<PAGE>



                           AMERICAN INCOME PARTNERS V













                 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP


                 Annual Report to the Partners, December 31, 1997

<PAGE>

                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                     INDEX TO ANNUAL REPORT TO THE PARTNERS

<TABLE>
<CAPTION>
                                                                                                              PAGE
                                                                                                            ---------
<S>                                                                                                         <C>

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, 1997 and 1996.............................................          8

Statement of Operations for the years ended December 31, 1997, 1996 and 1995..............................          9

Statement of Changes in Partners' Capital for the years ended December 31, 1997, 1996 and 1995............         10

Statement of Cash Flows for the years ended December 31, 1997, 1996 and 1995..............................         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 Restated Agreement and Certificate of Limited Partnership...................................         22

</TABLE>

                                       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, 1997:

<TABLE>
<CAPTION>
                SUMMARY OF
                OPERATIONS                      1997          1996          1995          1994          1993
------------------------------------------  ------------  ------------  ------------  ------------  -------------
<S>                                         <C>           <C>           <C>           <C>           <C>
Lease revenue.............................  $  1,192,858  $  2,994,157  $  3,617,207  $  5,021,135  $   5,756,394

Net income (loss).........................  $    563,044  $  2,350,010  $  1,781,012  $    554,771  $  (3,311,187)

Per Unit:

  Net income (loss).......................  $       0.57  $       2.40  $       1.82  $       0.57  $       (3.38)

  Cash distributions......................  $       0.42  $       4.97  $       2.00  $       2.37  $        1.56

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

Total assets..............................  $  2,387,283  $  2,642,076  $  5,978,807  $  8,276,250  $  12,676,603

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

Partners' capital.........................  $  2,274,364  $  2,124,515  $  4,644,639  $  4,822,454  $   6,593,790
</TABLE>


                                       2
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

       Year ended December 31, 1997 compared to the year ended December 31, 1996
                   and the year ended December 31, 1996 compared to
                             the year ended December 31, 1995

    Certain statements in this annual report of American Income Partner's V-C
Limited Partnership (the "Partnership") that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
outcome of the Class Action Lawsuit described in Note 6 to the accompanying
financial statements and the ability of Equis Financial Group Limited
Partnership (formerly American Finance Group), a Massachusetts limited
partnership ("EFG"), to collect all rents due under the attendant lease
agreements and successfully remarket the Partnership's equipment upon the
expiration of such leases.

    The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. EFG's computer
programs were designed and written using four digits to define the applicable
year. As a result, EFG does not anticipate system failure or miscalculations
causing disruptions of operations. Based on recent assessments, EFG determined
that minimal modification of software is required so that its network operating
system will function properly with respect to dates in the year 2000 and
thereafter. EFG believes that with these modifications to the existing operating
system, the Year 2000 Issue will not pose significant operational problems for
its computer systems. EFG will utilize internal resources to upgrade software
for Year 2000 modifications and anticipates completing the Year 2000 project by
December 31, 1998, which is prior to any anticipated impact on its operating
system. The total cost of the Year 2000 project is expected to be insignificant
and have no effect on the results of operations of the Partnership.

OVERVIEW

    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 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. The Partnership's stated investment objectives
and policies contemplated that the Partnership would wind-up its operations
within approximately seven years of its inception. Presently, the Partnership is
a Nominal Defendant in a Class Action Lawsuit. The outcome of the Class
Action Lawsuit could alter the nature of the Partnership's organization and
its future business operations. See Note 6 to the accompanying financial
statements.

RESULTS OF OPERATIONS

    For the year ended December 31, 1997, the Partnership recognized lease
revenue of $1,192,858 compared to $2,994,157 and $3,617,207 for the years ended
December 31, 1996 and 1995, 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 1995 to 1997 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 EFG. Proportionate equipment ownership enables the Partnership to
further diversify its equipment

                                       3

<PAGE>

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 1997, the Partnership sold equipment having a net book value of $78,990
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $60,576 compared to a net gain of $710,612 in
1996 on equipment having a net book value of $2,532,852 and a net gain of
$668,121 in 1995 on equipment having a net book value of $204,486. 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 $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.

    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 $524,664, $1,097,986 and
$2,107,857 for the years ended December 31, 1997, 1996 and 1995, 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.

    Interest expense was $4,589 or less than 1% of lease revenue in 1997,
$51,188 or 1.7% of lease revenue in 1996 and 149,961 or 4.2% of lease revenue in
1995. The Partnership's notes payable were fully amortized during the year
ending December 31, 1997.

    Management fees were approximately 4%, 4.8% and 4.2% of lease revenue during
the years ended December 31, 1997, 1996 and 1995, respectively. Management fees
for the year ended December 31, 1996 included $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.
                                       4

<PAGE>

    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. The increase in operating expenses from 1995 to 1997 is due
primarily to heavy maintenance and airframe overhaul costs incurred in
connection with the Partnership's interests in two Boeing 727 aircraft. 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. In April 1997, the Partnership entered into
a new 18-month lease agreement with Transmeridian Airlines to re-lease the
second aircraft at a base rent to the Partnership of $4,800 per month for 8
months and $4,200 per month for 10 months. The amount of future operating
expenses cannot be predicted with certainty; however, such expenses are usually
higher during the acquisition 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 continue to be used to pay management fees and operating
costs. Operating activities generated net cash inflows of $947,760 and
$2,940,262, and $3,631,082 for the years ended December 31, 1997, 1996, and
1995, 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 1997, the Partnership realized
$118,000 in equipment sale proceeds compared to $3,243,464 and $872,607 in 1996
and 1995, 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. 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. There were no
equipment acquisitions during the corresponding periods in 1996 or 1995.

    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. The Partnership's notes payable
were fully amortized during the year ending December 31, 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, 1997, the Partnership
declared total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $413,195. In accordance with
the Amended and Restated Agreement and Certificate of Limited Partnership, the
Recognized Owners were allocated 95% of these distributions, or $392,535, and
the General Partner was allocated 5%, or $20,660. The fourth quarter 1997 cash
distribution was paid on January 13, 1998.

                                       5

<PAGE>

    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,
as well as the outcome of the Class Action Lawsuit described in Note 6 to the
accompanying financial statements. The General Partner anticipates that cash
proceeds resulting from the collection of contractual rents and the outcome of
residual activities 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, 1997 and
1996, 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,
1997. 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, 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 10, 1998

                                       7
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
                        STATEMENT OF FINANCIAL POSITION

                          December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                                            1997          1996
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
ASSETS
Cash and cash equivalents.............................................................  $  1,880,014  $  1,584,360

Rents receivable, net of allowance for doubtful accounts of $15,000 at December 31,
  1996................................................................................        21,479        37,611

Accounts receivable--affiliate........................................................       146,113        76,774

Equipment at cost, net of accumulated depreciation of $7,522,412 and $7,893,295 at
  December 31, 1997 and 1996, respectively............................................       339,677       943,331
                                                                                        ------------  ------------
    Total assets......................................................................  $  2,387,283  $  2,642,076
                                                                                        ------------  ------------
                                                                                        ------------  ------------
LIABILITIES AND PARTNERS' CAPITAL

Notes payable.........................................................................  $    --       $    329,370
Accrued interest......................................................................       --              2,609
Accrued liabilities...................................................................         9,200        26,950
Accrued liabilities--affiliate........................................................        16,056        14,814
Deferred rental income................................................................         5,020        33,634
Cash distributions payable to partners................................................        82,643       110,184
                                                                                        ------------  ------------
    Total liabilities.................................................................       112,919       517,561
                                                                                        ------------  ------------
Partners' capital (deficit):
  General Partner.....................................................................      (917,792)     (925,284)
  Limited Partnership Interests (930,443 Units; initial purchase price of $25 each)...     3,192,156     3,049,799
                                                                                        ------------  ------------
     Total partners' capital..........................................................     2,274,364     2,124,515
                                                                                        ------------  ------------
     Total liabilities and partners' capital..........................................  $  2,387,283  $  2,642,076
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</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, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                              1997          1996          1995
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Income:

  Lease revenue.........................................................  $  1,192,858  $  2,994,157  $  3,617,207

  Interest income.......................................................        81,917       113,568        57,300

  Gain on sale of equipment.............................................        60,576       710,612       668,121
                                                                          ------------  ------------  ------------
    Total income........................................................     1,335,351     3,818,337     4,342,628
                                                                          ------------  ------------  ------------
Expenses:

  Depreciation and amortization.........................................       524,664     1,097,986     2,107,857

  Interest expense......................................................         4,589        51,188       149,961

  Equipment management fees--affiliate..................................        48,207       144,187       153,107

  Operating expenses--affiliate.........................................       194,847       174,966       150,691
                                                                          ------------  ------------  ------------
    Total expenses......................................................       772,307     1,468,327     2,561,616
                                                                          ------------  ------------  ------------
Net income..............................................................  $    563,044  $  2,350,010  $  1,781,012
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
Net income per limited partnership unit.................................  $       0.57  $       2.40  $       1.82
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
Cash distributions declared per limited partnership unit................  $       0.42  $       4.97  $       2.00
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
</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, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                  GENERAL       RECOGNIZED OWNERS
                                                                  PARTNER    -----------------------
                                                                  AMOUNT       UNITS       AMOUNT        TOTAL
                                                                -----------  ---------  ------------  ------------
<S>                                                             <C>          <C>        <C>           <C>
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

Net income--1997..............................................       28,152     --           534,892       563,044

Cash distributions declared...................................      (20,660)    --          (392,535)     (413,195)
                                                                -----------  ---------  ------------  ------------
Balance at December 31, 1997..................................  $  (917,792)   930,443  $  3,192,156  $  2,274,364
                                                                -----------  ---------  ------------  ------------
                                                                -----------  ---------  ------------  ------------
</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, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                                                  1997       1996       1995
                                                                                ---------  ---------  ---------
<S>                                                                             <C>        <C>        <C>
Cash flows from (used in) operating activities:
Net income....................................................................  $ 563,044  $2,350,010 $1,781,012
Adjustments to reconcile net income to net cash from operating activities:
  Depreciation and amortization...............................................    524,664  1,097,986  2,107,857
  Gain on sale of equipment...................................................    (60,576)  (710,612)  (668,121)
  Decrease in allowance for doubtful accounts.................................    (15,000)    --         --
Changes in assets and liabilities:
  Decrease (increase) in:
    Rents receivable..........................................................     31,132    141,020     25,988
    Accounts receivable--affiliate............................................    (69,339)    41,557    483,744
  Increase (decrease) in:
    Accrued interest..........................................................     (2,609)    (3,335)   (27,280)
    Accrued liabilities.......................................................    (17,750)     6,950      4,500
    Accrued liabilities--affiliate............................................      1,242      8,049    (55,739)
    Deferred rental income....................................................     (7,048)     8,637    (20,879)
                                                                                ---------  ---------  ---------
      Net cash from operating activities......................................    947,760  2,940,262  3,631,082
                                                                                ---------  ---------  ---------
Cash flows from (used in) investing activities:
  Purchase of equipment.......................................................     --        (65,700)    --
  Proceeds from equipment sales...............................................    118,000  3,243,464    872,607
                                                                                ---------  ---------  ---------
      Net cash from investing activities......................................    118,000  3,177,764    872,607
                                                                                ---------  ---------  ---------
Cash flows used in financing activities:
  Principal payments--notes payable...........................................   (329,370)  (457,385) (1,897,804)
  Distributions paid..........................................................   (440,736) (5,249,657) (2,081,253)
                                                                                ---------  ---------  ---------
      Net cash used in financing activities...................................   (770,106) (5,707,042) (3,979,057)
                                                                                ---------  ---------  ---------
Net increase in cash and cash equivalents.....................................    295,654    410,984    524,632
Cash and cash equivalents at beginning of year................................  1,584,360  1,173,376    648,744
                                                                                ---------  ---------  ---------
Cash and cash equivalents at end of year......................................  $1,880,014 $1,584,360 $1,173,376
                                                                                ---------  ---------  ---------
                                                                                ---------  ---------  ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest........................................  $   7,198  $  54,523  $ 177,241
                                                                                ---------  ---------  ---------
                                                                                ---------  ---------  ---------
Supplemental schedule of non-cash activity:
</TABLE>

    The Partnership received $21,566 from a lessee prior to 1997, representing
an equipment purchase option. These funds were classified as deferred rental
income on the Statement of Financial Position at December 31, 1996. During the
year ended December 31, 1997, the Partnership sold the equipment and such funds
were recognized as sales proceeds.

   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, 1997

NOTE 1--ORGANIZATION AND PARTNERSHIP MATTERS

    American Income Partners V-C Limited Partnership (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.

    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 (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 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. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved 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
assets owned by the Partnership and the Other Investment Programs.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                                       12
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                        NOTES TO THE FINANCIAL STATEMENTS

                                   (CONTINUED)


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 federal agency
discount notes and 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, 1997, the Partnership had $1,775,929 invested in
federal agency discount notes and 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 or quarterly 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 $809,408 are due as
follows:

<TABLE>
<S>                                                                                 <C>
For the year ending December 31, 1998.............................................  $ 510,045
                                 1999.............................................    259,803
                                 2000............................................     31,648
                                 2001............................................      7,912
                                 Total............................................  $ 809,408
</TABLE>

    The Partnership entered into a new 18-month lease agreement with
Transmeridian Airlines for its proportionate interest in a Boeing 727 Aircraft
at a base rent to the Partnership of $4,800 per month for 8 months and $4,200
per month for 10 months, effective April 30, 1997.

    Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1997, 1996, and 1995 are as
follows:

<TABLE>
<CAPTION>
                                                                               1997         1996          1995
                                                                            ----------  ------------  ------------
<S>                                                                         <C>         <C>           <C>
Shell Oil Company.........................................................  $  346,564  $    346,564  $    --
Westinghouse Electric Company.............................................  $  194,081  $    --       $    --
Ford Motor Company........................................................  $  146,643  $    --       $    --
Transnet Limited..........................................................  $  120,836  $    --       $    --
Northwest Airlines, Inc...................................................  $   --      $  1,581,666  $  1,298,262
Gearbulk Shipowning Ltd...................................................  $   --      $    336,440  $    498,438
</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.

EQUIPMENT ON LEASE

                                       13
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                         NOTES TO THE FINANCIAL STATEMENTS

                                    (CONTINUED)



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.

    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 and management fees 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 5 concerning
allocation of income or loss for income tax purposes.

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, 1997, 1996 and 1995 and computed
after allocation of the General Partner's 5% share of net income and cash
distributions.

                                       14
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                         NOTES TO THE FINANCIAL STATEMENTS

                                    (CONTINUED)



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.

NOTE 3--EQUIPMENT

    The following is a summary of equipment owned by the Partnership at December
31, 1997. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1997 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.

<TABLE>
<CAPTION>
                                        REMAINING
                                       LEASE TERM      EQUIPMENT
EQUIPMENT TYPE                          (MONTHS)        AT COST                         LOCATION
------------------------------------  -------------  -------------  ------------------------------------------------
<S>                                   <C>            <C>            <C>
Construction and mining.............         0-36    $   2,399,164  DE/GA/IN/WY
Aircraft............................         0-13        2,132,292  FL/KY/MN
Communications......................            5        1,278,350  FL
Retail store fixtures...............         0-12        1,144,958  AL/DE/GA/KY/MD/MS/NC/SC/TNVA/WV
Materials handling..................         0-15          689,753  GA/MI/NC/NY/SC
Motor vehicles......................           14          212,027  NJ
Computers and peripherals...........            0            5,545  LA
                                                     -------------
Total equipment cost...............................      7,862,089
Accumulated depreciation...........................     (7,522,412)
                                                     -------------
Equipment, net of accumulated depreciation.........
                                                     $     339,677
                                                     -------------
                                                     -------------
</TABLE>

    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 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, 1997, the Partnership's equipment
portfolio

                                       15
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                       NOTES TO THE FINANCIAL STATEMENTS

                                   (CONTINUED)



included equipment having a proportionate original cost of $2,132,292,
representing approximately 27% of total equipment cost.

    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
$902,000 and $220,000, respectively, at December 31, 1997. This equipment
consists of the Partnership's proportionate interest in a Pratt & Whitney
JT9D-7J jet engine, formerly leased to Southern Air Transport, Inc. The General
Partner is actively seeking the sale or re-lease of all equipment not on lease.
In addition, the summary above also includes equipment being leased on a
month-to-month basis.

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,
1997, 1996 and 1995 which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:

<TABLE>
<CAPTION>
                                                                                  1997        1996        1995
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
Equipment management fees....................................................  $   48,207  $  144,187  $  153,107
Administrative charges.......................................................      52,926      32,746      21,000
Reimbursable operating expenses due to third parties.........................     141,921     142,220     129,691
                                                                               ----------  ----------  ----------
    Total....................................................................  $  243,054  $  319,153  $  303,798
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</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.

                                       16
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                        NOTES TO THE FINANCIAL STATEMENTS

                                     (CONTINUED)



    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, 1997, the Partnership was owed $146,113 by EFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
January 1998.

    Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC"), both Massachusetts limited partnerships formed in
1995 owned and controlled by certain principals of EFG, own 59,877 Units or
6.44% and 7,850 Units or 0.84% of the total outstanding units of the
Partnership, respectively. EFG owns a Class D interest in AALP and a 49% limited
partnership interest in ONC, both of which it acquired in December 1996.

NOTE 5--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, 1997, 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, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                              1997         1996           1995
                                                                           ----------  -------------  ------------
<S>                                                                        <C>         <C>            <C>
Net income...............................................................  $  563,044  $   2,350,010  $  1,781,012
  Financial statement depreciation in excess of (less than) tax
    depreciation.........................................................     309,119        365,958        (3,406)
  Deferred rental income.................................................     (28,614)         8,637       (20,879)
  Other..................................................................      48,044     (1,791,731)      176,404
                                                                           ----------  -------------  ------------
Net income for federal income tax reporting purposes.....................  $  891,593  $     932,874  $  1,933,131
                                                                           ----------  -------------  ------------
                                                                           ----------  -------------  ------------
</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.

    The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                                            1997          1996
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
Partners' capital.....................................................................  $  2,274,364  $  2,124,515

  Add back selling commissions and organization and offering costs....................     2,611,871     2,611,871

  Financial statement distributions in excess of
</TABLE>

                                       17
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                       NOTES TO THE FINANCIAL STATEMENTS

                                    (CONTINUED)

<TABLE>
<S>                                                                                     <C>           <C>
  tax distributions...................................................................         4,132         5,509

  Cumulative difference between federal income tax and financial statement income
    (loss)............................................................................        34,469      (294,080)
                                                                                        ------------  ------------
Partners' capital for federal income tax reporting purposes...........................  $  4,924,836  $  4,447,815
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</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 6--LEGAL PROCEEDINGS

        On or about January 15, 1998, certain plaintiffs (the
"Plaintiffs") filed a class and derivative action, captioned
Leonard Rosenblum, et al. v. Equis Financial Group Limited
Partnership, et al., in the United States District Court for the
Southern District of Florida (the "Court") on behalf of a
proposed class of investors in 28 equipment leasing programs
sponsored by EFG, including the Partnership (collectively, the
"Nominal Defendants"), against EFG and a number of its
affiliates, including the General Partner, as defendants
(collectively, the "Defendants").  Certain of the Plaintiffs, on
or about June 24, 1997, had filed an earlier derivative action,
captioned Leonard Rosenblum, et al. v. Equis Financial Group
Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal
Defendants against the Defendants.  Both actions are referred to
herein collectively as the "Class Action Lawsuit."

        The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the
Securities Exchange Act of 1934, common law fraud, breach of contract, breach
of fiduciary duty, and violations of the partnership or trust agreements that
govern each of the Nominal Defendants.  The Defendants have denied, and
continue to deny, that any of them have committed or threatened to commit any
violations of law or breached any fiduciary duties to the Plaintiffs or the
Nominal Defendants.

        On March 9, 1998, counsel for the Defendants and the Plaintiffs
entered into a Memorandum of Understanding setting forth the terms pursuant
to which a settlement of the Class Action Lawsuit is intended to be achieved
and which, among other things, is expected to reduce the burdens and expenses
attendant to continuing litigation.  The Memorandum of Understanding
represents a preliminary step towards a comprehensive Stipulation of
Settlement between the parties that must be presented to and approved by the
Court as a condition precedent to effecting a settlement.  The Memorandum of
Understanding (i) prescribes a number of conditions necessary to achieving a
settlement, including providing the partners (or beneficiaries, as
applicable) of the Nominal Defendants with the opportunity to vote on any
settlement and (ii) contemplates various changes that, if effected, would
alter the future operations of the Nominal Defendants.  With respect to the
Partnership and 10 affiliated partnerships (hereafter referred to as the
"Exchange Partnerships"), the Memorandum of Understanding provides for the
restructuring of their respective business operations into a single successor
company whose securities would be listed and traded on a national stock
exchange.  The partners of the Exchange Partnerships would receive both
common stock in the new company and a cash distribution in exchange for their
existing partnership interests.  Such a transaction would, among other
things, allow for the consolidation of the Partnership's operating expenses
with other similarly-organized equipment leasing programs.  To the extent
that the parties agree upon a Stipulation of Settlement that is approved by
the Court, the complete terms thereof will be communicated to all of the
partners (or beneficiaries) of the Nominal Defendants to enable them to vote
thereon.

        There can be no assurance that the parties will agree upon a
Stipulation of Settlement,  or that it will be approved by the Court, or that
the outcome of the voting by the partners (or beneficiaries) of the Nominal
Defendants, including the Partnership, will result in a settlement finally
being effected or in the Partnership being included in any such settlement.
The General Partner and its affiliates, in consultation with counsel, concur
that there is a reasonable basis to believe that a Stipulation of Settlement
will be agreed upon by the parties and approved by the Court.  In the absence
of a Stipulation of Settlement approved by the Court, the Defendants intend
to defend vigorously against the claims asserted in the Class Action Lawsuit.
 The General Partner and its affiliates cannot predict with any degree of
certainty the ultimate outcome of such litigation.

                                       18
<PAGE>
                AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

                        NOTES TO THE FINANCIAL STATEMENTS

                                   (CONTINUED)



    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 Airlines, Inc. ("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 pending. 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, 1997, 1996 AND 1995

    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, 1997, 1996 and 1995.

<TABLE>
<CAPTION>
                                                                            1997          1996           1995
                                                                        ------------  -------------  ------------
<S>                                                                     <C>           <C>            <C>
Rents earned prior to disposal of equipment, net of interest
  charges.............................................................  $  1,191,798  $  12,065,562  $  3,044,646

Sale proceeds realized upon disposition of equipment..................       139,566      3,243,464       872,607
                                                                        ------------  -------------  ------------
Total cash generated from rents and equipment sale proceeds...........     1,331,364     15,309,026     3,917,253

Original acquisition cost of equipment disposed.......................       974,537     13,446,782     3,131,695
                                                                        ------------  -------------  ------------
Excess of total cash generated to cost of equipment disposed..........  $    356,827  $   1,862,244  $    785,558
                                                                        ------------  -------------  ------------
                                                                        ------------  -------------  ------------
</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, 1997

<TABLE>
<CAPTION>
                                                                                         SALES AND
                                                                           OPERATIONS   REFINANCINGS     TOTAL
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Net income..............................................................  $    502,468   $   60,576   $    563,044
Add:
  Depreciation..........................................................       524,664       --            524,664
  Management fees.......................................................        48,207       --             48,207
  Book value of disposed equipment......................................       --            78,990         78,990
  Decrease in allowance for doubtful accounts...........................       (15,000)      --            (15,000)
Less:
  Principal reduction of notes payable..................................      (329,370)      --           (329,370)
                                                                          ------------  ------------  ------------
  Cash from operations, sales and refinancings..........................       730,969      139,566        870,535
Less:
  Management fees.......................................................       (48,207)      --            (48,207)
                                                                          ------------  ------------  ------------
  Distributable cash from operations, sales and refinancings............       682,762      139,566        822,328
Other sources and uses of cash:
  Cash at beginning of year.............................................     1,584,360       --          1,584,360
  Net change in receivables and accruals................................       (64,372)     (21,566)       (85,938)
Less:
  Cash distributions paid...............................................      (322,736)    (118,000)      (440,736)
                                                                          ------------  ------------  ------------
Cash at end of year.....................................................  $  1,880,014       --       $  1,880,014
                                                                          ------------  ------------  ------------
                                                                          ------------  ------------  ------------
</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, 1997

    For the year ended December 31, 1997, the Partnership reimbursed the General
Partner and its Affiliates for the following costs:

<TABLE>
<S>                                                                                 <C>
    Operating expenses..........................................................    $ 209,695
</TABLE>

                                       22