UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 T QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 
 FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2009 or
 
  ̈ TRANSITION 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  T      NO   ̈
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).YES   ̈      NO   ̈
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definition of "accelerated filer,
“large accelerated filer" and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
 
 Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company T(Do
      not check if a smaller reporting company.)
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   YES   ̈NO  T
    
 
 1
  FORM
10-Q
 March
31, 2009
 TABLE
OF CONTENTS
 
 PART
      IItem
      1.
                Financial
      Statements
                3Item
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                13Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                17Item
      4T.
                Controls
      and Procedures
                17PART
      IIItem
      1.
                Legal
      Proceedings
                17Item
      1 A.
                Risk
      Factors
                18Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                18Item
      3.
                Defaults
      Upon Senior Securities
                18Item
      4.
                Submission
      of Matters to a Vote of Securities Holders
                18Item
      5.
                Other
      Information
                18Item
      6.
                Exhibits
                18
 
  2
  Part
I. FINANCIAL INFORMATION
 Item
1. Financial Statements
 
 Commonwealth
      Income & Growth Fund IVCondensed
      Balance SheetsMarch
      31,
                                                
                                                
                                                December 31,2009
                                                
                                                
                                                2008(unaudited)AssetsCash
                                                
                                                $
                                                64,156
                                                
                                                
                                                $
                                                952Lease
      income receivable, net of reserve of  $326,547 at March 31, 2009
      and December 31, 2008, respectively
                                                
                                                
                                                172,022
                                                
                                                
                                                
                                                194,452Accounts
      receivable, affiliated limited partnerships
                                                
                                                
                                                124
                                                
                                                
                                                
                                                4,826Refundable
      deposits
                                                
                                                
                                                1,130
                                                
                                                
                                                
                                                1,130Prepaid
      expenses
                                                
                                                
                                                1,240
                                                
                                                
                                                
                                                421238,672
                                                
                                                
                                                
                                                201,781Computer
      equipment, at cost
                                                
                                                
                                                5,517,673
                                                
                                                
                                                
                                                5,636,397Accumulated
      depreciation
                                                
                                                
                                                (4,655,014
                                                )
                                                
                                                
                                                (4,696,535
                                                )862,659
                                                
                                                
                                                
                                                939,862Equipment
      acquisition costs and deferred expenses, net of accumulated amortization
      of $40,831 at
                                                  March
      31, 2009 and  $51,128, at December 31, 2008,
      respectively
                                                
                                                
                                                23,287
                                                
                                                
                                                
                                                25,948Prepaid
      acquisition fees
                                                
                                                
                                                58,027
                                                
                                                
                                                
                                                60,81181,314
                                                
                                                
                                                
                                                86,759Total
      Assets
                                                
                                                $
                                                1,182,645
                                                
                                                
                                                
                                                1,228,402Liabilities
      and Partners' CapitalLiabilitiesAccounts
      payable
                                                
                                                $
                                                128,840
                                                
                                                
                                                $
                                                138,763Accounts
      payable, General Partner
                                                
                                                
                                                292,430
                                                
                                                
                                                
                                                291,603Accounts
      payable, CCC
                                                
                                                
                                                595,279
                                                
                                                
                                                
                                                618,684Other
      accrued expenses
                                                
                                                
                                                10,769
                                                
                                                
                                                
                                                -Unearned
      lease income
                                                
                                                
                                                40,810
                                                
                                                
                                                
                                                48,485Notes
      payable
                                                
                                                
                                                230,331
                                                
                                                
                                                
                                                294,636Total
      Liabilities
                                                
                                                
                                                1,298,459
                                                
                                                
                                                
                                                1,392,171Partners'
      CapitalGeneral
      partner
                                                
                                                
                                                1,000
                                                
                                                
                                                
                                                1,000Limited
      partners
                                                
                                                
                                                (116,814
                                                )
                                                
                                                
                                                (164,769
                                                )Total
      Partners' Capital
                                                
                                                
                                                (115,814
                                                )
                                                
                                                
                                                (163,769
                                                )Total
      Liabilities and Partners' Capital
                                                
                                                $
                                                1,182,645
                                                
                                                
                                                $
                                                1,228,402
 see
accompanying notes to condensed financial statements
   3
 
 Commonwealth
      Income & Growth Fund IVCondensed
      Statements of OperationsThree
      Months Ended
                                                      
                                                      
                                                      Three
      Months EndedMarch
      31,
                                                      
                                                      
                                                      March
      31,2009
                                                      
                                                      
                                                      2008(unaudited)
                                                      
                                                      
                                                      (unaudited)RevenueLease
                                                      
                                                      $
                                                      239,238
                                                      
                                                      
                                                      $
                                                      292,692Interest
      and other
                                                      
                                                      
                                                      270
                                                      
                                                      
                                                      
                                                      1,610Gain
      on sale of computer equipment
                                                      
                                                      
                                                      8,972
                                                      
                                                      
                                                      
                                                      5,187Total
      Revenue
                                                      
                                                      
                                                      248,480
                                                      
                                                      
                                                      
                                                      299,489ExpensesOperating,
      excluding depreciation
                                                      
                                                      
                                                      46,017
                                                      
                                                      
                                                      
                                                      106,909Equipment
      management fee, General Partner
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      14,720Interest
                                                      
                                                      
                                                      3,782
                                                      
                                                      
                                                      
                                                      5,593Depreciation
                                                      
                                                      
                                                      142,829
                                                      
                                                      
                                                      
                                                      219,743Amortization
      of equipment acquisition costs and deferred expenses
                                                      
                                                      
                                                      5,445
                                                      
                                                      
                                                      
                                                      9,163Bad
      debt expense
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (2,550
                                                      )Total
      expenses
                                                      
                                                      
                                                      198,073
                                                      
                                                      
                                                      
                                                      353,578Net
      income (loss)
                                                      
                                                      $
                                                      50,407
                                                      
                                                      
                                                      $
                                                      (54,089
                                                      )Net
      income (loss) allocated to limited partners
                                                      
                                                      $
                                                      50,407
                                                      
                                                      
                                                      $
                                                      (54,089
                                                      )Net
      income (loss) per equivalent limited partnership unit
                                                      
                                                      $
                                                      0.07
                                                      
                                                      
                                                      $
                                                      (0.07
                                                      )Weighted
      average number of equivalent limited partnership units outstanding during
      the period
                                                      
                                                      
                                                      749,400
                                                      
                                                      
                                                      
                                                      749,400
 
 see
accompanying notes to condensed financial statements
    4
  
 Commonwealth
      Income & Growth Fund IVCondensed
      Statements of Partners' CapitalFor
      the three months ended March 31, 2009(unaudited)General
      Partner Units
                  
                  
                  Limited
                    Partner
      Units
                  
                  
                  General
      Partner
                  
                  
                  Limited
      Partner
                  
                  
                  TotalBalance,
      January 1, 2009
                  
                  
                  50
                  
                  
                  
                  749,400
                  
                  
                  $
                  1,000
                  
                  
                  $
                  (164,769
                  )
                  
                  $
                  (163,769
                  )Net
      Income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  50,407
                  
                  
                  
                  50,407Forgiveness,
      payables
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  40,000
                  
                  
                  
                  40,000Contributions,
      CCC
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  50,192
                  
                  
                  
                  50,192Distributions
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (92,643
                  )
                  
                  
                  (92,643
                  )Balance,
      March 31, 2009
                  
                  
                  50
                  
                  
                  
                  749,400
                  
                  
                  $
                  1,000
                  
                  
                  $
                  (116,813
                  )
                  
                  $
                  (115,813
                  )
 see
accompanying notes to condensed financial statements
     5
  
 Commonwealth
      Income & Growth Fund IVCondensed
      Statements of Cash FlowThree
      Months ended
                                    
                                    
                                    Three
      Months endedMarch
      31,
                                    
                                    
                                    March
      31,2009
                                    
                                    
                                    2008(unaudited)
                                    
                                    
                                    (unaudited)Net
      cash provided by operating activities
                                    
                                    $
                                    162,309
                                    
                                    
                                    $
                                    226,290Investing
      activities:Capital
      Expenditures
                                    
                                    
                                    (19,413
                                    )
                                    
                                    
                                    (19,404
                                    )Prepaid
      acquisition fees
                                    
                                    
                                    2,784
                                    
                                    
                                    
                                    776Net
      proceeds from the sale of computer equipment
                                    
                                    
                                    12,951
                                    
                                    
                                    
                                    79,044Equipment
      acquisition fees, General Partner
                                    
                                    
                                    (2,784
                                    )
                                    
                                    
                                    (776
                                    )Net
      cash (used in) provided by investing activities
                                    
                                    
                                    (6,462
                                    )
                                    
                                    
                                    59,640Financing
      activities:Distributions
      to partners
                                    
                                    
                                    (92,643
                                    )
                                    
                                    
                                    (370,569
                                    )Net
      cash (used in) financing activities
                                    
                                    
                                    (92,643
                                    )
                                    
                                    
                                    (370,569
                                    )Net
      increase (decrease) in cash
                                    
                                    
                                    63,204
                                    
                                    
                                    
                                    (84,639
                                    )Cash
      beginning of period
                                    
                                    
                                    952
                                    
                                    
                                    
                                    91,908Cash
      end of period
                                    
                                    $
                                    64,156
                                    
                                    
                                    $
                                    7,269
 
 see
accompanying notes to condensed financial statements
   6
   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 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, acquires computer equipment
subject to associated debt obligations and lease agreements and allocates 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.
 
 The
Partnership had a negative working capital balance at March 31, 2009.  This
was primarily attributable to 2009 debt payments.  In an effort to increase
cash flow for the Fund, the General Partner partially funded distributions to
Limited partners during 2008 and the General Partner forgave certain fees owed
to it. Distributions were not funded by the General Partner during the
first quarter of 2009.  The General Partner forgave $40,000 of
payables owed to them by the Partnership during the first quarter of 2009 and
CCC made a non-cash capital contribution to the Partnership in the amount of
approximately $50,000.  Additionally, the General Partner elected to forgo
any distributions and allocations of net income owed to it during 2008 and
during the first quarter of 2009.   The General Partner will
continue to reassess the funding of limited partner distributions on a quarterly
basis in 2009 and will continue to waive certain fees if Management determines
it is in the best interest of the Partnership to do so.
 
 2.
Summary of Significant Accounting Policies
 
 Recent
Accounting Pronouncements
 
 In
September 2006, the FASB issued Statement of Financial Accounting Standards 157,
“Fair Value Measurements”(“SFAS 157”), which provides guidance on measuring the fair value of
assets and liabilities. SFAS 157 applies to other accounting pronouncements that
require or permit assets or liabilities to be measured at fair value but does
not expand the use of fair value to any new circumstances. This standard also
requires additional disclosures in both annual and quarterly reports.  As
of January 1, 2008 the Partnership adopted SFAS No. 157 for all financial
assets.  Adoption of this pronouncement did not impact the 2008 financial
statements of the Partnership.   In February 2008,  FASB issued
FSP FAS 157-2 to provide a one-year deferral of the effective date of Statement
157 for nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed in financial statements at fair value on a recurring
basis (that is, at least annually).  The adoption of SFAS 157-2 on
January 1, 2009 did not have a material impact on the Partnership’s financial
statements.
 
 7
  In
January 2009, FASB issued FSP EITF 99-20-1, “Amendments to the Impairment
Guidance of EITF Issue No. 99-20 (“FSP EITF 99-20-1”). FSP EITF 99-20-1 is
effective for interim and annual periods ending after December 15, 2008.
Retroactive application is not permitted. The adoption of FSP EITF 99-20-1 did
not have a significant impact on the Partnership’s financial position or results
of operations.
 
 In April
2009, the FASB issued FASB Staff Position No. 107-1 (“FSP FAS 107-1”) and APB
28-1 (“APB 28-1”), which amends FASB Statement No. 107, Disclosures about Fair
Value of Financial Instruments and APB Opinion NO. 28, Interim Financial
Reporting, to require disclosures about the fair value of financial instruments
for interim reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for
interim reporting periods ending after June 15, 2009. The adoption of this staff
position is not expected to have a material impact on the Partnership’s
financial position or results of operation
 
 Basis
of Presentation
 
 The
financial information presented as of any date other than December 31, 2008 has
been prepared from the books and records without audit.  Financial
information as of December 31, 2008 has been derived from the audited financial
statements of the Partnership, but does not include all disclosures required by
generally accepted accounting principles to be included in audited financial
statements.  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, 2008.  Operating results for the three months ended March
31, 2009 are not necessarily indicative of financial results that may be
expected for the full year ended December 31, 2009.
 
 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 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,
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 determined that no impairment
existed during the three months ended March 31, 2009 and 2008.
 
 Depreciation
on computer equipment for financial statement purposes is based on the
straight-line method estimated generally over useful lives of three or four
years.
 
 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.  For
example, if the Partnership has more investors than another program sponsored by
CCC, then higher amounts of expenses related to investor services, mailing and
printing costs will be allocated to the Partnership.  Also, while a
Partnership is in its offering stage, higher compliance costs are allocated to
it than to a program not in its offering stage, as compliance resources are
utilized to review incoming investor suitability and proper documentation. 
Finally, lease related expenses, such as due diligence, correspondence,
collection efforts and analysis staff costs, increase as programs purchase more
leases, and decrease as leases terminate and equipment is sold. All of these
factors contribute to CCC’s determination as to the amount of expenses to
allocate to the Partnership or to other sponsored programs.  For the
Partnership, all reimbursable expenses are expensed as they are
incurred.
 
 8
  Forgiveness
of Related Party Payables
 
 In
accordance with Accounting Principles Board Opinion No. 26, Early Extinguishment of Debt,
the Partnership accounts for forgiveness of related party payables as partner’s
capital transactions.
 
 Cash
 
 At March
31, 2009 cash was held in two accounts maintained at one financial institution.
The accounts were, in the aggregate, federally insured for up to
$250,000.  At March 31, 2009, the total cash balance was as follows
and did not exceed the federally insured limit of $250,000:
 
 At
      March 31, 2009Total
      balance Bank
                                      
                                      $
                                      162,000FDIC
      insurable limit
                                      
                                      $
                                      250,000
 
 The
Partnership can mitigate this risk by depositing funds with more than one
institution and by only depositing funds with major financial institutions. The
Partnership has not experienced any losses in such accounts, and believes it is
not exposed to any significant credit risk. The amount in such accounts will
fluctuate throughout 2009 due to many factors, including the pace of additional
revenues, equipment acquisitions and distributions.
 
 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
generally ranging from 12 to 48 months. In general, associated costs such as
repairs and maintenance, insurance and property taxes are paid by the
lessee.
 
 Through
March 31, 2009, 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 three months ended March 31, 2009 and 2008,
remarketing fees were incurred in the amounts of $37,000 and $7,000,
respectively. For the three months ended March 31, 2009 and 2008 remarketing
fees were paid in the amount of $43,217 and $9,000,
respectively.
 
 9
  The
Partnership’s share of the computer equipment in which it participates with
other partnerships at March 31, 2009 and December 31, 2008 was approximately
$1,156,000 and $1,323,000, respectively, and 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 March 31, 2009 and December
31, 2008 was approximately $9,733,000 and $9,888,000,
respectively.  The Partnership’s share of the outstanding debt
associated with this equipment at March 31, 2009 and December 31, 2008 was
approximately $202,000 and $251,000, respectively.  The total
outstanding debt associated with this equipment at March 31, 2009 and December
31, 2008 was approximately $3,066,000 and $3,477,000, respectively.
 
 The
following is a schedule of future minimum rentals on noncancellable operating
leases at March 31, 2009:
 
 AmountNine
      months ended December 31, 2009
                              
                              $
                              468,259Year
      Ended December 31, 2010
                              
                              
                              121,482Year
      Ended December 31, 2011
                              
                              
                              49,630Year
      Ended December 31, 2012
                              
                              
                              2,086$
                              641,457
 
 4.
Related Party Transactions
 
 Forgiveness
of Related Party payables
 
 During
the three months ended March 31, 2009, CCC and the General Partner forgave
payables owed to them by the Partnership in the amount of approximately
$40,000.
 
 Reimbursable
Expenses
 
 See
“Summary of Significant Accounting Policies – Reimbursable Expenses”
above.
 During
the three months ended March 31, 2009 the Partnership recorded approximately
$16,000 for reimbursement of expenses to the General Partner.  During
the three months ended March 31, 2008, the Partnership recorded approximately
$113,000 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 three months ended March 31,
2009 and 2008, equipment acquisition fees of approximately $3,000 and $800 were
earned bythe
General Partner.  The remaining balance of approximately $58,000 will
be earned in future periods.
 
 10
  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.  There were no debt placement fees earned by the General
Partner for the three months ended March 31, 2009 and 2008.
 
 Equipment
Management Fee
 
 The
General Partner is entitled to be paid a monthly fee equal to the lesser of (i)
the fees which would be charged by an independent third party for similar
services for similar equipment or (ii) the sum of (a) two percent of (1) the
gross lease revenues attributable to equipment which is subject to full payout
net leases which contain net lease provisions plus (2) the purchase price paid
on conditional sales contracts as received by the Partnership and (b) 5% of the
gross lease revenues attributable to equipment which is subject to operating and
capital leases.  For the three months ended March 31, 2009 equipment
management fees of approximately $12,000 were earned and were waived by the
General Partner. For the three months ended March 31, 2008 equipment management
fees of approximately $15,000 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
(i) a return of their net capital contributions and a 10% per annum cumulative
return, compounded daily, on adjusted capital contributions and (ii) 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 three months
ended March 31, 2009 and 2008, equipment liquidation fees of approximately
$1,000 and $2,500, respectively, were earned by the General
Partner.
 
 5.
Notes Payable
 
 Notes
payable consisted of the following:
 
 March
      31, 2009
                                    
                                    
                                    December
      31, 2008Installment
      notes payable to banks; interest ranging from 5.90% to 6.25% due in
      quarterly installments ranging from $859 to $22,096, including interest,
      with final payments from January through October 2009
                                    
                                    $
                                    132,203
                                    
                                    
                                    $
                                    186,155Installment
      notes payable to bank; interest at 5.75% due in quarterly installments
      ranging from $2,528 to $5,083, including interest, with final payments
      from January through July 2011
                                    
                                    
                                    98,128
                                    
                                    
                                    
                                    108,481$
                                    230,331
                                    
                                    
                                    $
                                    294,636
 
 11
  The notes
are secured by specific computer equipment and are nonrecourse liabilities of
the Partnership.  As such, the notes do not contain any debt covenants
with which we must comply on either an annual or quarterly
basis.  Aggregate maturities of notes payable for each of the periods
subsequent to March 31, 2009 are as follows:
 
 AmountNine
      months ended December 31, 2009
                                    
                                    $
                                    163,087Year
      ended December 31, 2010
                                    
                                    
                                    43,292Year
      ended December 31, 2011
                                    
                                    
                                    23,952$
                                    230,331
 
 At March
31, 2009 and December 31, 2008, the estimated fair value of our debt
approximates the carrying value of such instruments due to the interest rates on
such debt approximating current market rates.
 
 6.
Supplemental Cash Flow Information
 
 Other
noncash activities included in the determination of net loss are as
follows:
 
 Three
      months ended March 31,
                                      
                                      2009
                                      
                                      
                                      2008Lease
      income, net of interest expense on notes payable realized as a result of
      direct payment
                                        of
      principal by lessee to bank
                                      
                                      $
                                      64,607
                                      
                                      
                                      $
                                      93,561
 
 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:
 
 Three
      months ended March 31,
                              
                              2009
                              
                              
                              2008Forgiveness
      of related party payables recorded as a capital
    contribution
                              
                              $
                              40,000
                              
                              
                              $
                              -Capital
      Contribution- equipment transfer from CCC
                              
                              $
                              50,192
                              
                              
                              $
                              -Equipment
      acquisition fees earned by General Partner upon purchase of equipment from
      prepaid acquisition fees
                              
                              $
                              2,784
                              
                              
                              $
                              776
 
  12
   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,” “expect,” “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 estimated generally over useful lives of three or four
years.
 
 REVENUE
RECOGNITION
 
 Through
March 31, 2009, 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.
 
 13
  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 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,
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 determined that no impairment
existed during the three months ended March 31, 2009 and 2008.
 
 Depreciation
on computer equipment for financial statement purposes is based on the
straight-line method estimated generally over useful lives of three or four
years.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 The
Partnership’s primary source of capital for the three months ended March 31,
2009 was cash provided by operating activities of approximately $162,000 and
proceeds from the sale of computer equipment in the amount of approximately
$13,000. The Partnership’s primary source of capital for the three months
ended March 31, 2008 was cash provided by operating activities of approximately
$226,000 and proceeds from the sale of computer equipment of approximately
$79,000.   The primary uses of cash for the three months ended March
31, 2009 and 2008 were for capital expenditures for new equipment of $19,000,
respectively, and the payment of distributions to partners of approximately
$93,000 and $371,000, respectively.
 
 While the
Partnership intends to invest additional capital in equipment during the
remainder of 2009, the amount of such additional investment is uncertain, as
available funds will first be committed to the payment of investor distributions
and operating expenses.
 
 For the
three months ended March 31, 2009, the Partnership generated cash flows from
operating activities of approximately $163,000, which includes net income of
approximately $50,000, a gain on sale of equipment of approximately
$9,000 and depreciation and amortization expenses of approximately
$148,000. Other non-cash activities included in the determination of net income
include direct payments of lease income by lessees to banks of approximately
$65,000.
 
 14
  For the
three months ended March 31, 2008, the Partnership generated cash flows from
operating activities of approximately $226,000, which includes a net loss of
approximately $54,000, a gain on sale of equipment of approximately
$5,000, and depreciation and amortization expenses of approximately
$229,000. Other non-cash activities included in the determination of net income
include direct payments of lease income by lessees to banks of approximately
$94,000.
 
 At March
31, 2009 cash was held in two accounts maintained at one financial institution.
The accounts were, in the aggregate, federally insured for up to
$250,000.  At March 31, 2009, the total cash balance was as follows
and did not exceed the federally insured limit of $250,000:
  At
      March 31, 2009Total
      balance Bank
              
              $
              162,000FDIC
      insurable limit
              
              $
              250,000
  The
Partnership can mitigate this risk by depositing funds with more than one
institution and by only depositing funds with major financial institutions. The
Partnership has not experienced any losses in such accounts, and believes it is
not exposed to any significant credit risk. The amount in such accounts will
fluctuate throughout 2009 due to many factors, including the pace of additional
revenues, equipment acquisitions and distributions.
 
 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 March 31, 2009, the Partnership had future minimum
rentals on non-cancelable operating leases of approximately $468,000 for the
balance of the year ending December 31, 2009 and approximately $173,000
thereafter.  At March 31, 2009, the outstanding debt was approximately
$230,000, with interest rates ranging from 5.75% to 6.25%, and will be payable
through July 2011.
 
 The
Partnership had a negative working capital balance at March 31, 2009.  This
was primarily attributable to 2009 debt payments.  In an effort to increase
cash flow for the Fund, the General Partner partially funded distributions to
Limited partners during 2008 and the General Partner forgave certain fees owed
to it. Distributions were not funded by the General Partner during the
first quarter of 2009.  The General Partner forgave $40,000 of
payables owed to them by the Partnership during the first quarter of 2009 and
CCC made a non-cash capital contribution to the Partnership in the amount of
approximately $50,000.  Additionally, the General Partner elected to forgo
any distributions and allocations of net income owed to it during 2008 and
during the fist quarter of 2009.   The General Partner will
continue to reassess the funding of limited partner distributions on a quarterly
basis in 2009 and will continue to waive certain fees if Management determines
it is in the best interest of the Partnership to do so.   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.  Since the Partnership’s leases
are on a triple-net basis, no reserve for maintenance and repairs is deemed
necessary.  The Partnership’s cash from operations is expected to be
adequate to cover all operating expenses, liabilities, and distributions to
Partners during the next 12-month period.
 
  15
  RESULTS
OF OPERATIONS
 
 Three Months Ended March 31,
2009 compared to Three Months March 31, 2008
 
 For the
three months ended March 31, 2009, the Partnership recognized revenue of
approximately $248,000, and expenses of approximately $198,000 resulting in a
net gain of approximately $50,000.  For the three months ended March
31, 2008, the Partnership recognized revenue of approximately $300,000, and
expenses of approximately $354,000, resulting in net loss of approximately
$54,000.
 
 Lease
revenue decreased by 18% to $239,000 for the three months ended March 31, 2009,
from $293,000 for the three months ended March 31, 2008.  This
decrease was primarily due to more lease agreements ending versus new lease
agreements being acquired during the three months ended March 31,
2009.
 
 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.  These expenses
decreased 57% to approximately $46,000 for the three months ended March 31,
2009, from $107,000 for the three months ended March 31, 2008. This decrease is
primarily attributable to a decrease in accounting, legal and storage fees.
Additionally, no other limited partner expenses were charged to the Partnership
for the three months ended March 31, 2009.  This decrease was
partially offset by an increase in remarketing fees for the three months ended
March 31, 2009.
  The
equipment management fee is approximately 5% of the gross lease revenue
attributable to equipment that is subject to operating leases. The General
Partner waived equipment management fees of approximately $12,000 for the three
months ended March 31, 2009.  This fee was approximately $15,000 for
the three months ended March 31, 2008.
 
 Depreciation
and amortization expenses consist of depreciation on computer equipment,
including impairment charges, and amortization of equipment acquisition fees.
The expenses decreased 35% to approximately $148,000 for the three months ended
March 31, 2009, from $229,000 for the three months ended March 31, 2008 due to
equipment and acquisition fees being fully depreciated/amortized and not being
replaced with as many new purchases.
 
 The
Partnership sold computer equipment with a net book value of approximately
$4,000 for the three months ended March 31, 2009, for a net gain of
approximately $9,000.  The Partnership sold computer equipment with a
net book value of approximately $74,000 for the three months ended March 31,
2008, for a net gain of approximately $5,000.
   16
  Item
3.Quantitative and
Qualitative Disclosures About Market Risk
 
 N/A
 
 Item
4T.  Controls and Procedures
 
 Our
management, under the supervision and with the participation of the principal
executive officer and principal financial offer, have evaluated the
effectiveness of our controls and procedures related to our reporting and
disclosure obligations as of March 31, 2009 which is the end of the period
covered by this Quarterly Report on Form 10-Q.  Based on that
evaluation, the principal executive officer and principal financial officer have
concluded that our disclosure controls and procedures are effective to provide
that (a) material information relating to us, including our consolidated
affiliates is made known to these officers by us and our consolidated
affiliates’ other employees, particularly material information related to the
period for which this periodic report is being prepared; and (b) this
information is recorded, processed, summarized, evaluated and reported, as
applicable, within the time periods specified in the rules and forms promulgated
by the Securities and Exchange Commission.  There have been no
significant changes in the General Partner’s internal controls or in other
factors that could significantly affect our disclosure controls and procedures
in the first quarter of 2009 or subsequent to the date of the
evaluation.
 
 Part
II:                      OTHER
INFORMATION
 
 Item
1.                                Legal Proceedings
 
 The
Allserve bankruptcy proceedings remain open. Please see the description of the
Allserve bankruptcy in the Partnership’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2008 under the heading “Legal Proceedings” for a
more complete description of this matter.  From December 31, 2008 through
May 15, 2009, no material changes have occurred in the status of this
matter.
 
 As of
March 31, 2009, the Partnership had approximately $70,000 in accounts receivable
due from Chrysler LLC.  In light of Chrysler’s recent filing for Chapter 11
bankruptcy protection on April 30, 2009, we believe that a portion of that
amount may be uncollectible.  Prior to their bankruptcy filing, the fund
reserved approximately $43,000, due to trouble in collections efforts. 
Once Chrysler’s reorganization plan is confirmed, we expect to know which of
their leases will be affirmed or rejected.  Based on information currently
available, we believe there is a significant likelihood that the past due
amounts will be collectible, therefore we believe the current amount of reserve
is adequate through the quarter ended March 31, 2009.  As further
information becomes available in future periods, the Fund may need to increase
its reserve to cover potential loss exposure.
  17
   Item
      1A.
              Risk
      Factors
 
 Changes
in economic conditions could materially and negatively affect our
business.
  Our
business is directly impacted by factors such as economic, political, and market
conditions, broad trends in industry and finance, legislative and regulatory
changes, changes in government monetary and fiscal policies, and inflation, all
of which are beyond our control.  Beginning in 2008 and continuing
through the first quarter of 2009, general worldwide economic conditions
experienced a downturn due to the sequential effects of the subprime lending
crisis, general credit market crisis, collateral effects on the finance and
banking industries, increased energy costs, concerns about inflation, slower
economic activity, decreased consumer confidence, reduced corporate profits and
capital spending, adverse business conditions and liquidity concerns.  A
deterioration in economic conditions, whether caused by national or local
concerns, especially within our market area, could result in the following
consequences, any of which could hurt business materially: lease delinquencies
may increase; problem leases and defaults could increase; and demand for
information technology products generally may decrease as businesses attempt to
reduce expenses.
 
 Item
      2.
              Unregistered
      Sales of Equity Securities and Use of ProceedsN/AItem
      3.
              Defaults
      Upon Senior SecuritiesN/AItem
      4.
              Submission
      of Matters to a Vote of Securities HoldersN/AItem
      5.
              Other
      InformationN/AItem
      6.
              Exhibits
  18
 
 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
 
 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
    PartnerMay 15, 2009
                  By:/s/ Kimberly A.
      Springsteen-AbbottDate
                  Kimberly
      A. Springsteen-AbbottChief
      Executive OfficerMay 15, 2009
                  By:/s/ Lynn A.
FranceschinaDate
                  Lynn
      A. FranceschinaExecutive
      Vice President, Chief Operating Officer