<PAGE>

                          AMERICAN INCOME PARTNERS V



               American Income Partners V-C Limited Partnership


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

                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                     INDEX TO ANNUAL REPORT TO THE PARTNERS



                                                                    Page
                                                                    ----


SELECTED FINANCIAL DATA                                                2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                  3-6


FINANCIAL STATEMENTS:

Report of Independent Auditors                                         7

Statement of Financial Position
at December 31, 1996 and 1995                                          8

Statement of Operations
for the years ended December 31, 1996, 1995 and 1994                   9

Statement of Changes in Partners' Capital
for the years ended December 31, 1996, 1995 and 1994                  10

Statement of Cash Flows
for the years ended December 31, 1996, 1995 and 1994                  11

Notes to the Financial Statements                                  12-19

ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed                               20

Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings                               21

Schedule of Costs Reimbursed to the
General Partner and its Affiliates as
Required by Section 10.4 of the Amended and
and Restated Agreement and Certificate of
Limited Partnership                                                   22


                                      -1-
<PAGE>

                            SELECTED FINANCIAL DATA


    The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.

    For each of the five years in the period ended December 31, 1996:

<TABLE>
<CAPTION>

          Summary of
          Operations                  1996         1995         1994          1993           1992
--------------------------------  -----------  -----------  -----------  -------------  ------------
<S>                               <C>          <C>          <C>          <C>            <C>
Lease revenue                      $2,994,157   $3,617,207   $5,021,135   $ 5,756,394    $ 6,612,097

Net income (loss) before           $2,350,010   $1,781,012   $  554,771   $(3,311,187)   $   334,921
     extraordinary item

     Extraordinary item                    --           --           --            --        235,659
                                   -----------  -----------  -----------  -------------  -----------
Net income (loss)                  $2,350,010   $1,781,012   $  554,771   $(3,311,187)   $   570,580

Per Unit:
     Net income (loss)
     before extradordinary item    $     2.40   $     1.82   $     0.57   $     (3.38)   $      0.34

            Extraordinary item             --           --           --            --           0.24
                                   -----------  -----------  -----------  -------------  -----------
     Net income (loss)             $     2.40   $     1.82   $     0.57   $     (3.38)   $      0.58

     Cash distributions            $     4.97   $     2.00   $     2.37   $      1.56    $      3.75


      Financial Position
--------------------------------

Total assets                       $2,642,076   $5,978,807   $8,276,250   $12,676,603    $21,391,932

Total long-term obligations        $  329,370   $  786,755   $2,684,559   $ 5,374,251    $ 8,596,255

Partners' capital                  $2,124,515   $4,644,639   $4,822,454   $ 6,593,790    $11,435,312

</TABLE>

                                      -2-
<PAGE>

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

               Year ended December 31, 1996 compared to the year
          ended December 31, 1995 and the year ended December 31, 1995
                  compared to the year ended December 31, 1994

Overview
--------

  American Income Partners V-C Limited Partnership (the "Partnership") was
organized in 1989 as a direct-participation equipment leasing program to acquire
a diversified portfolio of capital equipment subject to lease agreements with
third parties.  The Partnership's stated investment objectives and policies
contemplated that the Partnership would wind-up its operations within
approximately seven years of its inception.  The value of the Partnership's
equipment portfolio decreases over time due to depreciation resulting from age
and usage of the equipment, as well as technological changes and other market
factors.  In addition, the Partnership does not replace equipment as it is sold;
therefore, its aggregate investment value in equipment declines from asset
disposals occurring in the normal course.  As a result of the Partnership's age
and a declining equipment portfolio, the General Partner is evaluating a variety
of transactions that will reduce the Partnership's prospective costs to operate
as a publicly registered limited partnership and, therefore, enhance overall
cash distributions to the limited partners.  Such a transaction might involve
the sale of the Partnership's remaining equipment or a transaction that would
allow for the consolidation of the Partnership's expenses with other similarly-
organized equipment leasing programs.  In order to increase the marketability of
the Partnership's remaining equipment, the General Partner expects to use a
portion of the Partnership's available cash and future cash flow to retire
indebtedness.  This may negatively effect short-term cash distributions.


Results of Operations
---------------------

  For the year ended December 31, 1996, the Partnership recognized lease revenue
of $2,994,157 compared to $3,617,207 and $5,021,135 for the years ended December
31, 1995 and 1994, respectively.  Lease revenue for the year ended December 31,
1996 includes the receipt of $872,305 of lease termination rents received in
connection with the sale of the Partnership's interest in two Boeing 727-
Advanced aircraft in July 1996 (see below).  The decrease in lease revenue from
1994 to 1996 was expected and resulted principally from primary lease term
expirations and the sale of equipment.  The Partnership also earns interest
income from temporary investments of rental receipts and equipment sales
proceeds in short-term instruments.

  The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest.  In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by Equis Financial Group Limited Partnership (formerly American
Finance Group), a Massachusetts limited partnership ("EFG").  Proportionate
equipment ownership enables the Partnership to further diversify its equipment
portfolio by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could result from a concentration in any single
equipment type, industry or lessee.  The Partnership and each affiliate
individually report, in proportion to their respective ownership interests,
their respective shares of assets, liabilities, revenues, and expenses
associated with the equipment.

  In 1996, the Partnership sold equipment having a net book value of $2,532,852
to existing lessees and third parties.  These sales resulted in a net gain, for
financial statement purposes, of $710,612 compared to a net gain of $668,121 in
1995 on equipment having a net book value of $204,486 and a net gain of $233,506
in 1994 on equipment having a net book value of $612,492.  The 1996 equipment
sales included the sale of the Partnership's interest in two Boeing 727-Advanced
jet aircraft with an original cost and net book value of $7,779,992 and
$1,238,414, respectively, which the Partnership sold to the existing lessee in
July 1996.  In connection with these sales, the Partnership realized sale
proceeds of $2,019,055, which resulted in a net gain, for financial statement
purposes, of $780,641.  These aircraft were sold prior to the expiration of the
related lease term.  The Partnership also realized lease termination rents equal
to $872,305 relating to these aircraft.  In addition, equipment sales in 1996
included the Partnership's interest in a vessel with an original cost and net
book value of $2,782,137 and

                                      -3-
<PAGE>

$1,230,287, respectively, which the Partnership sold to a third party in
September 1996. In connection with this sale, the Partnership realized net sale
proceeds of $944,213, which resulted in a net loss, for financial statement
purposes, of $286,074. This equipment was sold prior to the expiration of the
related lease term. This sale was effected in connection with a joint
remarketing effort involving 15 individual leasing programs sponsored by EFG,
consisting of the Partnership and 14 affiliates. See Note 3 for further
discussion of this transaction.

    It cannot be determined whether future sales of equipment will result
in a net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale.  In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

    The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment.  Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.  EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

    The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value.  The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis.  The Partnership
classifies such residual rental payments as lease revenue.  Consequently, the
amount of gain or loss reported in the financial statements is not necessarily
indicative of the total residual value the Partnership achieved from leasing the
equipment.

    Depreciation and amortization expense was $1,097,986, $2,107,857 and
$4,054,163 for the years ended December 31, 1996, 1995 and 1994, respectively.
For financial reporting purposes, to the extent that an asset is held on primary
lease term, the Partnership depreciates the difference between (i) the cost of
the asset and (ii) the estimated residual value of the asset on a straight-line
basis over such term.  For purposes of this policy, estimated residual values
represent estimates of equipment values at the date of primary lease expiration.
To the extent that an asset is held beyond its primary lease term, the
Partnership continues to depreciate the remaining net book value of the asset on
a straight-line basis over the asset's remaining economic life.  (See Note 2 to
the financial statements herein.)

    Interest expense was $51,188 or 1.7% of lease revenue in 1996, $149,961 or
4.2% of lease revenue in 1995 and $396,215 or 7.9% of lease revenue in 1994.
Interest expense in future periods will continue to decline in amount and as a
percentage of lease revenue as the principal balance of notes payable is reduced
through the application of rent receipts to outstanding debt.  In addition, the
General Partner expects to use a portion of the Partnership's available cash and
future cash flow to retire indebtedness (see Overview).

    Management fees were approximately 4.8%, 4.2%, and 4% of lease revenue
during the years ended December 31, 1996, 1995 and 1994, respectively.
Management fees for the year ended December 31, 1996 include $7,731, resulting
from an underaccrual in 1995. Management fees are based on 5% of gross lease
revenue generated by operating leases and 2% of gross lease revenue generated by
full payout leases.

    Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. In certain cases, equipment storage or
repairs and maintenance costs may be incurred in connection with equipment being
remarketed. Collectively, operating expenses represented 5.8%, 4.2% and 1.9% of
lease revenue in 1996, 1995 and 1994, respectively. The increase in operating
expenses during 1995 and 1996 compared to 1994 was due primarily to heavy
maintenance and airframe overhaul costs incurred or accrued in connection with
the Partnership's interests in two Boeing 727 aircraft. During 1996, the
Partnership received $21,112 from the former lessee of these aircraft,
representing a partial reimbursement of such costs. In 1996, the Partnership
entered into a new 36-month lease agreement with Sunworld International
Airlines, Inc. to re-lease one of the aircraft at a base rent to the Partnership
of $3,900 per month (see discussion below relating to the second aircraft). The
amount of future operating expenses cannot be predicted with certainty; however,
such expenses are usually higher during the acquisition

                                      -4-
<PAGE>

and liquidation phases of a partnership. Other fluctuations typically occur in
relation to the volume and timing of remarketing activities.

Liquidity and Capital Resources and Discussion of Cash Flows
------------------------------------------------------------

    The Partnership by its nature is a limited life entity which was established
for specific purposes described in the preceding "Overview".  As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions.  Accordingly, the Partnership's principal source of
cash from operations is generally provided by the collection of periodic rents.
These cash inflows are used to satisfy debt service obligations associated with
leveraged leases, and to pay management fees and operating costs.  Operating
activities generated net cash inflows of $2,940,262 and $3,631,082, and
$4,349,082 for the years ended December 31, 1996, 1995, and 1994, respectively.
Future renewal, re-lease and equipment sale activities will cause a  decline in
the Partnership's lease revenue and corresponding sources of operating cash.
Overall, expenses associated with rental activities, such as management fees,
and net cash flow from operating activities will also decline as the Partnership
experiences a higher frequency of remarketing events.

    Ultimately, the Partnership will dispose of all assets under lease. This
will occur principally through sale transactions whereby each asset will be sold
to the existing lessee or to a third party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.

    Cash expended for equipment acquisitions and cash realized from asset
disposal transactions are reported under investing activities on the
accompanying Statement of Cash Flows. During the year ended December 31, 1996,
the Partnership expended $65,700 to replace certain aircraft engines to
facilitate the re-lease of an aircraft, in which the Partnership has an
ownership interest, to Transmeridian Airlines (see discussion below). In 1994,
the Partnership capitalized $49,500 of refurbishment costs incurred to upgrade
equipment. Also in 1994, equipment in the amount of $161,340 was acquired in
connection with pre-existing lease agreements. During 1996, the Partnership
realized $3,243,464 in equipment sale proceeds compared to $872,607 and $845,998
in 1995 and 1994, respectively. Future inflows of cash from asset disposals will
vary in timing and amount and will be influenced by many factors including, but
not limited to, the frequency and timing of lease expirations, the type of
equipment being sold, its condition and age, and future market conditions.

    On November 30, 1995, upon the expiration of its lease term, Northwest
Airlines, Inc., returned a Boeing 727-251 Advanced aircraft (the "Aircraft") in
which the Partnership has a 6% ownership interest.  The aircraft had a cost and
net book value to the Partnership of approximately $649,000 and $95,000,
respectively, at December 31, 1996. The Aircraft is currently undergoing heavy
maintenance expected to cost the Partnership approximately $34,000, all of which
was incurred or accrued during the year ended December 31, 1996. The Partnership
had entered into a 28-month lease agreement with Transmeridian Airlines
effective upon completion of the heavy maintenance. However, as a result of
delays in completing the heavy maintenance, the Aircraft could not be delivered
to the lessee on the stipulated date, resulting in the cancellation of the
agreement. The General Partner is currently negotiating a new lease agreement
for the aircraft.

    In 1994, the Partnership incurred and capitalized costs of $270,000 to
refurbish and improve a cargo vessel leased by Gearbulk Shipowning Ltd.
("Gearbulk"), pursuant to the terms of an extended and renegotiated lease
contract with Gearbulk.  Refurbishment costs were financed by a third-party
lender and shared between the Partnership and other affiliated partnerships in
proportion to their respective ownership interests.  The cargo vessel was
subsequently sold in September 1996 in connection with a joint remarketing
effort involving 15 individual equipment leasing programs sponsored by EFG,
consisting of the Partnership and 14 affiliates.  See Note 3 to the financial
statements herein.

    The Partnership obtained long-term financing in connection with certain
equipment leases.  The repayments of principal related to such indebtedness are
reported as a component of financing activities.    Each note payable is
recourse only to the specific equipment financed and to the minimum rental
payments contracted to be received during the debt amortization period (which
period generally coincides with the lease rental term).  As rental

                                      -5-
<PAGE>

payments are collected, a portion or all of the rental payment is used to repay
the associated indebtedness. The amount of cash used to repay debt obligations
is scheduled to decline as the principal balance of notes payable is reduced
through the collection and application of rents. The General Partner also
expects to use a portion of the Partnership's available cash and future cash
flow to retire indebtedness (see Overview), which will be fully amortized in
1997.

    Cash distributions to the General Partner and Recognized Owners are declared
and generally paid within fifteen days following the end of each calendar
quarter.  The payment of such distributions is presented as a component of
financing activities.  For the year ended December 31, 1996, the Partnership
declared total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $4,870,134.  In accordance
with the Amended and Restated Agreement and Certificate of Limited Partnership,
the Recognized Owners were allocated 95% of these distributions, or $4,626,627,
and the General Partner was allocated 5%, or $243,507.  The fourth quarter 1996
cash distribution was paid on January 13, 1997.

    Cash distributions paid to the Recognized Owners consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date. Future market conditions, technological changes, the ability
of EFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Partnership's equipment portfolio.

    The future liquidity of the Partnership will be influenced by the foregoing
and will be greatly dependent upon the collection of contractual rents and the
outcome of residual activities. The General Partner anticipates that cash
proceeds resulting from these sources will satisfy the Partnership's future
expense obligations. However, the amount of cash available for distribution in
future periods will fluctuate. Equipment lease expirations and asset disposals
will cause the Partnership's net cash from operating activities to diminish over
time; and equipment sale proceeds will vary in amount and period of realization.
In addition, the Partnership may be required to incur asset refurbishment or
upgrade costs in connection with future remarketing activities. Accordingly,
fluctuations in the level of future quarterly cash distributions are
anticipated.

                                      -6-
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------


To the Partners of American Income Partners V-C Limited Partnership:

    We have audited the accompanying statements of financial position of
American Income Partners V-C Limited Partnership as of December 31, 1996 and
1995, and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1996.  These financial statements are the responsibility of the Partnership's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Income Partners V-C
Limited Partnership at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

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



                                                               ERNST & YOUNG LLP



Boston, Massachusetts
March 14, 1997

                                      -7-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                        STATEMENT OF FINANCIAL POSITION
                          December 31, 1996 and 1995
<TABLE>
<CAPTION>


                                                     1996          1995
                                                 ------------  ------------

ASSETS
------

<S>                                              <C>           <C>
Cash and cash equivalents                         $1,584,360    $1,173,376
Rents receivable, net of allowance for
   doubtful accounts of $15,000                       37,611       178,631
Accounts receivable - affiliate                       76,774       118,331
Equipment at cost, net of accumulated
   depreciation of $7,893,295 and
   $17,709,239 at December 31, 1996 and 1995,
   respectively                                      943,331     4,508,469
                                                  ----------    ----------

     Total assets                                 $2,642,076    $5,978,807
                                                  ==========    ==========

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Notes payable                                     $  329,370    $  786,755
Accrued interest                                       2,609         5,944
Accrued liabilities                                   26,950        20,000
Accrued liabilities - affiliate                       14,814         6,765
Deferred rental income                                33,634        24,997
Cash distributions payable to partners               110,184       489,707
                                                  ----------    ----------
     Total liabilities                               517,561     1,334,168
                                                  ----------    ----------
Partners' capital (deficit):
  General Partner                                   (925,284)     (799,277)
  Limited Partnership Interests
  (930,443 Units; initial purchase
   price of $25 each)                              3,049,799     5,443,916
                                                  ----------    ----------
     Total partners' capital                       2,124,515     4,644,639
                                                  ----------    ----------
     Total liabilities and partners' capital      $2,642,076    $5,978,807
                                                  ==========    ==========
</TABLE>


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

                                      -8-
<PAGE>

                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                            STATEMENT OF OPERATIONS
              for the years ended December 31, 1996, 1995 and 1994

<TABLE>
<CAPTION>


                                             1996         1995          1994
                                          -----------  -----------  -----------

Income:
<S>                                       <C>          <C>          <C>
   Lease revenue                           $2,994,157   $3,617,207   $5,021,135
   Interest income                            113,568       57,300       43,767
   Gain on sale of equipment                  710,612      668,121      233,506
                                           ----------   ----------   ----------
       Total income                         3,818,337    4,342,628    5,298,408
                                           ----------   ----------   ----------

Expenses:
   Depreciation and amortization            1,097,986    2,107,857    4,054,163
   Interest expense                            51,188      149,961      396,215
   Equipment management fees - affiliate      144,187      153,107      200,361
   Operating expenses - affiliate             174,966      150,691       92,898
                                           ----------   ----------   ----------
       Total expenses                       1,468,327    2,561,616    4,743,637
                                           ----------   ----------   ----------

Net income                                 $2,350,010   $1,781,012   $  554,771
                                           ==========   ==========   ==========

Net income
   per limited partnership unit            $     2.40   $     1.82   $     0.57
                                           ==========   ==========   ==========
Cash distributions declared
   per limited partnership unit            $     4.97   $     2.00   $     2.37
                                           ==========   ==========   ==========

</TABLE>


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

                                      -9-
<PAGE>

                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                   STATEMENT OF CHANGES IN PARTNERS' CAPITAL
              for the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>



                                  General      Recognized Owners
                                  Partner    ---------------------
                                  Amount      Units      Amount        Total
                                -----------  -------  ------------  ------------

<S>                             <C>          <C>      <C>           <C>
Balance at December 31, 1993     $(701,821)  930,443  $ 7,295,611   $ 6,593,790
Net income - 1994                   27,739        --      527,032       554,771
Cash distributions declared       (116,305)       --   (2,209,802)   (2,326,107)
                                 ---------   -------  -----------   -----------
Balance at December 31, 1994      (790,387)  930,443    5,612,841     4,822,454
Net income - 1995                   89,051        --    1,691,961     1,781,012
Cash distributions declared        (97,941)       --   (1,860,886)   (1,958,827)
                                 ---------   -------  -----------   -----------
Balance at December 31, 1995      (799,277)  930,443    5,443,916     4,644,639
Net income - 1996                  117,500        --    2,232,510     2,350,010
Cash distributions declared       (243,507)       --   (4,626,627)   (4,870,134)
                                 ---------   -------  -----------   -----------
Balance at December 31, 1996     $(925,284)  930,443  $ 3,049,799   $ 2,124,515
                                 =========   =======  ===========   ===========
</TABLE>

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

                                      -10-
<PAGE>

                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                            STATEMENT OF CASH FLOWS
              for the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>

                                                            1996            1995            1994
                                                        ------------    ------------    -----------
<S>                                                     <C>             <C>             <C>
Cash flows from (used in) operating activities:
Net income                                              $ 2,350,010     $ 1,781,012     $   554,771

Adjustments to reconcile net income
   to net cash from operating activities:
   Depreciation and amortization                          1,097,986       2,107,857       4,054,163
   Gain on sale of equipment                               (710,612)       (668,121)       (233,506)

Changes in assets and liabilities:
   Decrease in:
       Rents receivable                                     141,020          25,988         145,660
       Accounts receivable - affiliate                       41,557         483,744          73,385
   Increase (decrease) in:
       Accrued interest                                      (3,335)        (27,280)        (71,731)
       Accrued liabilities                                    6,950           4,500           2,000
       Accrued liabilities - affiliate                        8,049         (55,739)         62,504
       Deferred rental income                                 8,637         (20,879)       (238,164)
                                                        -----------     -----------     -----------
         Net cash from operating activities               2,940,262       3,631,082       4,349,082
                                                        -----------     -----------     -----------
Cash flows from (used in) investing activities:
   Purchase of equipment                                    (65,700)             --        (210,840)
   Proceeds from equipment sales                          3,243,464         872,607         845,998
                                                        -----------     -----------     -----------
         Net cash from investing activities               3,177,764         872,607         635,158
                                                        -----------     -----------     -----------
Cash flows used in financing activities:
   Principal payments - notes payable                      (457,385)     (1,897,804)     (2,959,692)
   Distributions paid                                    (5,249,657)     (2,081,253)     (2,020,041)
                                                        -----------     -----------     -----------
        Net cash used in financing activities            (5,707,042)     (3,979,057)     (4,979,733)
                                                        -----------     -----------     -----------
Net increase in cash and cash equivalents                   410,984         524,632           4,507

Cash and cash equivalents at beginning of year            1,173,376         648,744         644,237
                                                        -----------     -----------     -----------
                                                        $ 1,584,360     $ 1,173,376     $   648,744
Cash and cash equivalents at end of year                ===========     ===========     ===========


Supplemental disclosure of cash flow information:       $    54,523     $   177,241     $   467,946
   Cash paid during the year for interest               ===========     ===========     ===========


</TABLE>
Supplemental schedule of non-cash investing and financing activities:
  In 1994, the Partnership capitalized $270,000 of refurbishment costs incurred
  to upgrade certain equipment, all of which was financed by a third-party
  lender.


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

                                      -11-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                               December 31, 1996


NOTE 1 - ORGANIZATION AND PARTNERSHIP MATTERS
---------------------------------------------

    The Partnership was organized as a limited partnership under the
Massachusetts Uniform Limited Partnership Act (the "Uniform Act") on December
27, 1989 for the purpose of acquiring and leasing to third parties a diversified
portfolio of capital equipment.  Partners' capital initially consisted of
contributions of $1,000 from the General Partner (AFG Leasing IV Incorporated)
and $100 from the Initial Limited Partner (AFG Assignor Corporation).  On May
21, 1990, the Partnership issued 930,443 units, representing assignments of
limited partnership interests (the "Units"), to 1,550 investors.  Unitholders
and Limited Partners (other than the Initial Limited Partner) are collectively
referred to as Recognized Owners.  The Partnership has one General Partner,  AFG
Leasing IV Incorporated, a Massachusetts corporation and an affiliate of Equis
Financial Group Limited Partnership (formerly American Finance Group), a
Massachusetts limited partnership ("EFG").  The common stock of the General
Partner is owned by AF/AIP Programs Limited Partnership, of which EFG and a
wholly-owned subsidiary are the 99% limited partners, and AFG Programs, Inc.,
which is wholly-owned by Geoffrey A. MacDonald, is the 1% general partner.  The
General Partner is not required to make any other capital contributions except
as may be required under the Uniform Act and Section 6.1(b) of the Amended and
Restated Agreement and Certificate of Limited Partnership (the "Restated
Agreement, as amended").

    Significant operations commenced May 22, 1990 when the Partnership made its
initial equipment purchase. Pursuant to the Restated Agreement, as amended,
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Recognized Owners and 5% to the
General Partner. Payout will occur when the Recognized Owners have received
distributions equal to their original investment plus a cumulative annual return
of 11% (compounded quarterly) on undistributed invested capital.

    Under the terms of a management agreement between the Partnership and AF/AIP
Programs Limited Partnership and the terms of an identical management agreement
between AF/AIP Programs Limited Partnership and EFG (collectively, the
"Management Agreement"), management services are provided by EFG to the
Partnership at fees which the General Partner believes to be competitive for
similar services.  (Also see Note 4.)

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

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

    In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group," and its acronym, to a third party (the "Buyer").  AFG changed its name
to Equis Financial Group Limited Partnership after the sale was concluded.
Pursuant to terms of the sale agreements, EFG agreed not to compete with the
Buyer's lease origination business for a period of five years; however, EFG is
permitted to originate certain equipment leases, principally those involving
non-investment grade lessees and ocean-going vessels, which are not in
competition with the Buyer.  In addition, the sale agreements specifically
reserved to EFG the rights to continue using the name American Finance Group and
its acronym in connection with the Partnership and the Other Investment Programs
and to continue managing all

                                      -12-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                                  (Continued)

assets owned by the Partnership and the Other Investment Programs, including the
right to satisfy all required equipment acquisitions utilizing either brokers or
the Buyer. Geoffrey A. MacDonald, Chairman of Equis Corporation and Gary D.
Engle agreed not to compete with the sold business on terms and conditions
similar to those for the Company.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Statement of Cash Flows
-----------------------

    The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents.  From time to time, the
Partnership invests excess cash with large institutional banks in reverse
repurchase agreements with overnight maturities.  Under the terms of the
agreements, title to the underlying securities passes to the Partnership.  The
securities underlying the agreements are book entry securities.  At December 31,
1996, the Partnership had $1,485,000 invested in reverse repurchase agreements
secured by U.S. Treasury Bills or interests in U.S. Government securities.

Revenue Recognition
-------------------

    Rents are payable to the Partnership monthly, quarterly or semi-annually and
no significant amounts are calculated on factors other than the passage of time.
The leases are accounted for as operating leases and are noncancellable.  Rents
received prior to their due dates are deferred.  Future minimum rents of
$1,011,709 are due as follows:
<TABLE>
<CAPTION>


<S>                                     <C>    <C>
    For the year ending December 31, 1997     $  752,086
                                     1998        188,415
                                     1999         31,648
                                     2000         31,648
                                     2001          7,912
                                               ----------
                                     Total     $1,011,709
                                               ==========

</TABLE>

    Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1996, 1995, and 1994 are as
follows:
<TABLE>
<CAPTION>

                                 1996           1995           1994
                              -----------    -----------    -----------
<S>                           <C>            <C>            <C>
Northwest Airlines, Inc.       $1,581,666     $1,298,262     $1,416,059
Gearbulk Shipowning Ltd.       $  336,440     $  498,438             --
Shell Oil Company              $  346,564             --             --
</TABLE>

Use of Estimates
----------------

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

                                      -13-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                                  (Continued)


Equipment on Lease
------------------

    All equipment was acquired from EFG, one of its affiliates, including other
equipment leasing programs sponsored by EFG, or from third-party sellers.
Equipment cost represents asset base price plus acquisition fees and was
determined in accordance with the Restated Agreement, as amended, and certain
regulatory guidelines.  Asset base price is affected by the relationship of the
seller to the Partnership as summarized herein.  Where the seller of the
equipment was EFG or an affiliate, asset base price was the lower of (i) the
actual price paid for the equipment by EFG or the affiliate plus all actual
costs accrued by EFG or the affiliate while carrying the equipment less the
amount of all rents earned by EFG or the affiliate prior to selling the
equipment or (ii) fair market value as determined by the General Partner in its
best judgment, including all liens and encumbrances on the equipment and other
actual expenses.  Where the seller of the equipment was a third party who did
not manufacture the equipment, asset base price was the lower of (i) the price
invoiced by the third party or (ii) fair market value as determined by the
General Partner.  Where the seller of the equipment was a third party who also
manufactured the equipment, asset base price was the manufacturer's invoice
price, which price was considered to be representative of fair market value.

Depreciation and Amortization
-----------------------------

    The Partnership's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit.  The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset.  Accordingly, to the extent that an asset is
held on primary lease term, the Partnership depreciates the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term.  For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of primary
lease expiration.  To the extent that an asset is held beyond its primary lease
term, the Partnership continues to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value.  Adjustments to
reduce the net carrying value of equipment are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.

    The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.  EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

    Organization costs were amortized using the straight-line method over a
period of five years.

Accrued Liabilities - Affiliate
-------------------------------

    Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges are reported as Accrued Liabilities -
Affiliate.  (See Note 4.)

Allocation of Profits and Losses
--------------------------------

    For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the
Recognized Owners and 5% to the General Partner).  See Note 6 concerning
allocation of income or loss for income tax purposes.

                                      -14-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                                  (Continued)



Net Income and Cash Distributions Per Unit
------------------------------------------

    Net income and cash distributions per Unit are based on 930,443 units
outstanding during the years ended December 31, 1996, 1995 and 1994 and computed
after allocation of the General Partner's 5% share of net income and cash
distributions.

Provision for Income Taxes
--------------------------

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

Impact of Recently Issued Accounting Standards
----------------------------------------------

    In March 1995, the Financial Accounting Standards Board issued Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount.  Statement 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.  The
Partnership adopted Statement 121 in the first quarter of 1996.  The adoption of
Statement 121 did not have a material effect on the financial statements of the
Partnership.


NOTE 3 - EQUIPMENT
------------------

    The following is a summary of equipment owned by the Partnership at December
31, 1996.  In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.

<TABLE>
<CAPTION>

                                 Lease Term     Equipment
        Equipment Type            (Months)       at Cost               Location
------------------------------  -------------  ------------  -----------------------------
<S>                             <C>            <C>           <C>
Construction and mining                 6-84   $ 2,550,457   AL/DE/GA/IN/WY
Aircraft                                1-36     2,132,292   KY/MN/NY
Communications                         12-84     1,790,243   CA/FL/MD
Retail store fixtures                  12-72     1,144,958   AL/DE/GA/KY/MD/MS/NC/SC/TN/VA/WV
Materials handling                      1-60       789,713   CA/GA/KY/MI/NC/NY/OH/PA/SC/TX
Motor vehicles                            36       238,583   NJ
Locomotives                            48-78       184,820   IL/PA
Computers and peripherals              12-60         5,560   LA
                                               -----------
                      Total equipment cost       8,836,626

                  Accumulated depreciation      (7,893,295)
                                               -----------
Equipment, net of accumulated depreciation     $   943,331
                                               ===========
</TABLE>

                                      -15-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                                  (Continued)


    On September 30, 1996, the Partnership sold a 36% ownership interest,
representing its entire ownership interest, in a cargo vessel leased by Gearbulk
Shipowning Ltd. ("Gearbulk"), formerly Kristian Gerhard Jebsen Skipsrederi A/S
(the "Vessel"), having an original cost to the Partnership of $2,782,137 and a
net book value at September 30, 1996 of $1,230,287.  The Partnership received
net sale proceeds of $944,213, a portion of which was used to repay the
outstanding principal balance of notes payable associated with the Vessel of
$102,818.  The Partnership sold its interest in the Vessel prior to the
expiration of the related lease term.  This sale was effected in connection with
a joint remarketing effort involving 15 individual equipment leasing programs
sponsored by EFG, consisting of the Partnership and 14 affiliates.  In October
1996, the Partnership filed Form 8-K with the Securities and Exchange Commission
which provided a description of the remarketing process and the terms of the
sale.

    In 1994, the Partnership incurred and capitalized costs of $270,000 to
refurbish and improve a cargo vessel leased by Gearbulk, pursuant to the terms
of an extended and renegotiated lease contract with Gearbulk. Refurbishment
costs were financed by a third-party lender and shared between the Partnership
and other affiliated partnerships in proportion to their respective ownership
interests. The cargo vessel was subsequently sold in connection with the joint
remarketing effort described above.

    In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest.  The remaining interests are owned by EFG or
an affiliated equipment leasing program sponsored by EFG.  The Partnership and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.  Proportionate equipment ownership
enables the Partnership to further diversify its equipment portfolio by
participating in the ownership of selected assets, thereby reducing the general
levels of risk which could result from a concentration in any single equipment
type, industry or lessee.  At December 31, 1996, the Partnership's equipment
portfolio included equipment having a proportionate original cost of $2,317,112,
representing approximately 26% of total equipment cost.

    Certain of the equipment and related lease payment streams were used to
secure term loans with third-party lenders.  The preceding summary of equipment
includes leveraged equipment having an original cost of approximately $2,077,000
and a net book value of approximately $283,000 at December 31, 1996.  (See Note
5.)

    Generally, the costs associated with maintaining, insuring and operating the
Partnership's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Partnership.

    As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition.  The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms.  The summary above includes equipment
held for re-lease or sale with an original cost and net book value of
approximately $818,000 and $95,000, respectively, at December 31, 1996.  This
equipment includes the Partnership's proportionate interest in a Boeing 727-251
Advanced aircraft (the "Aircraft"), formerly leased to Northwest Airlines Inc.
("Northwest"), having a cost and net book value of approximately $649,000 and
$95,000, respectively at December 31, 1996.  This aircraft was returned upon
expiration of its lease term on November 30, 1995 and is currently undergoing
heavy maintenance expected to cost the Partnership $34,000, all of which was
accrued or incurred during the year ended December 31, 1996.  The Partnership
had entered into a 28-month lease agreement with Transmeridian Airlines
effective upon completion of the heavy maintenance. However, as a result of
delays in completing the heavy maintenance, the Aircraft could not be delivered
to the lessee on the stipulated date, resulting in the cancellation of the
agreement. The General Partner is currently negotiating a new lease agreement
for the aircraft.

                                      -16-
<PAGE>

                     AMERICAN INCOME PARTNERS V-C LIMITED
                       Notes to the Financial Statements

                                  (Continued)



NOTE 4 - RELATED PARTY TRANSACTIONS
-----------------------------------

    All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures.  Fees and other costs incurred during the years ended December 31,
1996, 1995 and 1994 which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:
<TABLE>
<CAPTION>

                                        1996           1995         1994
                                      ---------     ---------     ---------
<S>                                   <C>           <C>           <C>
Equipment management fees              $144,187      $153,107      $200,361
Administrative charges                   32,746        21,000        12,000
Reimbursable operating
 expenses due to third parties          142,220       129,691        80,898
                                       --------      --------      --------

                         Total         $319,153       $303,798     $293,259
                                       ========       ========     ========
</TABLE>

    As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership.  Such services include all aspects of
acquisition, management and sale of equipment.  For acquisition services, EFG is
compensated by an amount equal to 2.23% of Equipment Base Price paid by the
Partnership.  For management services, EFG is compensated by an amount equal to
the lesser of (i) 5% of gross operating lease rental revenue and 2% of gross
full payout lease rental revenue received by the Partnership or (ii) fees which
the General Partner reasonably believes to be competitive for similar services
for similar equipment.  Both of these fees are subject to certain limitations
defined in the Management Agreement.  Compensation to EFG for services connected
to the sale of equipment is calculated as the lesser of (i) 3% of gross sale
proceeds or (ii) one-half of reasonable brokerage fees otherwise payable under
arm's length circumstances.  Payment of the remarketing fee is subordinated to
Payout and is subject to certain limitations defined in the Management
Agreement.

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

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

    All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender.  EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At December 31, 1996, the Partnership was owed $76,774 by EFG for such funds and
the interest thereon.  These funds were remitted to the Partnership in January
1997.

    On August 18, 1995, Atlantic Acquisition Limited Partnership ("AALP"), a
newly formed Massachusetts limited partnership owned and controlled by certain
principals of EFG, commenced a voluntary cash Tender Offer (the "Offer") for up
to approximately 45% of the outstanding units of limited partner interest in
this Partnership and 20 affiliated partnerships sponsored and managed by EFG.
The Offer was subsequently amended and supplemented in order to provide
additional disclosure to unitholders; increase the offer price; reduce the
number of units sought to approximately 35% of the outstanding units; and extend
the expiration date of the Offer to October 20, 1995.  Following commencement of
the Offer, certain legal actions were initiated by interested persons against
AALP, each of the general partners (4 in total) of the 21 affected programs, and
various other affiliates and related parties.  One action, a class action
brought in the United States District Court for the District

                                      -17-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                       Notes to the Financial Statements

                                  (Continued)


of Massachusetts (the "Court") on behalf of the unitholders (Recognized Owners),
sought to enjoin the Offer and obtain unspecified monetary damages. A settlement
of this litigation was approved by the Court on November 15, 1995. The
Plaintiffs filed an appeal in this matter. On November 26, 1996, the United
States Court of Appeals for the First Circuit handed down a decision affirming
the Court's approval of the settlement. A second class action, brought in the
Superior Court of the Commonwealth of Massachusetts (the "Superior Court")
seeking to enjoin the Offer, obtain unspecified monetary damages, and intervene
in the first class action, was dismissed by the Superior Court. The limited
partners of the Partnership tendered approximately 59,877 units or 6.44% of the
total outstanding units of the Partnership to AALP. The operations of the
Partnership were not adversely affected by these proceedings or settlements. On
December 1, 1996, EFG purchased a Class D interest, representing a 49% economic
interest in AALP.


NOTE 5 - NOTES PAYABLE
----------------------

    Notes payable at December 31, 1996 consisted of an installment note of
$329,370 payable to an institutional lender.  The installment note is non-
recourse, with interest rate of 9.5%.  The installment note is collateralized by
the equipment and assignment of the related lease payments and will be fully
amortized by noncancellable rents in the year ending December 31, 1997.


NOTE 6 - INCOME TAXES
---------------------

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

    For financial statement purposes, the Partnership allocates net income or
loss to each class of partner according to their respective ownership
percentages (95% to the Recognized Owners and 5% to the General Partner).  This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended.  For income tax purposes, the Partnership allocates net income or net
loss, in accordance with the provisions of such agreement.  The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account.  At December 31, 1996, the General Partner had a positive tax
capital balance.

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

                                      1996            1995            1994
                                 --------------  --------------  --------------
<S>                              <C>             <C>             <C>
Net income                         $ 2,350,010      $1,781,012      $  544,771
   Financial statement
    depreciation in excess of
    (less than) tax depreciation       365,958          (3,406)      1,324,124
   Prepaid rental income                 8,637         (20,879)       (238,164)
   Other                            (1,791,731)        176,404          45,615
                                   -----------      ----------      ----------

Net income for federal income
   tax reporting purposes          $   932,874      $1,933,131      $1,686,346
                                   ===========      ==========      ==========

</TABLE>

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

                                      -18-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                      Notes to the Financial Statements

                                 (Continued)


    The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>

                                              1996         1995
                                          ------------  -----------
<S>                                       <C>           <C>
Partners' capital                          $2,124,515    $4,644,639
   Add back selling commissions and
   organization and offering costs          2,611,871     2,611,871

   Financial statement distributions in
   excess of tax distributions                  5,509        24,485

   Cumulative difference between
   federal income tax and financial          (294,080)    1,123,056
   statement income (loss)                 ----------    ----------

Partners' capital for federal income
 tax reporting purposes                    $4,447,815    $8,404,051
                                           ==========    ==========
</TABLE>

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


NOTE 7 - LEGAL PROCEEDINGS
--------------------------

    On September 22, 1995, Investors Asset Holding Corp. and First Security
Bank, N.A., trustees of the Partnership and various other affiliated investment
programs, filed an action in the United States District Court for the District
of Massachusetts against Northwest, a lessee of the Partnership.  The trustees
are seeking damages from Northwest and a declaratory judgment concerning
Northwest's maintenance and return obligations for certain aircraft owned by the
Partnership.  In addition to filing its Answer to the Plaintiffs' Complaint,
Northwest also filed a motion to transfer venue of this proceeding to Minnesota.
The Court denied such motion.  The parties have completed the initial phase of
discovery, and motions for partial summary judgment are due on March 28, 1997.
At present, it is not possible to determine the ultimate outcome of this matter.

                                      -19-
<PAGE>

                       ADDITIONAL FINANCIAL INFORMATION
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

        SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
                             OF EQUIPMENT DISPOSED

             for the years ended December 31, 1996, 1995 and 1994



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

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

                                          1996           1995           1994
                                       -----------     ----------     ----------
<S>                                    <C>             <C>            <C>
Rents earned prior to disposal of
   equipment, net of interest
    charges                            $12,065,562     $3,044,646     $3,986,631

Sale proceeds realized upon
 disposition of equipment                3,243,464        872,607        845,998
                                       -----------     ----------     ----------
Total cash generated from rents
   and equipment sale proceeds          15,309,026      3,917,253      4,832,629

Original acquisition cost of
 equipment disposed                     13,446,782      3,131,695      4,205,419
                                       -----------     ----------     ----------
Excess of total cash generated to
 cost of equipment disposed            $ 1,862,244     $  785,558     $  627,210
                                       ===========     ==========     ==========
</TABLE>

                                     -20-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

           STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
                            SALES AND REFINANCINGS

                     for the year ended December 31, 1996


<TABLE>
<CAPTION>


                                                    Sales and
                                    Operations    Refinancings       Total
                                  --------------  -------------  --------------

<S>                               <C>             <C>            <C>
Net income                          $ 1,639,398    $   710,612     $ 2,350,010

Add:
   Depreciation                       1,097,986             --       1,097,986
   Management fees                      144,187             --         144,187
   Book value of disposed equipment          --      2,532,852       2,532,852

Less:
   Principal reduction of notes
    payable                            (457,385)            --        (457,385)
                                    -----------   ------------     -----------

   Cash from operations, sales        2,424,186      3,243,464       5,667,650
    and refinancings

Less:
   Management fees                     (144,187)            --        (144,187)
                                     -----------   ------------     -----------
   Distributable cash from
    operations, sales and
     refinancings                     2,279,999      3,243,464       5,523,463

Other sources and uses of cash:
   Cash at beginning of year          1,173,376             --       1,173,376
   Purchase of equipment                (65,700)            --         (65,700)
   Net change in receivables
    and accruals                        202,878             --         202,878

Less:
   Cash distributions paid           (2,006,193)    (3,243,464)     (5,249,657)
                                    -----------   ------------     -----------

Cash at end of year                 $ 1,584,360             --     $ 1,584,360
                                    ===========   ============     ===========
</TABLE>


                                     -21-
<PAGE>

               AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

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

                               December 31, 1996


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



    Operating expenses                      $177,028




                                     -22-