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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

| | 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, L.P.

(Exact name of registrant as specified in its charter)



| | Pennsylvania(State or other jurisdiction ofincorporation or organization) |  | 65-1189593(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: YESNO

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

Large
          accelerated filerAccelerated
          filerNon-accelerated filer


Indicate
  by check mark whether the registrant is a shell company (as defined in Rule
  12b-2 of the Exchange Act). YESNO




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FORM
  10-Q

SEPTEMBER 30, 2006

TABLE OF CONTENTS



PART
          IItem
          1.
      
      Condensed
          Financial Statements
      3Item
          2.
      
      Managements
          Discussion and Analysis of Financial Condition and Results of Operations
      12Item
          3.
      
      Quantitative
          and Qualitative Disclosures About Market Risk
      16Item
          4.
      
      Controls
          and Procedures
      16PART
          IIItem
          1.
      
      Legal
          Proceedings
      16Item
          1A.
      
      Risk
          Factors
      16Item
          2.
      
      Unregistered
          Sales of Equity Securities and Use of Proceeds.
      18Item
          3.
      
      Defaults
          Upon Senior Securities
      18Item
          4.
      
      Submission
          of Matters to a Vote of Securities Holders
      18Item
          5.
      
      Other
          Information
      18Item
          6.
      
      Index
          to Exhibits
      18SignaturesCertifications


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Commonwealth Income & Growth Fund V, L.P.

Condensed Balance Sheet



September
          30,2006
      
      December
          31,2005(unaudited)AssetsCash
          and cash equivalents
      
      $
      8,559,522
      
      $
      10,722,300Lease
          income receivable, net of reserves of $0 as of September 30, 2006 and
          December 31, 2005
      
      
      246,167
      
      
      91,047Other
          receivable  Affiliates
      
      
      120,531
      
      
      71,259Other
          receivables - CCC
      
      
      3,572
      
      
      94,293Prepaid
          fees
      
      
      7,761
      
      
      8,937,553
      
      
      10,978,899Computer
          equipment, at cost
      
      
      12,853,266
      
      
      5,480,291Accumulated
          depreciation
      
      
      (2,062,875
      )
      
      (289,811
      )10,790,391
      
      
      5,190,480Equipment
          acquisition costs and deferred expenses, net
      
      
      422,457
      
      
      211,190Prepaid
          acquisition fees
      
      
      444,231
      
      
      483,504866,688
      
      
      694,694Total
          Assets
      
      $
      20,594,632
      
      $
      16,864,073Liabilities
          and Partners CapitalLiabilitiesAccounts
          payable
      
      $
      195,205
      
      $
      138,832Accounts
          payable - General Partner
      
      
      48,475
      
      
      61,224Accounts
          payable  Commonwealth Capital Corp.
      
      
      
      
      
      39,258Unearned
          lease income
      
      
      79,729
      
      
      45,867Notes
          payable
      
      
      1,926,998
      
      
      785,157Total
          liabilities
      
      
      2,250,407
      
      
      1,070,338Partners
          CapitalGeneral
          partner
      
      
      1,000
      
      
      1,000Limited
          partners
      
      
      18,343,225
      
      
      15,792,735Total
          Partners Capital
      
      
      18,344,225
      
      
      15,793,735Total
          Liabilities and Partners Capital
      
      $
      20,594,632
      
      $
      16,864,073


see accompanying notes to condensed financial statements

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Commonwealth Income & Growth Fund V

Condensed Statements of Operations



Nine
          Months EndedSeptember 30,2006
      
      For
          the period ofMarch 14, 2005(Commencement of Operations)- September 30,2005Three
          Months EndedSeptember
          30,2006
      
      September
          30,2005(unaudited)
      
      (unaudited)IncomeLease
      
      $
      1,022,145
      
      $
      84,282
      
      $
      2,388,849
      
      $
      101,759Interest
          and other
      
      
      106,215
      
      
      14,481
      
      
      273,838
      
      
      14,483Total
          income
      
      
      1,128,360
      
      
      98,763
      
      
      2,662,687
      
      
      116,242ExpensesOperating
      
      
      248,219
      
      
      253,543
      
      
      860,535
      
      
      481,203Organizational
          costs
      
      
      
      
      
      44,568
      
      
      36,751
      
      
      124,368Equipment
          management fee - General Partner
      
      
      48,013
      
      
      4,214
      
      
      120,091
      
      
      5,088Interest
      
      
      28,506
      
      
      
      
      
      65,564
      
      
      Depreciation
      
      
      745,646
      
      
      63,580
      
      
      1,773,063
      
      
      77,055Amortization
          of equipmentAcquisition
             costs and deferred expenses
      
      
      41,739
      
      
      3,735
      
      
      99,175
      
      
      4,454Total
          expenses
      
      
      1,112,123
      
      
      369,640
      
      
      2,955,179
      
      
      692,168Net
          income (loss)
      
      $
      16,237
      
      $
      (270,877
      )
      $
      (292,492
      )
      $
      (575,926
      )Net
          income (loss) allocated to limited partners
      
      $
      9,339
      
      $
      (274,483
      )
      $
      (310,635
      )
      $
      (580,551
      )Net
          income (loss) per equivalent limited partnership unit
      
      $
      0.01
      
      $
      (0.51
      )
      $
      (0.25
      )
      $
      (1.56
      )Weighted
          average number of equivalent limited partnership units outstanding during
          the period
      
      
      1,249,950
      
      
      535,174
      
      
      1,212,899
      
      
      371,096 see
    accompanying notes to condensed financial statements


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Commonwealth Income & Growth Fund V, L.P.

Condensed Statements of Partners Capital

For the nine months ended September 30, 2006

(unaudited)



GeneralPartnerUnits


      


      LimitedPartnerUnits


      

        GeneralPartner


      

        LimitedPartners


      

        TotalBalance,December 31, 2005


      


      50


      


      985,494


      


      $


      1,000


      


      $


      15,792,735


      


      $


      15,793,735Contributions

        

        

        

        264,456

        

        

        

        

        

        5,254,658

        

        

        5,254,658Offering costs

        

        

        

        

        

        

        

        

        

        (593,264

        )

        

        (593,264

        )Net income (loss)

        

        

        

        

        

        

        18,143

        

        

        (310,635

        )

        

        (292,492

        )Distributions

        

        

        

        

        

        

        (18,143

        )

        

        (1,800,269

        )

        

        (1,818,412

        )Balance, September 30, 2006

        

        50

        

        1,249,950

        

        $

        1,000

        

        $

        18,343,225

        

        $

        18,344,225


see accompanying notes to condensed financial statements

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Commonwealth Income & Growth Fund V, L.P.

Condensed Statements of Cash Flow

For
  the nine months ended September 30, 2006 and the period of March 14, 2005 (Commencement
  of
  Operations) through September 30, 2005



2006(unaudited)


      

        2005(unaudited)Net cash provided by (used in) operating activities


      


      $


      1,086,121


      


      $


      (402,619


      )Capital expenditures

        

        

        (5,820,712

        )

        

        (1,287,558

        )Prepaid acquisition fees

        

        

        39,273

        

        

        (379,949

        )Equipment acquisition fees paid to General Partner

        

        

        (294,919

        )

        

        (66,651

        )Net cash (used in) investing activities

        

        

        (6,076,358

        )

        

        (1,734,158

        )Contributions

        

        

        5,254,658

        

        

        12,766,790Distributions

        

        

        (1,818,412

        )

        

        (341,296

        )Offering costs

        

        

        (593,264

        )

        

        (1,524,839

        )Debt Placement fees paid to General Partner

        

        

        (15,523

        )

        

        (3,787

        )Net cash provided by financing activities

        

        

        2,827,459

        

        

        10,896,868Net (decrease) increase in cash and cash equivalents

        

        

        (2,162,778

        )

        

        8,760,091Cash and cash equivalents, beginning of period

        

        

        10,722,300

        

        

        1,067Cash and cash equivalents, end of period

        

        $

        8,559,522

        

        $

        8,761,158


see accompanying notes to condensed financial statements

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NOTES TO CONDENSED FINANCIAL STATEMENTS



1.


      Business


      

        Commonwealth Income & Growth Fund V (the Partnership) is a limited partnership which was 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 uses the proceeds of the Offering to acquire, own and lease various types of computer information technology equipment and other similar capital equipment, which will be leased primarily to U.S. corporations and institutions.

Commonwealth Capital Corp, (CCC), on behalf of the Partnership and other affiliated partnerships, will acquire computer equipment subject to associated debt obligations and lease agreements and allocate 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 Commonwealth Capital Corp. 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

        

        Basis of PresentationThe financial information presented as of any date other than December 31, 2005 has been prepared from the books and records without audit. Financial information as of December 31, 2005 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by accounting principles generally accepted in the United States of America. 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, 2005. Operating results for the nine month period ended September 30, 2006 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2006.


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ReclassificationCertain amounts in 2005 were reclassified to conform to the 2006 presentation.Long-Lived AssetsThe 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 September 30, 2006.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 UnitThe 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 limited partner units outstanding during the period.3.

        Computer Equipment

        

        The Partnership is the lessor of equipment under operating leases with periods ranging from 14 to 38 months. In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.Through September 30, 2006, the Partnerships leasing operations consisted of operating leases. Operating lease revenue is recognized on a monthly basis in accordance with the terms of the lease agreement.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. 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. No remarketing fees were paid for the periods ended September 30, 2006 and 2005.


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The
          Partnerships share of the computer equipment in which it participates
          with other partnerships at September 30, 2006 and December 31, 2005
          was approximately $2,848,000 and $932,000, respectively, and is included
          in the Partnerships fixed assets on its balance sheet. And the
          total cost of the equipment shared by the Partnership with other partnerships
          at September 30, 2006 and December 31, 2005 was approximately $6,482,000
          and $2,177,000, respectively. The Partnerships share of the outstanding
          debt associated with this equipment at September 30, 2006 and December
          31, 2005 was $416,000 and $0 respectively. The total outstanding debt
          at September 30, 2006 and December 31, 2005 was $942,000 and $0, respectively.The
          following is a schedule of future minimum rentals on noncancellable
          operating leases at September 30, 2006:AmountThree
          months ending December 31, 2006
      
      $
      964,922Year
          ended December 31, 2007
      
      
      3,797,577Year
          ended December 31, 2008
      
      
      3,153,974Year
          ended December 31, 2009
      
      
      546,101$
      8,462,5744.
      Related
          Party Transactions
      
      Receivables/PayablesAs
          of September 30, 2006, the Partnerships related party receivables
          and payables are short term, unsecured, and non-interest bearing.Reimbursable
          ExpensesThe
          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 nine months ended September 30, 2006,
          the Partnership recorded $678,000 for reimbursement of expenses to the
          General Partner. For the period of March 14, 2005 (Commencement of Operations)
          through September 30, 2005, the Partnership recorded $257,000 for reimbursement
          of expenses to the General Partner.


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Offering Costs

Offering costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the syndication. 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 period ended September 30, 2006, equipment acquisition fees of approximately $295,000 were earned bythe General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, equipment acquisition fees of approximately$67,000 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. For the period ended September 30, 2006, debt placement fees of approximately $16,000 were earned by the General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, debt placement fees of approximately $4,000 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 nine months ended September 30, 2006, equipment management fees of approximately $120,000 were earned by the General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, equipment management fees of approximately $5,100 were earned
bythe General Partner.


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5.


      Notes Payable

        Notes payable 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 September 30, 2006 are as follows:




September30,2006

        

        December31,2005Installment note payable to bank; interest at 4.61%, due in monthly installments of $160, including interest, with final payment in December 2007.

        

        $

        773

        

        Installment 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.

        

        

        820,816

        

        785,157Installment notes payable to banks; interest ranging from 6.08% to 6.2%, due in monthly installments ranging from $8,944 to $22,990, including interest, with final payment in June 2009.

        

        

        1,105,409

        

        $

        1,926,998

        

        785,157




Payments on the above notes are due as follows:




AmountThree months ended December 31, 2006

        

        $

        199,063Year ended December 31, 2007

        

        

        858,071Year ended December 31, 2008


      

        


      719,213Year ended December 31, 2009

        

        

        150,651$

        1,926,998


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6.


      SupplementalCash FlowInformation

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




Nine
          months Ended September 30,

        

        2006

        

        2005Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank


      

        $


      410,423


      


      $


      




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:




Nine
          months Ended September 30,

        

        

        2006

        

        

        2005Debt assumed in connection with purchase of computer equipment


      


      $


      1,552,263


      


      $


      378,710Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees

        

        $

        39,273

        

        $

        (379,949

        )


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

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.

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

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.

COMPUTER EQUIPMENT

CCC, 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 September 30, 2006, the Partnerships leasing operations consisted of operating leases. Operating lease revenue is recognized on a monthly basis in accordance with the terms of the lease agreement.

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, 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.

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Liquidity and Capital Resources

The Partnerships primary source of capital for the nine months ended September 30, 2006 and the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, was contributions of approximately $5,300,000 and $12,800,000, respectively. Equipment in the amount of approximately $5,800,000 was purchased during the nine months ended September 30, 2006 and distributions in the amount of $1,800,000 were paid during that same period. Equipment in the amount of $1,288,000 was purchased and distributions were paid in the amount of $341,000 during the period of March 14, 2005 (Commencement of Operations) through September 30, 2005.

For the nine months ended September 30, 2006, cash was provided from operations in the amount of $1,100,000 that includes a net loss of $292,000 and depreciation and amortization expenses of approximately $1,872,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $410,000.

For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, the Partnership used cash for operating activities of approximately $403,000, which includes a net loss of approximately $576,000, and depreciation and amortization expenses of approximately $81,000.

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 September 30, 2006, the Partnership had future minimum rentals on non-cancelable operating leases of $965,000 for the balance of the year ending December 31, 2006 and $7,497,000 thereafter.

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 are deemed necessary.

Results of Operations

Three months ended September 30, 2006 compared to three months ended September 30, 2005

For the three months ended September 30, 2006, the Partnership recognized income of approximately $1,128,000 and expenses of approximately $1,112,000, resulting in net income of approximately $16,000. For the three months ended September 30, 2005, the Partnership recognized income of approximately $99,000 and expenses of approximately $370,000, resulting in a net loss of approximately $271,000.

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Lease income increased to approximately $1,022,000 for the three months ended September 30, 2006, from $84,000 for the three months ended September 30, 2005, primarily due to lease agreements being entered into since the nine months ended September 30, 2005 as the fund commenced operations.

Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC, a related party, for administration and operation of the Partnership. The expenses decreased  2% to approximately $248,000 for the quarter ended September 30, 2006, versus $254,000 for the quarter ended September 30, 2005.

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 to approximately $48,000 for the quarter ended September 30, 2006, versus $4,000 for the quarter ended September 30, 2005, and is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses increased to approximately $787,000 for the quarter ended September 30, 2006, from $67,000 for the quarter ended September 30, 2005 due to additional equipment being purchased and associated acquisition and finance fees being recorded by the Partnership since the quarter ended September 30, 2005.

Nine months ended September 30, 2006 compared to March 14, 2005 (Commencement of Operations) through September 30, 2005

For the nine months ended September 30, 2006, the Partnership recognized income of approximately $2,663,000 and expenses of approximately $2,955,000 resulting in a net loss of approximately $292,000. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, the Partnership recognized income of approximately $116,000 and expenses of approximately $692,000, resulting in a net loss of approximately $576,000.

Lease income increased to $2,389,000 for the nine months ended September 30, 2006, versus $102,000 for the period of to March 14, 2005 (Commencement of Operations) through September 30, 2005, primarily due to more lease agreements being entered into since the period from September 30, 2005 as the fund commenced operations.

Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC, a related party, for administration and operation of the Partnership. The expenses increased to approximately $861,000 for the nine months ended September 30, 2006, from $481,000 for the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, primarily due to an LP expenses of approximately $333,000, an increase in insurance costs of approximately $16,000 and an increase in accounting fees of approximately $11,000. Such expenses increased due to commencement of operations and further activity within the fund.

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 to approximately $120,000 for the nine months ended September 30, 2006, from $5,000 for the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, and is consistent with the increase in lease income.

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Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses increased to approximately $1,870,000 for the nine months ended September 30, 2006 from $81,000 for the period ended September 30, 2005, due to additional equipment being purchased and the associated acquisition and finance fees being recorded by the Partnership since the period ended September 30, 2005.

Item
          3.

        Quantitative and Qualitative Disclosures About Market Risk


The Partnership believes its exposure to market risk is not material due to the fixed interest rate of its long-term debt. There are no material changes to this disclosure related to these items since the filing of our Annul Report on Form 10-K for the year ended December 31, 2005.

Item
          4.

        Controls and Procedures


The Chief Executive Officer and Financial Officer of the General Partner has conducted a review of the General Partners disclosure controls and procedures as of September 30, 2006.

The Companys disclosure controls and procedures include the General Partners controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended (the  Exchange Act) is accumulated and communicated to the General partners management, including its chief executive officer and a financial officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported with the required time periods.

Based upon this review, the General Partners Chief Executive Officer and Financial Officer has concluded that the General Partners disclosure controls (as defined pursuant to Rule 13a-14 c promulgated under the Exchange Act) are sufficiently effective to ensure that the information required to be disclosed by the General Partner in the reports it files under the Exchange Act is recorded, processed, summarized and reported with adequate timeliness.

There have been no changes in the General Partners internal controls or in other factors that could materially affect our disclosure controls and procedures in the quarter ended September 30, 2006, that have materially affected or are reasonably likely to materially affect the General Partners internal controls over financial reporting.

Part II: OTHER INFORMATION

Commonwealth Income & Growth Fund V

Item 1.


      Legal
          Proceedings.


N/A

Item 1A.


      Risk
          Factors


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THERE IS NO PUBLIC MARKET FOR THE UNITS, AND YOU MAY BE UNABLE TO SELL OR TRANSFER YOUR UNITS AT A TIME AND PRICE OF YOUR CHOOSING

There exists no public market for the units, and the General Partner does not expect a public market for units to develop. The units cannot be pledged or transferred without the consent of the General Partner. The units should be purchased as a long-term investment only. The General Partner intends to limit the number of transfers to no more than that number permitted by one of the safe harbors available under the tax laws and regulations to prevent CIGF5 from being taxed as a corporation. Generally, these safe harbors require that all nonexempt transfers and redemptions of units in any calendar year not exceed two percent of the outstanding interests in the capital or profits of CIGF5.

The General Partner has sole discretion in deciding whether we will redeem units in the future. Consequently, you may not be able to liquidate your investment in the event of an emergency. You must be prepared to hold your units for the life of CIGF5. CIGF5s life cycle will last approximately 10 to 12 years, and any extension of this period will require an amendment to the partnership agreement, which must be approved by a majority of the Limited Partners. You may be able to resell your units, if at all, only at a discount to the offering price, which may be significant, and the redemption or sale price may be less than the price you originally paid for your units.

INFORMATION
  TECHNOLOGY EQUIPMENT WE PURCHASE WILL DEPRECIATE IN VALUE AND/OR BECOME OBSOLETE
  OR LOSE VALUE AS NEW TECHNOLOGY IS DEVELOPED, WHICH CAN REDUCE THE VALUE OF
  YOUR UNITS AND YOUR ULTIMATE CASH RETURN.

Residual value is the amount realized upon the sale or release of equipment when the original lease has expired. The residual value of our equipment may decline if technological advancements make it obsolete or change market preferences. The residual value depends on, among other factors, the condition of the equipment, the cost of comparable new equipment, the technological obsolescence of the equipment and supply and demand for the equipment.

In either of these events, the equipment we purchased may have little or no residual value. This will result in insufficient assets for us to distribute cash in a total amount equal to the invested capital of the Limited Partners over the term of our existence. Also, such an occurrence may reduce the value of the units. Although currently we expect CIGF5 to acquire predominantly new equipment, CIGF5 may purchase used equipment. There is no limitation on the amount of used equipment which CIGF5 may acquire. The acquisitions of used equipment may increase the risk that such equipment will become obsolete so that it will have little or no residual value.

WE
  PAY SIGNIFICANT FEES TO THE GENERAL PARTNER AND AFFILIATES, WHICH WILL REDUCE
  CASH AVAILABLE FOR DISTRIBUTIONS.

The General Partner and its affiliates, including Commonwealth Capital Securities Corp.(CCSC), will receive substantial fees. Some fees will be paid without regard to the amount of distributions paid or the success or profitability of CIGF5s operations and investments. For example, an increase in portfolio turnover or the amount of leverage used to purchase equipment may increase the fees we pay to the General Partner. Such compensation and fees were established by the General Partner and are not based on arms-length negotiations.

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CIGF5 HAS A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE PERFORMANCE.  THERE CAN BE NO ASSURANCE THAT ANY OF THE INVESTMENT OBJECTIVES WILL BE ATTAINED.

Our operations may not ultimately be successful and we may be unable to meet our stated investment objectives. Specifically, sufficient cash may ultimately not be available for distribution to investors.  Our General Partner sponsors four other public equipment leasing programs with investment objectives similar to CIGF5. The General Partner has also sponsored several privately held equipment leasing programs. Results for these prior public and private programs have in some cases been lower than originally anticipated.

ANY
  DELAY IN ACQUIRING EQUIPMENT WILL DIMINISH OUR RETURNS.

Due to competition with other lessors, we may experience difficulty in obtaining and leasing appropriate equipment. Our ability to acquire and lease equipment may also be adversely affected by interest rates, the availability of capital or increases in corporate liquidity, since prospective lessees may prefer to raise capital, incur debt or use internally-generated cash to purchase equipment rather than enter the leasing market.

Item 2.


      Unregistered
          Sales of Equity Securities and Use of Proceeds.


N/A

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
          and Reports on Form 8-K


a)

        Exhibits


31.1 THE RULE 15d-14(a)

31.2 THE RULE 15d-14(a)



32.1SECTION 1350 CERTIFICATION OF CEO

32.2SECTION 1350 CERTIFICATION OF CFO

b)

        N/A


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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 PartnerNovember 14, 2006

        


      By:

        /s/ Kimberly A. SpringsteenDateKimberly A. SpringsteenChief Executive Officer




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