<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

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

                        Commission File Number: 33-62526

                   COMMONWEALTH INCOME & GROWTH FUND IV, L.P.
             (Exact name of registrant as specified in its charter)

        Pennsylvania                                23- 3080409
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
incorporation or organization)

                          470 John Young Way Suite 300
                                 Exton, PA 19341
          (Address, including zip code, of principal executive offices)

                                 (610) 594-9600
               (Registrant's telephone number including area code)

         Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (ii) has been subject to such filing
requirements for the past 90 days: YES [X] NO [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12c-2 of the Act): YES [ ] NO [X]


<PAGE>


                   COMMONWEALTH INCOME & GROWTH FUND IV, L.P.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                         SEPTEMBER 30,        DECEMBER 31,
                                                                             2004                 2003
                                                                        ---------------------------------
                                                                          (UNAUDITED)

<S>                                                                     <C>                   <C>
ASSETS

Cash and cash equivalents                                               $  1,429,271          $ 4,644,293
Lease income receivable                                                       68,776               88,996
Other receivables - General Partner                                            9,332                    -
Other receivables - Affiliated limited partnerships                                -               56,639
Deferred revenue                                                               1,294                2,438
Refundable deposits                                                            1,130                1,130
Prepaid expenses                                                               8,587                    -
                                                                        ---------------------------------
                                                                           1,518,390            4,793,496
                                                                        ---------------------------------

Computer equipment, at cost                                               13,001,306           10,738,728
Accumulated depreciation                                                  (3,509,061)          (1,285,576)
                                                                        ---------------------------------
                                                                           9,492,245            9,453,152
                                                                        ---------------------------------

Equipment acquisition costs and deferred expenses, net                       351,472              378,428
Other receivables - Commonwealth Capital Corp                                263,242              229,801
Prepaid acquisition fees                                                     123,366              177,841
                                                                        ---------------------------------
                                                                             738,080              786,070
                                                                        ---------------------------------

TOTAL ASSETS                                                            $ 11,748,715         $ 15,032,718
                                                                        =================================


LIABILITIES AND PARTNERS' CAPITAL


LIABILITIES
Accounts payable, primarily for equipment purchases                     $     64,730          $ 2,325,446
Accounts payable - General Partner                                                 -               71,024
Accounts payable - Affiliated limited partnerships                           361,449                    -
Other accrued expenses                                                         1,000               17,000
Unearned lease income                                                        121,172              102,485
Notes payable                                                              1,900,481            1,816,668
                                                                        ---------------------------------
TOTAL LIABILITIES                                                          2,448,832            4,332,623
                                                                        ---------------------------------

PARTNERS' CAPITAL
General partner                                                                1,000                1,000
Limited partners                                                           9,298,883           10,699,095
                                                                        ---------------------------------
TOTAL PARTNERS' CAPITAL                                                    9,299,883           10,700,095
                                                                        ---------------------------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                 $ 11,748,715         $ 15,032,718
                                                                        =================================
</TABLE>


                 see accompanying notes to financial statements

<PAGE>

                   COMMONWEALTH INCOME & GROWTH FUND IV, L.P.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                            THREE MONTHS     THREE MONTHS        NINE MONTHS         NINE MONTHS
                                                               ENDED             ENDED              ENDED                ENDED
                                                            SEPTEMBER 30,     SEPTEMBER 30,      SEPTEMBER 30,       SEPTEMBER 30,
                                                               2004               2003               2004                 2003
                                                            ---------------------------------------------------------------------
                                                                      (UNAUDITED)                           (UNAUDITED)
                                                            ---------------------------------------------------------------------
<S>                                                         <C>                 <C>               <C>                   <C>
INCOME
Lease                                                       $ 1,104,082         $  387,503        $ 3,139,172           $ 970,995
Interest and other                                                1,620              8,940              9,343              15,469
                                                            -----------         ----------        -----------          ----------

TOTAL INCOME                                                  1,105,702            396,443          3,148,515             986,464
                                                            -----------         ----------        -----------          ----------

EXPENSES
Operating                                                       160,238            380,198            767,636           1,045,210
Organizational costs                                                  -             33,893                  -              99,735
Equipment management fee - General Partner                       55,205             19,378            156,959              48,553
Interest                                                         27,059              9,877             82,771              31,526
Depreciation                                                    810,375            307,279          2,266,932             694,968
Amortization of equipment
  acquisition costs and deferred expenses                        46,970             16,919            131,420              40,579
Loss on sale of computer equipment                               14,646                  -             17,565                   -
                                                            -----------         ----------        -----------          ----------
TOTAL EXPENSES                                                1,114,493            767,544          3,423,282           1,960,571
                                                            -----------         ----------        -----------          ----------

NET (LOSS)                                                  $    (8,791)        $ (371,101)       $  (274,768)         $ (974,107)
                                                            ===========         ==========        ===========          ==========
NET (LOSS) PER EQUIVALENT LIMITED
  PARTNERSHIP UNIT                                          $     (0.01)        $    (0.55)       $     (0.37)         $    (2.25)
                                                            ===========         ==========        ===========          ==========

WEIGHTED AVERAGE NUMBER OF EQUIVALENT LIMITED
  PARTNERSHIP UNITS OUTSTANDING DURING THE PERIOD               749,950            669,054            749,950             433,440
                                                            ===========         ==========        ===========          ==========
</TABLE>

                 see accompanying notes to financial statements
<PAGE>

                   COMMONWEALTH INCOME & GROWTH FUND IV, L.P.
                        STATEMENTS OF PARTNERS' CAPITAL


                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 GENERAL       LIMITED
                                                 PARTNER       PARTNER            GENERAL           LIMITED
                                                  UNITS         UNITS             PARTNER           PARTNER            TOTAL
                                                 ------------------------------------------------------------------------------
<S>                                               <C>         <C>               <C>            <C>               <C>
PARTNERS' CAPITAL - DECEMBER 31, 2003               50          749,950           $ 1,000        $ 10,699,095      $ 10,700,095
  Net income (loss)                                  -                -            11,255            (286,023)         (274,768)
  Distributions                                      -                -           (11,255)         (1,114,189)       (1,125,444)
                                                 ------------------------------------------------------------------------------
PARTNERS' CAPITAL - SEPTEMBER 30, 2004              50          749,950           $ 1,000         $ 9,298,883       $ 9,299,883
                                                 ==============================================================================
</TABLE>


                 see accompanying notes to financial statements

<PAGE>


                   COMMONWEALTH INCOME & GROWTH FUND IV, L.P.
                             STATEMENTS OF CASH FLOW
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
<TABLE>
<CAPTION>
                                                                        2004                  2003
                                                                   ---------------------------------
OPERATING ACTIVITIES                                                (UNAUDITED)           (UNAUDITED)
<S>                                                                <C>                  <C>
Net (loss)                                                         $   (274,768)        $   (974,107)
Adjustments to reconcile net (loss) to net cash
 (used in) provided by operating activities
   Depreciation and amortization                                      2,398,352              735,547
   Loss on sale of computer equipment                                    17,565                 --
   Other noncash activities included in
     determination of net (loss)                                       (807,179)            (241,928)
   Changes in assets and liabilities
     (Increase) decrease in assets
        Lease income receivable                                          20,220               (9,006)
        Deferred revenue                                                  1,144               (2,819)
        Other receivable, General Partner                                (9,332)              (1,015)
        Other receivables - Affiliated limited partnerships             414,351              (39,755)
        Other receivables                                                 3,737              103,610
        Refundable deposits                                                  --               (1,130)
        Prepaid expenses                                                 (8,587)             (24,370)
     Increase (decrease) in liabilities
        Accounts payable                                             (2,260,716)              43,867
        Accounts payable, Common Capital Corp.                               --              (61,807)
        Accounts payable, General Partner                               (71,024)                (806)
        Other accrued expenses                                          (16,000)              13,150
        Unearned lease income                                            18,687               30,492
                                                                   ---------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES                                (573,550)            (430,077)
                                                                   ---------------------------------
INVESTING ACTIVITIES:

Capital expenditures                                                 (1,497,860)          (2,860,683)
Prepaid acquisition fees                                                 54,475             (275,150)
Net proceeds from the sale of computer equipment                         65,262                   --
Equipment acquisition fees paid to General Partner                      (95,554)            (147,068)
                                                                   ---------------------------------
NET CASH (USED IN) INVESTING ACTIVITIES                              (1,473,677)          (3,282,901)
                                                                   ---------------------------------

FINANCING ACTIVITIES:
Contributions                                                                --           11,340,160
Offering Costs                                                               --           (1,219,286)
Distributions to partners                                            (1,125,444)            (577,771)
Accounts receivable, CCC                                                (33,441)            (120,513)
Debt Placement fee paid to the General Partner                           (8,910)              (8,160)
                                                                   ---------------------------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  (1,167,795)           9,414,430
                                                                   ---------------------------------

Net (decrease) increase in cash and cash equivalents                 (3,215,022)           5,701,452
Cash and cash equivalents, beginning of period                        4,644,293              510,780
                                                                   ---------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                           $  1,429,271         $  6,212,232
                                                                   =================================
</TABLE>


                 see accompanying notes to financial statements
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

1.  BUSINESS      Commonwealth Income & Growth Fund IV (the "Partnership") is a
                  limited partnership organized in the Commonwealth of
                  Pennsylvania on May 15, 2001. The Partnership was offering for
                  sale up to 750,000 units of the limited partnership at the
                  purchase price of $20 per unit (the "Offering"). The
                  Partnership reached the minimum amount in escrow and commenced
                  operations on July 8, 2002 and was fully subscribed on
                  September 15, 2003.

                  The Partnership uses the proceeds of the Offering to acquire,
                  own and lease various types of computer peripheral equipment
                  and other similar capital equipment, which will be leased
                  primarily to U.S. corporations and institutions. Commonwealth
                  Capital Corp ("CCC"), on behalf of the Partnership and other
                  affiliated partnerships, will acquire computer equipment
                  subject to associated debt obligations and lease agreements
                  and allocate a participation in the cost, debt and lease
                  revenue to the various partnerships based on certain risk
                  factors.

                  The Partnership's General Partner is Commonwealth Income &
                  Growth Fund, Inc. (the "General Partner"), a Pennsylvania
                  corporation which is an indirect wholly owned subsidiary of
                  CCC. CCC is a member of the Investment Program Association
                  (IPA), Financial Planning Association (FPA), and the Equipment
                  Leasing Association (ELA). Approximately ten years after the
                  commencement of operations, the Partnership intends to sell or
                  otherwise dispose of all of its computer equipment, make final
                  distributions to partners, and to dissolve. Unless sooner
                  terminated, the Partnership will continue until December 31,
                  2012.

2.  SUMMARY OF    BASIS OF PRESENTATION
    SIGNIFICANT
    ACCOUNTING    The financial information presented as of any date other than
    POLICIES      December 31 has been prepared from the books and records
                  without audit. Financial information as of December 31 has
                  been derived from the audited financial statements of the
                  Partnership, but does not include all disclosures required by
                  accounting principles generally accepted in the United States.
                  In the opinion of management, all adjustments, consisting only
                  of normal recurring adjustments, necessary for a fair
                  presentation of the financial information for the periods
                  indicated have been included. For further information
                  regarding the Partnership's accounting policies, refer to the
                  financial statements and related notes included in the
                  Partnership's annual report on Form 10-K for the year ended
                  December 31, 2003. Operating results for the nine-month period
                  ended September 30, 2004 are not necessarily indicative of
                  financial results that may be expected for the full year ended
                  December 31, 2004.
<PAGE>


                  REVENUE RECOGNITION

                  Through September 30, 2004, the Partnership has Only Entered
                  Into Operating Leases. Lease Revenue is Recognized On a
                  Monthly Basis in Accordance With the Terms of the Operating
                  Lease Agreements.

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

                  USE OF ESTIMATES

                  The preparation of financial statements in conformity with
                  accounting principles generally accepted in the United States
                  requires management to make estimates and assumptions that
                  affect the reported amounts of assets and liabilities and
                  disclosure of contingent assets and liabilities at the date of
                  the financial statements and the reported amounts of revenues
                  and expenses during the reporting period. Actual results could
                  differ from those estimates.

                  LONG-LIVED ASSETS

                  The Partnership evaluates its long-lived assets when events or
                  circumstances indicate that the value of the asset may not be
                  recoverable. The Partnership determines whether an impairment
                  exists by estimating the undiscounted cash flows to be
                  generated by each asset. If the estimated undiscounted cash
                  flows are less than the carrying value of the asset then an
                  impairment exists. The amount of the impairment is determined
                  based on the difference between the carrying value and the
                  fair value. The fair value is determined based on estimated
                  discounted cash flows to be generated by the asset. As of
                  September 30, 2004, there is no impairment.

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

                  INTANGIBLE ASSETS

                  Equipment acquisition costs and deferred expenses are
                  amortized on a straight-line basis over two- to-four year
                  lives. Unamortized acquisition fees and deferred expenses are
                  charged to amortization expense when the associated leased
                  equipment is sold.

                  CASH AND CASH EQUIVALENTS

                  The Partnership considers all highly liquid investments with a
                  maturity of three months or less to be cash equivalents. Cash
                  equivalents have been invested in a money market fund
                  investing directly in Treasury obligations. The Partnership
                  maintains its cash balances in a financial institution. At
                  times, the balances may exceed federally insured limits. The
                  Partnership has not experienced any losses in such accounts,
                  and believes it is not exposed to any significant credit risk.


<PAGE>

                  INCOME TAXES

                  The Partnership is not subject to federal income taxes;
                  instead, any taxable income (loss) is passed through to the
                  partners and included on their respective income tax returns.

                  Taxable income differs from financial statement net income as
                  a result of reporting certain income and expense items for tax
                  purposes in periods other than those used for financial
                  statement purposes, principally relating to depreciation,
                  amortization, and lease income.

                  OFFERING COSTS

                  Offering costs are payments for selling commissions, dealer
                  manager fees, professional fees and other offering expenses
                  relating to the syndication. Selling commissions were 8% of
                  the partners' contributed capital and dealer manager fees were
                  1% of the partners' contributed capital. These costs have been
                  deducted from partnership capital in the accompanying
                  financial statements.

                  NET INCOME (LOSS) PER EQUIVALENT LIMITED PARTNERSHIP UNIT

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

                  REIMBURSABLE EXPENSES

                  Reimbursable expenses, which are charged to the Partnership by
                  CCC in connection with the administration and operation of the
                  Partnership, are allocated to the Partnership based upon
                  several factors including, but not limited to, the number of
                  investors, compliance issues, and the number of existing
                  leases.

3.  COMPUTER      The Partnership is the lessor of equipment under operating
    EQUIPMENT     leases with periods ranging from 16 to 42 months. In general,
                  the lessee pays associated costs such as repairs and
                  maintenance, insurance and property taxes.

                  The Partnership's share of the computer equipment in which it
                  participates with other partnerships at September 30, 2004 and
                  December 31, 2003 was approximately $631,000 and $8,000,
                  respectively, which is included in the Partnership's fixed
                  assets on its balance sheet, and the total cost of the
                  equipment shared by the Partnership with other partnerships at
                  September 30, 2004 and December 31, 2003 was approximately
                  $1,272,000 and $48,000, respectively. The Partnership's share
                  of the outstanding debt associated with this equipment at
                  September 30, 2004 was approximately $287,000, which is
                  included in the Partnership's notes payables on the balance
                  sheet, and the total outstanding debt at September 30, 2004
                  related to the equipment shared by the Partnership was
                  approximately $557,000. The Partnership did not share in any
                  outstanding debt associated with this equipment as of December
                  31, 2003.

<PAGE>

                  The following is a schedule of future minimum rentals on
                  noncancellable operating leases at September 30, 2004:

                                                               AMOUNT
                  ------------------------------------------------------
                  Three Months ending December 31, 2004      $1,104,000
                  Year Ended December 31, 2005                4,202,000
                  Year Ended December 31, 2006                2,625,000
                  Year Ended December 31, 2007                  234,000
                                                             -----------
                                                             $8,165,000
                  ------------------------------------------------------


4.  RELATED PARTY
    TRANSACTIONS

                  OTHER RECEIVABLES

                  As of September 30, 2004, the Partnership has an unsecured,
                  non-interest bearing receivable from CCC, a related party to
                  the Partnership, in the amount of approximately $263,000,
                  which primarily originated in 2003. CCC, through its indirect
                  subsidiaries, including the General Partner of the
                  Partnership, earns fees based on revenues and new lease
                  purchases from this fund. CCC intends to repay these
                  receivables, through acquisition fees, debt placement fees and
                  reimbursement of expenses, with a minimum amount of $12,500
                  per quarter, commencing in the quarter ending March, 2004.
                  During the quarter ended September 30, 2004, CCC has reduced
                  the receivable to the Partnership by approximately $22,000.

                  REIMBURSABLE EXPENSES

                  The General Partner and its affiliates are entitled to
                  reimbursement by the Partnership for the cost of supplies and
                  services obtained and used by the General Partner in
                  connection with the administration and operation of the
                  Partnership from third parties unaffiliated with the General
                  Partner. In addition, the General Partner and its affiliates
                  are entitled to reimbursement for certain expenses incurred by
                  the General Partner and its affiliates in connection with the
                  administration and operation of the Partnership. During the
                  nine months ended September 30, 2004 and 2003, the Partnership
                  recorded $668,000 and $745,000, respectively, for
                  reimbursement of expenses to the General Partner, which are
                  included in operating expenses.

<PAGE>


                  EQUIPMENT ACQUISITION FEE

                  The General Partner is entitled to be paid an equipment
                  acquisition fee of 4% of the purchase price of each item of
                  equipment purchased as compensation for the negotiation of the
                  acquisition of the equipment and lease thereof or sale under a
                  conditional sales contract. During the nine months ended
                  September 30, 2004 and 2003, equipment acquisition fees of
                  approximately $96,000 and $147,000, respectively, were earned
                  by the General Partner. As of September 30, 2004, the General
                  Partner owed the Partnership approximately $13,000. As of
                  December 31, 2003, the unpaid balance was approximately
                  $50,000.

                  DEBT PLACEMENT FEE

                  As compensation for arranging term debt to finance the
                  acquisition of equipment by the Partnership, the General
                  Partner is paid a fee equal to 1% of such indebtedness;
                  provided, however, that such fee shall be reduced to the
                  extent the Partnership incurs such fees to third parties,
                  unaffiliated with the General Partner or the lender, with
                  respect to such indebtedness and no such fee will be paid with
                  respect to borrowings from the General Partner or its
                  affiliates. During the nine months ended September 30, 2004
                  and 2003, debt placement fees of approximately $9,000 and
                  $8,000, respectively, were earned by the General Partner. As
                  of September 30, 2004, the General Partner owed the
                  Partnership approximately $3,000. As of December 31, 2003, the
                  unpaid balance was approximately $10,000.

                  EQUIPMENT MANAGEMENT FEE

                  The General Partner is entitled to be paid a monthly fee equal
                  to the lesser of (i) the fees which would be charged by an
                  independent third party for similar services for similar
                  equipment or (ii) the sum of (a) two percent of (1) the gross
                  lease revenues attributable to equipment which is subject to
                  full payout net leases which contain net lease provisions plus
                  (2) the purchase price paid on conditional sales contracts as
                  received by the Partnership and (b) 5% of the gross lease
                  revenues attributable to equipment which is subject to
                  operating and capital leases. During the nine months ended
                  September 30, 2004 and 2003, equipment management fees of
                  approximately $157,000 and $49,000, respectively, were earned
                  by the General Partner. As of September 30, 2004 and December
                  31, 2003, the unpaid balance was approximately $1,000 and
                  $9,000, respectively.

<PAGE>

                  EQUIPMENT LIQUIDATION FEE

                  With respect to each item of equipment sold by the General
                  Partner (other than in connection with a conditional sales
                  contract), a fee equal to the lesser of (i) 50% of the
                  competitive equipment sale commission or (ii) three percent of
                  the sales price for such equipment is payable to the General
                  Partner. The payment of such fee is subordinated to the
                  receipt by the limited partners of the net disposition
                  proceeds from such sale in accordance with the Partnership
                  Agreement. Such fee will be reduced to the extent any
                  liquidation or resale fees are paid to unaffiliated parties.
                  During the nine months ended September 30, 2004, equipment
                  liquidation fees of approximately $2,000 were earned by the
                  General Partner. There were no equipment liquidation fees
                  earned by the General Partner during the nine months ended
                  September 30, 2003.

5.  NOTES PAYABLE Notes payable consisted of the following:
<TABLE>
<CAPTION>
                                                                      SEPTEMBER 30,     DECEMBER 31,
                                                                          2004              2003
                      ------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
                      Installment notes payable to banks; interest
                      ranging from 5.75% to 7.75%, due in monthly
                      installments ranging from $60 to $1,980,
                      including interest, with final payments due
                      from June through December 2004.                $     5,354      $    56,857

                      Installment notes payable to banks; interest
                      ranging from 5.00% to 6.75%, due in monthly
                      installments ranging from $151 to $4,212,
                      including interest, with final payments due
                      from January through December 2005.                 206,892          396,330

                      Installment notes payable to banks; interest
                      ranging from 4.85% to 6.00%, due in monthly
                      installments ranging from $155 to $22,902,
                      including interest, with final payments due
                      in January through December 2006.                 1,016,781        1,363,481

                      Installment note payable to a bank; interest
                      at 4.78%, due in a monthly installment of
                      $9,868, including interest, with final
                      payment due in January 2007.                        671,454                -
                                                                      ----------------------------
                                                                      $ 1,900,481      $ 1,816,668
                      ============================================================================
</TABLE>
<PAGE>

                  These notes are secured by specific computer equipment and are
                  nonrecourse liabilities of the Partnership. Aggregate
                  maturities of notes payable for each of the periods subsequent
                  to September 30, 2004 are as follows:

                                                                       Amount
                                                                    ----------
                  Three months ending December 31, 2004             $  284,445
                  Year ended December 31, 2005                       1,006,962
                  Year ended December 31, 2006                         502,496
                  Year ended December 31, 2007                         106,578
                                                                    ----------
                                                                    $1,900,481
                                                                    ----------

6.  SUPPLEMENTAL  Other Noncash Activities Included in the Determination of
    CASH FLOW     Net Loss are As Follows:
    INFORMATION

Nine Months Ended September 30,                        2004           2003
--------------------------------------------------------------   -------------
Lease income, net of interest expense on
    notes payable realized as a result of
    direct payment of principal by lessee to
    bank                                           $   807,179   $     241,928

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

              Noncash investing and financing activities include the following:

Nine Months Ended September 30,                        2004           2003
--------------------------------------------------------------   -------------
Debt assumed in connection with
  purchase of computer equipment                    $ 890,992      $ 816,004
------------------------------------------------------------------------------
Equipment acquisition fees earned by
  General Partner upon purchase of
  equipment from prepaid acquisition
  fees                                              $  54,475      $ 111,110
------------------------------------------------------------------------------

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Financial Reporting Release No. 60, Which was Released by the Securities and
Exchange Commission, Requires All Companies to Include a Discussion of Critical
Accounting Policies or Methods Used in the Preparation of Financial Statements.
Our Significant Accounting Policies are Described in Note 2 of the Notes to the
Financial Statements. the Significant Accounting Policies That We Believe are
the Most Critical to Aid in Fully Understanding Our Reported Financial Results
Include the Following:


<PAGE>

COMPUTER EQUIPMENT

Commonwealth Capital Corp, on behalf of the Partnership and other affiliated
partnerships, acquires computer equipment subject to associated debt obligations
and lease revenue and allocates a participation in the cost, debt and lease
revenue to the various partnerships based on certain risk factors. The
Partnership will acquire equipment with no associated debt obligations with the
original contributions. The Partnership plans on acquiring equipment leases with
associated debt obligations from the monthly rental payments associated with the
equipment acquired with its original capital contributions. Depreciation on
computer equipment for financial statement purposes is based on the
straight-line method over estimated useful lives of four years.

REVENUE RECOGNITION

Through September 30, 2004, the Partnership has only entered into operating
leases. Lease revenue is recognized on a monthly basis in accordance with the
terms of the operating lease agreements.

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

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances
indicate that the value of the asset may not be recoverable. The Partnership
determines whether an impairment exists by estimating the undiscounted cash
flows to be generated by each asset. If the estimated undiscounted cash flows
are less than the carrying value of the asset then an impairment exists. The
amount of the impairment is determined based on the difference between the
carrying value and the fair value. Fair value is determined based on estimated
discounted cash flows to be generated by the asset.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership's primary source of capital for the nine months ended September
30, 2004 was from net proceeds received from sale of equipment of approximately
$65,000. The Partnership's primary source of capital for the nine months ended
September 30, 2003 was contributions of approximately $11,340,000. The primary
uses of cash for the nine months ended September 30, 2004 and 2003 were cash
used in operations of approximately $574,00 and $430,000, respectively, capital
expenditures for new equipment of approximately $1,498,000 and $2,861,000,
respectively, the payment of preferred distributions to partners of
approximately $1,125,000 and $578,000, respectively, and payment of an advance
by the Partnership to CCC, a related party to the Partnership, in the amount of
approximately $33,000 and $121,000, respectively. The Partnership also incurred
offering costs of approximately $1,219,000 for the nine months ended September
30, 2003. The Partnership incurred no offering costs in the nine months ended
September 30, 2004.

For the nine month period ended September 30, 2004, the Partnership used cash
flows from operating activities of approximately $574,000, which includes a net
loss of approximately $275,000, a loss on sale of equipment of approximately
$18,000, payment of accounts payable, which was primarily for the purchase of
computer equipment of approximately $2,261,000 and depreciation and amortization
expenses of approximately $2,398,000. Other noncash activities included in the
determination of net income include direct payments of lease income by lessees
to banks of approximately $807,000.

<PAGE>

For the nine month period ended September 30, 2003, the Partnership used cash
flows from operating activities of $430,000, which includes a net loss of
$974,000, depreciation and amortization expenses of $736,000. Other noncash
activities included in the determination of net income include direct payments
of lease income by lessees to banks of $242,000.

Cash is invested in money market accounts that invest directly in treasury
obligations pending the Partnership's use of such funds to purchase additional
computer equipment, to pay Partnership expenses or to make distributions to the
Partners. At September 30, 2004, the Partnership had approximately $1,312,000
invested in these money market accounts.

The Partnership's investment strategy of acquiring computer equipment and
generally leasing it under "triple-net leases" to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses. As
of September 30, 2004, the Partnership had future minimum rentals on
non-cancelable operating leases of $1,104,000 for the balance of the year ending
December 31, 2004 and $7,061,000 thereafter. At September 30, 2004, the
outstanding debt was $1,900,000, with interest rates ranging from 4.78% to
7.75%, and will be payable through January 2007.

As of September 30, 2004, the Partnership has an unsecured, non-interest bearing
receivable from CCC, a related party to the Partnership, in the amount of
approximately $263,000, which primarily originated in 2003. CCC, through its
indirect subsidiaries, including the General Partner of the Partnership, earns
fees based on revenues and new lease purchases from this fund. CCC intends to
repay these receivables, through acquisition fees, debt placement fees and
reimbursement of expenses, with a minimum amount of $12,500 per quarter,
commencing in the quarter ending March, 2004. During the quarter ended September
30, 2004, CCC has reduced the receivable to the Partnership by approximately
$22,000.

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

The Partnership's share of the computer equipment in which it participates with
other partnerships at September 30, 2004 and December 31, 2003 was approximately
$631,000 and $8,000, respectively, which is included in the Partnership's fixed
assets on its balance sheet, and the total cost of the equipment shared by the
Partnership with other partnerships at September 30, 2004 and December 31, 2003
was approximately $1,272,000 and $48,000, respectively. The Partnership's share
of the outstanding debt associated with this equipment at September 30, 2004 was
approximately $287,000, which is included in the Partnership's notes payables on
the balance sheet, and the total outstanding debt at September 30, 2004 related
to the equipment shared by the Partnership was approximately $557,000. The
Partnership did not share in any outstanding debt associated with this equipment
as of December 31, 2003.
<PAGE>

RESULTS OF OPERATIONS

      THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THREE MONTHS ENDED
                               SEPTEMBER 30, 2003

For the quarter ended September 30, 2004, the Partnership recognized income of
approximately $1,106,000, and expenses of approximately $1,115,000, resulting in
a net loss of approximately $8,000. For the quarter ended September 30, 2003,
the Partnership recognized income of approximately $397,000 and expenses of
approximately $768,000 resulting in a net loss of approximately $371,000.

Lease income increased by 185% to $1,104,000 for the quarter ended September 30,
2004, from $387,000 for the quarter ended September 30, 2003, primarily due to
the fact that more lease agreements were entered into since the quarter ended
September 30, 2003.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. The expense decreased 58% to
approximately $160,000 for the quarter ended September 30, 2004, from $380,000
for the quarter ended September 30, 2003, which is primarily attributable to a
decrease in the amount charged by CCC, a related party, to the Partnership for
its administration and operation of approximately $4,000. There was also a
decrease in printing services of approximately $27,000, a decrease in due
diligence expenses of approximately $42,000, a decrease in advertising of
approximately $34,000, a decrease in wholesalers' expenses of approximately
$95,000, a decrease in conventions of approximately $10,000, a decrease in
postage of approximately $10,000 and a decrease in supplies of approximately
$3,000. There was also an increase in professional services of approximately
$5,000. During the Offering Stage, which the Partnership was in during the
quarter ended September 30, 2003, the Partnership incurred certain expenses,
such as wholesalers' expenses, due diligence, printing services, and various
outside office services that are not being incurred during the Operational
Stage, which the Partnership is currently in during the quarter ended September
30, 2004, due to the nature of the different stages in the life of the
Partnership.

Organizational costs were approximately $34,000 for the quarter ended September
30, 2003. There were no organizational costs incurred in the quarter ended
September 30, 2004.

The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee increased 185% to approximately $55,000 for the quarter ended
September 30, 2004, from $19,000 for the quarter ended September 30, 2003, which
is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses increased
164% to approximately $857,000 for the quarter ended September 30, 2004, from
$324,000 for the quarter ended September 30, 2003 due to additional equipment
being purchased and the associated acquisition and finance fees being recorded
by the Partnership since the quarter ended September 30, 2003.

<PAGE>

Interest expense increased 174% to $27,000 for the quarter ended September 30,
2004 from $10,000 for the quarter ended September 30, 2003, primarily due to the
increase in debt relating to the purchase of computer equipment and due to the
fact that more lease agreements were entered into with debt since the quarter
ended September 30, 2003.

The Partnership sold computer equipment with a net book value of approximately
$25,000 for the nine months ended September 30, 2004, for a net loss of
approximately $15,000. The Partnership did not sell any computer equipment for
the nine months ended September 30, 2003.

       NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO NINE MONTHS ENDED
                               SEPTEMBER 30, 2003

For the nine months ended September 30, 2004, the Partnership recognized income
of approximately $3,148,000, and expenses of approximately $3,423,000, resulting
in a net loss of approximately $275,000. For the nine months ended September 30,
2003, the Partnership recognized income of approximately $987,000 and expenses
of approximately $1,961,000 resulting in a net loss of approximately $974,000.

Lease income increased by 223% to $3,139,000 for the nine months ended September
30, 2004, from $971,000 for the nine months ended September 30, 2003, primarily
due to the fact that more lease agreements were entered into since the nine
months ended September 30, 2003.

Operating expenses, excluding depreciation, primarily consist of accounting,
legal, outside service fees and reimbursement of expenses to CCC for
administration and operation of the Partnership. The expense decreased 27% to
approximately $768,000 for the nine months ended September 30, 2004, from
$1,045,000 for the nine months ended September 30, 2003, which is primarily
attributable to a decrease in printing services of approximately $78,000, a
decrease in due diligence expenses of approximately $99,000, a decrease in
advertising of approximately $65,000, a decrease in wholesalers' expenses of
approximately $173,000, a decrease in office supplies of approximately $13,000,
a decrease in postage of approximately $7,000, a decrease in outside office
services of approximately $40,000 and a decrease in conventions of approximately
$22,000. There was also an increase in the amount charged by CCC, a related
party, to the Partnership for its administration and operation of approximately
$167,000 and an increase in professional services of approximately $52,000.
During the Offering Stage, which the Partnership was in during the nine months
ended September 30, 2003, the Partnership incurred certain expenses, such as
wholesalers' expenses, due diligence, printing services, and various outside
office services that are not being incurred during the Operational Stage, which
the Partnership is currently in during the nine months ended September 30, 2004,
due to the nature of the different stages in the life of the Partnership.

Organizational costs were approximately $100,000 for the nine months ended
September 30, 2003. There were no organizational costs incurred in the nine
months ended September 30, 2004.

The equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The equipment
management fee increased 223% to approximately $157,000 for the nine months
ended September 30, 2004, from $49,000 for the nine months ended September 30,
2003, which is consistent with the increase in lease income.

<PAGE>

Depreciation and amortization expenses consist of depreciation on computer
equipment and amortization of equipment acquisition fees. The expenses increased
163% to approximately $2,398,000 for the nine months ended September 30, 2004,
from $736,000 for the nine months ended September 30, 2003 due to additional
equipment being purchased and the associated acquisition and finance fees being
recorded by the Partnership since the nine months ended September 30, 2003.

Interest expense increased 163% to $83,000 for the nine months ended September
30, 2004 from $32,000 for the nine months ended September 30, 2003, primarily
due to the increase in debt relating to the purchase of computer equipment and
due to the fact that more lease agreements were entered into with debt since the
nine months ended September 30, 2003.

The Partnership sold computer equipment with a net book value of approximately
$83,000 for the nine months ended September 30, 2004, for a net loss of
approximately $18,000. The Partnership did not sell any computer equipment for
the nine months ended September 30, 2003.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership believes its exposure to market risk is not material due to the
fixed interest rate of its long-term debt.

ITEM 4. CONTROLS AND PROCEDURES

The Chief Executive Officer and a Financial Officer of the Partnership have
conducted a review of the Partnership's disclosure controls and procedures as of
September 30, 2004.

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

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


<PAGE>

PART II: OTHER INFORMATION

                      COMMONWEALTH INCOME & GROWTH FUND IV

      Item 1.    LEGAL PROCEEDINGS.

                 Inapplicable

      Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

                 Inapplicable

      Item 3.    DEFAULTS UPON SENIOR SECURITIES.

                 Inapplicable

      Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

                 Inapplicable

      Item 5.    OTHER INFORMATION.

                 Inapplicable

      Item 6.    EXHIBITS.

                     31.1 THE RULE 15D-14(A)

                     31.2 THE RULE 15D-14(A)

                     32.1 SECTION 1350 CERTIFICATION OF CEO

                     32.2 SECTION 1350 CERTIFICATION OF CFO

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           COMMONWEALTH INCOME & GROWTH FUND IV

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

November 15, 2004                          By: /s/ George S. Springsteen
-----------------                          -----------------------------
Date                                       George S. Springsteen
                                           President