UNITED
        STATES
 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, 2007
 
 oTRANSITION
        REPORT
        PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 
 Commission
        File Number:  333-62526
 
 COMMONWEALTH
        INCOME & GROWTH FUND IV
 (Exact
        name of registrant as specified in its charter)
 
 Pennsylvania
              23-
                  3080409(State
                  or other jurisdiction of incorporation
                  or organization)
              (I.R.S.
                  Employer Identification Number)
 
 Brandywine
        Bldg. One, Suite 200
 2
        Christy
        Drive
 Chadds
        Ford, PA 19317
 (Address,
        including zip code, of principal executive offices)
 
 (610)
        594-9600
 (Registrant’s
        telephone number including area code)
 
 Indicate
        by check mark whether the
        registrant (i) has filed all reports required to be filed by Section 13 or
        15(d)
        of the Securities Exchange Act of 1934 during the preceding 12 months, and
        (ii)
        has been subject to such filing requirements for the past 90 days:
        YES  x  NO  o
 
 Indicate
        by check mark whether the
        registrant is a large accelerated filer, an accelerated filer, or a
        non-accelerated filer.  See definition of “accelerated filer and large
        accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
 
 Large
        accelerated
        filer  o  Accelerated
        filer  o   Non-accelerated
        filer
x
 
 Indicate
        by check mark whether the
        registrant is a shell company (as defined in Rule 12b-2 of the Exchange
        Act).      YES  o  NO  x
  -1-
 **FORM
        10-Q**
 **SEPTEMBER
        30, 2007**
 
 **TABLE
        OF CONTENTS**
 
 PART
                  IItem
                  1.
              Financial
                  Statements
              3Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              11Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market
                  Risk
              14Item
                  4.
              Controls
                  and Procedures
              14PART
                  IIItem
                  1.
              Legal
                  Proceedings
              15Item
                  1 A.
              Risk
                  Factors
              16Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              16Item
                  3.
              Defaults
                  Upon Senior Securities
              16Item
                  4.
              Submission
                  of Matters to a Vote of Securities
                  Holders
              16Item
                  5.
              Other
                  Information
              16Item
                  6.
              Exhibits
              16
 
  -2-
  **Part
        I. FINANCIAL INFORMATION**
 **Item
        1. Financial Statements**
 
 
 **Commonwealth
                  Income & Growth Fund IV****Condensed
                  Balance Sheets****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****(unaudited)****Assets**Cash
                  and cash equivalents
              
              $
              5,615
              
              
              $
              185,564Lease
                  income receivable, net of reserves of  $288,587 and $282,587 as
                  of September 30, 2007 and December 31, 2006
              
              
              205,217
              
              
              
              441,123Other
                  receivables - affiliated limited partnerships
              
              
              20,429
              
              
              
              26,493Refundable
                  deposits
              
              
              1,130
              
              
              
              1,130Prepaid
                  expenses
              
              
              3,285
              
              
              
              3,762****
              **235,676**
              
              
              
              658,072Computer
                  equipment, at cost
              
              
              7,838,387
              
              
              
              10,748,987Accumulated
                  depreciation
              
              
              (5,875,380
              )
              
              
              (7,326,525
              )****
              **1,963,007**
              
              
              
              3,422,462Equipment
                  acquisition costs and deferred expenses, net
              
              
              57,489
              
              
              
              95,323Other
                  receivables - Commonwealth Capital Corp
              
              
              4,174
              
              
              
              165,459Prepaid
                  acquisition fees
              
              
              63,799
              
              
              
              70,528****
              **125,462**
              
              
              
              331,310**Total
                  Assets**
              
              **$**
              **2,324,145**
              
              
              $
              4,411,844**Liabilities
                  and Partners' Capital****Liabilities**Accounts
                  payable
              
              $
              42,589
              
              
              $
              103,534Accounts
                  payable - General Partner
              
              
              120,204
              
              
              
              58,367Unearned
                  lease income
              
              
              52,716
              
              
              
              50,331Notes
                  payable
              
              
              534,341
              
              
              
              975,457**Total
                  Liabilities**
              
              ****
              **749,850**
              
              
              
              1,187,689**Partners'
                  Capital**General
                  partner
              
              
              1,000
              
              
              
              1,000Limited
                  partners
              
              
              1,573,295
              
              
              
              3,223,155**Total
                  Partners' Capital**
              
              ****
              **1,574,295**
              
              
              
              3,224,155**Total
                  Liabilities and Partners' Capital**
              
              **$**
              **2,324,145**
              
              
              $
              4,411,844
 
 *see
        accompanying notes to condensed financial statements*
  -3-
 
 *Table
        of
        Contents*
   **Commonwealth
                  Income & Growth Fund IV****Condensed
                  Statements of Operations****Three
                  Months**
              
              
              **Nine
                  Months****Ended**
              
              
              **Ended****September
                  30,**
              
              
              **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****(unaudited)**
              
              
              **(unaudited)****Revenue**Lease
              
              $
              383,776
              
              
              $
              699,839
              
              
              $
              1,531,508
              
              
              $
              2,501,099Interest
                  and other
              
              
              233
              
              
              
              13,021
              
              
              
              19,990
              
              
              
              23,748**Total
                  Revenue**
              
              ****
              **384,009**
              
              
              
              712,860
              
              
              ****
              **1,551,498**
              
              
              
              2,524,847**Expenses**Operating,
                  excluding depreciation
              
              
              48,532
              
              
              
              148,075
              
              
              
              300,710
              
              
              
              544,166Equipment
                  management fee - General Partner
              
              
              -
              
              
              
              36,023
              
              
              
              33,835
              
              
              
              126,086Interest
              
              
              9,599
              
              
              
              15,573
              
              
              
              30,005
              
              
              
              57,160Depreciation
              
              
              387,966
              
              
              
              780,140
              
              
              
              1,443,613
              
              
              
              2,441,870Amortization
                  of equipment acquisition costs and deferred expenses
              
              
              13,984
              
              
              
              39,859
              
              
              
              58,323
              
              
              
              138,193Bad
                  debt expense
              
              
              17,650
              
              
              
              -
              
              
              
              21,281
              
              
              
              -Loss
                  on sale of computer equipment
              
              
              38,285
              
              
              
              20,694
              
              
              
              190,656
              
              
              
              278,762**Total
                  expenses**
              
              ****
              **516,016**
              
              
              
              1,040,364
              
              
              ****
              **2,078,423**
              
              
              
              3,586,237**Net
                  (loss)**
              
              **$**
              **(132,007**
              **)**
              
              $
              (327,504
              )
              
              **$**
              **(526,925**
              **)**
              
              $
              (1,061,390
              )**Net
                  (loss) allocated to limited partners**
              
              **$**
              **(135,750**
              **)**
              
              $
              (331,247
              )
              
              **$**
              **(538,154**
              **)**
              
              $
              (1,072,594
              )**Net
                  (loss) per equivalent limited partnership unit**
              
              **$**
              **(0.18**
              **)**
              
              $
              (0.44
              )
              
              **$**
              **(0.72**
              **)**
              
              $
              (1.43
              )**Weighted
                  Average number of equivalent limited partnership units outstanding
                  during
                  the period**
              
              ****
              **749,400**
              
              
              
              749,400
              
              
              ****
              **749,400**
              
              
              
              749,400
 
 *see
        accompanying notes to condensed financial statements*
  *Table
          of
          Contents*
  
 **Commonwealth
                  Income & Growth Fund IV****Condensed
                  Statements of Partners' Capital****For
                  the Nine Months ended September 30,2007****(unaudited)****General
                  Partner Units**
              
              
              **Limited
                  Partner Units**
              
              
              **General
                  Partner**
              
              
              **Limited
                  Partner**
              
              
              **Total****Partners'
                  capital - January 1, 2007**
              
              ****
              **50**
              
              
              ****
              **749,400**
              
              
              **$**
              **1,000**
              
              
              **$**
              **3,223,155**
              
              
              **$**
              **3,224,155**Net
                  Income (loss)
              
              
              -
              
              
              
              -
              
              
              
              11,229
              
              
              
              (538,154
              )
              
              
              (526,925
              )Distributions
              
              
              -
              
              
              
              -
              
              
              
              (11,229
              )
              
              
              (1,111,706
              )
              
              
              (1,122,935
              )**Partners'
                  capital - September 30, 2007**
              
              ****
              **50**
              
              
              ****
              **749,400**
              
              
              **$**
              **1,000**
              
              
              **$**
              **1,573,295**
              
              
              **$**
              **1,574,295**
 
 *see
        accompanying notes to condensed financial statements*
  -5-
 
 *Table
        of
        Contents*
 
 **Commonwealth
                  Income & Growth Fund IV****Condensed
                  Statements of Cash Flow****For
                  the nine months ended September 30, 2007 and 2006****2007**
              
              
              **2006****(unaudited)****Net
                  cash provided by operating activities**
              
              **$**
              **724,354**
              
              
              $
              779,080**Investing
                  activities:**Capital
                  expenditures
              
              
              (204,797
              )
              
              
              (487,808
              )Prepaid
                  acquisition fees
              
              
              6,729
              
              
              
              17,625Net
                  proceeds from the sale of computer equipment
              
              
              275,903
              
              
              
              440,861Equipment
                  acquisition fees paid to General Partner
              
              
              (18,029
              )
              
              
              (28,451
              )**Net
                  cash provided by investing activities**
              
              ****
              **59,806**
              
              
              
              57,773**Financing
                  activities:**Distributions
                  to partners
              
              
              (1,122,935
              )
              
              
              (1,123,036
              )Accounts
                  receivable, CCC
              
              
              161,285
              
              
              
              (1,702
              )Debt
                  placement fee paid to the General Partner
              
              
              (2,459
              )
              
              
              (2,235
              )**Net
                  cash (used in) financing activities**
              
              ****
              **(964,109**
              **)**
              
              
              (1,126,973
              )Net
                  (decrease) in cash and cash equivalents
              
              
              (179,949
              )
              
              
              (405,666
              )Cash
                  and cash equivalents, beginning of period
              
              
              185,564
              
              
              
              891,708**Cash
                  and cash equivalents, end of period**
              
              **$**
              **5,615**
              
              
              $
              486,042
 
 
 *see
        accompanying notes to condensed financial statements*
  -6-
 
 *Table
        of
        Contents*
  **NOTES
        TO CONDENSED 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 offered 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 used the proceeds of the Offering to acquire, own and lease various
        types of computer information technology (I.T.) equipment and other similar
        capital equipment, which is leased primarily to U.S. corporations and
        institutions.  Commonwealth Capital Corp. (“CCC”), on behalf of the
        Partnership and other affiliated partnerships, 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
        it
        controls 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.  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 Significant Accounting Policies**
 
 **Basis
        of Presentation**
 
 The
        financial information presented as of any date other than December 31, 2006
        has
        been prepared from the books and records without audit.  Financial
        information as of December 31, 2006 has been derived from the audited financial
        statements of the Partnership, but does not include all disclosures required
        by
        generally accepted accounting principles.  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, 2006.  Operating results for the nine months ended
        September 30, 2007 are not necessarily indicative of financial results that
        may
        be expected for the full year ended December 31, 2007.
 
 **Long-Lived
        Assets**
 
 The
        Partnership evaluates its long-lived assets when events or circumstances
        indicate that the value of the asset may not be recoverable.  The
        Partnership determines whether an impairment exists by estimating the
        undiscounted cash flows to be generated by each asset.  If the
        estimated undiscounted cash flows are less than the carrying value of the
        asset,
        an impairment exists.  The amount of the impairment is determined
        based on the difference between the carrying value and the fair
        value.  The fair value is determined based on estimated discounted
        cash flows to be generated by the asset.  The Partnership recorded
        impairment charges of approximately $35,000 to reflect the assets at their
        current estimated net realizable value for the period ended September 30,
        2007.
 
 Depreciation
        on computer equipment for financial statement purposes is based on the
        straight-line method over estimated useful lives of four years.
  -7-
 *Table
            of Contents*
  **Net
        Income (Loss) Per Equivalent Limited Partnership Unit**
 
 The
        net
        income (loss) per equivalent limited partnership unit is computed based upon
        net
        income (loss) allocated to the limited partners and the weighted average
        number
        of equivalent units outstanding during the period.
 
 **3.
        Computer Equipment**
 
 The
        Partnership is the lessor of equipment under operating leases with periods
        ranging from 22 to 37 months. In general, associated costs such as repairs
        and
        maintenance, insurance and property taxes are paid by the lessee.
 
 Through
        September 30, 2007, the Partnership has only entered into operating
        leases.  Lease revenue is recognized on the monthly straight-line
        basis which is generally in accordance with the terms of the operating lease
        agreements.
 
 Remarketing
        fees are paid to the leasing companies from which the Partnership purchases
        leases.  These are fees that are earned by the leasing companies when
        the initial terms of the lease have been met.  The General Partner
        believes that this strategy adds value since it entices the leasing company
        to
        "stay with the lease" for potential extensions, remarketing or sale of
        equipment.  This strategy potentially minimizes any conflicts the
        leasing company may have with a potential new lease and will potentially
        assist
        in maximizing overall portfolio performance.  The remarketing fee is
        tied into lease performance thresholds and is factored in the negotiation
        of the
        fee.  Remarketing fees incurred in connection with lease extensions
        are accounted for as operating costs.  Remarketing fees incurred in
        connection with the sale of computer equipment are included in our gain or
        loss
        calculations.  For the nine months ended September 30, 2007 and 2006,
        remarketing fees were incurred in the amounts of $114,000 and $10,000,
        respectively.
 
 The
        Partnership’s share of the computer equipment in which it participates with
        other partnerships at September 30, 2007 and December 31, 2006 was $1,900,000
        and $1,600,000, respectively, which is included in the Partnership’s fixed
        assets on its balance sheet.  The total cost of the equipment shared
        by the Partnership with other partnerships at September 30, 2007 and December
        31, 2006 was $5,409,000 and $4,500,000, respectively. The Partnership’s share of
        the outstanding debt associated with this equipment at September 30, 2007
        and
        December 31, 2006 was $298,000 and $164,000, respectively.  The total
        outstanding debt at September 30, 2007 and December 31, 2006 was $842,000
        and
        $328,000, respectively.
 
 The
        following is a schedule of future minimum rentals on noncancellable operating
        leases at September 30, 2007:
 
 ***Amount***Three
                  Months ended December 31, 2007
              
              $
              255,844Year
                  Ended December 31, 2008
              
              
              599,129Year
                  Ended December 31, 2009
              
              
              286,266Year
                  Ended December 31, 2010
              
              
              24,303**$**
              **1,165,542**
 
 
 **4.
        Related Party Transactions**
 
 **Receivables/Payables**
 
 As
        of
        September 30, 2007, the Partnership’s related party receivables and payables are
        short term, unsecured, and non-interest bearing.
  -8-
 *Table
            of Contents*
 
 **Other
          Receivables**
 
 The
          Partnership had an unsecured, non-interest bearing receivable from CCC,
          an
          affiliate, in the original amount of $160,000, which originated primarily
          in
          2003.  As of September 30, 2007, $32,000 of this receivable remained
          outstanding, and the remaining balance was subsequently paid in full on
          October
          31, 2007.
  **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, 2007 and
        2006, the Partnership recorded approximately $249,000 and $486,000 for
        reimbursement of expenses to the General Partner.
 
 **Equipment
        Acquisition Fee**
 
 The
        General Partner is entitled to be paid an equipment acquisition fee of 4%
        of the
        purchase price of each item of equipment purchased as compensation for the
        negotiation of the acquisition of the equipment and lease thereof or sale
        under
        a conditional sales contract.  For the nine months ended September 30,
        2007 and 2006, equipment acquisition fees of approximately $18,000 and $28,000
        were earned by******the General Partner.
 
 **Debt
        Placement Fee**
 
 As
        compensation for arranging term debt to finance the acquisition of equipment
        by
        the Partnership, the General Partner is paid a fee equal to 1% of such
        indebtedness; provided, however, that such fee shall be reduced to the extent
        the Partnership incurs such fees to third parties, unaffiliated with the
        General
        Partner or the lender, with respect to such indebtedness and no such fee
        will be
        paid with respect to borrowings from the General Partner or its
        affiliates.  For the nine months ended September 30, 2007 and 2006,
        debt placement fees of approximately $2,000 were earned by the General
        Partner.
 
 **Equipment
        Management Fee**
 
 The
        General Partner is entitled to be paid a monthly fee equal to the lesser
        of (i)
        the fees which would be charged by an independent third party for similar
        services for similar equipment or (ii) the sum of (a) two percent of (1)
        the
        gross lease revenues attributable to equipment which is subject to full payout
        net leases which contain net lease provisions plus (2) the purchase price
        paid
        on conditional sales contracts as received by the Partnership and (b) 5%
        of the
        gross lease revenues attributable to equipment which is subject to operating
        and
        capital leases.  The equipment management fees were waived for the
        three months ended September 30, 2007.  For the nine months ended
        September 30, 2007 and 2006, equipment management fees of approximately $34,000
        and $126,000 were earned by******the General
        Partner.
 
 **Equipment
        Liquidation Fee**
 
 With
        respect to each item of equipment sold by the General Partner (other than
        in
        connection with a conditional sales contract), a fee equal to the lesser
        of (i)
        50% of the competitive equipment sale commission or (ii) three percent of
        the
        sales price for such equipment is payable to the General Partner.  The
        payment of such fee is subordinated to the receipt by the limited partners
        of
        the net disposition proceeds from such sale in accordance with the Partnership
        Agreement.  Such fee will be reduced to the extent any liquidation or
        resale fees are paid to unaffiliated parties.  For the nine months
        ended September 30, 2007 and 2006, equipment liquidation fees of approximately
        $11,000 and $15,000 were earned by the General Partner.
  -9-
 *Table
            of Contents*
  **5.
        Notes Payable**
 
 Notes
        payable consisted of the following:
 
 **September
                  30,****2007**
              
              
              December
                  31, 2006Installment
                  notes payable to banks; interest ranging from 4.29% to 7.50%, due
                  in
                  monthly installments ranging from $256 to $13,488, including interest,
                  with final payments due in January through December 2007.
              
              **$**
              **35,009**
              
              
              $
              424,863Installment
                  notes payable to banks; interest ranging from 4.65% to 6.06%, due
                  in
                  monthly installments ranging from $162 to $7,289 including interest,
                  with
                  final payment due in January through September 2008.
              
              ****
              **139,480**
              
              
              
              309,316Installment
                  notes payable to banks; interest ranging from 5.9% to 6.25%, due
                  in
                  monthly installments ranging from $1,901 to $73,654, including
                  interest,
                  with final payments from January through October 2009.
              
              ****
              **359,852**
              
              
              
              241,278**$**
              **534,341**
              
              
              $
              975,457
 
 
 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, 2007 are as follows:
 
 ***Amount***Three
                  months ended December 31, 2007
              
              $
              134,400Year
                  ended December 31, 2008
              
              
              252,421Year
                  ended December 31, 2009
              
              
              147,520**$**
              **534,341**
 
 **6.
        Supplemental Cash Flow Information**
 
 Other
        noncash activities included in the determination of net loss are as
        follows:
  *Nine
                    months Ended September 30,*
                
                **2007**
                
                
                2006Lease
                    income, net of interest expense on notes payable realized as
                    a result of
                    direct payment of principal by lessee to bank
                
                **$**
                **687,038**
                
                
                $
                869,485****
  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,*
                
                **2007**
                
                
                2006Debt
                    assumed in connection with purchase of computer equipment
                
                **$**
                **245,921**
                
                
                $
                223,464Equipment
                    acquisition fees earned by General Partner upon purchase of equipment
                    from
                    prepaid acquisition fees
                
                **$**
                **6,729**
                
                
                $
                17,626****
  -10-
 *Table
            of Contents*
  **Item
        2: Management’s Discussion and Analysis of Financial
        Condition and Results of Operations**
  **FORWARD
        LOOKING STATEMENTS**
  Certain
        statements within this Quarterly Report on Form 10-Q may constitute
        forward-looking statements within the meaning of the Private Securities
        Litigation Reform Act of 1995 (“PSLRA”). These statements are being made
        pursuant to the PSLRA, with the intention of obtaining the benefits of the
“safe
        harbor” provisions of the PSLRA, and, other than as required by law, we assume
        no obligation to update or supplement such statements. Forward-looking
        statements are those that do not relate solely to historical fact. They include,
        but are not limited to, any statement that may predict, forecast, indicate
        or
        imply future results, performance, achievements or events. You can identify
        these statements by the use of words such as “may,” “will,” “could,”
“anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project”
and variations of these words or comparable words or phrases of similar meaning.
        These forward-looking statements reflect our current beliefs and expectations
        with respect to future events and are based on assumptions and are subject
        to
        risks and uncertainties and other factors outside our control that may cause
        actual results to differ materially from those projected.
 
 **CRITICAL
        ACCOUNTING POLICIES**
 
 The
        Partnership's discussion and analysis of its financial condition and results
        of
        operations are based upon its financial statements which have been prepared
        in
        accordance with accounting principles generally accepted in the United States.
        The preparation of these financial statements requires the Partnership to
        make
        estimates and judgments that affect the reported amounts of assets, liabilities,
        revenues and expenses. The Partnership bases its estimates on historical
        experience and on various other assumptions that are believed to be reasonable
        under the circumstances, the results of which form the basis for making
        judgments about the carrying values of assets and liabilities that are not
        readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions.
 
 The
        Partnership believes that its critical accounting policies affect its more
        significant judgments and estimates used in the preparation of its financial
        statements.
 
 **COMPUTER
        EQUIPMENT**
 
 Commonwealth
        Capital Corp., on behalf of the Partnership and other affiliated partnerships,
        acquires computer equipment subject to associated debt obligations and lease
        revenue and allocates a participation in the cost, debt and lease revenue
        to the
        various partnerships based on certain risk factors.  Depreciation on
        computer equipment for financial statement purposes is based on the
        straight-line method over estimated useful lives of four years.
 
 **REVENUE
        RECOGNITION**
 
 Through
        September 30, 2007, the Partnership has only entered into operating
        leases.  Lease revenue is recognized on the monthly straight-line
        basis which is generally in accordance with the terms of the operating lease
        agreements.
 
 The
        Partnership reviews a customer’s credit history before 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.  The Partnership recorded
        impairment charges of approximately $35,000 to reflect the assets at their
        current estimated net realizable value for the three months ended September
        30,
        2007.
  -11-
 *Table
            of Contents*
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 The
        Partnership’s primary source of capital for the nine months ended September 30,
        2007 and 2006 was from net proceeds received from sale of equipment of
        approximately $276,000 and $441,000.  The primary uses of cash for the
        nine months ended September 30, 2007 and 2006 were for capital expenditures
        for
        new equipment of $205,000 and $488,000, respectively, and the payment of
        preferred distributions to partners of approximately $1,123,000 for both
        years.
 
 While
        the
        Partnership intends to invest additional capital in equipment during the
        remainder of 2007, the amount of such additional investment is uncertain,
        and
        may be impacted by the status or outcome of the Allserve bankruptcy. See
‘Legal
        Proceedings” in Part II, Item I. Any acquisition of equipment will be funded by
        debt financing, and the debt service will be funded from cash flows from
        lease
        rental payments.
 
 For
        the
        nine months ended September 30, 2007, the Partnership generated cash flows
        from
        operating activities of approximately $724,000, which includes a net loss
        of
        approximately $527,000, a loss on sale of equipment of approximately
        $191,000, and depreciation and amortization expenses of approximately
        $1,502,000. Other non-cash activities included in the determination of net
        income include direct payments of lease income by lessees to banks of
        approximately $687,000.
 
 For
        the
        nine months ended September 30, 2006, the Partnership generated cash flows
        from
        operating activities of approximately $779,000, which includes a net loss
        of
        approximately $1,061,000, a loss on sale of equipment of approximately
        $279,000, and depreciation and amortization expenses of approximately
        $2,512,000. Other non-cash activities included in the determination of net
        income include direct payments of lease income by lessees to banks of
        approximately $869,000.
 
 The
        Partnership's investment strategy of acquiring computer equipment and generally
        leasing it under “triple-net leases” to operators who generally meet specified
        financial standards minimizes the Partnership's operating
        expenses.  As of September 30, 2007, the Partnership had future
        minimum rentals on non-cancelable operating leases of approximately $256,000
        for
        the balance of the year ending December 31, 2007 and approximately $910,000
        thereafter.  At September 30, 2007, the outstanding debt was
        approximately $534,000, with interest rates ranging from 4.29% to 7.5%, and
        will
        be payable through October 2009.
 
 The
        Partnership had an unsecured, non-interest bearing receivable from CCC, an
        affiliate, in the original amount of $160,000, which originated primarily
        in
        2003.  As of September 30, 2007, $32,000 of this receivable remained
        outstanding, and the remaining balance was subsequently paid in full on October
        31, 2007.
 
 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.
  -12-
 *Table
            of Contents*
 
 **RESULTS
        OF OPERATIONS**
 
 Three
        Months Ended September 30, 2007 compared to Three Months September 30,
        2006
 
 For
        the
        three months ended September 30, 2007, the Partnership recognized revenue
        of approximately $384,000, and expenses of approximately $516,000, resulting
        in
        net loss of approximately $132,000.  For the three months ended
        September 30, 2006, the Partnership recognized income of approximately $713,000,
        and expenses of approximately $1,040,000, resulting in net loss of approximately
        $328,000.
 
 Lease
        income decreased by 45% to $384,000 for the three months ended September
        30,
        2007, from $700,000 for the three months ended September 30,
        2006.  This decrease was primarily due to more lease agreements ending
        versus new lease agreements being acquired during the three months ended
        September 30, 2007.
 
 Operating
        expenses, excluding depreciation, primarily consist of accounting, legal,
        outside service fees and reimbursement of expenses to CCC, a related party,
        for
        administration and operation of the Partnership.  The expenses
        decreased 67% to approximately $49,000 for the three months ended September
        30,
        2007, from $148,000 for the three months ended September 30, 2006. This decrease
        is primarily attributable to a decrease in other LP expenses of approximately
        $43,000, a decrease in remarketing fees of approximately $12,000 and a decrease
        in accounting fees of approximately $9,000.
 
 The
        equipment management fee is approximately 5% of the gross lease revenue
        attributable to equipment that is subject to operating leases. For the three
        months ended September 30, 2007, the equipment management fee was waived
        by the
        general partner, in an effort to assist in the operating results of the
        Partnership. The equipment management fee was approximately $36,000 for the
        three months ended September 30, 2006.
 
 Depreciation
        and amortization expenses consist of depreciation on computer equipment,
        including impairment charges, and amortization of equipment acquisition fees.
        The expenses decreased 51% to approximately $402,000 for the three months
        ended
        September 30, 2007, from $820,000 for the three months ended September 30,
        2006
        due to equipment and acquisition fees being fully depreciated/amortized and
        not
        being replaced with as many new purchases.
 
 Nine
        Months Ended September 30, 2007 compared to Nine Months Ended September 30,
        2006
 
 For
        the
        nine months ended September 30, 2007, the Partnership recognized revenue of
        approximately $1,551,000, and expenses of approximately $2,078,000, resulting
        in
        a net loss of approximately $527,000.  For the nine months ended
        September 30, 2006, the Partnership recognized income of approximately
        $2,525,000, and expenses of approximately $3,586,000, resulting in a net
        loss of
        approximately $1,061,000.
 
 Lease
        income decreased by 39% to $1,532,000 for the nine months ended September
        30,
        2007, from $2,501,000 for the nine months ended September 30, 2006, primarily
        due to fewer lease agreements have been entered into since the nine months
        ended
        September 30, 2006.
 
 Operating
        expenses, excluding depreciation, primarily consist of accounting, legal,
        outside service fees and reimbursement of expenses to CCC, a related party,
        for
        administration and operation of the Partnership.  The expenses
        decreased 45% to approximately $301,000 for the nine months ended September
        30,
        2007, from $544,000 for the nine months ended September 30, 2006, primarily
        due
        to a decrease in other LP expenses of approximately $117,000, a decrease
        in the
        amount charged by CCC to the Partnership for its legal fees of approximately
        $30,000 and a decrease in partnership tax of approximately $26,000.
  -13-
 *Table
            of Contents*
 
 The
        equipment management fee is approximately 5% of the gross lease revenue
        attributable to equipment that is subject to operating leases. The equipment
        management fee decreased 73% to approximately $34,000 for the nine months
        ended
        September 30, 2007, from $126,000 for the nine months ended September 30,
        2006.  This decrease is primarily attributable to the suspension of
        the equipment management fees for the nine months ended September 30,
        2006.
 
 Depreciation
        and amortization expenses consist of depreciation on computer equipment and
        amortization of equipment acquisition fees. The expenses decreased 42% to
        approximately $1,502,000 for the nine months ended September 30, 2007, from
        $2,580,000 for the nine months ended September 30, 2006 due to specific
        equipment and acquisition fees being fully depreciated/amortized. The
        Partnership identified specific computer equipment and associated equipment
        acquisition costs, which were reevaluated due to technological
        changes.  The Partnership recorded impairment charges of approximately
        $35,000 to reflect the assets at their current estimated net realizable value
        for the period ending September 30, 2007.  No such adjustment was
        necessary for the period ended September 30, 2006.
 
 The
        Partnership sold computer equipment with a net book value of approximately
        $467,000 for the nine months ended September 30, 2007, for a net loss of
        approximately $191,000.  The Partnership sold computer equipment with
        a net book value of approximately $720,000 for the nine months ended September
        30, 2006, for a net loss of approximately $279,000.
 
 **Item
        3.Quantitative and
        Qualitative Disclosures About Market Risk**
 
 The
        Partnership believes its exposure to market risk is not material due to the
        fixedinterest rate of its long-term debt and its associated fixed
        revenue streams.
 
 **Item
        4. Controls and Procedures**
 
 The
        Chief
        Executive Officer and Principal Financial Officer of the Partnership have
        conducted a review of the Partnership's disclosure controls and procedures
        as of
        September 30, 2007.
 
 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 recorded, processed, summarized and
        reported within the time periods specified in the Securities and Exchange
        Commission’s rules and forms.  The Partnership’s disclosure controls and
        procedures also 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 Exchange Act is accumulated and communicated to the
        Partnership's management, including its Chief Executive Officer and Principal
        Financial Officer, to allow timely decisions regarding required disclosure
        and
        to ensure that such information is recorded, processed, summarized and reported
        within the required time periods.
 
 Based
        upon this review, the Partnership’s Chief Executive Officer and Principal
        Financial Officer have concluded that the Partnership's disclosure controls
        (as
        defined in Rule 13a-15e promulgated under the Exchange Act) are effective
        to
        ensure that the information required to be disclosed by the Partnership in
        the
        reports it files under the Exchange Act (i) is recorded, processed, summarized
        and reported within the time periods specified in the Securities and Exchange
        Commission rules and forms and (ii) is accumulated and communicated to the
        Partnership's management, including its Chief Executive Officer and Principal
        Financial Officer, to allow timely decisions regarding required disclosure
        and
        to ensure that such information is recorded, processed, summarized and reported
        within the required time periods.
 
 There
        have been no changes in the General Partner’s internal controls or in other
        factors that could materially affect the disclosure controls and procedures
        in the nine months ended September 30, 2007, that have materially affected
        or
        are reasonably likely to materially affect the General Partner’s internal
        controls over financial reporting.
  -14-
 *Table
            of Contents*
  **Part
        II:                   OTHER
        INFORMATION**
 
 **Commonwealth
        Income & Growth Fund IV**
 
 Item
        1.                                **Legal
        Proceedings**
 
 In
        the 4th quarter
        of 2005, CCC identified payment problems with Allserve Systems Corp.
        (“Allserve”), one of the Partnerships’ lessees. The bank had returned a number
        of Allserve’s checks issued in October 2005.  The Partnership
        immediately began communication with the lessee, only to ultimately find
        that
        they filed for protection under Chapter 11 of the United States Bankruptcy
        Code
        on November 18, 2005.  The General Partner responded to the Bankruptcy
        petition promptly and assertively.  Counsel was retained for the
        Partnership.  All litigation meetings and equipment inspections were
        attended by the General Partner, for purpose of identifying and tagging all
        assets belonging to the Partnership. The Partnership owns either all or portions
        of 5 equipment leases with Allserve, with original purchase prices of
        approximately $2,789,000.
 
 On
        January 12, 2006, the trustee filed a petition before the court asking for
        the
        bankruptcy petition to be changed to a Chapter 7 Liquidation, due to Allerve’s
        inability to pay its ongoing bills and the trustee’s belief that Allserve was
        not being honest in its dealings with the Trustee.  The Judge granted this
        request.
 
 An
        official creditors’ committee (“Creditors’ Committee”) was organized by the
        Trustee in February 2006.  An officer of CCC is a member of the Creditors’
Committee.  Other creditors affected and represented on the creditors
        committee include IBM Credit LLC, DB Zwirn and Universal Equipment
        Leasing.  A forensic accounting firm is being retained by the Creditors’
Committee to investigate transfers of significant quantities of cash from
        Allserve accounts, prior to its Bankruptcy petition.  On March 16, 2006,
        the Trustee granted stay relief to allow the Partnership and other creditors
        to
        take possession of their assets.  As of March 23, 2006, the Partnership had
        recovered all of its equipment which was subject to leases with
        Allserve.  The equipment was relocated to an asset management location
        in New Jersey, where it will be audited and tested, as well as evaluated
        for
        sale or re-lease.
 
 In
        January 2007 executive management of Commonwealth Capital Corp. met with
        a
        nationally known leasing company that has been in business for over 25 years.
        This company has helped other Allserve creditors sell and/or re-lease recovered
        equipment and they are currently doing an analysis of the best possible way
        to
        bring Commonwealth’s equipment to market. As there is a great deal of this
        equipment currently available, due to the size of the Allserve bankruptcy,
        this
        process will take more time than normal.  Since August 14, 2007, the
        Partnership has been in the process of reviewing the audit reports prepared
        by
        Global Key, a third party who received and tested the equipment; and obtaining
        a
        list of parts required in order to bring the equipment up to specifications
        for
        sale.  It has been the intention of the Partnership to attempt to
        market the equipment in the third world market once this upgrade has taken
        place.  Further, the Partnership intends to offer the equipment “as
        is” both domestically and internationally while soliciting a buyer (or buyers)
        in order to maximize revenue.  Management of the Partnership
        anticipates this process to continue until the end of 2007.  In
        recognition of such, the Partnership recorded a further impairment charge
        of
        approximately 25% of the net book value of equipment (or $34,000) as of
        September 30, 2007.
 
 The
        Allserve equipment leases were purchased by the Partnership between December
        2003 and December 2004.   The Partnership believes there is
        resale value for this equipment and will be pursuing resale and litigation
        options in an attempt to maximize investor’s total return on this
        equipment.  The Partnership received lease payments up through and
        including September 2005.  Therefore, the Partnership has recovered a
        portion of the equipment’s purchase price to date.  The Partnership
        recorded a reserve against all outstanding rentals in the amount of
        approximately $261,000 through December 31, 2006 and also recorded cumulative
        impairment charges against the equipment leased to Allserve of approximately
        $397,000 through September 30, 2007.
  -15-
 *Table
            of Contents*
  Item
        1A.                          
**Risk Factors**
 
 There
        have been no material changes to the risk factors set forth in our Annual
        Report
        on Form 10-K for the year ended December 31, 2006, as filed with the SEC.
        In addition to the other information set forth in this report, you should
        carefully consider the factors discussed in Part I, Item 1A, “Risk
        Factors” in our Annual Report on Form 10-K which could materially affect our
        business, financial condition or future results. The risks described in our
        Annual Report on Form 10-K are not the only risks facing our company. Additional
        risks and uncertainties not currently known to us or that we currently deem
        immaterial also may have a material adverse effect on our business, financial
        condition and/or operating results.
 
 Item
        2.                            **Unregistered
        Sales of Equity Securities and Use of Proceeds**
 
 N/A
 
 Item
        3.                                **Defaults
        Upon Senior Securities**
 
 N/A
 
 Item
        4.                           **Submission
        of Matters to a Vote of Securities Holders**
 
 N/A
 
 Item
        5.                               **Other
        Information**
 
 N/A
 
 Item
        6.                               **Exhibits**
  **31.1
          THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL
          EXECUTIVE OFFICER**
 **31.2
        THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL
        FINANCIAL OFFICER**
 **32.1
        SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE
        OFFICER**
 **32.2
        SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL
        OFFICER**
  -16-
 *Table
            of Contents*
  **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 IVBY:
                  COMMONWEALTH INCOME & GROWTH FUND, INC., General
                  Partner
 
 November
                  13, 2007
              By:/s/ Kimberly A. SpringsteenDate
              Kimberly
                  A. SpringsteenChief
                  Executive Officer
 
  -17-