UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                             ----------------------

                                    FORM 10-Q

                             ----------------------



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

                For the quarterly period ended September 30, 1996

                                       OR

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

                   For the transition period from ____ to ____

                             ----------------------

                          Commission File No. 33-15551

                             ----------------------



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                        State of Organization: California
                   IRS Employer Identification No. 94-3039169
         201 Mission Street, 27th Floor, San Francisco, California 94105
                           Telephone - (415) 284-7400



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,  and (2) has been  subject to such filing
requirements for the past 90 days.



                           Yes _X_               No ___








                       This document consists of 16 pages.


<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

          FORM 10-Q - For the Quarterly Period Ended September 30, 1996




                                      INDEX


Part I.    Financial Information                                         Page


        Item 1.   Financial Statements

           a)  Balance Sheets - September 30, 1996 and
               December 31, 1995............................................3

           b)  Statements of Operations - Three and Nine Months
               Ended September 30, 1996 and 1995............................4

           c)  Statements of Changes in Partners' Capital
               (Deficit) - Year Ended December 31, 1995
               and Nine Months Ended September 30, 1996.....................5

           d)  Statements of Cash Flows - Nine Months
               Ended September 30, 1996 and 1995............................6

           e)  Notes to Financial Statements................................7

        Item 2.   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations............12


Part II.   Other Information

        Item 1.   Legal Proceedings........................................14

        Item 5.   Other Information........................................15

        Item 6.   Exhibits and Reports on Form 8-K.........................15

        Signature .........................................................16

                                        2

<PAGE>



                          Part I. Financial Information
                          -----------------------------
Item 1. Financial Statements

                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                                 BALANCE SHEETS
                                   (Unaudited)

                                                     September 30,  December 31,
                                                         1996           1995
                                                         ----           ----
ASSETS:

CASH AND CASH EQUIVALENTS                           $ 24,996,601   $ 23,456,031

RENT AND OTHER RECEIVABLES, net of
   allowance for credit losses of $0 in 1996 and
   $710,809 in 1995                                    1,213,238      1,513,176

NOTES RECEIVABLE, net of allowance for credit
   losses of $331,979 in 1996 and $1,466,456 in 1995        --        3,010,224

AIRCRAFT, net of accumulated depreciation of
   $65,540,658 in 1996 and $59,542,596 in 1995        53,136,786     59,134,848

OTHER ASSETS, net of accumulated amortization
   of $2,182,497 in 1996 and $2,149,685 in 1995           27,753         60,565
                                                    ------------   ------------

                                                    $ 79,374,378   $ 87,174,844
                                                    ============   ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT):

PAYABLE TO AFFILIATES                               $    156,101   $    145,908

ACCOUNTS PAYABLE AND ACCRUED
   LIABILITIES                                           289,426        107,574

LESSEE SECURITY DEPOSITS                               1,111,690      1,124,458

MAINTENANCE RESERVES                                   5,585,278      5,011,217

DEFERRED RENTAL INCOME                                      --          382,500
                                                    ------------   ------------

       Total Liabilities                               7,142,495      6,771,657
                                                    ------------   ------------

PARTNERS' CAPITAL (DEFICIT):
   General Partner                                    (3,733,710)    (3,651,904)
   Limited Partners, 499,964 units
     issued and outstanding                           75,965,593     84,055,091
                                                    ------------   ------------

       Total Partners' Capital                        72,231,883     80,403,187
                                                    ------------   ------------

                                                    $ 79,374,378   $ 87,174,844
                                                    ============   ============

        The accompanying notes are an integral part of these statements.

                                        3

<PAGE>


<TABLE>
                          POLARIS AIRCRAFT INCOME FUND IV,
                          A California Limited Partnership

                              STATEMENTS OF OPERATIONS
                                     (Unaudited)


<CAPTION>
                                        Three Months Ended       Nine Months Ended
                                           September 30,            September 30,
                                           -------------            -------------

                                        1996         1995         1996         1995
                                        ----         ----         ----         ----
<S>                                 <C>          <C>          <C>          <C>
REVENUES:
  Rent from operating leases        $ 2,361,349  $ 2,963,924  $ 8,664,507  $ 9,260,336
  Interest                              324,128      457,573    1,077,051    1,500,640
  Other                                  15,386         --         15,386         --
                                    -----------  -----------  -----------  -----------

         Total Revenues               2,700,863    3,421,497    9,756,944   10,760,976
                                    -----------  -----------  -----------  -----------

EXPENSES:
  Depreciation and amortization       1,986,210    1,841,748    6,030,874    6,581,985
  Management fees to general partner    118,067      148,196      418,225      463,017
  Provision for credit losses           281,902         --        589,029         --
  Operating                              71,674        4,640      252,222       51,574
  Administration and other               74,150       70,319      221,981      206,839
                                    -----------  -----------  -----------  -----------

         Total Expenses               2,532,003    2,064,903    7,512,331    7,303,415
                                    -----------  -----------  -----------  -----------

NET INCOME                          $   168,860  $ 1,356,594  $ 2,244,613  $ 3,457,561
                                    ===========  ===========  ===========  ===========

NET INCOME ALLOCATED
  TO THE GENERAL PARTNER            $   314,136  $   326,012  $   959,786  $   971,914
                                    ===========  ===========  ===========  ===========

NET INCOME (LOSS) ALLOCATED
  TO LIMITED PARTNERS               $  (145,276) $ 1,030,582  $ 1,284,827  $ 2,485,647
                                    ===========  ===========  ===========  ===========

NET INCOME (LOSS) PER
  LIMITED PARTNERSHIP UNIT          $     (0.29) $      2.06  $      2.57  $      4.97
                                    ===========  ===========  ===========  ===========


          The accompanying notes are an integral part of these statements.
</TABLE>
                                         4

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
                                   (Unaudited)


                                         Year Ended December 31, 1995 and
                                       Nine Months Ended September 30, 1996
                                       ------------------------------------

                                       General        Limited
                                       Partner        Partners         Total
                                       -------        --------         -----

Balance, December 31, 1994         $ (3,543,265)   $ 94,797,766    $ 91,254,501

  Net income                          1,280,150       1,756,425       3,036,575

  Cash distributions to partners     (1,388,789)    (12,499,100)    (13,887,889)
                                   ------------    ------------    ------------

Balance, December 31, 1995           (3,651,904)     84,055,091      80,403,187

  Net income                            959,786       1,284,827       2,244,613

  Cash distributions to partners     (1,041,592)     (9,374,325)    (10,415,917)
                                   ------------    ------------    ------------

Balance, September 30, 1996        $ (3,733,710)   $ 75,965,593    $ 72,231,883
                                   ============    ============    ============


        The accompanying notes are an integral part of these statements.

                                        5

<PAGE>


<TABLE>
                          POLARIS AIRCRAFT INCOME FUND IV,
                          A California Limited Partnership

                              STATEMENTS OF CASH FLOWS
                                     (Unaudited)
<CAPTION>
                                                            Nine Months Ended September 30,
                                                            -------------------------------

                                                                  1996          1995
                                                                  ----          ----
<S>                                                          <C>           <C>
OPERATING ACTIVITIES:
     Net income                                              $  2,244,613  $  3,457,561
     Adjustments to reconcile net income to
       net cash provided by operating activities:
       Depreciation and amortization                            6,030,874     6,581,985
       Net provision for credit losses                           (440,689)         --
       Changes in operating assets and liabilities:
         Decrease (increase) in rent and other receivables      1,010,747      (287,697)
         Increase in payable to affiliates                         10,193         2,540
         Increase in accounts payable and accrued liabilities     181,852        14,224
         Increase (decrease) in lessee security deposits          (12,768)       39,122
         Increase in maintenance reserves                         574,061     2,526,575
         Decrease in deferred income                             (382,500)     (110,000)
                                                             ------------  ------------

           Net cash provided by operating activities            9,216,383    12,224,310
                                                             ------------  ------------

INVESTING ACTIVITIES:
     Principal payments on notes receivable                     2,740,104     2,127,923
                                                             ------------  ------------

           Net cash provided by investing activities            2,740,104     2,127,923
                                                             ------------  ------------

FINANCING ACTIVITIES:
     Cash distributions to partners                           (10,415,917)  (10,415,917)
                                                             ------------  ------------

           Net cash used in financing activities              (10,415,917)  (10,415,917)
                                                             ------------  ------------

CHANGES IN CASH AND CASH
     EQUIVALENTS                                                1,540,570     3,936,316

CASH AND CASH EQUIVALENTS AT
     BEGINNING OF PERIOD                                       23,456,031    18,152,875
                                                             ------------  ------------

CASH AND CASH EQUIVALENTS AT
     END OF PERIOD                                           $ 24,996,601  $ 22,089,191
                                                             ============  ============

            The accompanying notes are an integral part of these statements.
</TABLE>
                                          6

<PAGE>



                        POLARIS AIRCRAFT INCOME FUND IV,
                        A California Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.     Accounting Principles and Policies

In the opinion of management,  the financial statements presented herein include
all  adjustments,  consisting  only of  normal  recurring  items,  necessary  to
summarize fairly Polaris Aircraft Income Fund IV's (the Partnership's) financial
position and results of operations.  The financial statements have been prepared
in accordance with the  instructions  of the Quarterly  Report to the Securities
and  Exchange  Commission  (SEC)  Form  10-Q  and  do  not  include  all  of the
information  and note  disclosures  required by  generally  accepted  accounting
principles.  These  statements  should be read in conjunction with the financial
statements  and notes thereto for the years ended  December 31, 1995,  1994, and
1993  included in the  Partnership's  1995 Annual Report to the SEC on Form 10-K
(Form 10-K).

Aircraft and  Depreciation  - The aircraft are recorded at cost,  which includes
acquisition costs. Depreciation to an estimated residual value is computed using
the straight-line  method over the estimated economic life of the aircraft which
was  originally  estimated  to  be  30  years  from  the  date  of  manufacture.
Depreciation in the year of acquisition was calculated  based upon the number of
days that the aircraft were in service.

The Partnership periodically reviews the estimated realizability of the residual
values at the projected end of each aircraft's  economic life based on estimated
residual  values  obtained from  independent  parties which provide  current and
future estimated  aircraft values by aircraft type. For any downward  adjustment
in estimated  residual  value or decrease in the  projected  remaining  economic
life, the depreciation expense over the projected remaining economic life of the
aircraft is increased.

If the projected net cash flow for each aircraft (projected rental revenue,  net
of management fees, less projected maintenance costs, if any, plus the estimated
residual  value) is less than the carrying value of the aircraft,  an impairment
loss is  recognized.  Pursuant to Statement of  Financial  Accounting  Standards
(SFAS) No. 121, as discussed  below,  measurement of an impairment  loss will be
based on the "fair value" of the asset as defined in the statement.

Capitalized  Costs -  Aircraft  modification  and  maintenance  costs  which are
determined  to increase  the value or extend the useful life of the aircraft are
capitalized  and  amortized  using the  straight-line  method over the estimated
useful  life of the  improvement.  These  costs  are also  subject  to  periodic
evaluation as discussed above.

Financial  Accounting  Pronouncements  - SFAS No. 107,  "Disclosures  about Fair
Value of Financial  Instruments,"  requires the Partnership to disclose the fair
value of financial  instruments.  Cash and cash  equivalents  is stated at cost,
which  approximates  fair  value.  The  fair  value of the  Partnership's  notes
receivable is estimated by discounting future estimated cash flows using current
interest  rates at which similar  loans would be made to borrowers  with similar
credit  ratings and remaining  maturities.  As discussed in Note 3, the carrying
value of the notes receivable from Continental Airlines,  Inc. (Continental) for
deferred  rents is zero due to a recorded  allowance  for credit losses equal to
the balance of the notes.  As of September 30, 1996, the aggregate fair value of
the Continental deferred rent notes receivable was estimated to be approximately
$0.3 million.


                                        7

<PAGE>



The  Partnership  adopted  SFAS  No.  121,  "Accounting  for the  Impairment  of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of January 1,
1996. This statement  requires that long-lived  assets and certain  identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  The Partnership  estimates that this pronouncement will
not have a material impact on the Partnership's financial position or results of
operations unless events or circumstances  change that would cause projected net
cash flows to be adjusted.  No impairment loss was recognized by the Partnership
during the first three quarters of 1996.


2.     Lease to American Trans Air, Inc. (ATA)

As  discussed  in the Form 10-K,  under the ATA lease,  the  Partnership  may be
required to finance up to two  aircraft  hushkits  for use on the aircraft at an
estimated aggregate cost of approximately $5.2 million, which would be partially
recovered with interest  through  payments from ATA over an extended lease term.
The Partnership  loaned $1,164,800 to ATA in 1993 to finance the purchase by ATA
of two spare engines. The balance of the note at December 31, 1995 was $799,712.
ATA paid the Partnership the remaining note balance in full in March 1996.


3.      Lease to Continental

As discussed in the Form 10-K, the leases with  Continental  were modified after
Continental  filed for Chapter 11 bankruptcy  protection in December  1990.  The
modified  agreement with Continental  included an extended deferral of the dates
when Continental would remit its rental payments for the period from December 3,
1990 through  September 30, 1991 and for a period of three months,  beginning in
November 1992,  aggregating  $8,385,000 (the Deferred  Amount).  The Partnership
recorded a note receivable and an allowance for credit losses equal to the total
of the deferred rents and prior accrued interest,  the net of which is reflected
in the  accompanying  balance  sheets.  The note  receivable  and  corresponding
allowance  for credit  losses are reduced by the  principal  portion of payments
received.  In addition,  the Partnership  recognizes rental revenue and interest
revenue in the period the deferred rental payments are received.

The allowances for credit losses on the principal and interest portions due were
$331,979  and  $1,466,456  as of  September  30,  1996 and  December  31,  1995,
respectively.  The  unrecognized  Deferred  Amounts as of September 30, 1996 and
December 31, 1995 were $328,399 and $1,434,402, respectively. In accordance with
the aforementioned agreement, Continental began making supplemental payments for
the Deferred Amount plus interest on July 1, 1992.  During the nine months ended
September 30, 1996 and 1995, the Partnership received  supplemental  payments of
$1,195,353 and $1,537,924,  of which $1,106,004 and $1,229,333 was recognized as
rental  revenue  in  the  nine  months  ended   September  30,  1996  and  1995,
respectively.

The leases of five McDonnell  Douglas  DC-9-30  aircraft with  Continental  were
originally scheduled to expire in June 1996.  Continental  exercised their right
to extend the leases for the five aircraft for a one-year term through June 1997
at the current market lease rate, which is approximately  65% of the prior lease
rate.




                                        8

<PAGE>



4.     Sale of Aircraft to Continental

In May 1994, the  Partnership  sold five Boeing 727-200  aircraft to Continental
for an aggregate  sales price of  $5,032,865.  The  Partnership  recorded a note
receivable  for the sales  price and  agreed to  accept  payment  in 29  monthly
installments  of $192,500,  with interest at a rate of 9.5% per annum.  The note
receivable  balance at December 31, 1995 was  $1,664,763.  The  Partnership  has
received  all  scheduled  payments  due under the note which was paid in full by
Continental during the third quarter of 1996.


5.     Viscount Air Services, Inc. (Viscount) Default and Bankruptcy Filing

On January 24, 1996,  Viscount filed a petition for protection  under Chapter 11
of the United States  Bankruptcy Code in the United States  Bankruptcy  Court in
Tucson,  Arizona. In April 1996, GE Capital Aviation Services,  Inc. (GECAS), on
behalf of the Partnership,  First Security Bank, National Association  (formerly
known  as  First  Security  Bank  of  Utah,  National  Association)  (FSB),  the
owner/trustee  under  the  Partnership's  leases  with  Viscount  (the  Leases),
Viscount,  certain guarantors of Viscount's  indebtedness and others executed in
April 1996 a  Compromise  of Claims and  Stipulation  under  Section 1110 of the
Bankruptcy  Code  (the  Compromise  and  Stipulation),  which  was  subsequently
approved by the Bankruptcy  Court. The Compromise and Stipulation  provided that
in the event that  Viscount  failed to promptly and timely  perform its monetary
obligations under the Leases and the Compromise and Stipulation, without further
order of the Bankruptcy Court,  GECAS would be entitled to immediate  possession
of the aircraft for which Viscount  failed to perform and Viscount would deliver
such aircraft and all records related thereto to GECAS.

GECAS agreed to a rescheduling of Viscount's  September 1996 rent obligations to
allow Viscount to make a 25% payment on September 3, 1996,  with any defaults to
be cured on or before  September  6, 1996.  The  remainder  of the rents and all
maintenance  reserve obligations were to be paid on September 10, 1996, with any
defaults to be cured on or before  September  13, 1996.  Viscount  agreed to the
proposed  cure dates and waived  any  requirement  for a notice of default to be
sent.  Viscount  failed to make the rent and  maintenance  reserve  payments  on
September  10, 1996 and  asserted  that it was  entitled to various  credits and
offsets with respect to such obligations.  GECAS disputed Viscount's  assertions
and notified Viscount that it was in default under the Leases and the Compromise
and  Stipulation.  On September 18, 1996,  GECAS (on behalf of the  Partnership,
Polaris Holding Company, Polaris Aircraft Income Fund I, Polaris Aircraft Income
Fund  II and  Polaris  Aircraft  Investors  XVIII)  (collectively,  the  Polaris
Entities) and Viscount entered into a Stipulation and Agreement (the Stipulation
and Agreement) by which Viscount agreed to voluntarily return all of the Polaris
Entities'  aircraft and  engines,  turn over  possession  of the majority of its
aircraft parts inventory, and cooperate with GECAS in the transition of aircraft
equipment and maintenance, in exchange for which, upon Bankruptcy Court approval
of the  Stipulation and Agreement,  the Polaris  Entities would waive their pre-
and post-petition claims against Viscount for amounts due and unpaid.

The  Stipulation  and  Agreement  provides that upon the return and surrender of
possession of the  Partnership's  two aircraft,  Viscount's rights and interests
therein  shall  terminate.  As of September 13, 1996,  Viscount had  surrendered
possession  of  one  of  the  Partnership's  aircraft.   Viscount  returned  the
Partnership's  remaining  aircraft on October 1, 1996,  as  discussed in Note 7.
GECAS,  on  behalf of the  Polaris  Entities,  is  evaluating  the  spare  parts
inventory to which  Viscount  relinquished  possession in order to determine its
condition  and  value,  the  portion  allocable  to  the  Partnership,  and  the
Partnership's  alternatives  for the use and/or  disposition  of such  parts.  A
significant  portion of the spare parts inventory is currently in the possession
of third party  maintenance and repair  facilities  with whom GECAS  anticipates
that it will need to negotiate for the repair and/or return of these parts.

                                        9

<PAGE>



The Stipulation and Agreement also provides that the Polaris Entities, GECAS and
FSB shall release any and all claims  against  Viscount,  Viscount's  bankruptcy
estate, and the property of Viscount's  bankruptcy estate,  effective upon entry
of a final  non-appealable  court order approving the Stipulation and Agreement.
The Bankruptcy  Court approved the Stipulation and Agreement on October 23, 1996
as discussed in Note 7.

As  discussed  in the  Partnership's  June 30, 1996 Form 10-Q,  the  Partnership
recorded  allowances  for credit  losses of  approximately  $1.0 million for the
aggregate  unsecured  receivables from Viscount.  The line of credit,  which was
advanced  to  Viscount  in 1994,  was, in  accordance  with the  Compromise  and
Stipulation, secured by certain of Viscount's trade receivables and spare parts.
The  Stipulation  and  Agreement   releases  the  Partnership's   claim  against
Viscount's  trade  receivables.   As  a  result,  the  Partnership  recorded  an
additional  allowance for credit  losses of  approximately  $282,000  during the
third quarter of 1996,  representing  Viscount's outstanding balance of the line
of credit and accrued  interest.  Payments  received by the Partnership from the
sale of the spare aircraft parts (as discussed  above), if any, will be recorded
as revenue when received.  The  Stipulation  and Agreement  provides that,  upon
entry of a final  non-appealable court order approving it, the Partnership would
waive its pre- and post-petition claims against Viscount for all amounts due and
unpaid. As a result, the Partnership  considers all receivables from Viscount to
be  uncollectible  and has  written-off,  during the third quarter of 1996,  all
notes, rents and interest receivable balances from Viscount.

The  Partnership has evaluated the returned  aircraft for potential  re-lease or
sale and estimated that very  substantial  maintenance and  refurbishment  costs
aggregating  approximately  $2.15 million  would be required if the  Partnership
decided  to  re-lease  rather  than  sell  these  aircraft.   Alternatively,  if
Partnership decided to sell rather than re-lease these aircraft, such sale would
likely be made on an "as is, where is" basis, without the Partnership  incurring
substantial  maintenance costs. As a result of this evaluation,  the Partnership
estimates  it is likely that a sale of these  aircraft  on an "as is,  where is"
basis would maximize the economic return on the aircraft to the Partnership.

Viscount's  failure to perform its financial  obligations to the Partnership has
had a material  adverse effect on the  Partnership's  financial  position.  As a
result of Viscount's  defaults and Chapter 11 bankruptcy filing, the Partnership
has  incurred  legal costs of  approximately  $250,000,  which are  reflected in
operating  expense in the  Partnership's  statement of  operations  for the nine
months ended September 30, 1996.


6.     Related Parties

Under the Limited Partnership  Agreement,  the Partnership paid or agreed to pay
the following  amounts for the current quarter to the general  partner,  Polaris
Investment  Management  Corporation,  in connection  with  services  rendered or
payments made on behalf of the Partnership:

                                         Payments for the
                                        Three Months Ended       Payable at
                                        September 30, 1996    September 30, 1996
                                        ------------------    ------------------

Aircraft Management Fees                      $433,550            $ 59,400
Out-of-Pocket Administrative Expense
    Reimbursement                              263,793              96,701
Out-of-Pocket Operating and
    Remarketing Expense Reimbursement            2,649                --
                                              --------            --------

                                              $699,992            $156,101
                                              ========            ========

                                       10

<PAGE>




7.      Subsequent Event

Viscount  Stipulation and Agreement - As discussed in Note 5, Viscount  returned
one of the Partnership's aircraft on October 1, 1996 pursuant to the Stipulation
and  Agreement.   On  October  23,  1996,  the  Bankruptcy  Court  approved  the
Stipulation  and Agreement.  The  Partnership is currently  remarketing  the two
aircraft returned by Viscount for sale.








                                       11

<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Polaris  Aircraft Income Fund IV (the  Partnership)  owns a portfolio of 13 used
commercial  jet  aircraft out of its  original  portfolio  of 33  aircraft.  The
portfolio  includes five DC-9-30 aircraft leased to Continental  Airlines,  Inc.
(Continental);  two Boeing 727-200  Advanced  aircraft  leased to American Trans
Air, Inc.  (ATA);  two Boeing 737-200  Advanced  aircraft  leased to Independent
Aviation Group Limited (IAG); two Boeing 737-200 Advanced aircraft leased to TBG
Airways Limited (TBG Airways);  and two Boeing 737-200 aircraft  formerly leased
to Viscount Air Services, Inc. (Viscount) which Viscount returned or surrendered
possession of in September and October 1996. Out of an original  portfolio of 33
aircraft,  one Boeing 727-100 was declared a casualty loss due to an accident in
1991,  fourteen  Boeing  727-100  Freighters  were sold in 1993, and five Boeing
727-200  aircraft  were  sold in May  1994.  In  1993,  ATA  transferred  to the
Partnership  two Boeing 727-100  aircraft as part of the ATA lease  transaction.
One of these Boeing  727-100  aircraft was sold in February  1994 and the second
Boeing 727-100 aircraft was sold in August 1994.


Remarketing Update

Continental  Lease  Extension  - The leases of five  McDonnell  Douglas  DC-9-30
aircraft  with  Continental  were  originally  scheduled to expire in June 1996.
Continental exercised their right to extend the leases for the five aircraft for
a one-year  term  through June 1997 at the current  market lease rate,  which is
approximately 65% of the prior lease rate.

IAG Lease Extension - The lease of two Boeing 737-200  Advanced  aircraft to IAG
were  scheduled  to expire in October  1996.  IAG  exercised  their  option,  as
specified  in the lease,  to extend  the lease for a period of one year  through
October 1997 at approximately 97% of the prior average lease rate.


Partnership Operations

The  Partnership  recorded net income of $168,860,  or an allocated  net loss of
$0.29 per limited  partnership  unit,  for the three months ended  September 30,
1996,  compared  to net income of  $1,356,594,  or $2.06 per unit,  for the same
period in 1995. The Partnership recorded net income of $2,244,613,  or $2.57 per
limited partnership unit, for the nine months ended September 30, 1996, compared
to net income of $3,457,561, or $4.97 per unit, for the same period in 1995.

The decline in operating  results during 1996, as compared to 1995, is primarily
the result of decreased  rental and interest  revenues during 1996. As discussed
above,  Continental  exercised  their  right to extend  the  leases for the five
McDonnell  Douglas DC-9-30  aircraft for a one-year term commencing in July 1996
at  approximately  65% of the prior lease rate.  As  discussed  in Note 5 to the
financial  statements,  the Partnership  recognized as revenue only a portion of
the rental amounts due from Viscount during September 1996. No additional rental
revenue is expected to be recognized  for these two aircraft as the  Partnership
is currently remarketing these former Viscount aircraft for sale.

Interest revenue also decreased during the three and nine months ended September
30, 1996,  as compared to the same periods in 1995.  The lower 1996  interest is
primarily the result of lower interest  recognized on the  Continental  deferred
rents as the note receivable balance is amortized.


                                       12

<PAGE>



Further  affecting the decline in operating results in 1996 as compared to 1995,
year to date  1996  operating  results  reflect  provisions  for  credit  losses
aggregating  $589,029  recorded for certain rent and interest  receivables  from
Viscount  during 1996,  as discussed in Note 5 to the financial  statements.  In
addition,   the  Partnership  recognized  legal  expenses  aggregating  $250,000
incurred during the first three quarters of 1996 related to the Viscount default
and Chapter 11 bankruptcy filing.


Liquidity and Cash Distributions

Liquidity - As discussed in Note 5 to the financial  statements  and in Part II,
Item 1, the Viscount  Stipulation and Agreement  specifies,  among other things,
that the Partnership  waive its pre- and  post-petition  claims against Viscount
for amounts due and unpaid. As a result, the Partnership  recorded an additional
allowance for credit losses of  approximately  $282,000 during the third quarter
of 1996,  representing  Viscount's outstanding balance of the line of credit and
accrued  interest.   In  addition,   the  Partnership  currently  considers  all
receivables  from Viscount to be uncollectible  and has written-off,  during the
third quarter of 1996, all notes,  rents and interest  receivable  balances from
Viscount.

As described  in Note 3 to the  financial  statements,  the  Continental  leases
provide for payment by the Partnership of the costs of certain maintenance work,
Airworthiness Directive (AD) compliance, aircraft modification and refurbishment
costs,  which are not to exceed  approximately  $4.9 million, a portion of which
will be recovered with interest through payments from Continental over the lease
terms.  The balance of the costs that the Partnership may be obligated to pay or
finance is approximately $2.3 million.

The ATA lease  specifies  that the  Partnership  may finance up to two  aircraft
hushkits at an aggregate cost of approximately  $5.2 million, a portion of which
would be partially  recovered  with interest  through  payments from ATA over an
extended lease term.

The  Partnership  receives  maintenance  reserve  payments  from  certain of its
lessees that may be  reimbursed to the lessee or applied  against  certain costs
incurred by the Partnership for maintenance work performed on the  Partnership's
aircraft,  as specified in the leases.  Maintenance  reserve  balances,  if any,
remaining  at the  termination  of the lease may be used by the  Partnership  to
offset future maintenance expenses,  recognized as revenue, or reimbursed to the
lessee.  The  net  maintenance  reserve  balances  aggregate  $5,585,278  as  of
September 30, 1996.

The  Partnership  is retaining  cash  reserves to finance a portion of the costs
that may be  incurred  under the leases with  Continental  and ATA, to cover the
additional costs that the Partnership will incur relating to the re-marketing of
the former Viscount aircraft, and to cover other cash requirements.

Cash  Distributions - Cash  distributions  to limited  partners during the three
months ended September 30, 1996 and 1995 were  $3,124,775,  or $6.25 per limited
partnership unit for both periods. Cash distributions to limited partners during
the nine months ended September 30, 1996 and 1995 were $9,374,325, or $18.75 per
limited partnership unit for both periods.  The timing and amount of future cash
distributions to partners are not yet known and will depend on the Partnership's
future cash  requirements,  including the costs that may be incurred relating to
the former  Viscount  aircraft;  the receipt from  Continental  of  modification
financing  payments;  and the receipt of rental payments from Continental,  ATA,
IAG and TBG Airways.


                                       13

<PAGE>



                           Part II. Other Information
                           --------------------------


Item 1.     Legal Proceedings

As  discussed  in Item 3 of Part I of  Polaris  Aircraft  Income  Fund IV's (the
Partnership) 1995 Annual Report to the Securities and Exchange  Commission (SEC)
on Form 10-K (Form 10-K) and in Item 1 of Part II of the Partnership's Quarterly
Report to the SEC on Form 10-Q (Form 10-Q) for the periods  ended March 31, 1996
and June 30, 1996,  there are a number of pending legal  actions or  proceedings
involving  the  Partnership.  Except  as  described  below,  there  have been no
material developments with respect to any such actions or proceedings during the
period covered by this report.

Viscount Air Services,  Inc. (Viscount)  Bankruptcy - As previously reported, GE
Capital  Aviation  Service  (GECAS),  on  behalf  of the  Partnership  and other
entities, and Viscount and its affiliates, executed an agreement (Compromise and
Stipulation)  regarding,  among other things,  resumption of payments  under the
leases. The Compromise and Stipulation,  which was subsequently  approved by the
Bankruptcy  Court,  also provided  that if Viscount  failed to meet its monetary
obligations,  the Partnership  would be entitled to immediate  possession of the
aircraft for which  Viscount  failed to perform,  and Viscount  would deliver to
GECAS all records  related  thereto,  without  further  order of the  Bankruptcy
Court.

GECAS agreed to a rescheduling  of Viscount's  September rent  obligations,  but
Viscount was  ultimately  unable to meet its cure  obligations  on or before the
agreed-upon  cure date of September 13, 1996.  On September 18, 1996,  GECAS (on
behalf of the  Partnership  and other  entities)  and  Viscount  entered  into a
Stipulation  and Agreement by which Viscount  agreed to  voluntarily  return the
Partnership's  aircraft,  turn over  possession  of the majority of its aircraft
parts  inventory,  and  cooperate  with  GECAS  in the  transition  of  aircraft
equipment and maintenance, in exchange for which, upon Bankruptcy Court approval
of the Stipulation and Agreement,  the Partnership would waive its right to pre-
and  post-petition  claims  against  Viscount  for amounts  due and unpaid.  The
aircraft were returned to the  Partnership  on September 18, 1996 and October 1,
1996,  and the  Partnership  is currently  remarketing  the aircraft for sale or
re-lease.

Other Proceedings - Item 10 in Part III of the Partnership's  1995 Form 10-K and
Item 1 in Part II of the Partnership's Form 10-Q for the periods ended March 31,
1996 and June 30, 1996 discuss  certain  actions  which have been filed  against
Polaris Investment Management Corporation and others in connection with the sale
of interests in the Partnership and the management of the Partnership.  With the
exception of Novak,  et al v. Polaris  Holding  Company,  et al, (which has been
dismissed,  as discussed in Item 10 of the  Partnership's  1995 Form 10-K) where
the  Partnership  was  named  as  a  defendant  for  procedural  purposes,   the
Partnership is not a party to these actions.  Except as discussed  below,  there
have been no material developments during the period covered by this report with
respect  to  any  of  the  actions  described  in  Item  10 in  Part  III of the
Partnership's  1995  Form 10-K and Item 1 in Part II of the  Partnership's  Form
10-Q for the periods ended March 31, 1996 and June 30, 1996.

Wilson  et al. v.  Polaris  Holding  Company  et al. - On  October  1,  1996,  a
complaint  was filed in the Superior  Court of the State of  California  for the
County of Sacramento by over 500  individual  plaintiffs  who purchased  limited
partnership  units in one or more of Polaris Aircraft Income Funds I through VI.
The  complaint  names  Polaris  Holding   Company,   Polaris   Aircraft  Leasing
Corporation,  Polaris  Investment  Management  Corporation,  Polaris  Securities
Corporation,  Polaris Jet  Leasing,  Inc.,  Polaris  Technical  Services,  Inc.,
General  Electric  Company,  General Electric Capital  Services,  Inc.,  General
Electric Capital Corporation,  GE Capital Aviation Services, Inc. and DOES 1-100

                                       14

<PAGE>



as defendants.  The Partnership has not been named as a defendant. The complaint
alleges   violations   of  state   common  law,   including   fraud,   negligent
misrepresentation, negligence, breach of contract, and breach of fiduciary duty.
The complaint seeks to recover  compensatory  damages and punitive damages in an
unspecified amount, interest and rescission with respect to the Polaris Aircraft
Income Funds sold to plaintiffs.  Defendants time to answer or otherwise respond
to the complaint is November 18, 1996.

B&L  Industries,  Inc. et al. v. Polaris  Holding Company et al. - On August 16,
1996,  defendants filed a motion to dismiss plaintiffs'  amended complaint.  The
motion is returnable on January 16, 1997.

In re Prudential  Securities Inc. Limited  Partnerships  Litigation - The trial,
which was  scheduled  for November 11, 1996,  has not proceeded and no new trial
date has been set.



Item 5.     Other Information

James W.  Linnan  resigned  as  Director  and  President  of Polaris  Investment
Management Corporation effective December 31, 1996. Mr. Linnan's replacement has
not presently been named.  Mr. Linnan will continue to serve in those capacities
through the effective date of his resignation.



Item 6.     Exhibits and Reports on Form 8-K

a)  Exhibits (numbered in accordance with Item 601 of Regulation S-K)

    27.  Financial Data Schedules

b)  Reports on Form 8-K

    No reports on Form 8-K were filed by the  Registrant  during the quarter for
    which this report is filed.


                                       15

<PAGE>



                                    SIGNATURE



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.

                                     POLARIS AIRCRAFT INCOME FUND IV,
                                     A California Limited Partnership
                                     (Registrant)
                                     By: Polaris Investment
                                         Management Corporation,
                                         General Partner




        November 12, 1996                By:  /S/Marc A. Meiches
----------------------------------            ------------------
                                              Marc A. Meiches
                                              Chief Financial Officer
                                              (principal financial officer and
                                              principal accounting officer of
                                              Polaris Investment Management
                                              Corporation, General Partner of
                                              the Registrant)

                                       16