UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 
 FORM
        10-Q
 
 x
        QUARTERLY REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 
 FOR
        THE QUARTERLY PERIOD ENDED MARCH 31, 2007
 
  ̈
        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  x  NO    ̈
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
        Act. (Check one):
 
 Large
        accelerated filer   ̈  Accelerated
        filer   ̈   Non-accelerated
        filer  x
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange
        Act)      YES   ̈  NO   x
  
 
  **FORM
        10-Q**
 **MARCH
        31, 2007**
 
 **TABLE
        OF CONTENTS**
 
 PART
                  IItem
                  1.
              Condensed
                  Financial Statements
              3Item
                  2.
              Management's
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              12Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market
                  Risk
              16Item
                  4.
              Controls
                  and Procedures
              16PART
                  IIItem
                  1.
              Legal
                  Proceedings
              17Item
                  1 A.
              Risk
                  Factors
              17Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              17Item
                  3.
              Defaults
                  Upon Senior Securities
              17Item
                  4.
              Submission
                  of Matters to a Vote of Securities
                  Holders
              17Item
                  5.
              Other
                  Information
              17Item
                  6.
              Index
                  to Exhibits
              17SignaturesCertifications
  **2**
 ***Table
            of Contents***
  **Commonwealth
        Income & Growth Fund IV**
 **Condensed
        Balance Sheets**
 
 **March
                  31,**
                **2007**
              
              
              **December
                  31,**
                **2006****(unaudited)****Assets**Cash
                  and cash equivalents
              
              $
              66,891
              
              
              $
              185,564Lease
                  income receivable, net of reserves of  $282,587 as of March 31,
                  2007 and December 31, 2006
              
              
              591,174
              
              
              
              441,123Other
                  receivables – other affiliated partnerships
              
              
              26,493
              
              
              
              26,493Refundable
                  deposits
              
              
              1,130
              
              
              
              1,130Prepaid
                  expenses
              
              
              11,865
              
              
              
              3,762****
              **697,553**
              
              
              
              658,072Computer
                  equipment, at cost
              
              
              9,894,276
              
              
              
              10,748,987Accumulated
                  depreciation
              
              
              (7,035,246
              )
              
              
              (7,326,525
              )****
              **2,859,030**
              
              
              
              3,422,462Equipment
                  acquisition costs and deferred expenses, net
              
              
              86,431
              
              
              
              95,323Other
                  receivables - Commonwealth Capital Corp
              
              
              98,692
              
              
              
              165,459Prepaid
                  acquisition fees
              
              
              69,846
              
              
              
              70,528****
              **254,969**
              
              
              
              331,310**Total
                  Assets**
              
              **$**
              **3,811,552**
              
              
              $
              4,411,844**Liabilities
                  and Partners’ Capital****Liabilities**Accounts
                  payable, primarily for equipment purchases
              
              $
              139,847
              
              
              $
              103,534Accounts
                  payable – General Partner
              
              
              45,653
              
              
              
              58,367Unearned
                  lease income
              
              
              38,477
              
              
              
              50,331Notes
                  payable
              
              
              891,755
              
              
              
              975,457**Total
                  Liabilities**
              
              ****
              **1,115,732**
              
              
              
              1,187,689**Partners'
                  Capital**General
                  partner
              
              
              1,000
              
              
              
              1,000Limited
                  partners
              
              
              2,694,820
              
              
              
              3,223,155**Total
                  Partners' Capital**
              
              ****
              **2,695,820**
              
              
              
              3,224,155**Total
                  Liabilities and Partners' Capital**
              
              **$**
              **3,811,552**
              
              
              $
              4,411,844
  **3**
 ***Table
            of Contents***
  **Commonwealth
        Income & Growth Fund IV**
 **Condensed
        Statements of Operations**
 
 **Three
                    Months Ended**
                  **March
                    31,****2007**
                
                
                **2006****(unaudited)****Income**Lease
                
                $
                676,700
                
                
                $
                953,201Interest
                    and other
                
                
                15,106
                
                
                
                3,940**Total
                    income**
                
                ****
                **691,806**
                
                
                
                957,141**Expenses**Operating,
                    excluding depreciation
                
                
                116,534
                
                
                
                201,742Equipment
                    management fee - General Partner
                
                
                33,835
                
                
                
                47,660Interest
                
                
                10,500
                
                
                
                22,927Depreciation
                
                
                525,891
                
                
                
                799,012Amortization
                    of equipment acquisition costs and deferred expenses
                
                
                23,333
                
                
                
                52,694Loss
                    on sale of computer equipment
                
                
                135,737
                
                
                
                207,954**Total
                    expenses**
                
                ****
                **845,830**
                
                
                
                1,331,989**Net  (loss)**
                
                **$**
                **(154,024**
                **)**
                
                $
                (374,848
                )**Net
                    (loss) allocated to limited partners**
                
                **$**
                **(157,767**
                **)**
                
                $
                (378,591
                )**Net
                    (loss) per equivalent limited****partnership
                    unit**
                
                **$**
                **(0.21**
                **)**
                
                $
                (0.95
                )**Weighted
                    Average number of equivalent limited partnership units outstanding
                    during
                    the period**
                
                ****
                **749,400**
                
                
                
                749,400
 *see
        accompanying notes to condensed financial statements*
  **4**
 ***Table
            of Contents***
  **Commonwealth
        Income & Growth Find IV**
 **Condensed
        Statements of Partners’ Capital**
 **For
        the Three Months ended March 31, 2007**
 
 **(unaudited)**
 
 **General**
                **Partner**
                **Units**
              
              
              **Limited**
                **Partner**
                **Units**
              
              
              **General**
                **Partner**
              
              
              **Limited**
                **Partner**
              
              
              **Total****Partners'
                  capital – January 1, 2007**
              
              ****
              **50**
              
              
              ****
              **749,400**
              
              
              **$**
              **1,000**
              
              
              **$**
              **3,223,155**
              
              
              **$**
              **3,224,155**Net
                  income (loss)
              
              
              -
              
              
              
              -
              
              
              
              3,743
              
              
              
              (157,767
              )
              
              
              (154,024
              )Distributions
              
              
              -
              
              
              
              -
              
              
              
              (3,743
              )
              
              
              (370,568
              )
              
              
              (374,311
              )**Partners'
                  capital – March 31, 2007**
              
              ****
              **50**
              
              
              ****
              **749,400**
              
              
              **$**
              **1,000**
              
              
              **$**
              **2,694,820**
              
              
              **$**
              **2,695,820**
 
 *see
        accompanying notes to condensed financial statements*
  **5**
 ***Table
            of Contents***
  **Commonwealth
        Income & Growth Fund IV**
 **Condensed
          Statements of Cash Flow**
 
 **Three
                    months Ended**
                  **March
                    31,****2007**
                
                
                **2006****(unaudited)****Net
                    cash provided by operating activities**
                
                **$**
                **54,905**
                
                
                $
                312,492**Investing
                    activities:**Capital
                    expenditures
                
                
                (53,636
                )
                
                
                (229,103
                )Prepaid
                    acquisition fees
                
                
                682
                
                
                
                7,875Net
                    proceeds from sale of computer equipment
                
                
                201,361
                
                
                
                157,233Equipment
                    acquisition fees paid to General Partner
                
                
                (11,982
                )
                
                
                (15,742
                )**Net
                    cash provided by (used in) investing activities**
                
                ****
                **136,425**
                
                
                
                (79,737
                )**Financing
                    activities:**Distributions
                    to partners
                
                
                (374,311
                )
                
                
                (374,375
                )Other
                    receivable, Commonwealth Capital Corp
                
                
                66,767
                
                
                
                35,527Debt
                    Placement fee paid to the General Partner
                
                
                (2,459
                )
                
                
                (1,645
                )**Net
                    cash (used in)  financing activities**
                
                ****
                **(310,003**
                **)**
                
                
                (340,493
                )Net
                    (decrease) in cash and cash equivalents
                
                
                (118,673
                )
                
                
                (107,738
                )Cash
                    and cash equivalents, beginning of period
                
                
                185,564
                
                
                
                891,708**Cash
                    and cash equivalents, end of period**
                
                **$**
                **66,891**
                
                
                $
                783,970
 
 ***see
        accompanying notes to condensed financial
        statements***
  **6**
 ***Table
            of Contents***
  **NOTES
        TO CONDENSED FINANCIAL STATEMENTS**
 
 
 **1.
        Business**
 
 Commonwealth
        Income & Growth Fund IV (the “Partnership”) is a limited partnership
        organized in the Commonwealth of Pennsylvania on May 15, 2001.  The
        Partnership offered for sale up to 750,000 units of the limited partnership
        at
        the purchase price of $20 per unit (the “Offering”).  The Partnership
        reached the minimum amount in escrow and commenced operations on July 8,
        2002
        and was fully subscribed on September 15, 2003.
 
 The
        Partnership used the proceeds of the Offering to acquire, own and lease various
        types of computer information technology (I.T.) equipment and other similar
        capital equipment, which is leased primarily to U.S. corporations and
        institutions.  Commonwealth Capital Corp, on behalf of the Partnership
        and other affiliated partnerships, will acquire computer equipment subject
        to
        associated debt obligations and lease agreements and allocate a participation
        in
        the cost, debt and lease revenue to the various partnerships it controls
        based
        on certain risk factors.
 
 The
        Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc.
        (the “General Partner”), a Pennsylvania corporation which is an indirect wholly
        owned subsidiary of CCC.  Approximately ten years after the
        commencement of operations, the Partnership intends to sell or otherwise
        dispose
        of all of its computer equipment, make final distributions to partners, and
        to
        dissolve.  Unless sooner terminated, the Partnership will continue
        until December 31, 2012.
 
 
 **2.
        Summary of Significant Accounting Policies**
 
 **Basis
        of Presentation**
 
 The
        financial information presented as of any date other than December 31, 2006
        has
        been prepared from the books and records without audit.  Financial
        information as of December 31, 2006 has been derived from the audited financial
        statements of the Partnership, but does not include all disclosures required
        by
        generally accepted accounting principles.  In the opinion of
        management, all adjustments, consisting only of normal recurring adjustments,
        necessary for a fair presentation of the financial information for the periods
        indicated have been included.  For further information regarding the
        Partnership’s accounting policies, refer to the financial statements and related
        notes included in the Partnership’s annual report on Form 10-K for the year
        ended December 31, 2006.  Operating results for the three-month period
        ended March 31, 2007 are not necessarily indicative of financial results
        that
        may be expected for the full year ended December 31, 2007.
 
 **Long-Lived
        Assets**
 
 The
        Partnership evaluates its long-lived assets when events or circumstances
        indicate that the value of the asset may not be recoverable.  The
        Partnership determines whether an impairment exists by estimating the
        undiscounted cash flows to be generated by each asset.  If the
        estimated undiscounted cash flows are less than the carrying value of the
        asset
        then an impairment exists.  The amount of the impairment is determined
        based on the difference between the carrying value and the fair
        value.  The fair value is determined based on estimated discounted
        cash flows to be generated by the asset.  The Partnership determined
        that no impairment had occurred during the three months ended March 31,
        2007.
  **7**
 ***Table
            of Contents***
  Depreciation
        on computer equipment for financial statement purposes is based on the
        straight-line method over estimated useful lives of four years.
 
 **Net
        Income (Loss) Per Equivalent Limited Partnership Unit**
 
 The
        net
        income (loss) per equivalent limited partnership unit is computed based upon
        net
        income (loss) allocated to the limited partners and the weighted average
        number
        of equivalent units outstanding during the period.
   **3.
        Computer Equipment**
 
 The
        Partnership is the lessor of equipment under operating leases with periods
        ranging from 12 to 36 months. In general, the lessee pays associated costs
        such
        as repairs and maintenance, insurance and property taxes.
 
 Through
        March 31, 2007, the Partnership has only entered into operating
        leases.  Lease revenue is recognized on the monthly straight-line
        basis which is generally in accordance with the terms of the operating lease
        agreements.
 
 Remarketing
        fees are paid to the leasing companies from which the Partnership purchases
        leases.  These are fees that are earned by the leasing companies when
        the initial terms of the lease have been met.  The General Partner
        believes that this strategy adds value since it entices the leasing company
        to
        "stay with the lease" for potential extensions, remarketing or sale of
        equipment.  This strategy potentially minimizes any conflicts the
        leasing company may have with a potential new lease and will potentially
        assist
        in maximizing overall portfolio performance.  The remarketing fee is
        tied into lease performance thresholds and is factored in the negotiation
        of the
        fee.  Remarketing fees incurred in connection with lease extensions
        are accounted for as operating costs.  Remarketing fees incurred in
        connection with the sale of computer equipment are included in our gain or
        loss
        calculations.  For the three month period ended March 31, 2007 and
        2006, remarketing fees were incurred in the amounts of $4,500 and $5,000
        respectively
 
 The
        Partnership’s share of the computer equipment in which it participates at March
        31, 2007 and December 31, 2006 was approximately $1,900,000 and $1,617,000
        respectively, which is included in the Partnership’s fixed assets on its balance
        sheet, and the total cost of the equipment shared by the Partnership with
        other
        partnerships at March 31, 2007 and December 31, 2006 was approximately
        $5,409,000 and $4,467,000 respectively. The Partnership’s share of the
        outstanding debt associated with this equipment at March 31, 2007 and December
        31, 2006 was $364,000 and $164,000 respectively.  The total
        outstanding debt at March 31, 2007 and December 31, 2006 was $1,028,000 and
        $328,000, respectively.
  **8**
 ***Table
            of Contents***
  The
        following is a schedule of future minimum rentals on noncancellable operating
        leases at March 31, 2007:
 
 *Amount*Nine
                  Months ended December 31, 2007
              
              $
              912,679Year
                  Ended December 31, 2008
              
              
              593,073Year
                  Ended December 31, 2009
              
              
              146,224Year
                  Ended December 31, 2010
              
              
              891**$**
              **1,652,867**
   **4.
        Related Party Transactions**
 
 **Receivables/Payables**
 
 As
        of
        March 31, 2007, the Partnership’s related party receivables and payables are
        short term, unsecured, and non-interest bearing.
 **Other
          Receivables**
 As
        of
        March 31, 2007, the Partnership has an unsecured, non-interest bearing
        receivable from CCC, a related party to the Partnership, in the amount of
        approximately $134,000, which primarily originated in 2003.  CCC,
        through its indirect subsidiaries, including the General Partner of the
        Partnership, earns fees based on revenues and new lease purchases from this
        fund.  CCC has been repaying receivables, through acquisition fees,
        debt placement fees and reimbursement of expenses, with a minimum amount
        of
        $12,500 per quarter, which commenced in the quarter ending March 31,
        2005.
 
 **Reimbursable
        Expenses**
 
 The
        General Partner and its affiliates are entitled to reimbursement by the
        Partnership for the cost of supplies and services obtained and used by the
        General Partner in connection with the administration and operation of the
        Partnership from third parties unaffiliated with the General
        Partner.  In addition, the General Partner and its affiliates are
        entitled to reimbursement for certain expenses incurred by the General Partner
        and its affiliates in connection with the administration and operation of
        the
        Partnership.  During the three months ended March 31, 2007 and 2006
        the Partnership recorded $114,000 and $170,000, respectively, 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.  During the three months ended March 31,
        2007 and 2006, equipment acquisition fees of approximately $12,000 and $16,000,
        respectively, were earned by******the General
        Partner.
 
 **Debt
        Placement Fee**
 
 As
        compensation for arranging term debt to finance the acquisition of equipment
        by
        the Partnership, the General Partner is paid a fee equal to 1% of such
        indebtedness; provided, however, that such fee shall be reduced to the extent
        the Partnership incurs such fees to third parties, unaffiliated with the
        General
        Partner or the lender, with respect to such indebtedness and no such fee
        will be
        paid with respect to borrowings from the General Partner or its
        affiliates.  During the three months ended March 31, 2007 and 2006,
        debt placement fees of approximately $2,500 and $2,000, respectively, were
        earned by the General Partner.
  **9**
 ***Table
            of Contents***
  **Equipment
        Management Fee**
 
 The
        General Partner is entitled to be paid a monthly fee equal to the lesser
        of (i)
        the fees which would be charged by an independent third party for similar
        services for similar equipment or (ii) the sum of (a) two percent of (1)
        the
        gross lease revenues attributable to equipment which is subject to full payout
        net leases which contain net lease provisions plus (2) the purchase price
        paid
        on conditional sales contracts as received by the Partnership and (b) 5%
        of the
        gross lease revenues attributable to equipment which is subject to operating
        and
        capital leases.  During the three months ended March 31, 2007 and
        2006, equipment management fees of approximately $34,000 and $48,000,
        respectively, were earned by******the General
        Partner.
 
 **Equipment
        Liquidation Fee**
 
 With
        respect to each item of equipment sold by the General Partner (other than
        in
        connection with a conditional sales contract), a fee equal to the lesser
        of (i)
        50% of the competitive equipment sale commission or (ii) three percent of
        the
        sales price for such equipment is payable to the General Partner.  The
        payment of such fee is subordinated to the receipt by the limited partners
        of
        the net disposition proceeds from such sale in accordance with the Partnership
        Agreement.  Such fee will be reduced to the extent any liquidation or
        resale fees are paid to unaffiliated parties.  During the three months
        ended March 31, 2007 and 2006, equipment liquidation fees of approximately
        $8,000 and $6,000, respectively, were earned by the General
        Partner.
 
 
 **5.
        Notes Payable**
 
 Notes
        payable consisted of the following:
 
 **March
                  31,**
                **2007**
              
              
              **December
                  31,**
                **2006**Installment
                  notes payable to banks; interest ranging from 4.29% to 6.50%, due
                  in
                  monthly installments ranging from $256 to $13,488, including interest,
                  with final payments due in January through December 2007.
              
              **$**
              **195,678**
              
              
              $
              424,863Installment
                  notes payable to banks; interest ranging from 4.65% to 6.06%, due
                  in
                  monthly installments ranging from $162 to $7,289 including interest,
                  with
                  final payment due in January through September 2008.
              
              ****
              **253,473**
              
              
              
              309,316Installment
                  notes payable to banks; interest ranging from 5.9% to 6.25%, due
                  in
                  monthly installments ranging from $1,901 to $73,654, including
                  interest,
                  with final payments from January through October 2009.
              
              ****
              **442,604**
              
              
              
              241,278**$**
              **891,755**
              
              
              $
              975,457
 
 
 10
 *Table
            of Contents*
  These
        notes are secured by specific computer equipment and are nonrecourse liabilities
        of the Partnership.  Aggregate maturities of notes payable for each of
        the periods subsequent to March 31, 2007 are as follows:
 
 
 ***Amount***Nine
                  months ended December 31, 2007
              
              $
              491,816Year
                  ended December 31, 2008
              
              
              252,420Year
                  ended December 31, 2009
              
              
              147,519**$**
              **891,755**
 
 
 **6.
        Supplemental Cash Flow Information**
 
 Other
        noncash activities included in the determination of net loss are as
        follows:
 
 *Three
                  months Ended March 31,*
              
              **2007**
              
              
              2006Lease
                  income, net of interest expense on notes payable realized as a
                  result of
                  direct payment of principal by lessee to bank
              
              **$**
              **329,624**
              
              
              $
              362,643
 
 
 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.
  11
 ***Table
            of Contents***
  Noncash
        investing and financing
        activities include the following:
 
 *Three
                months Ended March 31,*
              
              **2007**
              
              
              2006Debt
                  assumed in connection with purchase of computer equipment
              
              **$**
              **246,000**
              
              
              **$**
              164,000Equipment
                  acquisition fees earned by General Partner upon purchase of equipment
                  from
                  prepaid acquisition fees
              
              **$**
              **680**
              
              
              **$**
              7,875
 
 **Item
        2: Management’s Discussion and Analysis of Financial
        Condition and Results of Operations**
  **FORWARD
        LOOKING STATEMENTS**
  Certain
        statements within this Quarterly Report on Form 10-Q may constitute
        forward-looking statements within the meaning of the Private Securities
        Litigation Reform Act of 1995 (“PSLRA”). These statements are being made
        pursuant to the PSLRA, with the intention of obtaining the benefits of the
“safe
        harbor” provisions of the PSLRA, and, other than as required by law, we assume
        no obligation to update or supplement such statements. Forward-looking
        statements are those that do not relate solely to historical fact. They include,
        but are not limited to, any statement that may predict, forecast, indicate
        or
        imply future results, performance, achievements or events. You can identify
        these statements by the use of words such as “may,” “will,” “could,”
“anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project”
and variations of these words or comparable words or phrases of similar meaning.
        These forward-looking statements reflect our current beliefs and expectations
        with respect to future events and are based on assumptions and are subject
        to
        risks and uncertainties and other factors outside our control that may cause
        actual results to differ materially from those projected.
  **CRITICAL
        ACCOUNTING POLICIES**
 
 The
        Partnership's discussion and analysis of its financial condition and results
        of
        operations are based upon its financial statements which have been prepared
        in
        accordance with accounting principles generally accepted in the United States.
        The preparation of these financial statements requires the Partnership to
        make
        estimates and judgments that affect the reported amounts of assets, liabilities,
        revenues and expenses. The Partnership bases its estimates on historical
        experience and on various other assumptions that are believed to be reasonable
        under the circumstances, the results of which form the basis for making
        judgments about the carrying values of assets and liabilities that are not
        readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions.
 
 The
        Partnership believes that its critical accounting policies affect its more
        significant judgments and estimates used in the preparation of its financial
        statements.
  12
 ***Table
            of Contents***
  **COMPUTER
        EQUIPMENT**
 
 Commonwealth
        Capital Corp, on behalf of the Partnership and other affiliated partnerships,
        acquires computer equipment subject to associated debt obligations and lease
        revenue and allocates a participation in the cost, debt and lease revenue
        to the
        various partnerships based on certain risk factors.  The Partnership
        will acquire equipment with no associated debt obligations with the original
        contributions.  The Partnership plans on acquiring equipment leases
        with associated debt obligations from the monthly rental payments associated
        with the equipment acquired with its original capital contributions.
        Depreciation on computer equipment for financial statement purposes is based
        on
        the straight-line method over estimated useful lives of four years.
 
 **REVENUE
        RECOGNITION**
 
 Through
        March 31, 2007, the Partnership has only entered into operating
        leases.  Lease revenue is recognized on the monthly straight-line
        basis which is generally in accordance with the terms of the operating lease
        agreements.
 
 The
        Partnership reviews a customer’s credit history extending credit and establishes
        provisions for uncollectible accounts based upon the credit risk of specific
        customers, historical trends and other information.
 
 **LONG-LIVED
        ASSETS**
 
 The
        Partnership evaluates its long-lived assets when events or circumstances
        indicate that the value of the asset may not be recoverable.  The
        Partnership determines whether an impairment exists by estimating the
        undiscounted cash flows to be generated by each asset.  If the
        estimated undiscounted cash flows are less than the carrying value of the
        asset
        then an impairment exists.  The amount of the impairment is determined
        based on the difference between the carrying value and the fair
        value.  Fair value is determined based on estimated discounted cash
        flows to be generated by the asset.
 
 **Liquidity
        and Capital Resources**
 
 The
        Partnership’s primary source of capital for the three months ended March 31,
        2007 and 2006 was from net proceeds received from sale of equipment of
        approximately $201,000 and $157,000, respectively.  The primary uses
        of cash for the three months ended March 31, 2007 and 2006 were for capital
        expenditures for new equipment of approximately $54,000 and $230,000,
        respectively, and the payment of preferred distributions to partners of
        approximately $374,000 and $374,000, respectively.
 
 For
        the
        three month period ended March 31, 2007, the Partnership generated cash flows
        from operating activities of approximately $55,000, which includes a net
        loss of
        approximately $154,000, a loss on sale of equipment of approximately
        $136,000, and depreciation and amortization expenses of approximately
        $549,000. Other non-cash activities included in the determination of net
        income
        include direct payments of lease income by lessees to banks of approximately
        $330,000.
 
 For
        the
        three month period ended March 31, 2006, the Partnership generated cash flows
        from operating activities of approximately $312,000, which includes a net
        loss
        of approximately $375,000, a loss on sale of equipment of approximately
        $208,000, and depreciation and amortization expenses of approximately
        $852,000. Other non-cash activities included in the determination of net
        income
        include direct payments of lease income by lessees to banks of approximately
        $363,000.
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  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, 2007, the Partnership had future minimum
        rentals on non-cancelable operating leases of $913,000 for the balance of
        the
        year ending December 31, 2007 and $740,000 thereafter.  At March 31,
        2007, the outstanding debt was $892,000, with interest rates ranging from
        4.29%
        to 6.50%, and will be payable through October 2009.
 
 As
        of
        March 31, 2007, the Partnership has an unsecured, non-interest bearing
        receivable from CCC, a related party to the Partnership, in the amount of
        approximately $134,000, which primarily****originated in
        2003.  CCC, through its indirect subsidiaries, including the General
        Partner of the Partnership, earns fees based on revenues and new lease purchases
        from this fund.  CCC has been paying these receivables, through
        acquisition fees, debt placement fees and reimbursement of expenses, with
        a
        minimum amount of $12,500 per quarter, which commenced in the quarter ending
        March, 2005.
 
 The
        Partnership’s cash from operations is expected to continue to be adequate to
        cover all operating expenses, liabilities, and preferred distributions to
        Partners during the next 12-month period.  If available Cash Flow or
        Net Disposition Proceeds are insufficient to cover the Partnership expenses
        and
        liabilities on a short and long term basis, the Partnership will attempt
        to
        obtain additional funds by disposing of or refinancing Equipment, or by
        borrowing within its permissible limits.  The Partnership may, from
        time to time, reduce the distributions to its Partners if it deems
        necessary.  Since the Partnership’s leases are on a “triple-net”
basis, no reserve for maintenance and repairs are deemed necessary.
 
 While
        the
        Partnership intends to invest additional capital in equipment during the
        remainder of 2007, the amount of such additional investment is uncertain,
        and
        may be impacted by the status or outcome of the Allserve bankruptcy. See
‘Legal
        Proceedings” in Part II, Item I. Any acquisition of equipment will be funded by
        debt financing, and the debt service will be funded from cash flows from
        lease
        rental payments.
 
 The
        Partnership’s share of the computer equipment in which it participates at March
        31, 2007 and December 31, 2006 was approximately $1,900,000 and $1,617,000
        respectively, which is included in the Partnership’s fixed assets on its balance
        sheet. The total cost of the equipment shared by the Partnership with other
        partnerships at March 31, 2007 and December 31, 2006 was approximately
        $5,400,000 and $4,467,000 respectively.
 
 **Results
        of Operations**
 
 Three
        Months Ended March 31, 2007 compared to Three Months March 31,
        2006
 
 For
        the
        three months ended March 31, 2007, the Partnership recognized income of
        approximately $692,000, and expenses of approximately $846,000, resulting
        in net
        loss of approximately $154,000.  For the three months ended March 31,
        2006, the Partnership recognized income of approximately $957,000, and expenses
        of approximately $1,332,000, resulting in net loss of approximately
        $375,000.
  14
 ***Table
            of Contents***
  Lease
        income decreased by 29% to $677,000 for the quarter ended March 31, 2007,
        from
        $953,000 for the quarter ended March 31, 2006, primarily due to the fact
        that
        more lease agreements ended than began since the quarter ended March 31,
        2006.
 
 Operating
        expenses, excluding depreciation, primarily consist of accounting, legal,
        outside service fees and reimbursement of expenses to CCC, a related party,
        for
        administration and operation of the Partnership.  The expenses
        decreased 42% to approximately $117,000 for the quarter ended March 31, 2007,
        from $202,000 for the quarter ended March 31, 2006. This decrease is primarily
        attributable to a decrease in Other Limited Partnership expenses of
        approximately $40,600, a decrease in IT expenses of $5,000 and a decrease
        in
        legal fees of approximately $37,000 associated with the bankruptcy of Allserve
        Systems Corp.
 
 The
        equipment management fee is approximately 5% of the gross lease revenue
        attributable to equipment that is subject to operating leases. The equipment
        management fee decreased 29% to approximately $34,000 for the quarter ended
        March 31, 2007, from $48,000 for the quarter ended March 31, 2006, which
        is
        consistent with the decrease in lease income.
 
 Depreciation
        and amortization expenses consist of depreciation on computer equipment and
        amortization of equipment acquisition fees. The expenses decreased 36% to
        approximately $549,000 for the quarter ended March 31, 2007, from $850,000
        for
        the quarter ended March 31, 2006 due to equipment and acquisition fees being
        fully depreciated/amortized and not being replaced with as many new
        purchases.
  **Item
          3.Quantitativeand
          Qualitative Disclosures About Market Risk**
  The
        Partnership believes its exposure to market risk is not material due to the
        fixedinterest rate of its long-term debt.
 
 **Item
        4.  Controls and Procedures**
 
 The
        Chief
        Executive Officer and Principal Financial Officer of the General Partner
        have
        conducted a review of the Partnership's disclosure controls and procedures
        as of
        March 31, 2007.
 
 The
          Partnership’s disclosure controls and procedures include the Partnership’s
          controls and other procedures designed to ensure that information required
          to be
          disclosed in this and other reports filed under the Securities Exchange Act
          of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and
          reported within the time periods specified in the Securities and Exchange
          Commission’s rules and forms. The Partnership’s disclosure controls and
          procedures also include the Partnership’s controls and other procedures designed
          to ensure that information required to be disclosed in this and other reports
          filed under the Exchange Act is accumulated and communicated to the
          Partnership’s management, including its Chief Executive Officer and Principal
          Financial Officer, to allow timely decisions regarding required disclosure
          and
          to ensure that such information is recorded, processed, summarized and
          reported
          within the required time periods.
 
 Based
          upon this review, the Partnership’s Chief Executive Officer and
          Principal Financial Officer have concluded that the Partnership’s
          disclosure controls (as defined in Rule 13a-15e promulgated under the Exchange
          Act) are effective to ensure that the information required to be disclosed
          by
          the Partnership in the reports it files under the Exchange Act (i) is recorded,
          processed, summarized and reported within the time periods specified in
          the
          Securities and Exchange Commission rules and forms and (ii) is accumulated
          and
          communicated to the Partnership’s management, including its Chief Executive
          Officer and Principal Financial Officer, to allow timely decisions
          regarding required disclosure and to ensure that such information is recorded,
          processed, summarized and reported within the required time
          periods.
 There
        have been no changes in the General Partner’s internal controls or in other
        factors that could materially affect our disclosure controls and procedures
        in
        the quarter ended March 31, 2007, that have materially affected or are
        reasonably likely to materially affect the General Partner’s internal controls
        over financial reporting.
  15
 ***Table
            of Contents***
  **Part
        II:   OTHER INFORMATION**
 
 **Commonwealth
        Income & Growth Fund IV**
 
 Item
                  1.
              **Legal
                  Proceedings**
 
 In
        the 4th quarter
        of 2005, CCC identified payment problems with Allserve Systems Corp.
        (“Allserve”), one of the Partnerships’ lessees. The bank had returned a number
        of Allserve’s checks issued in October 2005.  The Partnership
        immediately began communication with the lessee, only to ultimately find
        that
        they filed for protection under Chapter 11 of the United States Bankruptcy
        Code
        on November 18, 2005.  The General Partner responded to the Bankruptcy
        petition promptly and assertively.  Counsel was retained for the
        Partnership.  All litigation meetings and equipment inspections were
        attended by the General Partner, for purpose of identifying and tagging all
        assets belonging to the Partnership. The Partnership owns either all or portions
        of 5 equipment leases with Allserve, with original purchase prices of
        approximately $2,789,000.
 
 On
        January 12, 2006, the trustee filed a petition before the court asking for
        the
        bankruptcy petition to be changed to a Chapter 7 Liquidation, due to Allerve’s
        inability to pay its ongoing bills and the trustee’s belief that Allserve was
        not being honest in its dealings with the Trustee.  The Judge granted this
        request.
 
 An
        official creditors’ committee (“Creditors’ Committee”) was organized by the
        Trustee in February 2006.  An officer of CCC is a member of the Creditors’
Committee.  Other creditors affected and represented on the creditors
        committee include IBM Credit LLC, DB Zwirn and Universal Equipment
        Leasing.  A forensic accounting firm is being retained by the Creditors’
Committee to investigate transfers of significant quantities of cash from
        Allserve accounts, prior to its Bankruptcy petition.  On March 16, 2006,
        the Trustee granted stay relief to allow the Partnership and other creditors
        to
        take possession of their assets.  As of March 23, 2006, the Partnership had
        recovered all of its equipment which was subject to leases with
        Allserve.  The equipment was relocated to an asset management location
        in New Jersey, where it will be audited and tested, as well as evaluated
        for
        sale or re-lease.
 
 In
        January 2007 executive management of Commonwealth Capital Corp. met with
        a
        nationally known leasing company that has been in business for over 25 years.
        This company has helped other Allserve creditors sell and/or re-lease recovered
        equipment and they are currently doing an analysis of the best possible way
        to
        bring Commonwealth’s equipment to market. As there is a great deal of this
        equipment currently available, due to the size of the Allserve bankruptcy,
        this
        process will take more time than normal.  The Partnership will attempt to
        place the equipment piece by piece on either a lease or sale basis to end
        users
        in an effort to realize the highest possible return.  Management of the
        Partnership anticipates this process to carry over into the second quarter
        of
        2007. In recognition of such, the Partnership recorded a further impairment
        charge of approximately 25% as of December 31, 2006.
 
 The
        equipment leases were purchased by the Partnership between December 2003
        and
        December 2004.   The Partnership believes there is resale value
        for this equipment and will be pursuing resale and litigation options in
        an
        attempt to maximize investor’s total return on this equipment.  The
        Partnership received lease payments up through and including September
        2005.  Therefore the Partnership has recovered a portion of the
        equipment’s purchase price to date.  The Partnership recorded a reserve
        against all outstanding rentals in the amount of approximately $261,000 through
        December 31, 2006 and also recorded impairment charges of approximately $363,000
        to reflect the assets at their current estimated net realizable value. No
        impairment was recorded at March 31, 2007. The net book value of the remaining
        Allserve equipment at March 31, 2007 is approximately $582,500.
  16
 ***Table
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  Item
                  1A.
              **Risk
                  Factors**
 
 There
        have been no material changes to the risk factors set forth in our Annual
        Report
        on Form 10-K for the year ended December 31, 2006, as filed with the SEC.
        In addition to the other information set forth in this report, you should
        carefully consider the factors discussed in Part I, Item 1A, “Risk
        Factors” in our Annual Report on Form 10-K which could materially affect our
        business, financial condition or future results. The risks described in our
        Annual Report on Form 10-K are not the only risks facing our company. Additional
        risks and uncertainties not currently known to us or that we currently deem
        immaterial also may have a material adverse effect on our business, financial
        condition and/or operating results.
 
 
 Item
                  2.
              **Changes
                  in Securities**
 
 N/A
 
 Item
                  3.
              **Defaults
                  Upon Senior Securities**
 
 N/A
 
 Item
                  4.
              **Submission
                  of Matters to a Vote of Securities Holders**
 
 N/A
 
 Item
                  5.
              **Other
                  Information**
 
 N/A
 
 Item
                  6.
              **Exhibits**
 
 a)
              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**
  17
 ***Table
            of Contents***
  **SIGNATURE**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned, thereunto
        duly authorized.
 
 COMMONWEALTH
                  INCOME & GROWTH FUND IVBY:
                  COMMONWEALTH INCOME & GROWTH FUND, INC. General
                  PartnerMay
                  15, 2007
              
              By:
              /s/
                  Kimberly A. SpringsteenDate
              
              Kimberly
                  A. SpringsteenChief
                  Executive Officer
   18