UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 ______________
 
 FORM
10-Q
 
 ______________
 (Mark
One)
 
 x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
the quarterly period ended June 30, 2008
 
 OR
 
 [  ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 
 Commission
File Number 0-17015
 
 
 
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 (Exact
name of registrant as specified in its charter)
 
 
 
 Delaware
            
            13-3809869(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer Identification No.)625
      Madison Avenue, New York, New York
            
            10022(Address
      of principal executive offices)
            
            (Zip
      Code)
 
 
 Registrant’s
telephone number, including area code (212) 317-5700
 
 
 Indicate
by check mark whether the registrant (1) 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 (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes  xNo  [  ]
 
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.  See definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 
 
 Large
      accelerated filer [  ]
            
            Accelerated
      filer  [  ]Non-accelerated
      filer [  ]  (Do not check if a smaller reporting
      company)
            
            Smaller
      reporting company  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
 
 
 
 
 PART I –
FINANCIAL INFORMATION
 
 Item 1.
Financial Statements
 
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Condensed
Consolidated Balance Sheets
 
 
 June
      30,
              2008
            
            March
      31,
              2008(Unaudited)
            
            (Audited)ASSETSOperating
      assetsProperty
      and equipment - (at cost, net of accumulated depreciation of$21,728,980
      and $21,186,975, respectively)
            
            $
            48,481,747
            
            $
            49,023,752Cash
      and cash equivalents
            
            
            2,603,632
            
            
            2,231,576Cash
      held in escrow
            
            
            2,967,093
            
            
            2,816,310Deferred
      costs (net of accumulated amortization of $742,045 and$731,095,
      respectively)
            
            
            398,548
            
            
            409,498Due
      from local general partners and affiliates
            
            
            308,985
            
            
            299,985Other
      assets
            
            
            579,410
            
            
            517,343Total
      operating assets
            
            $
            55,339,415
            
            $
            55,298,464Assets
      of discontinued operations (Note 5):Net
      assets held for sale
            
            
            0
            
            
            554,439Total
      discontinued assets
            
            
            0
            
            
            554,439Total
      assets
            
            $
            55,339,415
            
            $
            55,852,903LIABILITIES
      AND PARTNERS’ CAPITAL (DEFICIT)Operating
      liabilitiesMortgage
      notes payable
            
            $
            27,168,604
            
            $
            27,258,408Accounts
      payable
            
            
            744,768
            
            
            434,095Accrued
      interest payable
            
            
            6,179,126
            
            
            6,010,799Security
      deposit payable
            
            
            311,176
            
            
            330,190Due
      to local general partners and affiliates (Note 2)
            
            
            1,762,802
            
            
            1,823,782Due
      to general partners and affiliates
            
            
            2,867,201
            
            
            2,757,581Total
      operating liabilities
            
            
            39,033,677
            
            
            38,614,855Liabilities
      of discontinued operations (Note 5)Mortgage
      notes payable
            
            
            0
            
            
            216,891Net
      liabilities held for sale
            
            
            0
            
            
            18Total
      discontinued liabilities
            
            
            0
            
            
            216,909Total
      liabilities
            
            
            39,033,677
            
            
            38,831,764Minority
      interests
            
            
            1,458,801
            
            
            1,456,791Commitments
      and contingencies (Note 6)Partners’
      capital (deficit):Limited
      partners – 45,844 Beneficial Assignment Certificates (“BACs”) issued and
      outstanding
            
            
            15,106,003
            
            
            15,816,240General
      partners
            
            
            (259,066
            )
            
            (251,892
            )Total
      partners’ capital (deficit)
            
            
            14,846,937
            
            
            15,564,348Total
      liabilities and partners’ capital (deficit)
            
            $
            55,339,415
            
            $
            55,852,903The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
   - 2
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Condensed
Consolidated Statements of Operations
 (Unaudited)
 
 
 
 
 Three
      Months Ended
              June
      30,2008
            
            
            2007*Operations:RevenuesRental
      income
            
            
            
            
            
            
            
            
            
            $
            1,268,651
            
            
            $
            1,230,255Other
            
            
            
            
            
            
            
            
            
            
            74,517
            
            
            
            89,476Total
      revenues
            
            
            
            
            
            
            
            
            
            
            1,343,168
            
            
            
            1,319,731ExpensesGeneral
      and administrative
            
            
            
            
            
            
            
            
            
            
            386,440
            
            
            
            320,601General
      and administrative-related parties (Note 2)
            
            
            
            
            
            
            
            
            
            
            197,458
            
            
            
            175,341Repairs
      and maintenance
            
            
            
            
            
            
            
            
            
            
            189,798
            
            
            
            207,416Operating
      and other
            
            
            
            
            
            
            
            
            
            
            221,045
            
            
            
            226,988Real
      estate taxes
            
            
            
            
            
            
            
            
            
            
            31,307
            
            
            
            31,624Insurance
            
            
            
            
            
            
            
            
            
            
            80,276
            
            
            
            79,182Interest
            
            
            
            
            
            
            
            
            
            
            357,881
            
            
            
            359,918Depreciation
      and amortization
            
            
            
            
            
            
            
            
            
            
            552,955
            
            
            
            550,477Total
      expenses
            
            
            
            
            
            
            
            
            
            
            2,017,160
            
            
            
            1,951,547Loss
      before minority interest and discontinued operations
            
            
            
            
            
            
            
            
            
            
            (673,992
            )
            
            
            (631,816
            )Minority
      interest in (loss) income of subsidiaries from operations
            
            
            
            
            
            
            
            
            
            
            (9,177
            )
            
            
            597Loss
      from continuing operations
            
            
            
            
            
            
            
            
            
            
            (683,169
            )
            
            
            (631,219
            )Discontinued
      operations:Loss
      from discontinued operations (including loss on sale of property) (Note
      5)
            
            
            
            
            
            
            
            
            
            
            (34,242
            )
            
            
            (108,036
            )Net
      loss
            
            
            
            
            
            
            
            
            
            $
            (717,411
            )
            
            $
            (739,255
            )Loss
      from continuing operations – limited partners
            
            
            
            
            
            
            
            
            
            $
            (676,337
            )
            
            $
            (624,907
            )Loss
      from discontinued operations (including loss on sale of property) –
      limited partners
            
            
            
            
            
            
            
            
            
            
            (33,900
            )
            
            
            (106,955
            )Net
      loss – limited partners
            
            
            
            
            
            
            
            
            
            $
            (710,237
            )
            
            $
            (731,862
            )Weighted
      average number of BACs outstanding
            
            
            
            
            
            
            
            
            
            
            45,844
            
            
            
            45,844Loss
      from continuing operations per weighted average BAC
            
            
            
            
            
            
            
            
            
            $
            (14.75
            )
            
            $
            (13.63
            )Loss
      from discontinued operations per weighted average BAC
            
            
            
            
            
            
            
            
            
            
            (0.74
            )
            
            
            (2.33
            )Net
      loss per weighted average BAC
            
            
            
            
            
            
            
            
            
            $
            (15.49
            )
            
            $
            (15.96
            )*  Reclassified
      for comparative purposes.The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
   - 3
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Condensed
Consolidated Statement of Changes in Partners’ Capital (Deficit)
 (Unaudited)
 
 
 
 
 Total
            
            
            Limited
              Partners
            
            
            General
              PartnerPartners’
      capital (deficit) – April 1, 2008
            
            $
            15,564,348
            
            
            $
            15,816,240
            
            
            $
            (251,892
            )Net
      loss
            
            
            (717,411
            )
            
            
            (710,237
            )
            
            
            (7,174
            )Partners’
      capital (deficit) – June 30, 2008
            
            $
            14,846,937
            
            
            $
            15,106,003
            
            
            $
            (259,066
            )The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
 
 
 - 4
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Condensed
Consolidated Statements of Cash Flows
 (Unaudited)
 
 
 
 Three
      Months Ended
              June
      30,2008
            
            
            2007*Cash
      flows from operating activities:Net
      loss
            
            $
            (717,411
            )
            
            $
            (739,255
            )Adjustments
      to reconcile net loss to net cash (used in) provided by operating
      activities:Depreciation
      and amortization
            
            
            552,955
            
            
            
            605,620Loss
      on sale of property
            
            
            34,242
            
            
            
            0Minority
      interest in income (loss) of subsidiary partnerships
            
            
            9,177
            
            
            
            (597
            )Increase
      in cash held in escrow
            
            
            (173,099
            )
            
            
            (177,324
            )(Increase)
      decrease in other assets
            
            
            (62,067
            )
            
            
            31,278(Decrease)
      increase in accounts payable
            
            
            (125,853
            )
            
            
            56,132Increase
      in accrued interest payable
            
            
            168,327
            
            
            
            169,360Decrease
      in security deposit payable
            
            
            (19,014
            )
            
            
            (5,228
            )(Decrease)
      increase in due to local general partners and affiliates
            
            
            (63,483
            )
            
            
            2,628Increase
      in due to general partner and affiliates
            
            
            109,620
            
            
            
            117,952Total
      adjustments
            
            
            430,805
            
            
            
            799,821Net
      cash (used in) provided by operating activities
            
            
            (286,606
            )
            
            
            60,566Cash
      flows from investing activities:Release
      of cash held in escrow
            
            
            22,316
            
            
            
            8,909Proceeds
      from sale of property
            
            
            303,289
            
            
            
            0Increase
      in due from local general partner and affiliates
            
            
            (9,000
            )
            
            
            (9,000
            )Net
      payments from (to) local general partners and affiliates
            
            
            2,503
            
            
            
            (17,382
            )Net
      cash provided by (used in) investing activities
            
            
            319,108
            
            
            
            (17,473
            )Cash
      flows from financing activities:Repayments
      of mortgage notes
            
            
            (89,804
            )
            
            
            (108,507
            )Decrease
      in capitalization of consolidated subsidiaries attributable to minority
      interest
            
            
            (7,167
            )
            
            
            (24,000
            )Net
      cash used in financing activities
            
            
            (96,971
            )
            
            
            (132,507
            )Net
      decrease in cash and cash equivalents
            
            
            (64,469
            )
            
            
            (89,414
            )Cash
      and cash equivalents at beginning of period
            
            
            2,668,101
            
            
            
            1,375,669Cash
      and cash equivalents at end of period
            
            $
            2,603,632
            
            
            $
            1,286,255Supplemental
      disclosure of cash flow information:Cash
      paid during period for interest
            
            $
            189,554
            
            
            $
            299,552*Reclassified
      for comparative purposes.Summarized
      below are the components of the loss on sale of property:Proceeds
      from sale of investment – net
            
            $
            (303,289
            )
            
            $
            0Decrease
      in other assets
            
            
            54,000
            
            
            
            0Increase
      in mortgage notes payable
            
            
            (216,891
            )
            
            
            0Increase
      in accounts payable and other liabilities
            
            
            436,508
            
            
            
            0Decrease
      in due from local general partner and affiliates
            
            
            63,914
            
            
            
            0The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.
  
 - 5
-
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (Unaudited)
 Note 1 -
General
 
 The
condensed consolidated financial statements include the accounts of Independence
Tax Credit Plus L.P. IV (the “Partnership”) and thirteen other limited
partnerships (“subsidiary partnerships”, “subsidiaries” or “Local Partnerships”)
owning affordable apartment complexes (“Properties”) that are eligible for the
low-income housing tax credits.  Some of the Properties may also be
eligible for the historic rehabilitation tax credits.  As of June 30,
2008, the property and the related assets and liabilities of one Local
Partnership were sold (see Note 4).  The general partner of the
Partnership is Related Independence L.L.C., a Delaware limited liability company
(the “General Partner”).  Through the rights of the Partnership and/or
an affiliate of the General Partner, which affiliate has a contractual
obligation to act on behalf of the Partnership to remove the general partner of
the subsidiary partnerships (“Local General Partners”) and to approve certain
major operating and financial decisions, the Partnership has a controlling
financial interest in the subsidiary partnerships.
 
 For
financial reporting purposes, the Partnership’s first fiscal quarter ends June
30.  The first quarter for all subsidiaries ends March
31.  Accounts of the subsidiaries have been adjusted for intercompany
transactions from April 1 through June 30.  The Partnership’s fiscal
quarter ends three months after the subsidiaries in order to allow adequate time
for the subsidiaries’ financial statements to be prepared and
consolidated.
 
 All
intercompany accounts and transactions with the subsidiary partnerships have
been eliminated in consolidation.
 
 Increase
(decrease) in the capitalization of consolidated subsidiaries attributable to
minority interest arises from cash contributions from and cash distributions to
the minority interest partners.
 
 Losses
attributable to minority interests that exceed the minority interests’
investment in a subsidiary have been charged to the Partnership.  Such
losses aggregated approximately $0 and $3,000 for the three months ended June
30, 2008 and 2007, respectively.  The Partnership’s investment in each
subsidiary is equal to the respective subsidiary’s partners’ equity less
minority interest capital, if any. In consolidation, all subsidiary partnership
losses are included in the Partnership’s capital account except for losses
allocated to minority interest capital.
 
 Certain
information and note disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) have been omitted or condensed. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Partnership’s Annual Report on Form 10-K for the year ended March 31,
2008.
 
 The books
and records of the Partnership are maintained on the accrual basis of accounting
in accordance with GAAP.  In the opinion of the General Partner of the
Partnership, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the consolidated financial position of
the Partnership as of June 30, 2008, the results of its operations and its cash
flows for the three months ended June 30, 2008 and 2007.  However, the
operating results for the three months ended June 30, 2008 may not be indicative
of the results for the entire year.
 Recent Accounting
Pronouncements
 
 In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements. This statement was issued with the
intent to improve the relevance, comparability, and transparency of the
financial information that a reporting entity provides in its consolidated
financial statements for those entities that have outstanding non-controlling
interest in one or more subsidiaries.  The effective date for this
provision is for fiscal years beginning after December 15, 2008.  The
Partnership is currently evaluating the impact of the provisions of this
statement on the condensed consolidated financial statements.
 
 In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAF No. 162”). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of non-governmental
entities that are presented I conformity with generally accepted accounting
principles. SFAF No. 162 directs the hierarchy to the entity, rather than the
independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
generally accepted accounting principles. The standard is effective 60days
following Securities and Exchange Commission (“SEC”) approval of the Public
Company Accounting Oversight Board (“PCAOB”) amendments to remove the hierarchy
of generally accepted accounting principles from the auditing standards. SFAF
No. 162 is not expected to have an impact on the Partnership’s condensed
consolidated financial statements.
 - 6
-
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (Unaudited)
 Note 2 -
Related Party Transactions
    An
affiliate of the General Partner has a .01% interest as a special limited
partner in each of the Local Partnerships.
 
 The costs
incurred to related parties from operations for the three months ended June 30,
2008 and 2007 were as follows:
 
 Three
      Months Ended
                  June
      30,2008
                
                
                2007Partnership
      management fees (a)
                
                $
                77,750
                
                
                $
                84,280Expense
      reimbursement (b)
                
                
                27,758
                
                
                
                24,454Local
      administrative fee (c)
                
                
                19,000
                
                
                
                15,750Total
      general and administrative-General Partners
                
                
                124,508
                
                
                
                124,484Property
      management fees incurred to affiliates of thesubsidiary
      partnerships’ general partners (d)
                
                
                72,950
                
                
                
                50,857Total
      general and administrative-related parties
                
                $
                197,458
                
                
                $
                175,341
 
 
 There
were no costs incurred to related parties from discontinued operations for the
three months ended June 30, 2008 and 2007.
 
 (a)  The
General Partner is entitled to receive a partnership management fee, after
payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partner in its sole discretion
based upon its review of the Partnership’s investments.  Unpaid
partnership management fees for any year will be accrued without interest and
will be payable only to the extent of available funds after payments on all
Partnership liabilities have been made other than to those owed to the General
Partner.  Partnership management fees owed to the General Partner
amounting to approximately $2,248,000 and $2,170,000 were accrued and unpaid as
of June 30, 2008 and March 31, 2008, respectively and are included in due to
local general partners and affiliates on the consolidated balance
sheets.
 
 (b)  The
Partnership reimburses the General Partner and its affiliates for actual
Partnership operating expenses incurred by the General Partner and its
affiliates on the Partnership’s behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partner performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships’ performance.
 
 (c)  Independence
SLP IV L.P., a special limited partner of the subsidiary partnerships, is
entitled to receive a local administrative fee of $0 to $5,000 per year from
each subsidiary partnership.
 
 (d)  Property
management fees incurred by the Local Partnerships amounted to $112,830 and
$97,991 for the three months ended June 30, 2008 and 2007,
respectively.  Of these fees, $72,950 and $50,857 were incurred to
affiliates of the subsidiary partnerships’ general partners (“Local General
Partners”) which includes $0 of fees relating to discontinued
operations.
 B) 
Due to Local General Partners and Affiliates
  The
amounts due to Local General Partners and affiliates from operating liabilities
consists of the following:
 
 June
      30,
                    2008
                  
                  
                  March
      31,
                    2008Development
      fee payable
                  
                  $
                  1,586,237
                  
                  
                  $
                  1,583,734Construction
      costs payable
                  
                  
                  50,000
                  
                  
                  
                  50,000Operating
      advances
                  
                  
                  126,565
                  
                  
                  
                  126,565Management
      and other fees
                  
                  
                  0
                  
                  
                  
                  63,483$
                  1,762,802
                  
                  
                  $
                  1,823,782
 - 7
-
  INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (Unaudited)
 Note 3 –
Fair Value Measurements
 
 In the
first quarter of 2008, we adopted SFAS No. 157, “Fair Value Measurements”,for
financial assets and liabilities.This standard
defines fair value, provides guidance for measuring fair value and requires
certain disclosures.  This standard does not require any new fair
value measurements, but discusses valuation techniques, such as the market
approach (comparable market prices), the income approach (present value of
future income or cash flow), and the cost approach (cost to replace the service
capacity of an asset or replacement cost).  The statement provides for
a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value into three broad levels.  The following is a
brief description of those three levels:
 
 Level
      1:
                Observable
      inputs such as quoted prices (unadjusted) in active markets for identical
      assets or liabilities.
 
 Level
      2:
                Inputs
      other than quoted prices that are observable for the asset or liability,
      either directly or indirectly.  These include quoted prices for
      similar assets or liabilities in active markets and quoted prices for
      identical or similar assets or liabilities in markets that are not
      active.
 
 Level
      3:
                Unobservable
      inputs that reflect our own
assumptions.
 
 As
permitted, we chose not to elect the fair value option as prescribed by FASB
SFAS No. 159, “The Fair Value
Option for Financial Assets and Financial Liabilities” – Including an
Amendment of FASB Statement No. 115, for our financial assets and liabilities
that had not been previously carried at fair value.  Therefore, we did
not elect to fair value any additional items under SFAS No. 159.  We,
in accordance with Financial Accounting Standards Board Staff Position No.
157-2, “The Effective Date of
FASB Statement No. 157”, will defer application on SFAS No. 157 for
nonfinancial assets and nonfinancial liabilities until first quarter
2009.
 
 The
Partnership’s financial assets and liabilities subject to recurring fair value
measurements and necessary disclosures are as
follows:
 At
      June 30, 2008
                
                Fair
      Value Measurements at
                  June
      30, 2008 using
                  Fair
      Value HierarchyCost
                
                Fair
      Value
                
                Level
      1
                
                Level
      2
                
                Level
      3LIABILITIES:Mortgage
      notes
                
                $
                27,168,604
                
                
                $
                27,168,604
                
                
                $
                27,168,604
                
                
                $
                0
                
                
                $
                0
 
 
 Certain
assets and liabilities are measured at fair value on a non-recurring basis and
therefore are not included in the table above.
 
 
 Note 4 –
Sale of Property
 
 The
Partnership is currently in the process of disposing of its
investments.  As of June 30, 2008, the property and the related assets
and liabilities of one Local Partnership have been sold.  There can be
no assurance as to when the Partnership will dispose of its remaining
investments or the amount of proceeds which may be received.  However,
based on the historical operating results of the Local Partnerships and the
current economic conditions, including changes in tax laws, it is unlikely that
the proceeds from such sales received by the Partnership will be sufficient to
return to the limited partners their original investments.  All gains
and losses on sales are included in discontinued operations.
  Note 5 –
Discontinued Operations
 
 The
following table summarizes the financial position of the Local Partnerships that
are classified as discontinued operations because the respective Local
Partnerships were classified as assets held for sale.  As of June 30,
2008, there were no Local Partnerships classified as discontinued operations in
the consolidated balance sheets.  As of March 31, 2008, Westminster
was classified as a discontinued operation in the consolidated balance
sheets.  The amounts shown below, as of March 31, 2008, represent
residual cash and accounts payable balances as of the balance sheet date from
the sale of Westminster.
 
 - 8
-
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (Unaudited)
 Consolidated
Balance Sheets:
 
 June
      30,
                  2008
                
                
                March
      31,
                  2008AssetsCash
      and cash equivalents
                
                $
                0
                
                
                $
                436,525Due
      from Local General Partners and affiliates
                
                
                0
                
                
                
                63,914Other
      assets
                
                
                0
                
                
                
                54,000Total
      assets
                
                $
                0
                
                
                $
                554,439LiabilitiesMortgage
      notes payable
                
                $
                0
                
                
                $
                216,891Accounts
      payable and other liabilities
                
                
                0
                
                
                
                18Total
      liabilities
                
                $
                0
                
                
                $
                216,909
   Consolidated
Statements of Discontinued Operations:
 
 Three
      Months Ended
                    June
      30,2008
                  
                  
                  2007*RevenuesRental
      income
                  
                  $
                  0
                  
                  
                  $
                  286,629Other
                  
                  
                  0
                  
                  
                  
                  11,286Loss
      on sale of property (Note 4)
                  
                  
                  (34,242
                  )
                  
                  
                  0Total
      revenue
                  
                  
                  (34,242
                  )
                  
                  
                  297,915ExpensesGeneral
      and administrative
                  
                  
                  0
                  
                  
                  
                  143,488Repairs
      and maintenance
                  
                  
                  0
                  
                  
                  
                  48,472Operating
                  
                  
                  0
                  
                  
                  
                  23,439Taxes
                  
                  
                  0
                  
                  
                  
                  13,959Insurance
                  
                  
                  0
                  
                  
                  
                  12,455Interest
                  
                  
                  0
                  
                  
                  
                  108,995Depreciation
      and amortization
                  
                  
                  0
                  
                  
                  
                  55,143Total
      expenses
                  
                  
                  0
                  
                  
                  
                  405,951Net
      loss from discontinued operations
                  
                  $
                  (34,242
                  )
                  
                  $
                  (108,036
                  )Net
      loss from discontinued operations – limited partners
                  
                  $
                  (33,900
                  )
                  
                  $
                  (106,955
                  )Number
      of BACs outstanding
                  
                  
                  45,844
                  
                  
                  
                  45,844Net
      loss from discontinued operations per BAC
                  
                  $
                  (0.74
                  )
                  
                  $
                  (2.33
                  )
  - 9
-
 INDEPENDENCE
TAX CREDIT PLUS L.P. IV
 AND
SUBSIDIARIES
 Notes to
Condensed Consolidated Financial Statements
 June 30,
2008
 (Unaudited)
 Cash
Flows from Discontinued Operations:
 
 Three
      Months Ended
                  June
      30,2008
                
                
                2007*Net
      cash provided by operating activities
                
                $
                0
                
                
                $
                73,389Net
      cash provided by (used in) investing activities
                
                $
                303,289
                
                
                $
                (55,297
                )Net
      cash used in financing activities
                
                $
                0
                
                
                $
                (25,145
                )
 
 *Reclassified
for comparative purposes.
 
 
 Note 6 –
Commitments and Contingencies
 
 There
have been no material changes and/or additions to the disclosures regarding the
subsidiary partnerships which were included in the Partnership’s Annual Report
on Form 10-K for the fiscal year ended March 31, 2008.
 
 Other
 
 The
Partnership is subject to risks incident to potential losses arising from the
management and ownership of improved real estate. The Partnership can also be
affected by poor economic conditions generally, however no more than 23% of the
properties are located in any single state, including New Jersey (23%), Kentucky
(15%) and California (15%). There are also substantial risks associated with
owning properties receiving government assistance, for example the possibility
that Congress may not appropriate funds to enable the U.S. Department of Housing
and Urban Development (“HUD”) to make rental assistance payments. HUD also
restricts annual cash distributions to partners based on operating results and a
percentage of the owners’ equity contribution.  As of June 30, 2008,
there were three Local Partnerships subsidized by HUD.  The
Partnership cannot sell or substantially liquidate its investments in subsidiary
partnerships during the period that the subsidy agreements are in existence
without HUD’s approval. Furthermore there may not be market demand for
apartments at full market rents when the rental assistance contract
expires.
  
 - 10
-
 
 Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 Liquidity and Capital
Resources
 
 The
Partnership originally invested approximately $37,555,000 (including
approximately $902,000 classified as a loan repayable from sale/refinancing
proceeds in accordance with the Contribution Agreement, which has been
eliminated in consolidation, and not including acquisition fees of approximately
$1,771,000) of net proceeds in fourteen Local Partnerships of which, as of June
30, 2008, approximately $973,000 remains to be paid to the Local Partnerships
(including approximately $434,000 being held in escrow) as certain benchmarks,
such as occupancy level, must be attained prior to the release of the
funds.  During the three months ended June 30, 2008, no payments were
made to the Local Partnerships.  As of June 30, 2008, the property and
the related assets and liabilities of one Local Partnership were sold (see Item
1, Note 4).
 
 Short-Term
 
 The
Partnership’s primary sources of funds include:  (i) working capital
reserves, exclusive of Local Partnerships’ working capital; (ii) interest earned
on the working capital reserves; (iii) cash distributions from operations of the
Local Partnerships; and (iv) sales proceeds and distributions.  Such
funds, although minimal (other than possible sales proceeds and sales
distributions), are available to meet the obligations of the
Partnership.  The Partnership does not anticipate providing cash
distributions to BACs holders in circumstances other than refinancing or
sales.  During the three months ended June 30, 2008 and 2007,
distributions from operations of the Local Partnerships amounted to
approximately $9,000 and $0, respectively.  Additionally, during the
three months ended June 30, 2008 and 2007, the Partnership received
approximately $303,000 and $0, respectively, of distributions from the sale of
investments.
 
 For the
three months ended June 30, 2008, cash and cash equivalents of the Partnership
and its consolidated Local Partnerships decreased approximately $64,000 due to
net cash used in operating activities of approximately $287,000, an increase in
due from local general partners of approximately $9,000, a decrease in
capitalization of consolidated subsidiaries attributable to minority interest of
approximately $7,000 and repayments of mortgage notes of approximately
$90,000.  Such outflows exceeded proceeds from the sale of property of
approximately $303,000, a decrease of cash held in escrow of approximately
$22,000 and net payments from local general partners and affiliates of
approximately $3,000.  Included in the adjustments to reconcile the
net loss to net cash used in operating activities is depreciation and
amortization of approximately $553,000 and loss on sale of property of
approximately $34,000.
 
 Total
expenses for the three months ended June 30, 2008 and 2007, excluding
depreciation and amortization, interest and general and administrative-related
parties, totaled $908,866 and $865,811, respectively.
 
 Accounts
payable totaled $744,768 and $434,095 as of June 30, 2008 and March 31, 2008,
respectively.  Accounts payable are short term liabilities which are
expected to be paid from operating cash flows, working capital balances at the
Local Partnership level, Local General Partner advances and, in certain
circumstances, advances from the Partnership.  The Partnership
believes it (and the applicable Local Partnerships) has sufficient liquidity and
ability to generate cash and to meet existing and known or reasonably likely
future cash requirements over both the short and long term.
 
 Accrued
interest payable as of June 30, 2008 and March 31, 2008 was $6,179,126 and
$6,010,799, respectively.  Accrued interest payable represents the
accrued interest on all mortgage loans, which include primary and secondary
loans. Certain secondary loans have provisions such that interest is accrued but
not payable until a future date.  In addition, there was no accrued
interest payable from discontinued operations, as of June 30, 2008 and March 31,
2008.  The Partnership anticipates the payment of accrued interest on
the secondary loans (which make up the majority of the accrued interest payable
amount and which have been accumulating since the Partnership’s investment in
the respective Local Partnership) will be made from future refinancings or sales
proceeds of the respective Local Partnerships.  Furthermore, each
Local Partnership’s mortgage notes are collateralized by the land and buildings
of the respective Local Partnership, and are without further recourse to the
Partnership.
 
 Security
deposits payable are offset by cash held in security deposits, which are
included in “Cash held in escrow” on the financial statements.
 
 A working
capital reserve of approximately $1,436,000, exclusive of the Local
Partnership’s working capital, remained unused at June 30, 2008.  The
General Partner believes that these reserves, plus any cash distributions
received from the operations of the Local Partnerships, will be sufficient to
fund the Partnership’s ongoing operations for the foreseeable future not
including fees owed to the General Partner.
 
 Long-Term
 
 Partnership
management fees owed to the General Partner amounting to approximately
$2,248,000 and $2,170,000 were accrued and unpaid as of June 30, 2008 and March
31, 2008, respectively.  Unpaid partnership management fees for any
year will be accrued without interest and will be payable only to the extent of
available funds after payments on all Partnership liabilities have been made
other than to those owed to the General Partner.
 
 The Local
Partnerships are impacted by inflation in several ways.  Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs, such as fuel, utilities, and labor.  Since revenues
from sales of assets are driven by market conditions, inflation has little
impact on sales.  However, the Partnership’s portfolio may not be
protected against a general downturn in the national economy.
 
 Management
is not aware of any trends or events, commitments or uncertainties, which have
not otherwise been disclosed that will or are likely to impact liquidity in a
material way. Management believes the only impact would be from laws that have
not yet been adopted. The portfolio is diversified by the location of the
Properties around the United States so that if one area of the country is
experiencing downturns in the economy, the remaining Properties in the portfolio
may be experiencing upswings. However, the geographic diversification of the
portfolio may not protect against a general downturn in the national
economy.  Tax Credits will be attached to the Property for a period of
ten years, and will be transferable with the Property during the remainder of
such ten-year period. If trends in the real estate market warranted the sale of
a Property, the remaining tax credits would transfer to the new owner, thereby
adding value to the Property on the market.  However, such value
declines each year and is not included in the financial statement carrying
amount.  The Credit Periods are scheduled to expire, and have expired,
at various times from December 31, 2005 through December 31, 2010 with respect
to the Local Partnerships depending upon when the Credit Period
commenced.  However, each Local Partnership must continue to comply
with the Tax Credit requirements until the end of the Compliance Period in order
to avoid recapture of the Tax Credits.  The Compliance Periods will
continue through December 31, 2014 with respect to the Properties depending upon
when the Compliance Period commenced.
  
 - 11
-
  Off-Balance Sheet
Arrangements
 The
Partnership has no off-balance sheet arrangements.
 
 Tabular Disclosure of
Contractual Obligations
 The
Partnership disclosed in Item 7 of the Partnership’s Annual Report on Form 10-K
for the year ended March 31, 2008, the Partnership’s commitments to make future
payments under its debt agreements and other contractual
obligations.  There are no material changes to such disclosure or
amounts as of June 30, 2008.
 
 Critical Accounting Policies
and Estimates
 
 In
preparing the condensed consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the condensed
consolidated financial statements. The summary should be read in conjunction
with the more complete discussion of the Partnership’s accounting policies
included in Item 8, Note 2 to the consolidated financial statements which are
included in the Partnership’s Annual Report on Form 10-K for the year ended
March 31, 2008.
 
 Property and
Equipment/Valuation of Long-Lived Assets
 
 Property
and equipment to be held and used are carried at cost which includes the
purchase price, acquisition fees and expenses, and any other costs incurred in
acquiring the Properties.  The cost of property and equipment is
depreciated over their estimated useful lives using accelerated and
straight-line methods. Expenditures for repairs and maintenance are charged to
expense as incurred; major renewals and betterments are
capitalized.  At the time property and equipment are retired or
otherwise disposed of, the cost and accumulated depreciation are eliminated from
the assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings.  The Partnership complies with
Statement of Financial Accounting Standards (“SFAS”) No. 144 “Accounting for the
Impairment or Disposal of Long-Lived Assets”.  A loss on impairment of
assets is recorded when management estimates amounts recoverable through future
operations and sale of the Property on an undiscounted basis are below
depreciated cost.  At that time Property investments themselves are
reduced to estimated fair value (generally using discounted cash flows) when the
Property is considered to be impaired and the depreciated cost exceeds estimated
fair value.  Through March 31, 2008, the Partnership has not recorded
any loss on impairment of assets or reductions to estimated fair
value.
 
 At the
time management commits to a plan to dispose of an asset, such asset is adjusted
to the lower of carrying amount or fair value less costs to
sell.  These assets are classified as property and equipment-held for
sale and are not depreciated.
 
 Revenue
Recognition
 
 Rental
income is earned under standard residential operating leases and is typically
due the first day of each month, but can vary by Property due to the terms of
the tenant leases. Rental income is recognized when earned and charged to
tenants’ accounts receivable if not received by the due date. Rental payments
received in advance of the due date are deferred until earned. Rental subsidies
are recognized as rental income during the month in which it is
earned.
 
 Other
revenues are recorded when earned and consist of the following
items:  Interest income earned on cash and cash equivalent balances
and cash held in escrow balances, income from forfeited security deposits, late
charges, laundry and vending income and other rental related items.
 
 Results of
Operations
 
 The
results of operations for the three months ended June 30, 2008 and 2007
continued to be in the form of rental income with corresponding expenses divided
among operations, depreciation and mortgage interest, excluding the results of
its discontinued operations which are not reflected in the following discussion
(see Item 1, Note 5).
 
 Rental
income increased approximately 3% for the three months ended June 30, 2008, as
compared to the corresponding period in 2007, primarily due to increases in
rental rates at the Local Partnerships.
 
 Other
income decreased approximately $15,000 for the three months ended June 30, 2008,
as compared to the corresponding period in 2007, primarily due to an overaccrual
of interest income during the first quarter of 2007 at one Local
Partnership.
 
 Total
expenses, excluding general and administrative and general and
administrative-related parties, remained fairly consistent, with a decrease of
approximately 2% for the three months ended June 30, 2008 as compared to the
corresponding period in 2007.
 
 General
and administrative expenses increased approximately $66,000 for the three months
ended June 30, 2008, as compared to the corresponding period in 2007, primarily
due to an increase in accounting and auditing fees, administrative salaries and
employee benefits at several Local Partnerships and an increase in audit and
review fees resulting from compliance with the PCAOB requirements at the
Partnership level.
   - 12
-
 General
and administrative-related parties increased approximately $22,000 for the three
months ended June 30, 2008, as compared to the corresponding period in 2007,
primarily due to an increase in the property management fee at one Local
Partnership.
 
 Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
 The
Partnership has mortgage notes that are payable in aggregate monthly
installments including principal and interest at rates varying from 0% to 9.11%
per annum. The Partnership does not believe there is a material risk associated
with the various interest rates associated with the mortgage notes as the
majority of the Local Partnership mortgage notes have fixed
rates.  The Partnership disclosed in Item 8, Note 3 to the
consolidated financial statements in the Partnership’s Annual Report on Form
10-K for the year ended March 31, 2008, the fair value of the mortgage notes
payable.  There are no material changes to such disclosure amounts as
of June 30, 2008.
 
 The
Partnership does not have any other market risk sensitive
instruments.
 
 Item 4T.
Controls and Procedures
 
 (a)Evaluation of Disclosure
Controls and Procedures.The Chief Executive Officer and Chief
Financial Officer of Related Independence L.L.C, the general partner of the
Partnership, have evaluated the effectiveness of the Partnership’s disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)
as of the end of the period covered by this report.  Based on such
evaluation, such officers have concluded that, as of the end of such period, the
Partnership’s disclosure controls and procedures are effective.
 
 (b)  Management’s Annual
Report on Internal Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f).  In evaluating the Partnership’s
internal control over financial reporting, management has adopted the framework
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
organizations of the Treadway Commission (the “COSO
Framework”).  Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer of
the General Partner, the Partnership conducted an evaluation of the
effectiveness of its internal control over financial reporting as of March 31,
2008.  The Partnership’s internal control over financial reporting is
a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
reporting purposes in accordance with generally accepted accounting
principles.  Internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.  However, because of
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Based on
management’s evaluation under the COSO Framework, it has concluded that the
Partnership’s internal control over financial reporting, was, as of  March
31, 2008, (1) effective at the Partnership level, in that they provide
reasonable assurance that information required to be disclosed by the
Partnership in the reports it files or submits under the Securities Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms and (2) ineffective at the subsidiary
level due to certain control deficiencies noted in the audit reports for such
subsidiaries.  Management will attempt to cause the Local General
Partner’s to remedy such deficiencies; however, the General Partner does not
have control over the internal controls at the subsidiary
level.  Management believes they have sufficient controls at the
Partnership level to mitigate these deficiencies, and such deficiencies do not
have a material impact on the consolidated financial statements.
 
 The
Partnership’s Annual Report on Form 10-K did not include an attestation report
of the Partnership’s registered public accounting firm regarding internal
control over financial reporting. The Partnership’s internal control over
financial reporting was not subject to attestation by the Partnership’s
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Partnership to provide only this
report.
 
 (c)  Changes in Internal Controls over Financial
Reporting.Except as noted in (b) above, during the period
ended June 30, 2008, there were no changes in the Partnership’s internal control
over financial reporting that have materially affected, or are reasonably likely
to materially affect, the Partnership’s internal control over financial
reporting.
 - 13
-
  PART II.
OTHER INFORMATION
 
 Item
      1.
              Legal
      Proceedings – NoneItem
      1A.
              Risk
      Factors – No changesItem
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds – NoneItem
      3.
              Defaults
      upon Senior Securities - NoneItem
      4.
              Submission
      of Matters to a Vote of Security Holders – NoneItem
      5.
              Other
      Information – NoneItem
      6.
              Exhibits(4)
              Form
      of Amended and Restated Agreement of Limited Partnership of the
      Partnership (attached to the Prospectus as Exhibit A)*(10A)
              Form
      of Subscription Agreement (attached to the Prospectus as Exhibit
      B)*(10B)
              Form
      of Escrow Agreement between the Partnership and the Escrow
      Agent**(10C)
              Form
      of Purchase and Sales Agreement pertaining to the Partnership’s
      acquisition of Local Partnership Interests**(10D)
              Form
      of Amended and Restated Agreement of Limited Partnership of Local
      Partnerships**(31.1)
              Certification
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a).(31.2)
              Certification
      Pursuant to Rule 13a-14(a) or Rule 15d-14(a).(32.1)
              Certification
      Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18
      of the United States Code (18 U.S.C. 1350).*
              Incorporated
      herein by reference to the final Prospectus as filed pursuant to Rule 424
      under the Securities Act of 1933.**
              Filed
      as an exhibit to the Registration Statement on Form S-11 of the
      Partnership (File No. 33-89968) and incorporated herein by reference
      thereto.
 
 - 14
-
 SIGNATURES
 
 
 
 Pursuant
to the requirements of Section 13 or 15(d) 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.
 
 
 
 INDEPENDENCE TAX CREDIT PLUS
L.P. IV
 (Registrant)
 
 
 
 By:
            RELATED
      INDEPENDENCE L.L.C.,a
      General PartnerDate:
            August 13, 2008
            
            
            
            By:
            /s/ Robert L. LevyRobert
      L. LevyChief
      Financial Officer, Principal Accounting Officer and
    DirectorDate:
            August 13, 2008
            
            
            
            By:
            /s/ Andrew J. WeilAndrew
      J. WeilPresident
      and Chief Executive Officer
  
 - 15 -