )Net
      cash (used in) investing activities
                                
                                
                                (1,113,800
                                )
                                
                                
                                (507,653
                                )Financing
      activities:Redemptions
                                
                                
                                (22,249
                                )
                                
                                
                                -Distributions
      to partners
                                
                                
                                (622,590
                                )
                                
                                
                                (624,974
                                )Net
      cash (used in) financing activities
                                
                                
                                (644,839
                                )
                                
                                
                                (624,974
                                )Net
      (decrease) in cash
                                
                                
                                (1,131,625
                                )
                                
                                
                                (398,493
                                )Cash
      beginning of period
                                
                                
                                3,053,703
                                
                                
                                
                                4,114,953Cash
      end of period
                                
                                $
                                1,922,078
                                
                                
                                $
                                3,716,460
 
 see
accompanying notes to condensed financial statements
   6
   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
 
 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.  As
of January 1, 2008 the Partnership adopted SFAS No. 157 for all financial
assets.  Adoption of this pronouncement did not impact the 2008 financial
statements of the Partnership.   In February 2008,  FASB issued
FSP FAS 157-2 to provide a one-year deferral of the effective date of Statement
157 for nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed in financial statements at fair value on a recurring
basis (that is, at least annually).   The adoption of SFAS 157-2 on
January 1, 2009 did not have a material impact on the Partnership’s financial
statements.
 
 In
January 2009, FASB issued FSP EITF 99-20-1, “Amendments to the Impairment
Guidance of EITF Issue No. 99-20 (“FSP EITF 99-20-1”). FSP EITF 99-20-1 is
effective for interim and annual periods ending after December 15, 2008.
Retroactive application is not permitted. The adoption of FSP EITF 99-20-1 did
not have a significant impact on the Partnership’s financial position or results
of operations.
 
 7
  In April
2009, the FASB issued FASB Staff Position No. 107-1 (“FSP FAS 107-1”) and APB
28-1 (“APB 28-1”), which amends FASB Statement No. 107, Disclosures about Fair
Value of Financial Instruments and APB Opinion NO. 28, Interim Financial
Reporting, to require disclosures about the fair value of financial instruments
for interim reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for
interim reporting periods ending after June 15, 2009. The adoption of this staff
position is not expected to have a material impact on the Partnership’s
financial position or results of operation
 
 Basis
of Presentation
 
 The
financial information presented as of any date other than December 31, 2008 has
been prepared from the books and records without audit.  Financial
information as of December 31, 2008 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, 2008.  Operating results for the three months ended March
31, 2009 are not necessarily indicative of financial results that may be
expected for the full year ended December 31, 2009.
 
 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 at March 31, 2009 and 2008.
 
 Depreciation
on computer equipment for financial statement purposes is based on the
straight-line method estimated generally over useful lives of three to four
years.
 
 Reimbursable
Expenses
 
 Reimbursable
expenses, which are charged to the Partnership by CCC in connection with the
administration and operation of the Partnership, are allocated to the
Partnership based upon several factors including, but not limited to, the number
of investors, compliance issues, and the number of existing leases.  For
example, if the Partnership has more investors than another program sponsored by
CCC, then higher amounts of expenses related to investor services, mailing and
printing costs will be allocated to the Partnership.  Also, while a
Partnership is in its offering stage, higher compliance costs are allocated to
it than to a program not in its offering stage, as compliance resources are
utilized to review incoming investor suitability and proper documentation. 
Finally, lease related expenses, such as due diligence, correspondence,
collection efforts and analysis staff costs, increase as programs purchase more
leases, and decrease as leases terminate and equipment is sold. All of these
factors contribute to CCC’s determination as to the amount of expenses to
allocate to the Partnership or to other sponsored programs.  For the
Partnership, all reimbursable expenses are expensed as they are
incurred.
 
 8
  Cash
 
 At March
31, 2009 cash was held in two accounts maintained at one financial institution.
The accounts were, in the aggregate, federally insured for up to
$250,000.  At March 31, 2009, the total cash balance was as
follows:
 
 At
      March 31, 2009Total
      balance Bank
                            
                            $
                            2,442,071FDIC
      insurable limit
                            
                            $
                            250,000Exceeded
      FDIC limit by
                            
                            $
                            2,192,071
 
 The
Partnership can mitigate this risk by depositing funds with more than one
institution and by only depositing funds with major financial institutions. The
Partnership has not experienced any losses in such accounts, and believes it is
not exposed to any significant credit risk. The amount in such accounts will
fluctuate throughout 2009 due to many factors, including the pace of additional
revenues, equipment acquisitions and distributions.
 
 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
generally ranging from 12 to 48 months.  In general, associated costs
such as repairs and maintenance, insurance and property taxes are paid by the
lessee.
 
 Through
March 31, 2009, 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.
 
 9
  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, 2009 and 2008, the Partnership incurred
remarketing fees of approximately $7,000 and $2,600, respectively. For the three
months ended March 31, 2009 the Partnership paid approximately $5,000 in such
fees.  No such fees were paid for the three months ended March 31,
2008.
 
 The
Partnership’s share of the computer equipment in which it participates with
other partnerships at March 31, 2009 and December 31, 2008 was approximately
$9,920,000 and $9,480,000, 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, 2009 and December
31, 2008 was approximately $25,068,000 and $23,272,000,
respectively.  The Partnership’s share of the outstanding debt
associated with this equipment at March 31, 2009 and December 31, 2008 was
$923,000 and $1,183,000, respectively.  The total outstanding debt
related to the equipment shared by the Partnership at March 31, 2009 and
December 31, 2008 was approximately $2,728,000 and $3,349,000,
respectively.
 
 The
following is a schedule of future minimum rentals on noncancellable operating
leases at March 31, 2009:
 
 AmountNine
      months ended December 31, 2009
                                        
                                        $
                                        3,746,203Year
      ended December 31, 2010
                                        
                                        
                                        1,330,970Year
      ended December 31, 2011
                                        
                                        
                                        569,544Year
      ended December 31, 2012
                                        
                                        
                                        112,855$
                                        5,759,572
 
 4.
Related Party Transactions
 
 Receivables/Payables
 
 As of
March 31, 2009, the Partnership’s related party receivables and payables are
short term, unsecured, and non-interest bearing.
  10
  Reimbursable
Expenses
 
 See
“Summary of Significant Accounting Policies- Reimbursable Expenses,” above.
During the three months ended March 31, 2009 and 2008, the Partnership recorded
approximately $341,000 and $376,000, respectively, for reimbursement of expenses
to the General Partner.
 
 Equipment
Acquisition Fee
 
 The
General Partner is entitled to be paid an equipment acquisition fee of 4% of the
purchase price of each item of equipment purchased as compensation for the
negotiation of the acquisition of the equipment and lease thereof or sale under
a conditional sales contract.  For the three months ended March 31,
2009 and 2008, equipment acquisition fees of approximately $45,000 and $20,000,
respectively, were earned.  The remaining balance of approximately
$135,000 will be earned in future periods.
  Debt
Placement Fee
 
 As
compensation for arranging term debt to finance the acquisition of equipment by
the Partnership, the General Partner is paid a fee equal to 1% of such
indebtedness; provided, however, that such fee shall be reduced to the extent
the Partnership incurs such fees to third parties, unaffiliated with the General
Partner or the lender, with respect to such indebtedness and no such fee will be
paid with respect to borrowings from the General Partner or its
affiliates.  There were no debt placement fees earned by the General
Partner for the three months ended March 31, 2009 and 2008.
 
 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, 2009, and 2008,
equipment management fees of approximately $77,000, and $86,000, respectively,
were earned by the General Partner.
 
 Equipment
Liquidation Fee
 
 With
respect to each item of equipment sold by the General Partner (other than in
connection with a conditional sales contract), a fee equal to the lesser of (i)
50% of the competitive equipment sale commission or (ii) three percent of the
sales price for such equipment is payable to the General Partner.  The
payment of such fee is subordinated to the receipt by the limited partners of
(i) a return of their net capital contributions and a 10% per annum cumulative
return, compounded daily, on adjusted capital contributions and (ii) 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, 2009 and 2008, equipment liquidation fees of approximately $300
and $200, respectively, were earned by the General Partner.
  11
  5.
Notes Payable
 
 Notes
payable consisted of the following:
 
 March
      31, 2009
                    
                    
                    December
      31, 2008Installment
      notes payable to banks; interest ranging from 5.25% to 6.20% due in
      quarterly or monthly installments ranging from $6,588 to $134,671,
      including interest, with final payments from February through October
      2009
                    
                    $
                    626,766
                    
                    
                    $
                    989,358Installment
      notes payable to banks; interest ranging from 5.40% to 5.85% due in
      quarterly installments ranging from $23,643 to $31,661, including
      interest, with final payments from January through July
    2010
                    
                    
                    271,402
                    
                    
                    
                    322,037Installment
      note payable to bank; interest at 5.75% due in quarterly installments of
      $22,756 including interest, with final payment in January
    2011
                    
                    
                    170,816
                    
                    
                    
                    190,829Installment
      note payable to bank; interest at 6.21%, due in monthly installments of
      $1,368, including interest, with final payment in May
2012.
                    
                    
                    47,073
                    
                    
                    
                    49,253$
                    1,116,057
                    
                    
                    $
                    1,551,477
 
 
 The notes
are secured by specific computer equipment and are nonrecourse liabilities of
the Partnership.  As such, the notes do not contain any debt covenants
with which we must comply on either an annual or quarterly basis. 
Aggregate maturities of notes payable for each of the periods subsequent to
March 31, 2009 are as follows:
 
 AmountNine
      months ending December 31, 2009
                                        
                                        $
                                        855,070Year
      ended December 31, 2010
                                        
                                        
                                        216,350Year
      ended December 31, 2011
                                        
                                        
                                        37,903Year
      ended December 31, 2012
                                        
                                        
                                        6,734$
                                        1,116,057
 
  12
  At March
31, 2009 and December 31, 2008, the estimated fair value of our debt
approximates the carrying value of such instruments due to the interest rates on
such debt approximating current market rates.
 
 6.
Supplemental Cash Flow Information
 
 Other
noncash activities included in the determination of net loss are as
follows:
 
 Three
      months ended March 31,
                        
                        2009
                        
                        
                        2008Lease
      income, net of interest expense on notes payable realized as a result of
      direct payment of principal by lessee to bank
                        
                        $
                        435,421
                        
                        
                        $
                        495,179
 
 No
interest or principal on notes payable was paid by the Partnership because
direct payment was made by lessee to the bank in lieu of collection of lease
income and payment of interest and principal by the Partnership.
 
 Noncash investing and financing
activities include the following:
 
 Three
      months ended March 31,
                      
                      2009
                      
                      
                      2008Equipment
      acquisition fees earned by General Partner upon purchase of equipment from
      prepaid acquisition fees
                      
                      $
                      44,991
                      
                      
                      $
                      20,500
 
 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.
 
  13
  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.
 
 REVENUE
RECOGNITION
 
 Through
March 31, 2009, 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, 2009 and 2008.
 
 Depreciation
on computer equipment for financial statement purposes is based on the
straight-line method estimated generally over useful lives of three to four
years.
 
 14
  LIQUIDITY
AND CAPITAL RESOURCES
 
 The
Partnership’s primary source of cash for the three months ended March 31, 2009
and 2008 was cash provided by operating activities of approximately $627,000 and
$734,000, respectively.  During the three months ended March 31, 2009
and 2008, equipment was purchased in the amount of approximately $1,125,000 and
$513,000, respectively, and distributions were made to partners in the amount of
approximately $623,000 and $625,000, respectively.
 
 The
Partnership intends to invest approximately $2,000,000 in additional equipment
for the remainder of 2009.  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, 2009, the Partnership generated cash flows from
operating activities of approximately $627,000, which includes a net loss of
approximately $375,000 and depreciation and amortization expenses of
approximately $1,438,000.  Other non-cash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of approximately $435,420.
 
 For the
three months ended March 31, 2008, the Partnership generated cash flows from
operating activities of approximately $734,000, which includes a net loss of
approximately $93,000, loss on sale of computer equipment of approximately
$5,000 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.
 
 At March
31, 2009, cash was held in two accounts maintained at one financial institution.
The accounts were, in the aggregate, federally insured for up to
$250,000.  At March 31, 2009, the total cash balance was as
follows:
  At
      March 31, 2009Total
      balance Bank
              
              $
              2,442,071FDIC
      insurable limit
              
              $
              250,000Exceeded
      FDIC limit by
              
              $
              2,192,071
  The
Partnership can mitigate this risk by depositing funds with more than one
institution and by only depositing funds with major financial institutions. The
Partnership has not experienced any losses in such accounts, and believes it is
not exposed to any significant credit risk. The amount in such accounts will
fluctuate throughout 2009 due to many factors, including the pace of additional
revenues, equipment acquisitions and distributions.
 
 The
Partnership's investment strategy of acquiring computer equipment and generally
leasing it under “triple-net leases” to operators who generally meet specified
financial standards minimizes the Partnership's operating
expenses.  As of March 31, 2009, the Partnership had future minimum
rentals on non-cancelable operating leases of approximately $3,746,000 for the
balance of the year ending December 31, 2009 and approximately $2,013,000
thereafter.  As of March 31, 2009, the Partnership’s outstanding debt
was approximately $1,116,000 with interest rates ranging from 5.25% to 6.21%,
and will be payable through May 2012.
 
 15
  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 deemed necessary.
  RESULTS
OF OPERATIONS
 
 Three months ended March 31,
2009 compared to three months ended March 31, 2008
 
 For the
three months ended March 31, 2009, the Partnership recognized revenue of
approximately $1,550,000 and expenses of approximately $ 1,925,000, resulting in
a net loss of approximately $ 375,000.  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.
 
 Lease
revenue decreased 16 % to approximately $1,528,000 for the three months ended
March 31, 2009, from approximately $1,828,000 for the three months ended March
31, 2008.  This decrease was primarily attributable more lease
agreements ending versus new leases commencing, during the three months ended
March 31, 2009.
 
 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.  These expenses of approximately
$375,000 remained relatively consistent for the three months ended March 31,
2009 and 2008 primarily due to the steady continuing operation of the
Partnership, without the occurrence of any unusual or unexpected
expenses.
 
 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 decreased 11 % to approximately $77,000 for the three months
ended March 31, 2009, from approximately $86,000 for the three months ended
March 31, 2008, which is consistent with the decrease in lease
revenue.
 
 16
  Depreciation
and amortization expenses consist of depreciation on computer equipment and
amortization of equipment acquisition fees. These expenses slightly decreased to
approximately $1,438,000 for the three months ended March 31, 2009, from
$1,441,000 for the three months ended March 31, 2008. This decrease is primarily
attributable to equipment being fully amortized and depreciated and not being
replaced with as many new leases.
 
 The
Partnership sold computer equipment with a net book value of approximately
$9,500 for the three months ended March 31, 2009, for a net gain of
approximately $1,500.  The Partnership sold computer equipment with a
net book value of approximately $10,000 for the three months ended March 31,
2008, for a net loss of approximately $5,000.
 
 
 Item
3.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, 2009 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 sufficient 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 2009 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. In July 2008, we recovered a portion of
the equipment leased to Quick Loan Funding, and we are continuing to pursue all
available means to recover the remainder of the equipment and the outstanding
amounts owed to us.  On September 24, 2008, we obtained a judgment against
Quick Loan Funding for all amounts owed to us. We are currently in the process
of executing this judgment against any available assets of Quick Loan Funding.
 While we believe Quick Loan Funding is currently insolvent, to our
knowledge no proceedings in bankruptcy have been initiated. We believe, based on
our physical inspection of Quick Loan’s physical assets during our repossession
efforts, that Quick Loan Funding may have sufficient assets to cover our
judgment lien against it.  To date, the
Partnership has recorded a reserve against all outstanding rentals in the amount
of approximately $43,000.   For the years ended December
31,2008 and 2007,the
Partnership recorded impairment charges of approximately $63,000 and
$18,000,respectively. As of December
31, 2008 the equipment has a net book value of zero.  The
Partnership has not experienced any significant changes related to this matter
during the first quarter of 2009.
 
 In August
2007, a lessee, MobilePro, Inc. defaulted on lease payments for wi-fi equipment
owned by the fund.  We were able to cover unpaid amounts by retaining cash
collateral in the form of security deposits, which covered approximately eight
months of additional rent. Since that period, we communicated with and attempted
to work with MobilePro on a resolution, through an equipment sale that could
satisfy their obligations to us.
 
 17
 
 As of
December 31, 2008, it became clear that they could not locate a buyer for the
equipment.  Therefore, we began to make several demands for payments of
back rent not satisfied by the security deposits, and these demands were not
satisfied.  Subsequently, on February 10, 2009, our General Partner filed
suit against MobilePro and other related parties for collection, in the US
District Court for the District of Arizona.
 
 Simultaneously, we
also filed suit against the City of Tempe, Arizona in order to seek access to
our equipment, so that we could repossess and remarket the equipment, as Tempe
has denied us access.  On March 27, 2009, the City of Tempe filed a
response and counterclaim, seeking an unspecified amount for the use of the
right-of-way on the utility poles where the equipment is located, as well as an
unspecified fee for electricity used by the equipment and the city is
additionally seeking entitlement to ownership of the equipment. We believe both
counterclaims are without merit for several reasons and will continue to enforce
our rights to the equipment.  On May 4, 2009, Mobile Pro filed its
response generally denying liability, and counterclaimed for unspecified damages
due to our alleged failure to mitigate our damages. We believe Mobile Pro’s
counterclaims are without merit and will continue to pursue our action for
damages.  To date,
the Partnership has taken reserves against outstanding rentals of approximately
$31,000 to cover potential loss exposure.
  As of March
31, 2009, the Partnership had approximately $126,000 in accounts receivable due
from Chrysler LLC.  In light of Chrysler’s recent filing for Chapter 11
bankruptcy protection on April 30, 2009, we believe that a portion of that
amount may be uncollectible.  Prior to their bankruptcy filing, the fund
reserved approximately $55,000, due to trouble in collections efforts. 
Once Chrysler’s reorganization plan is confirmed, we expect to know which of
their leases will be affirmed or rejected.  Based on information currently
available, we believe there is a significant likelihood that the past due
amounts will be collectible, therefore we believe the current amount of reserve
is adequate through the quarter ended March 31, 2009.  As further
information becomes available, the Fund may need to increase its reserve in
future periods to cover potential loss exposure.
 
 Item
1A.                       Risk Factors
 
 Changes
in economic conditions could materially and negatively affect our
business.
  Our
business is directly impacted by factors such as economic, political, and market
conditions, broad trends in industry and finance, legislative and regulatory
changes, changes in government monetary and fiscal policies, and inflation, all
of which are beyond our control.  Beginning in 2008 and continuing
through the first quarter of 2009, general worldwide economic conditions
experienced a downturn due to the sequential effects of the subprime lending
crisis, general credit market crisis, collateral effects on the finance and
banking industries, increased energy costs, concerns about inflation, slower
economic activity, decreased consumer confidence, reduced corporate profits and
capital spending, adverse business conditions and liquidity concerns.  A
deterioration in economic conditions, whether caused by national or local
concerns, especially within our market area, could result in the following
consequences, any of which could hurt business materially: lease delinquencies
may increase; problem leases and defaults could increase; and demand for
information technology products generally may decrease as businesses attempt to
reduce expenses.
 
 Item
2.                                Unregistered Sales of Equity
Securities and Use of Proceeds
 
 N/A
 
 18
  Item
3.                                Defaults Upon Senior
Securities
 
 N/A
 
 Item
4.                                Submission of Matters to a Vote of
Securities Holders
 
 N/A
 
 Item
5.                                Other Information
 
 N/A
 
 Item
6.                                Exhibits
 
 
  31.1 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE
OFFICER
 31.2 THE 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 15, 2009
                    By:/s/ Kimberly A.
      Springsteen-AbbottDate
                    Kimberly
      A. Springsteen-AbbottChief
      Executive OfficerMay 15, 2009
                    /s/  Lynn A.
      FranceschinaDate
                    Lynn
      A. FranceschinaExecutive
      Vice President, Chief Operating Officer