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 JUNE 30, 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
 June 30, 2009
 TABLE OF CONTENTS
 
 PART IItem 1.
Financial Statements
3Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
14Item 3.
Quantitative and Qualitative Disclosures About Market Risk
18Item 4T.
Controls and Procedures
18PART IIItem 1.
Legal Proceedings
18Item 1 A.
Risk Factors
19Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
19Item 3.
Defaults Upon Senior Securities
19Item 4.
Submission of Matters to a Vote of Securities Holders
19Item 5.
Other Information
19Item 6.
Exhibits
19
 
  2
  Part I. FINANCIAL INFORMATION
 Item 1. Financial Statements
 
 Commonwealth Income & Growth Fund IVCondensed Balance SheetsJune 30,


December 31,2009


2008(unaudited)AssetsCash

$
67,189


$
952Lease income receivable, net of reserve of  $336,547 and $326,547, at June 30, 2009 and December 31, 2008 respectively


142,431



194,452Accounts receivable, affiliated limited partnerships


123



4,826Refundable Deposits


1,130



1,130Prepaid expenses


668



421211,541



201,781Computer equipment, at cost


5,534,862



5,636,397Accumulated depreciation


(4,744,485
)


(4,696,535
)790,377



939,862Equipment acquisition costs and deferred expenses, net of accumulated amortization of $42,674
at June 30, 2009 and $51,128, at December 31, 2008  respectively


20,920



25,948Prepaid acquisition fees


55,057



60,81175,977



86,759Total Assets

$
1,077,895


$
1,228,402Liabilities and Partners' CapitalLiabilitiesAccounts payable

$
114,643


$
138,763Accounts payable, General Partner


292,517



291,603Accounts payable, Commonwealth Capital Corp.


576,060



618,684Other accrued expenses


894



-Unearned lease income


26,286



48,485Notes payable


165,589



294,636Total Liabilities


1,175,989



1,392,171Partners' CapitalGeneral partner


1,000



1,000Limited partners


(99,094
)


(164,769
)Total Partners' Capital


(98,094
)


(163,769
)Total Liabilities and Partners' Capital

$
1,077,895


$
1,228,402
 
 see accompanying notes to condensed financial statements
 
  3
  
 
 
 Commonwealth Income & Growth Fund IVCondensed Statements of Operations(unaudited)Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008RevenueLease

$
225,650


$
248,140


$
464,888


$
540,832Interest and other


173



4,953



443



6,563Gain on sale of computer equipment


-



-



1,262



-Total revenue


225,823



253,093



466,593



547,395ExpensesOperating, excluding depreciation


52,917



155,526



98,934



262,435Equipment management fee, General Partner


-



-



-



14,720Interest


3,345



4,510



7,127



10,103Depreciation


136,062



171,140



278,891



390,884Amortization of equipment acquisition costs and deferred expenses


5,336



7,664



10,781



16,827Bad debt expense


10,000



-



10,000



(2,550
)Loss on sale of computer equipment


7,710



19,307



-



14,119Total expenses


215,370



358,147



405,733



706,538Net income (loss)

$
10,453


$
(105,054
)

$
60,860


$
(159,143
)Net income (loss) allocated to limited partners

$
10,453


$
(105,054
)

$
60,860


$
(159,143
)Net income (loss) per equivalent limited partnership unit

$
0.01


$
(0.14
)

$
0.08


$
(0.21
)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
  4
  
 Commonwealth Income & Growth Fund IVCondensed Statements of Partners' CapitalFor the six months ended June 30, 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
-
-
-
60,860
60,860Forgiveness, payables
-
-
-
78,961
78,961Contributions, CCC
-
-
-
111,140
111,140Distributions
-
-
-
(185,286)
(185,286)Balance, June 30, 2009
50
749,400
$                  1,000
$             (99,094)
$            (98,094)
 
 see accompanying notes to condensed financial statements
  5
  
 Commonwealth Income & Growth Fund IVCondensed Statements of Cash Flow(unaudited)Six Months ended


Six Months endedJune 30,


June 30,2009


2008Net cash provided by operating activities

$
268,525


$
750,088Investing activities:Capital Expenditures


(32,717
)


(37,823
)Prepaid acquisition fees


-



(1,324
)Net proceeds from the sale of computer equipment


15,715



167,789Net cash (used in) provided by investing activities


(128,142
)


128,642Financing activities:Distributions to partners


(185,286
)


(739,703
)Debt placement fee paid to General Partner


-



(282
)Net cash (used in) financing activities


(74,146
)


(739,985
)Net increase in cash


66,237



138,745Cash beginning of period


952



91,908Cash end of period

$
67,189


$
230,653
 
 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 June 30, 2009.  This was primarily attributable to 2009 debt payments.  In an effort to increase cash flow for the Fund the General Partner forgave $79,000 of payables owed to them by the Partnership during the six months ended June 30, 2009 and CCC made a non-cash capital
contribution of equipment to the Partnership in the amount of approximately $111,000. Additionally, the General Partner elected to forgo any distributions and allocations of net income owed to it during 2008 and during the first and second quarters 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  June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification (Codification) and the Hierarchyof GAAP(“SFAS 168”), which replaces SFAS No. 162, The
Hierarchy of GAAPand establishes the Codification as the single source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities.  SEC rules and interpretive releases are also sources of authoritative GAAP for SEC registrants.  SFAS 168 modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative.  SFAS 168 is effective for interim and annual periods ending after September 15, 2009.  As SFAS 168
is not intended to change or alter existing GAAP, it will not impact the Partnership’s condensed financial statements.  The Partnership will adjust historical GAAP references in its third quarter 2009 Form 10-Q to reflect accounting guidance references included in the Codification.
 
 In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R)(“SFAS 167”), which amended certain requirements of FIN 46R to improve financial reporting disclosure by companies involved with variable interest entities and to provide
more relevant and reliable information to users of financial statements. SFAS 167 is effective for annual reporting periods beginning after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter, with early adoption prohibited. The Partnership is currently evaluating the potential impact of the adoption of SFAS 167 on its condensed financial statements.
 
 7
 In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140(“SFAS 166”), which was issued to improve the relevance, representational faithfulness, and comparability of the information that
a reporting entity provides in its financial statements about (1) a transfer of its financial assets, (2) the effects of such a transfer on its financial position, financial performance, and cash flows, and (3) a reporting entity’s continuing involvement, if any, in the transferred financial assets. SFAS 166 is effective for annual reporting periods beginning after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods
thereafter, with early adoption prohibited. The Partnership is currently evaluating the potential impact of the adoption of SFAS 166, but does not believe that it will have a material impact on its financial statements.
 
 In May 2009, the FASB issued SFAS No. 165, Subsequent Events(“SFAS 165”), which sets forth principles and requirements for subsequent events, specifically (1) the period during which management should evaluate events or transactions that may occur for potential
recognition and disclosure, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, and (3) the disclosures that an entity should make about events and transactions occurring after the balance sheet date. SFAS 165 is effective for interim reporting periods ending after June 15, 2009. The Partnership adopted SFAS 165 during the second quarter of 2009 and it did not have a material impact on the Partnership’s condensed financial
statements.
 
 In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments(“FAS 115-2 and FAS 124-2”).  This FSP provides a framework to perform an other-than-temporary impairment analysis, in compliance with GAAP,
which determines whether the holder of an investment in a debt or equity security, for which changes in fair value are not regularly recognized in earnings, should recognize a loss in earnings when the investment is impaired.  Additionally this FSP amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.   FAS
115-2 is effective for interim reporting periods ending after June 15, 2009.  The Partnership adopted FAS 115-2 and FAS 124-2 in the quarter ended June 30, 2009.  The adoption did not have a material impact on the Partnership’s condensed financial statements.
 
 In April 2009, the Financial Accounting Standards Board (FASB) issued Staff Position (FSP) FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments(FSP FAS 107-1 and APB 28-1), which amends Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures
about Fair Value of Financial Instruments, to require disclosures about the fair value of financial instruments for interim reporting periods, as well as annual reporting periods. FSP FAS 107-1 and APB 28-1 are effective for all interim and annual reporting periods ending after June 15, 2009 and shall be applied prospectively.  The Partnership adopted FSP 107-1 in the second quarter of 2009. Except for the disclosure requirements, the adoption of FSP 107-1 and APB 28-1 did not have a material impact
on the Partnership’s condensed financial statements.
 
 In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activityfor the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly(“FAS
157-4”).  This FSP provides additional guidance for estimating fair value in accordance with FASB Statement No. 157 when the volume and level of activity for the asset or liability have significantly decreased and provides guidance on identifying circumstances that indicate a transaction is not orderly.  FAS 157-4 is effective for interim reporting periods ending after June 15, 2009.  The Partnership adopted FAS 157-4 in the quarter ended June 30, 2009.  The adoption did not have
a material impact on the Partnership’s condensed financial statements.
 
 8
 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 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 Partnership adopted
the provisions of FSP FAS 157-2 in the quarter ended March 31, 2009.  The required provisions did not have a material impact on the Partnership’s condensed financial statements.
 
 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 six months ended June 30, 2009 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2009.
 
 Pursuant to Statement of Financial Accounting Standards No. 165 (“FASB No. 165”), subsequent events have been evaluated through August 12, 2009, the date these financial statements were available to be issued, and there were no subsequent events to be reported.
 
 Disclosure of Fair Value of Financial Instruments
 
 Effective April 2009, the Partnership has adopted Financial Accounting Standards Board Staff Position SFAS 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP SFAS 107-1 and APB 28-1). The FSP amends SFAS 107 to require disclosures about fair value of
financial instruments in both interim and annual financial statements. This FSP also amends APB 28 to require those disclosures in summarized financial information at interim reporting periods.
 
 9
 Estimated fair value was determined by management using available market information and appropriate valuation methodologies.  However, judgment was necessary to interpret market data and develop estimated fair value.  The partnership holds no financial instruments, except notes payable. Cash, receivables, accounts payable,
and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of June 30, 2009 and December 31, 2008.
 
 The Partnership’s long-term debt consists of notes payable, which are secured by specific computer equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at June 30, 2009 and December 31, 2008 approximates the carrying value of these instruments, due to the interest rates approximating current
market values.
 
 Disclosure about fair value of financial instruments is based on pertinent information available to management as of June 30, 2009 and December 31, 2008.
 
 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 at June 30, 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.
 
 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 Partners’ capital transactions.
 
 Cash
 
 At June 30, 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 June 30, 2009, the total cash balance was as follows and did not exceed the federally insured limit of $250,000:
 
 At June 30, 2009Total bank balance

$
165,789FDIC insurable limit

$
250,000
 
 The Partnership mitigates this risk 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.
 
 10
 
 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.
 
 Reclassification
 
 Certain prior amounts have been reclassified to conform to the current presentation. The net results of the reclassifications did not have an impact on the Partnership’s previously reported financial position, cash flows, or results of operations.
 
 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 June 30, 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 six months ended June 30, 2009 and 2008, remarketing fees were incurred in the amount of approximately $46,000 and $50,000, respectively. For the six months ended June 30, 2009 and 2008 remarketing fees were paid in the amount of approximately $81,000 and $9,000, respectively.
 
 The Partnership’s share of the computer equipment in which it participates with other partnerships at June 30, 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 June 30, 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 June 30, 2009 and December 31, 2008 was approximately $152,000 and $251,000, respectively.  The total outstanding debt associated with this equipment at June 30, 2009 and December 31, 2008 was approximately $2,658,000 and $3,477,000, respectively.
 
 11
 The following is a schedule of future minimum rentals on noncancellable operating leases at June 30, 2009:
 
 AmountSix months ended December 31, 2009

$
221,574Year Ended December 31, 2010


140,803Year Ended December 31, 2011


66,082Year Ended December 31, 2012


9,319$
437,778
 
 4. Related Party Transactions
 
 Forgiveness of Related Party payables
 
 During the six months ended June 30, 2009, CCC and the General Partner forgave payables owed to them by the Partnership in the amount of approximately $79,000. CCC made a non-cash capital contribution of equipment to the Partnership in the amount of approximately $111,000 during the six months ended June 30, 2009.
 
 Reimbursable Expenses
 
 See “Summary of Significant Accounting Policies – Reimbursable Expenses” above.
 During the six months ended June 30, 2009 the Partnership recorded approximately $55,000 for reimbursement of expenses to the General Partner.  During the six months ended June 30, 2008, the Partnership recorded approximately $223,000 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 six months ended June 30, 2009 and 2008, equipment acquisition
fees of approximately $6,000 and $3,000 were earned bythe General Partner. As of June 30, 2009, the Partnership had a remaining balance of approximately $55,000 which will be earned in future periods.
 
 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 six months ended June 30, 2009 there were no such fees earned by the General Partner. For the six months ended 2008, debt placement fees of $300 were earned by the General Partner.
 
 12
 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 six months ended June 30, 2009 equipment management fees of approximately $23,000 were earned but were waived by the General Partner. For the six months ended June 30, 2008, equipment management fees of approximately $27,000 were earned by the General Partner and of this
amount, approximately $12,000 was waived by the General Partner in order to assist in the operating results of the Partnership.
 
 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 fees will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties.  For the six months ended June 30, 2009 and 2008, equipment liquidation fees of approximately
$1,000 and $5,000, respectively, were earned by the General Partner.
 
 5. Notes Payable
 
 Notes payable consisted of the following:
 
 June 30, 2009


December 31, 2008Installment notes payable to banks; interest ranging from 5.90% to 6.25% due in monthly and quarterly installments ranging from $859 to $22,096, including interest, with final payments from January through October 2009

$
77,610


$
186,155Installment notes payable to banks; 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


87,979



108,481$
165,589


$
294,636
 
 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 June 30, 2009 are as follows:
 
 AmountSix months ended December 31, 2009

$
98,346Year ended December 31, 2010


43,291Year ended December 31, 2011


23,952$
165,589
 
 13
 
 6. Supplemental Cash Flow Information
 
 Other noncash activities included in the determination of net loss are as follows:
 
 Six months ended June 30,

2009


2008Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank

$
129,047


$
163,430
 
 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:
  Six months ended June 30,

2009


2008Forgiveness of related party payables recorded as a capital contribution

$
78,961


$
52,053Capital Contribution- equipment transfer from CCC

$
111,140


$
-Debt assumed in connection with purchase of computer equipment

$
-


$
28,165Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees

$
5,754


$
2,640
 
 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.
  14
 
 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 June 30, 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. 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 at June 30, 2009 and 2008.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 The Partnership’s primary source of cash for the six months ended June 30, 2009 was cash provided by operating activities of approximately $269,000 and proceeds from the sale of computer equipment in the amount of approximately $16,000.  Equipment was purchased in the amount of approximately $33,000 and distributions to partners
were approximately $185,000.
 
 The Partnership’s primary source of cash for the six months ended June 30, 2008 were net proceeds received from sale of equipment of approximately $168,000.  The Partnership’s primary uses of cash for the six months ended June 30, 2008 were for capital expenditures for new equipment of approximately $38,000 and the payment
of distributions to partners of approximately $740,000.
 
 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.
 
 15
 
 For the six months ended June 30, 2009, the Partnership generated cash flows from operating activities of approximately $269,000, which includes net income of approximately $61,000, a gain on sale of equipment of approximately $1,000 and depreciation and amortization expenses of approximately $290,000. Other non-cash activities included
in the determination of net income include direct payments of lease income by lessees to banks of approximately $129,000.
 
 For the six months ended June 30, 2008, the Partnership generated cash flows from operating activities of approximately $750,000, which includes a net loss of approximately $159,000, a loss on sale of equipment of approximately $14,000, payables to CCC of approximately $526,000 and depreciation and amortization expenses of approximately
$408,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $163,000.
 
 At June 30, 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 June 30, 2009, the total cash balance was as follows and did not exceed the federally insured limit of $250,000:
 At June 30, 2009Total bank balance

$
165,789FDIC insurable limit

$
250,000
  The Partnership mitigates this risk 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 June 30, 2009, the Partnership had future minimum rentals on non-cancelable operating leases of
approximately $222,000 for the balance of the year ending December 31, 2009 and approximately $216,000 thereafter.  At June 30, 2009, the outstanding debt was approximately $166,000, 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 June 30, 2009.  This was primarily attributable to 2009 debt payments.  In an effort to increase cash flow for the Fund the General Partner forgave $79,000 of payables owed to them by the Partnership during the six months ended June 30, 2009 and CCC made a non-cash capital
contribution of equipment to the Partnership in the amount of approximately $111,000. Additionally, the General Partner elected to forgo any distributions and allocations of net income owed to it during 2008 and during the first and second quarters 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.
 
 RESULTS OF OPERATIONS
 
 Three Months Ended June 30, 2009 compared to Three Months June 30, 2008
 
 For the three months ended June 30, 2009, the Partnership recognized revenue of approximately $226,000, and expenses of approximately $215,000 resulting in net income of approximately $11,000.  For the three months ended June 30, 2008, the Partnership recognized revenue of approximately $253,000, and expenses of approximately $358,000,
resulting in net loss of approximately $105,000.
 
 Lease revenue decreased by 9% to $226,000 for the three months ended June 30, 2009, from $248,000 for the six months ended June 30, 2008.  This decrease was primarily due to more lease agreements ending versus new lease agreements being acquired during the three months ended June 30, 2009.
 
 16
 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 66% to approximately $53,000 for the three months ended June 30, 2009, from $156,000 for the
three months ended June 30, 2008. In addition to decreases in accounting, legal and various administrative expenses, this decrease is primarily attributable to management’s decision to waive limited partner expenses during the three months ended June 30, 2009.  See “Summary of Significant Accounting Policies Reimbursable Expenses,” in note 2.
 
 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 $11,000 and $12,000 for the three months ended June 30, 2009 and 2008, respectively.
 
 Depreciation and amortization expenses consist of depreciation on computer equipment, including impairment charges, and amortization of equipment acquisition fees. These expenses decreased 21% to approximately $141,000 for the three months ended June 30, 2009, from $179,000 for the three months ended June 30, 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 $10,000 for the three months ended June 30, 2009, for a net loss of approximately $8,000.  The Partnership sold computer equipment with a net book value of approximately $108,000 for the three months ended June 30, 2008, for a net loss of approximately
$19,000.
 
 Six Months Ended June 30, 2009 compared to Six Months June 30, 2008
 
 For the six months ended June 30, 2009, the Partnership recognized revenue of approximately $467,000, and expenses of approximately $406,000 resulting in net income of approximately $61,000.  For the six months ended June 30, 2008, the Partnership recognized revenue of approximately $547,000, and expenses of approximately $706,000,
resulting in net loss of approximately $159,000.
 
 Lease revenue decreased by 14% to $465,000 for the six months ended June 30, 2009, from $541,000 for the six months ended June 30, 2008.  This decrease was primarily due to more lease agreements ending versus new lease agreements being acquired during the six months ended June 30, 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 62% to approximately $99,000 for the six months ended June 30, 2009, from $262,000 for the six
months ended June 30, 2008. In addition to decreases in accounting, legal and various administrative expenses, this decrease is primarily attributable to management’s decision to waive limited partner expenses during the three months ended June 30, 2009.  See “Summary of Significant Accounting Policies  Reimbursable Expenses,” in note 2.
 
 17
 
 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 $23,000 and $12,000 or the six months ended June 30, 2009 and 2008, respectively.
 
 Depreciation and amortization expenses consist of depreciation on computer equipment, including impairment charges, and amortization of equipment acquisition fees. The expenses decreased 29% to approximately $289,000 for the six months ended June 30, 2009, from $408,000 for the six months ended June 30, 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 $14,000 for the six months ended June 30, 2009, for a net gain of approximately $1,000.  The Partnership sold computer equipment with a net book value of approximately $182,000 for the six months ended June 30, 2008, for a net loss of approximately $14,000.
 
 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 June 30, 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 second 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.  On July 20, 2009, the Bankruptcy Court allowed the Trustee additional time to revise its complaint, putting the responsibility on the Trustee to factually indicate the basis for its adversary claim, and therefore denied our motion to dismiss.  We will continue to defend our position
and the parties are preparing a scheduling order to proceed with discovery and trial with the Trustee.  Please see the description of this proceeding in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (under “Legal Proceedings”).
 
 As of June 30, 2009, the Partnership has approximately $86,000 in accounts receivable due from Chrysler. We believe a portion of that amount may be uncollectible.  To date, the Partnership has recorded a reserve against all outstanding rentals for Chrysler in the amount of $43,000.  We are currently negotiating a cure resolution
agreement with Chrysler, pursuant to which Chrysler is expected to agree to pay certain past due amounts and cure its pre-bankruptcy defaults under its leases.  We expect that upon signing of the cure resolution agreement, we will recover a meaningful percentage of the outstanding receivables. Therefore, as we have not yet reached a definitive agreement on the cure amounts, we believe the current amount of reserve is adequate through the quarter ended June 30, 2009.  We may, however, determine that
additional reserves may need to be taken to cover potential loss exposure at a later time.
 
 18
 
 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 second 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
 
 
 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 PartnerAugust 13, 2009
By:/s/ Kimberly A. Springsteen-AbbottDate
Kimberly A. Springsteen-AbbottChief Executive OfficerAugust 13, 2009
By:/s/ Lynn A. FranceschinaDate
Lynn A. FranceschinaExecutive Vice President, Chief Operating Officer