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UNITED STATES  SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





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





FOR  THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003





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





Commission File  Number:   33-62526





|COMMONWEALTH    INCOME & GROWTH FUND IV                       
|--------------------------------------------------------------
|(Exact name of registrant as specified in its charter)        
|                                                              
|Pennsylvania                                                  
|(State or other jurisdiction of incorporation or organization)
|                                                              
|470 John Young Way  Suite 300                                 
|Exton, PA 19341                                               
|(Address, including zip code, of principal executive offices) 
|                                                              
|(610) 594-9600                                                
|(Registrants telephone number including area code)           




Indicate by  check mark whether the registrant (i) has filed all reports required to be  filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the  preceding 12 months, and (III) has been subject to such filing requirements for  the past 90 days:





YES       NO





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|
|
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Commonwealth Income & Growth Fund IV


Balance Sheets





|                                                          |  | September    30,    2003 |            | December    31,    2002 |  
|--------------------------------------------------------- |  | ------------------------ | ---------- | ----------------------- | -
|                                                          |  |                          |            |                         |  
|                                                          |  | (unaudited)              |            |                         |  
|Assets                                                    |  |                          |            |                         |  
|Cash and cash equivalents                                 |  | $                        | 6,212,232  |                         | $
|Lease income receivable                                   |  |                          | 39,963     |                         |  
|Other receivables -    Commonwealth Capital Corp          |  |                          | 120,513    |                         |  
|Other receivables -    General Partner                    |  |                          | 1,015      |                         |  
|Other receivables -    affiliated limited partnerships    |  |                          | 45,755     |                         |  
|Other receivables                                         |  |                          |           |                         |  
|Deferred revenue                                          |  |                          | 2,819      |                         |  
|Refundable deposits                                       |  |                          | 1,130      |                         |  
|Prepaid expenses                                          |  |                          | 24,370     |                         |  
|                                                          |  |                          |            |                         |  
|                                                          |  |                          | 6,447,797  |                         |  
|                                                          |  |                          |            |                         |  
|Computer equipment, at    cost                            |  |                          | 5,787,293  |                         |  
|Accumulated depreciation                                  |  |                          | (787,899   | )                       |  
|                                                          |  |                          |            |                         |  
|                                                          |  |                          | 4,999,394  |                         |  
|                                                          |  |                          |            |                         |  
|Equipment acquisition    costs and deferred expenses, net |  |                          | 194,321    |                         |  
|Prepaid acquisition fees                                  |  |                          | 309,055    |                         |  
|                                                          |  |                          |            |                         |  
|                                                          |  |                          | 503,376    |                         |  
|                                                          |  |                          |            |                         |  
|Total    assets                                           |  | $                        | 11,950,567 |                         | $
|                                                          |  |                          |            |                         |  
|Liabilities    and Partners Capital                      |  |                          |            |                         |  
|Liabilities                                               |  |                          |            |                         |  
|Accounts payable                                          |  |                          | 64,353     |                         |  
|Accounts payable - General    Partner                     |  |                          |           |                         |  
|Accounts payable -    Commonwealth Capital Corp.          |  |                          |           |                         |  
|Other accrued expenses                                    |  |                          | 13,150     |                         |  
|Unearned lease income                                     |  |                          | 37,006     |                         |  
|Notes payable                                             |  |                          | 574,076    |                         |  
|                                                          |  |                          |            |                         |  
|Total    liabilities                                      |  |                          | 688,585    |                         |  
|                                                          |  |                          |            |                         |  
|Partners    Capital                                      |  |                          |            |                         |  
|General partner                                           |  |                          | 1,000      |                         |  
|Limited partners                                          |  |                          | 11,260,982 |                         |  
|                                                          |  |                          |            |                         |  
|Total    partners capital                                |  |                          | 11,261,982 |                         |  
|                                                          |  |                          |            |                         |  
|Total    liabilities and partners capital                |  | $                        | 11,950,567 |                         | $
|                                                          |  |                          |            |                         |  




see accompanying notes to financial  statements


---






Commonwealth Income & Growth Fund IV


Statements of Operations





|                                                                                                    |  | Three    Months    Ended    September 30,    2003 |          | For the    period    July 8, 2002    (Commencement of    Operation) through    September 30, 2002 (1) |   | Nine Months     Ended    September 30,    2003 |   | For the    period    July 8, 2002    (Commencement of    Operation) through    September 30, 2002 (1) |          
|--------------------------------------------------------------------------------------------------- |  | ------------------------------------------------- | -------- | ----------------------------------------------------------------------------------------------------- | - | ---------------------------------------------- | - | ----------------------------------------------------------------------------------------------------- | ---------
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|                                                                                                    |  | (unaudited)                                       |          | (unaudited)                                                                                           |  
|Income                                                                                              |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Lease                                                                                               |  | $                                                 | 387,503  |                                                                                                       | $ | 17,647                                         |   | $                                                                                                     | 970,995  
|Interest and other                                                                                  |  |                                                   | 8,940    |                                                                                                       |   | 1,797                                          |   |                                                                                                       | 15,469   
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Total    Income                                                                                     |  |                                                   | 396,443  |                                                                                                       |   | 19,444                                         |   |                                                                                                       | 986,464  
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Expenses                                                                                            |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Operating, excluding    depreciation                                                                |  |                                                   | 380,198  |                                                                                                       |   | 191,540                                        |   |                                                                                                       | 1,045,210
|Organizational costs                                                                                |  |                                                   | 33,893   |                                                                                                       |   | 22,492                                         |   |                                                                                                       | 99,735   
|Equipment management fee -    General Partner                                                       |  |                                                   | 19,378   |                                                                                                       |   | 882                                            |   |                                                                                                       | 48,553   
|Interest                                                                                            |  |                                                   | 9,877    |                                                                                                       |   |                                               |   |                                                                                                       | 31,526   
|Depreciation                                                                                        |  |                                                   | 307,279  |                                                                                                       |   | 11,707                                         |   |                                                                                                       | 694,968  
|Amortization of equipment    acquisition costs and deferred expenses                                |  |                                                   | 16,919   |                                                                                                       |   | 624                                            |   |                                                                                                       | 40,579   
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Total    expenses                                                                                   |  |                                                   | 767,544  |                                                                                                       |   | 227,245                                        |   |                                                                                                       | 1,960,571
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Net    (loss)                                                                                       |  | $                                                 | (371,101 | )                                                                                                     | $ | (207,801                                       | ) | $                                                                                                     | (974,107 
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Net    (loss) per equivalent limited partnership unit                                               |  | $                                                 | (0.55    | )                                                                                                     | $ | (11.22                                         | ) | $                                                                                                     | (2.25    
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          
|Weighted    Average number of equivalent limited partnership units outstanding during the    period |  |                                                   | 669,054  |                                                                                                       |   | 18,528                                         |   |                                                                                                       | 433,440  
|                                                                                                    |  |                                                   |          |                                                                                                       |   |                                                |   |                                                                                                       |          




|(1) | Although the Partnership was formed on May 15, 2001, the    Fund did not commence operations until July 8, 2002.
|--- | ----------------------------------------------------------------------------------------------------------------




see accompanying notes to financial  statements


---






Commonwealth Income & Growth Fund IV


Statements of Partners Capital





|                                       |  | For the    nine months ended September 30, 2003 |   
|-------------------------------------- |  | ----------------------------------------------- | --
|                                       |  | (unaudited)                                     |   
|                                       |  | General    Partner    Units                     |   
|                                       |  |                                                 |   
|Partners capital - December 31, 2002  |  |                                                 | 50
|Contributions                          |  |                                                 |  
|Offering    costs                      |  |                                                 |  
|Net    income (loss)                   |  |                                                 |  
|Distributions                          |  |                                                 |  
|                                       |  |                                                 |   
|Partners capital - September 30, 2003 |  |                                                 | 50
|                                       |  |                                                 |   




see accompanying notes to financial  statements


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Commonwealth Income & Growth Fund IV


Statements of Cash Flow


For the nine months ended September 30, 2003 and the period  of July 8, 2002


(Commencement of Operations) through September 30, 2002 (1)





|                                                                                              |  | 2003        |            | 2002 |  
|--------------------------------------------------------------------------------------------- |  | ----------- | ---------- | ---- | -
|                                                                                              |  |             |            |      |  
|                                                                                              |  | (unaudited) |           
|Operating    activities                                                                       |  |             |            |      |  
|Net (loss)                                                                                    |  | $           | (974,107   | )    | $
|Adjustments to reconcile    net (loss) to net cash (used in) provided by operating activities |  |             |            |      |  
|Depreciation    and amortization                                                              |  |             | 735,547    |      |  
|Other    noncash activities included in determination of net (loss)                           |  |             | (241,928   | )    |  
|Changes    in assets and liabilities (Increase) decrease in assets                            |  |             |            |      |  
|Lease    income receivable                                                                    |  |             | (9,006     | )    |  
|Deferred    revenue                                                                           |  |             | (2,819     | )    |  
|Other    receivable, General Partner                                                          |  |             | (1,015     | )    |  
|Other    receivables - affiliated limited partnerships                                        |  |             | (39,755    | )    |  
|Other    receivables                                                                          |  |             | 103,610    |      |  
|Refundable    deposits                                                                        |  |             | (1,130     | )    |  
|Prepaid    expenses                                                                           |  |             | (24,370    | )    |  
|Increase    (decrease) in liabilities                                                         |  |             |            |      |  
|Accounts    payable                                                                           |  |             | 43,867     |      |  
|Accounts    payable, Common Capital Corp.                                                     |  |             | (61,807    | )    |  
|Accounts    payable, General Partner                                                          |  |             | (806       | )    |  
|Other    accrued expenses                                                                     |  |             | 13,150     |      |  
|Unearned    lease income                                                                      |  |             | 30,492     |      |  
|                                                                                              |  |             |            |      |  
|Net cash    (used in) provided by operating activities                                        |  |             | (430,077   | )    |  
|                                                                                              |  |             |            |      |  
|Investing    activities:                                                                      |  |             |            |      |  
|Capital Expenditures                                                                          |  |             | (2,860,683 | )    |  
|Prepaid acquisition fees                                                                      |  |             | (275,150   | )    |  
|Equipment acquisition fees    paid to General Partner                                         |  |             | (147,068   | )    |  
|                                                                                              |  |             |            |      |  
|Net cash    (used in) investing activities                                                    |  |             | (3,282,901 | )    |  
|                                                                                              |  |             |            |      |  
|Financing    activities:                                                                      |  |             |            |      |  
|Contributions                                                                                 |  |             | 11,340,160 |      |  
|Offering Costs                                                                                |  |             | (1,219,286 | )    |  
|Distributions to partners                                                                     |  |             | (577,771   | )    |  
|Other receivable, CCC                                                                         |  |             | (120,513   | )    |  
|Debt Placement fee paid to    the General Partner                                             |  |             | (8,160     | )    |  
|                                                                                              |  |             |            |      |  
|Net cash    provided by financing activities                                                  |  |             | 9,414,430  |      |  
|                                                                                              |  |             |            |      |  
|Net increase in cash and    cash equivalents                                                  |  |             | 5,701,452  |      |  
|Cash and cash equivalents,    beginning of period                                             |  |             | 510,780    |      |  
|                                                                                              |  |             |            |      |  
|Cash and    cash equivalents, end of period                                                   |  | $           | 6,212,232  |      | $
|                                                                                              |  |             |            |      |  




| | (1) | Although the Partnership was formed on May    15, 2001, the Fund did not commence operations until July 8, 2002.
| | --- | ----------------------------------------------------------------------------------------------------------------




see accompanying  notes to financial statements


---






NOTES TO FINANCIAL STATEMENTS





|1. | Business | Commonwealth    Income & Growth Fund IV (the Partnership) is a limited partnership    organized in the Commonwealth of Pennsylvania on May 15, 2001.  The Partnership is offering for sale up to    750,000 units of the limited partnership at the purchase price of $20 per unit    (the Offering).  The Partnership    reached the minimum amount in escrow and commenced operations on July 8,    2002.  As of September 30, 2003, the    Partnership has received $14,966,714 in contributions from limited partners,    amounting to 749,950 units.  For the    quarter ended September 30, 2003, the Partnership has received $5,054,569 in    contributions from limited partners, amounting to 253,253 units.
  
  The    Partnership uses the proceeds of the Offering to acquire, own and lease    various types of computer peripheral equipment and other similar capital    equipment, which will be leased primarily to U.S. corporations and    institutions.  Commonwealth Capital    Corp (CCC), on behalf of the Partnership and other affiliated partnerships,    will acquire computer equipment subject to associated debt obligations and    lease agreements and allocate a participation in the cost, debt and lease    revenue to the various partnerships based on certain risk factors.
  
  The    Partnerships General Partner is Commonwealth Income & Growth Fund, Inc.    (the General Partner), a Pennsylvania corporation which is an indirect    wholly owned subsidiary of CCC.  CCC    is a member of the Investment Program Association (IPA), Financial Planning    Association (FPA), and the Equipment Leasing Association (ELA).  Approximately ten years after the    commencement of operations, the Partnership intends to sell or otherwise    dispose of all of its computer equipment, make final distributions to    partners, and to dissolve.  Unless    sooner terminated, the Partnership will continue until December 31,    2012.
|-- | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|2. | Summary of    Significant    Accounting    Policies | Basis of Presentation
  
  The    financial information presented as of any date other than December 31 has    been prepared from the books and records without audit.  Financial information as of December 31    has been derived from the audited financial statements of  the Partnership, but does not include all    disclosures required by 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, 2002.  Operating results for the nine-month period ended September 30,    2003 are not necessarily indicative of financial results that may be
expected    for the full year ended December 31, 2003.
|-- | --------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                     | Revenue Recognition
  
  Through    September 30, 2003, the Partnership has only entered into operating    leases.  Lease revenue is recognized    on a monthly basis in accordance with the terms of the operating lease    agreements.
  
  The    Partnership reviews a customers credit history before extending credit and    may establish a provision for uncollectible accounts receivable based upon    the credit risk of specific customers, historical trends and other information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                     | Use of Estimates
  
  The    preparation of financial statements in conformity with generally accepted    accounting principles requires management to make estimates and assumptions    that affect the reported amounts of assets and liabilities and disclosure of    contingent assets and liabilities at the date of the financial statements and    the reported amounts of revenues and expenses during the reporting    period.  Actual results could differ    from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                     | Long-Lived Assets
  
  The    Partnership evaluates its long-lived assets when events or circumstances    indicate that the value of the asset may not be recoverable.  The Partnership determines whether an    impairment exists by estimating the undiscounted cash flows to be generated    by each asset.  If the estimated    undiscounted cash flows are less than the carrying value of the asset then an    impairment exists.  The amount of the    impairment is determined based on the difference between the carrying value    and the fair value.  The fair value is    determined based on estimated discounted cash flows to be generated by the    asset.  As of September 30, 2003,    there is no impairment.                                                                                                                                                                                                                                                                                                                        

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| |  | Depreciation    on computer equipment for financial statement purposes is based on the    straight-line method over estimated useful lives of four years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Intangible Assets
  
  Equipment    acquisition costs and deferred expenses are amortized on a straight-line    basis over two- to-four year lives.     Unamortized acquisition fees and deferred expenses are charged to amortization    expense when the associated leased equipment is sold.                                                                                                                                                                                                                                                                                                                                                                        
| |  | Cash and Cash Equivalents
  
  The    Partnership considers all highly liquid investments with a maturity of three    months or less to be cash equivalents.     Cash equivalents have been invested in a money market fund investing    directly in Treasury obligations.                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Income Taxes
  
  The    Partnership is not subject to federal income taxes; instead, any taxable    income (loss) is passed through to the partners and included on their    respective income tax returns.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Taxable    income differs from financial statement net income as a result of reporting    certain income and expense items for tax purposes in periods other than those    used for financial statement purposes, principally relating to depreciation,    amortization, and lease income.                                                                                                                                                                                                                                                                                                                                                                             
| |  | Offering Costs
  
  Offering    costs are payments for selling commissions, dealer manager fees, professional    fees and other offering expenses relating to the syndication.  Selling commissions are 8% of the    partners contributed capital and dealer manager fees are 1% of the partners    contributed capital.  These costs have    been deducted from partnership capital in the accompanying financial    statements.                                                                                                                                                                                                                                    
| |  | Net Income (Loss) Per Equivalent Limited    Partnership Unit
  
  The net    income (loss) per equivalent limited partnership unit is computed based upon    net income (loss) allocated to the limited partners and the weighted average    number of equivalent units outstanding during the period.
  
  Reimbursable Expenses
  
  Reimbursable    expenses, which are charged to the Partnership by CCC in connection with the    administration and operation of the Partnership, are allocated to the    Partnership based upon several factors including, but not limited to, the    number of investors, compliance issues, and the number of existing leases.

---






|3. | Computer
  Equipment | The    Partnership is the lessor of equipment under operating leases with periods    ranging from 16 to 36 months.  In    general, the lessee pays associated costs such as repairs and maintenance,    insurance and property taxes.
  
  The    Partnerships share of the computer equipment in which they participate at    September 30, 2003 was approximately $8,000, which is included in the    Partnerships fixed assets on their balance sheet, and the total cost of the    equipment shared by the Partnership with other partnerships at September 30,    2003 was approximately $48,000.  The    Partnership did not participate in shared equipment as of December 31, 2002.
|-- | -------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                      | The    following is a schedule of future minimum rentals on noncancellable operating    leases at September 30, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        




|                                        |  | Amount |          
|--------------------------------------- |  | ------ | ---------
|                                        |  |        |          
|Three Months    ended December 31, 2003 |  | $      | 524,000  
|Year Ended    December 31, 2004         |  |        | 1,978,000
|Year Ended    December 31, 2005         |  |        | 1,581,000
|Year Ended    December 31, 2006         |  |        | 522,000  
|                                        |  |        |          
|                                        |  | $      | 4,605,000
|                                        |  |        |          




|4. | Related Party
  Transactions | Other Receivables
  
  During the    nine-months ended September 30, 2003, the Partnership made a non-interest    bearing advance to CCC, a related party to the Partnership, in the amount of    approximately $120,000.  This advance,    as well as potential future advances, was and will be made at the discretion    of the General Partner.  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, through its indirect subsidiaries,    including the General Partner of the Partnership, earns fees based on    revenues and new lease purchases from this fund.  CCC intends to repay the receivable via the offsetting of    acquisition and debt placement fees over the next several fiscal years.
|-- | ---------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|5. | Notes Payable | Notes    payable consisted of the following:
|-- | ------------- | --------------------------------------------




|                                                                                                                                                                                                                            |  | September    30,     2003 |         | December    31,     2002 | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | ------------------------ | 
|                                                                                                                                                                                                                            |  |                           |         |                          | 
|Installment    notes payable to banks; interest ranging from 5.75% to 7.75%, due in monthly    installments ranging from $60 to $1,980, including interest, with final    payments due from June through December 2004.     |  | $                         | 74,668  |                          | 
|Installment    notes payable to banks; interest ranging from 5.50% to 6.75%, due in monthly    installments ranging from $151 to $4,212, including interest, with final    payments due from January through December 2005. |  |                           | 444,442 |                          | 
|Installment    notes payable to banks; interest ranging from 5.50% to 6.00%, due in monthly    installments ranging from $155 to $1,445, including interest, with final    payments due in January 2006.                    |  |                           | 54,966  |                          | 
|                                                                                                                                                                                                                            |  |                           |         |                          | 
|                                                                                                                                                                                                                            |  | $                         | 574,076 |                          | 
|                                                                                                                                                                                                                            |  |                           |         |                          | 




| |  | These notes are secured by specific computer equipment and are    nonrecourse liabilities of the Partnership.     Aggregate maturities of notes payable for each of the periods    subsequent to September 30, 2003 are as follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|                                        |  | Amount |        
|--------------------------------------- |  | ------ | -------
|                                        |  |        |        
|Three months    ended December 31, 2003 |  | $      | 86,273 
|Year ended    December 31, 2004         |  |        | 341,539
|Year ended    December 31, 2005         |  |        | 144,174
|Year ended    December 31, 2006         |  |        | 2,090  
|                                        |  |        |        
|                                        |  | $      | 574,076
|                                        |  |        |        

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|6. | Supplemental
  Cash Flow
  Information | Other noncash activities included in the determination of net loss    are as follows:
|-- | -------------------------------------- | -------------------------------------------------------------------------------------




|                                                                                                                                   |  | Nine    months    ended    September    30,    2003 |         | For the     period    July 8, 2002    (Commencement of    Operation)    through    September 30,    2002 |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------- | ------- | -------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                   |  |                                                     |         |                                                                                                          |  
|Lease    income, net of interest expense on notes payable realized as a result of    direct payment of principal by lessee to bank |  | $                                                   | 241,928 |                                                                                                          | $
|                                                                                                                                   |  |                                                     |         |                                                                                                          |  




| |  | No interest    or principal on notes payable was paid by the Partnership because direct    payment was made by lessee to the bank in lieu of collection of lease income    and payment of interest and principal by the Partnership.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                     
| |  | Noncash investing and financing activities include the following:                                                                                                                                                                   




|                                                                  |  | Nine    months    ended    September 30,    2003 |         | For the    period    July 8, 2002    (Commencement    of    Operation)     through    September 30,     2002 |  
|----------------------------------------------------------------- |  | ------------------------------------------------ | ------- | ------------------------------------------------------------------------------------------------------------ | -
|                                                                  |  |                                                  |         |                                                                                                              |  
|Debt assumed    in connection with purchase of computer equipment |  | $                                                | 816,004 |                                                                                                              | $
|                                                                  |  |                                                  |         |                                                                                                              |  




Item  2:  Managements Discussion and Analysis of Financial Condition and  Results of Operations





CRITICAL  ACCOUNTING POLICIES





Financial  Reporting Release No. 60, which was released by the Securities and Exchange  Commission, requires all companies to include a discussion of critical  accounting policies or methods used in the preparation of financial  statements.  Our significant accounting  policies are described in Note 1 of the Notes to the Financial Statements.  The significant accounting policies that we  believe are the most critical to aid in fully understanding our reported  financial results include the following:


---






COMPUTER  EQUIPMENT





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





REVENUE RECOGNITION





Through September 30, 2003, the  Partnership has only entered into operating leases.  Lease revenue is recognized on a monthly basis in accordance with  the terms of the operating lease agreements.





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





LONG-LIVED  ASSETS





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





Liquidity and Capital Resources





The Partnerships primary  source of capital for the nine months ended September 30, 2003 was  contributions of approximately $11,340,000.   The primary uses of cash for the nine months ended September 30, 2003  were for capital expenditures of new equipment totaling $2,861,000, offering  costs of approximately $1,219,000, payment of an advance made by the  Partnership to CCC, a related party to the Partnership, of approximately  $120,000 and payments of preferred distributions to partners of approximately  $578,000.





The Partnerships primary  source of capital for the period of July 8, 2002 (Commencement of Operations)  through September 30, 2002 was contributions of approximately $2,142,000.  The primary uses of cash for the nine months  ended September 30, 2002 were for capital expenditures of new equipment totaling  $805,000, offering costs of approximately $228,000 and payments of preferred  distributions to partners of approximately $23,000.





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


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For the for the period of July  8, 2002 (Commencement of Operations) through September 30, 2002, the  Partnership generated cash flows from operating activities of $7,000, which  includes a net loss of $208,000, depreciation and amortization expenses of  $12,000, and a payable to the General Partner of approximately $154,000.





Cash is invested in money  market accounts that invest directly in treasury obligations pending the  Partnerships use of such funds to purchase additional computer equipment, to  pay Partnership expenses or to make distributions to the Partners.  At September 30, 2003, the Partnership had  approximately $5,978,000 invested in these money market accounts.





The Partnerships investment  strategy of acquiring computer equipment and generally leasing it under  triple-net leases to operators who generally meet specified financial  standards minimizes the Partnerships operating expenses.  As of September 30, 2003, the Partnership  had future minimum rentals on non-cancelable operating leases of $524,000 for  the balance of the year ending December 31, 2003 and $4,081,000  thereafter.  At September 30, 2003, the  outstanding debt was $574,000, with interest rates ranging from 5.50% to 7.75%,  and will be payable through January 2006.





During the nine-months ended  September 30, 2003, the Partnership made a non-interest bearing advance to CCC,  a related party to the Partnership, in the amount of approximately  $120,000.  This advance, as well as  potential future advances, was and will be made at the discretion of the  General Partner.  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, through its indirect subsidiaries,  including the General Partner of the Partnership, earns fees based on revenues  and new lease purchases from this fund.   CCC intends to repay the receivable by the offsetting of acquisition and  debt placement fees over the next several fiscal years.





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





The Partnerships share of the  computer equipment in which they participate at September 30, 2003 was  approximately $8,000, which is included in the Partnerships fixed assets on  their balance sheet, and the total cost of the equipment shared by the  Partnership with other partnerships at September 30, 2003 was approximately $48,000.  The Partnership did not participate in  shared equipment as of December 31, 2002.





Results of Operations





Three Months Ended September 30, 2003 compared to the period of July 8,  2002  (Commencement of Operations) through September 30, 2002





For the three months ended  September 30, 2003, the Partnership recognized income of $397,000, and expenses  of $768,000, resulting in a net loss of $371,000. For the period of


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July 8, 2002 (Commencement of  Operations) through September 30, 2002, the Partnership recognized income of  $19,000 and expenses of $227,000   resulting in a net loss of $208,000.





Lease income was approximately  $388,000 for the three months ended September 30, 2003.  The Partnership has entered into  approximately seven new leases during the quarter ended September 30,  2003.  Lease income was approximately  $18,000 for the period of July 8, 2002 (Commencement of Operations) through  September 30, 2002.  The Partnership  entered into approximately twenty-two leases for the period of July 8, 2002  (Commencement of Operations) through September 30, 2002





For the three months ended  September 30, 2003, operating expenses of approximately $380,000, excluding  depreciation, primarily consist of professional fees of approximately $15,000,  due diligence of approximately $40,000, outside service fees of approximately  $30,000, advertising and promotions of approximately $16,000, printing services  or approximately $29,000, postage of approximately $13,000, wholesalers travel  expenses of approximately $35,000, conventions of $10,000 and reimbursement of  expenses to CCC for administration and operation of the Partnership of  approximately $85,000.





For the period of July 8, 2002  (Commencement of Operations) through September 30, 2002, operating expenses of  $192,000, excluding depreciation, primarily consists of the amount charged by  Commonwealth Capital Corp, a related party, to the Partnership for the  administration and operation of approximately $154,000.  This amount includes approximately $103,000  that was incurred by CCC on behalf of the Partnership through the date the  Partnership broke escrow, July 8, 2002.





Organizational costs were  approximately $34,000 for the three months ended September 30, 2003 and  approximately $23,000 for the period of July 8, 2002 (Commencement of  Operations) through September 30, 2002.





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 is approximately  $19,000 for the three months ended September 30, 2003 and approximately $1,000  for the period of July 8, 2002 (Commencement of Operations) through September  30, 2002.





Depreciation and amortization  expenses consist of depreciation on computer equipment and amortization of  equipment acquisition fees. The expenses totaled approximately $324,000 for the  three months ended September 30, 2003 and approximately $12,000 for the period  of July 8, 2002 (Commencement of Operations) through September 30, 2002.





Nine Months Ended September 30, 2003 compared to the period of July 8,  2002  (Commencement of Operations) through September 30, 2002





For the nine months ended  September 30, 2003, the Partnership recognized income of $987,000 and expenses  of $1,961,000 resulting in a net loss of $974,000.  For the period of July 8, 2002 (Commencement of Operations)  through September 30, 2002, the Partnership recognized income of $19,000 and  expenses of $227,000 resulting in a net loss of $208,000.


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Lease income was approximately  $971,000 for the nine months ended September 30, 2003.  The Partnership has entered into  approximately ninety-one leases through the nine months ended September 30,  2003.  Lease income was approximately $18,000  for the period of July 8, 2002 (Commencement of Operations) through September  30, 2002.  The Partnership entered into  approximately 22 leases for the period of July 8, 2002 (Commencement of  Operations) through September 30, 2002.





For the nine months ended  September 30, 2003, operating expenses of approximately $1,045,000, excluding  depreciation, primarily consist of professional fees of approximately $90,000,  due diligence of approximately $112,000, outside service fees of approximately  $49,000, postage of approximately $26,000, printing services of approximately  $87,000, wholesalers travel expenses of approximately $100,0000, advertising  and promotions of approximately $26,000 and reimbursement of expenses to CCC  for administration and operation of the Partnership of approximately $222,000.  Operating expenses of $192,000, excluding depreciation, primarily consists of  the amount charged by Commonwealth Capital Corp, a related party, to the  Partnership for the administration and operation of approximately $154,000 for  the period of July 8, 2002 (Commencement of Operations) through September 30,  2002.  This amount includes  approximately $103,000 that was incurred
by CCC on behalf of the Partnership  through the date the Partnership broke escrow, July 8, 2002.





For the nine months ended  September 30, 2003, organizational costs were approximately $100,000 and  approximately $23,000 for the period of July 8, 2002 (Commencement of  Operations) through September 30, 2002.





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 is approximately  $49,000 for the nine months ended September 30, 2003 and approximately $1,000  for the period of July 8, 2002 (Commencement of Operations) through September  30, 2002.





Depreciation and amortization  expenses consist of depreciation on computer equipment and amortization of  equipment acquisition fees. The expenses totaled approximately $736,000 for the  nine months ended September 30, 2003 and approximately $12,000 for the period  of July 8, 2002 (Commencement of Operations) through September 30, 2002.





Item 3.  Quantitative and  Qualitative Disclosures About Market Risk





Inapplicable





Item  4.  Controls and Procedures





The Chief Executive Officer and  a Financial Officer of the Partnership have conducted a review of the  Partnerships disclosure controls and procedures as of September 30, 2003.





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


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summarized and reported with  the required time quarters.





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





Part II:   OTHER INFORMATION





Commonwealth  Income & Growth Fund IV


| |         |                                                          
| | ------- | ---------------------------------------------------------
| | Item 1. | Legal Proceedings.                                       
| |         |                                                          
| |         | Inapplicable                                             
| |         |                                                          
| | Item 2. | Changes in Securities.                                   
| |         |                                                          
| |         | Inapplicable                                             
| |         |                                                          
| | Item 3. | Defaults Upon Senior Securities.                         
| |         |                                                          
| |         | Inapplicable                                             
| |         |                                                          
| | Item 4. | Submission of Matters to a Vote of Securities    Holders.
| |         |                                                          
| |         | Inapplicable                                             
| |         |                                                          
| | Item 5. | Other Information.                                       
| |         |                                                          
| |         | Inapplicable                                             
| |         |                                                          
| | Item 6. | Exhibits and Reports on Form 8-K.                        
| |         |                                                          
| |         | a)                                                       
| |         |                                                          
| |         | 31.1 THE RULE 15d-14(a)                                  
| |         | 31.2 THE RULE 15d-14(a)                                  
| |         | 32.1 SECTION 1350 CERTIFICATION OF CEO                   
| |         | 32.2 SECTION 1350 CERTIFICATION OF CFO                   
| |         |                                                          
| |         | b)                                                       

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SIGNATURE





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





|                     | COMMONWEALTH    INCOME & GROWTH FUND IV
|-------------------- | ---------------------------------------
|                     |                                        
|                     |                                        
|November 10,    2003 | By:                                    
|Date                 | George S.    Springsteen               
|                     | President                              
|                     |