FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


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

                For the quarterly period ended September 30, 1998
             -------------------------------------------------------


                                       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 number
                                     0-17549
                          ----------------------------


                            CNL Income Fund IV, Ltd.
     ---------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    Florida                                    59-2854435
          (State of other jurisdiction                      (I.R.S. Employer
       of incorporation or organization)                   Identification No.)


              400 E. South Street
                Orlando, Florida                                  32801
    (Address of principal executive offices)                   (Zip Code)


        Registrant's telephone number
        (including area code)                              (407) 422-1574


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  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 X No


<PAGE>








                                    CONTENTS




Part I                                                        Page

    Item 1.  Financial Statements:

       Condensed Balance Sheets                               1

       Condensed Statements of Income                         2

       Condensed Statements of Partners' Capital              3

       Condensed Statements of Cash Flows                     4-5

       Notes to Condensed Financial Statements                6-10

    Item 2.  Management's Discussion and Analysis
                  of Financial Condition and
                  Results of Operations                       11-17


Part II

    Other Information                                         18



<PAGE>






                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                   September 30,            December 31,
                                                                        1998                    1997
                                                                  -----------------       ------------------
<S> <C>
                      ASSETS

Land and buildings on operating leases,
    less accumulated depreciation and
    allowance for loss on land and building                            $15,587,830             $18,097,997
Net investment in direct financing leases                                1,241,326               1,269,389
Investment in joint ventures                                             2,883,497               2,708,012
Cash and cash equivalents                                                  765,359                 876,452
Restricted cash                                                            533,019                      --
Receivables, less allowance for doubtful
    accounts of $258,741 and $295,580                                       18,718                  37,669
Prepaid expenses                                                            12,197                  11,115
Lease costs, less accumulated
    amortization of $20,681 and $17,956                                     18,863                  21,588
Accrued rental income                                                      270,472                 287,466
Other assets                                                                    --                     200
                                                                  -----------------       -----------------


                                                                       $21,331,281             $23,309,888
                                                                  =================       =================


               LIABILITIES AND PARTNERS' CAPITAL


Accounts payable                                                   $         6,687         $         8,576
Accrued construction costs payable                                              --                 250,000
Accrued and escrowed real estate
    taxes payable                                                           76,311                  65,176
Distributions payable                                                      600,000                 690,000
Due to related parties                                                     138,193                  93,854
Rents paid in advance and deposits                                          81,329                  49,983
                                                                  -----------------       -----------------
       Total liabilities                                                   902,520               1,157,589

Commitment (Note 7)

Partners' capital                                                       20,428,761              22,152,299
                                                                  -----------------       -----------------

                                                                       $21,331,281             $23,309,888
                                                                  =================       =================
</TABLE>


                 See accompanying notes to financial statements.

                                       1
<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                          Quarter Ended                 Nine Months Ended
                                                          September 30,                   September 30,
                                                       1998           1997            1998            1997
                                                     ----------     ---------      ------------    ------------
<S> <C>
Revenues:
    Rental income from operating leases               $547,853       $508,852       $1,598,854      $1,558,963
    Earned income from direct
       financing leases                                 31,630         32,564           95,611          98,344
    Contingent rental income                                --         20,661           37,207          65,265
    Interest and other income                           24,951         17,509           46,143          28,980
                                                     ----------     ----------     ------------    ------------
                                                       604,434        579,586        1,777,815       1,751,552
                                                     ----------     ----------     ------------    ------------

Expenses:
    General operating and administrative                46,096         33,940          121,811         113,606
    Bad debt expense                                        --             --               --          12,794
    Professional services                                5,999          4,110           38,644          18,200
    Real estate taxes                                   26,225          3,487           46,980          31,514
    State and other taxes                                   --             25           15,747          16,476
    Depreciation and amortization                      104,058        113,230          326,835         339,692
                                                     ----------     ----------     ------------    ------------
                                                       182,378        154,792          550,017         532,282
                                                     ----------     ----------     ------------    ------------

Income Before Equity in Earnings (Loss)
    of Joint Ventures and Gain on Sale of
    Land and Buildings                                 422,056        424,794        1,227,798       1,219,270

Equity in Earnings (Loss) of Joint
    Ventures                                             5,276         52,359         (143,612 )       172,340

Gain on Sale on Land and Buildings                     170,281             --          226,024              --
                                                     ----------     ----------     ------------    ------------

Net Income                                            $597,613       $477,153       $1,310,210      $1,391,610
                                                     ==========     ==========     ============    ============

Allocation of Net Income:
    General partners                                  $  5,195       $  4,772       $    7,612      $   13,916
    Limited partners                                   592,418        472,381        1,302,598       1,377,694
                                                     ----------     ----------     ------------    ------------

                                                      $597,613       $477,153       $1,310,210      $1,391,610
                                                     ==========     ==========     ============    ============

Net Income Per Limited Partner Unit                   $   9.87       $   7.87       $    21.71      $    22.96
                                                     ==========     ==========     ============    ============

Weighted Average Number of Limited
    Partner Units Outstanding                           60,000         60,000           60,000          60,000
                                                     ==========     ==========     ============    ============

</TABLE>


                 See accompanying notes to financial statements.

                                       2
<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL

<TABLE>
<CAPTION>

                                                                  Nine Months Ended              Year Ended
                                                                    September 30,                December 31,
                                                                         1998                       1997
                                                              ---------------------------     -----------------
<S> <C>
  General partners:
      Beginning balance                                             $      756,354             $     446,657
      Contribution                                                              --                   294,000
      Net income                                                             7,612                    15,697
                                                                   ----------------           ---------------
                                                                           763,966                   756,354
                                                                   ----------------           ---------------
  Limited partners:
      Beginning balance                                                 21,395,945                22,450,974
      Net income                                                         1,302,598                 1,704,971
      Distributions ($50.56 and
         $46.00 per limited partner
         unit, respectively)                                            (3,033,748 )              (2,760,000 )
                                                                   ----------------           ---------------
                                                                        19,664,795                21,395,945
                                                                   ----------------           ---------------

  Total partners' capital                                              $20,428,761               $22,152,299
                                                                   ================           ===============


</TABLE>

                 See accompanying notes to financial statements.

                                       3
<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                              Nine Months Ended
                                                                                September 30,
                                                                         1998                    1997
                                                                    ---------------         ---------------
<S> <C>
Increase (Decrease) in Cash and Cash
   Equivalents:

      Net Cash Provided by Operating
         Activities                                                   $  1,794,173            $  1,746,810
                                                                   ----------------        ----------------

      Cash Flows from Investing Activities:
         Additions to land and building on
             operating leases                                             (275,000 )                    --
         Proceeds from sale of land
             and buildings                                               2,526,354                      --
         Investment in joint ventures                                     (499,274 )                    --
         Increase in restricted cash                                      (533,598 )                    --
         Other                                                                  --                   7,338
                                                                   ----------------        ----------------
                Net cash provided by
                   investing activities                                  1,218,482                   7,338
                                                                   ----------------        ----------------

      Cash Flows from Financing Activities:
         Contributions from general partner                                     --                 225,000
         Distributions to limited partners                              (3,123,748 )            (2,070,000 )
                                                                   ----------------        ----------------
                Net cash used in financing
                   activities                                           (3,123,748 )            (1,845,000 )
                                                                   ----------------        ----------------

Net Decrease in Cash and Cash Equivalents                                 (111,093 )               (90,852 )

Cash and Cash Equivalents at Beginning
   of Period                                                               876,452                 554,593
                                                                   ----------------        ----------------

Cash and Cash Equivalents at End of
   Period                                                            $     765,359           $     463,741
                                                                   ================        ================

</TABLE>




                 See accompanying notes to financial statements.

                                       4
<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                 CONDENSED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>


                                                                                Nine Months Ended
                                                                                  September 30,
                                                                           1998                  1997
                                                                      ---------------       ----------------
<S> <C>
Supplemental Schedule of Non-Cash
    Investing and Financing Activities:

       Deferred real estate disposition fees
          incurred and unpaid at end of
          period                                                       $      45,663           $         --
                                                                      ===============        ===============

       Distributions declared and unpaid at
          end of period                                                 $    600,000           $    690,000
                                                                      ===============        ===============

</TABLE>



                 See accompanying notes to financial statements.

                                       5
<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 1998 and 1997


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the  quarter and nine  months  ended  September  30,  1998,  may not be
         indicative  of the  results  that may be  expected  for the year ending
         December  31, 1998.  Amounts as of December  31, 1997,  included in the
         financial   statements,   have  been  derived  from  audited  financial
         statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in the Form 10-K of
         CNL Income Fund IV, Ltd. (the "Partnership")for the year ended December
         31, 1997.

         In May  1998,  the  Financial  Accounting  Standards  Board  reached  a
         consensus in EITF 98-9, entitled "Accounting for Contingent Rent in the
         Interim Financial  Periods."  Adoption of this consensus did not have a
         material effect on the Partnership's  financial  position or results of
         operations.

2.       Land and Building on Operating Leases:

         Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>

                                                            September 30,       December 31,
                                                                1998                1997
                                                          ------------------  -----------------
<S> <C>
                          Land                                $  7,244,513       $  8,328,572
                          Buildings                             11,986,558         13,684,194
                                                           ----------------    ---------------
                                                                19,231,071         22,012,766
                          Less accumulated
                              depreciation                      (3,643,241 )       (3,844,432 )
                                                           ----------------    ---------------
                                                                15,587,830         18,168,334
                          Less allowance for loss on
                              land and building                         --            (70,337 )
                                                           ----------------    ---------------

                                                               $15,587,830        $18,097,997
                                                           ================    ===============
</TABLE>

                                       6

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
               NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
           Quarters and Nine Months Ended September 30, 1998 and 1997


2.       Land and Building on Operating Leases - Continued:

         In March  1998,  the  Partnership  sold  its  property  in Fort  Myers,
         Florida,  to a third party for $842,100 and received net sales proceeds
         of $794,690,  resulting in a gain of $225,902 for  financial  reporting
         purposes.  This property was originally  acquired by the Partnership in
         December  1988  and  had a cost  of  approximately  $598,000  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for  approximately  $196,700 in excess of
         its original purchase price.

         In March 1998,  the  Partnership  sold its property in Union  Township,
         Ohio, to a third party for $680,000 and received net sales  proceeds of
         $674,135,  resulting  in a loss of  $104,987  for  financial  reporting
         purposes.

         In connection  with the sale of the  properties  described  above,  the
         Partnership  incurred deferred,  subordinated,  real estate disposition
         fees of $45,663 (see Note 4).

         In July 1998, the Partnership  sold its property in Leesburg,  Florida,
         for $565,000 and received net sales proceeds of $523,931,  resulting in
         a total loss for financial  reporting purposes of $135,509.  Due to the
         fact  that at  December  31,  1997,  the  Partnership  had  recorded  a
         provision  for loss on land and  building  in the amount of $70,337 for
         this property, the Partnership recognized the remaining loss of $65,172
         for financial reporting purposes in July 1998, relating to the sale.

         In  September  1998,  the  Partnership  sold its  property  in  Naples,
         Florida,  to a third party for $563,000 and received net sales proceeds
         of $533,598,  resulting in a gain of $170,281 for  financial  reporting
         purposes.  This property was originally  acquired by the Partnership in
         December  1988  and  had a cost  of  approximately  $410,500  excluding
         acquisition fees and miscellaneous acquisition expenses; therefore, the
         Partnership sold the property for  approximately  $123,100 in excess of
         its original purchase price.

3.        Investment in Joint Ventures:

         In  September  1998,  the  Partnership  entered  into a  joint  venture
         arrangement,  Warren  Joint  Venture,  with an affiliate of the general
         partners to hold one restaurant property. As of September 30, 1998, the
         Partnership  had  contributed  $498,953 to the joint venture to acquire
         the  restaurant  property.  As of September 30, 1998,  the  Partnership
         owned  approximately a 36 percent interest in the profits and losses of
         the joint venture.  The Partnership accounts for its investment in this
         joint  venture  under the equity  method since the  Partnership  shares
         control with the affiliate.



                                       7

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
               NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
           Quarters and Nine Months Ended September 30, 1998 and 1997


3.       Investment in Joint Ventures - Continued:

         The following presents the combined,  condensed  financial  information
         for all of the  Partnership's  investments  in joint  ventures  and the
         property held as tenants-in-common at:
<TABLE>
<CAPTION>

                                                                            September 30,            December 31,
                                                                                1998                     1997
                                                                         --------------------     -------------------
<S> <C>
                  Land and buildings on operating
                      leases, less accumulated depreciation
                      and allowance for loss on land and
                      building                                                 $4,418,423              $3,338,372
                  Net investment in direct financing lease,
                      less allowance for loss on building                         631,673                 842,633
                  Cash                                                             21,864                  12,331
                  Receivables                                                      20,713                  40,456
                  Accrued rental income                                           162,507                 177,567
                  Other assets                                                      2,513                   2,029
                  Liabilities                                                      37,488                  16,283
                  Partners' capital                                             5,220,205               4,397,105
                  Revenues                                                        236,627                 434,177
                  Provision for loss on land and buildings                       (455,379 )              (147,039 )
                  Net income (loss)                                              (306,969 )               126,271
</TABLE>

         The  Partnership  recognized  a  loss  totalling  $143,612  and  income
         totalling  $172,340  for the nine months ended  September  30, 1998 and
         1997,  respectively,  from these joint ventures,  and recognized income
         totalling  $5,276 and $52,359 during the quarters  ended  September 30,
         1998 and 1997, respectively.

4.        Restricted Cash:

         As of September 30, 1998,  the net sales  proceeds of $533,598 from the
         sale of the  property  in Naples,  Florida,  plus  accrued  interest of
         $1,371,   less   escrow   fees  of  $1,950,   were  being  held  in  an
         interest-bearing  escrow  account  pending  the release of funds by the
         escrow  agent to  acquire  an  additional  property  on  behalf  of the
         Partnership.


                                       8
<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
               NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
           Quarters and Nine Months Ended September 30, 1998 and 1997


5.       Allocations and Distributions:

         Generally, all net income and net losses of the Partnership,  excluding
         gains and losses from the sale of property, are allocated 99 percent to
         the  limited  partners  and  one  percent  to  the  general   partners.
         Distributions  of net  cash  flow are made 99  percent  to the  limited
         partners and one percent to the general  partners;  provided,  however,
         that the one percent of net cash flow to be  distributed to the general
         partners  is  subordinated  to receipt by the  limited  partners  of an
         aggregate,  ten percent,  cumulative,  noncompounded  annual  return on
         their adjusted capital contributions (the "10% Preferred Return").

         Generally,  net  sales  proceeds  from the sale of  properties,  to the
         extent  distributed,  will be distributed first to the limited partners
         in an  amount  sufficient  to  provide  them with  their 10%  Preferred
         Return,  plus the return of their adjusted capital  contributions.  The
         general   partners  will  then  receive,   to  the  extent   previously
         subordinated   and  unpaid,   a  one  percent  interest  in  all  prior
         distributions   of  net  cash  flow  and  a  return  of  their  capital
         contributions.  Any remaining  sales  proceeds will be  distributed  95
         percent  to the  limited  partners  and  five  percent  to the  general
         partners.  Any  gain  from  the  sale of a  property  is,  in  general,
         allocated in the same manner as net sales  proceeds are  distributable.
         Any loss from the sale of a property is, in general,  allocated  first,
         on a pro rata  basis,  to  partners  with  positive  balances  in their
         capital  accounts;  and thereafter,  95 percent to the limited partners
         and five percent to the general partners.

         During  the  nine  months  ended  September  30,  1998  and  1997,  the
         Partnership   declared   distributions   to  the  limited  partners  of
         $3,033,748 and $2,070,000,  respectively ($600,000 and $690,000 for the
         quarters  ended  September  30,  1998  and  1997,  respectively).  This
         represents  distributions  for the nine months ended September 30, 1998
         and 1997,  of $50.56  and  $34.50 per unit,  respectively  ($10.00  and
         $11.50 per unit for the  quarters  ended  September  30, 1998 and 1997,
         respectively).  Distributions  for the nine months ended  September 30,
         1998,  included $1,233,748 as a result of the distribution of net sales
         proceeds  from the sale of the  properties  in Fort Myers,  Florida and
         Union  Township,  Ohio.  This  amount was  applied  toward the  limited
         partners' 10% Preferred Return. No distributions  have been made to the
         general partners to date.


                                       9

<PAGE>


                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
               NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
           Quarters and Nine Months Ended September 30, 1998 and 1997


6.       Related Party Transactions:

         An  affiliate  of the  Partnership  is  entitled to receive a deferred,
         subordinated real estate  disposition fee, payable upon the sale of one
         or more  properties  based on the lesser of one-half  of a  competitive
         real  estate  commission  or three  percent  of the sales  price if the
         affiliate  provides a substantial amount of services in connection with
         the sale. Payment of the real estate disposition fee is subordinated to
         receipt  by the  limited  partners  of their  aggregate  10%  Preferred
         Return, plus their adjusted capital contributions.  For the nine months
         ended September 30, 1998, the Partnership incurred $45,663 in deferred,
         subordinated,  real estate disposition fees as a result of the sales of
         properties.  No deferred,  subordinated,  real estate  disposition fees
         were incurred for the nine months ended September 30, 1997.

7.        Commitment:

         During August 1998, the  Partnership  entered into an agreement with an
         unrelated  third  party to sell the Taco  Bell  property  in  Edgewood,
         Maryland. The general partners believe that the anticipated sales price
         will  exceed  the  Partnership's  cost  attributable  to the  property;
         however, as of November 6, 1998, the sale had not occurred.


                                       10
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income  Fund IV,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership that was organized on November 18, 1987, to acquire for cash, either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing restaurant  properties,  as well as land upon which restaurants were to
be constructed, which are leased primarily to operators of national and regional
fast-food and family-style  restaurant chains (collectively,  the "Properties").
The leases generally are triple-net leases, with the lessees responsible for all
repairs  and  maintenance,  property  taxes,  insurance  and  utilities.  As  of
September  30,  1998,  the  Partnership  owned  37  Properties,  which  included
interests in six Properties  owned by joint ventures in which the Partnership is
a co-venturer and one Property owned with affiliates as tenants-in-common.

Liquidity and Capital Resources

         During  the  nine  months  ended  September  30,  1998  and  1997,  the
Partnership  generated cash from  operations  (which includes cash received from
tenants,  distributions  from joint  ventures,  and  interest  and other  income
received,   less  cash  paid  for  expenses)  of  $1,794,173   and   $1,746,810,
respectively.  The  increase in cash from  operations  for the nine months ended
September  30,  1998,  is  primarily  a result of changes  in the  Partnership's
working capital.

         Other  sources and uses of capital  included the  following  during the
nine months ended September 30, 1998.

         In  July  1997,  the  Partnership  entered  into  new  leases  for  the
Properties in Portland and Winchester, Indiana, with a new tenant to operate the
Properties as Arby's restaurants.  In connection therewith, the Partnership paid
a total of $250,000 in renovation  costs during the nine months ended  September
30, 1998,  which had been incurred and accrued as construction  costs payable at
December 31, 1997.

         In March  1998,  the  Partnership  sold  its  Property  in Fort  Myers,
Florida,  to a third  party for  $842,100  and  received  net sales  proceeds of
$794,690, resulting in a gain of $225,902 for financial reporting purposes. This
Property was originally  acquired by the  Partnership in December 1988 and had a
cost of approximately  $598,000,  excluding  acquisition fees and  miscellaneous
acquisition  expenses;   therefore,   the  Partnership  sold  the  Property  for
approximately $196,700 in excess of its original purchase price. The Partnership
anticipates  that it will  distribute  amounts  sufficient to enable the limited
partners to pay federal and state income  taxes,  if any (at a level  reasonably
assumed by the general partners), resulting from the sale. In addition, in March
1998, the Partnership sold its Property in Union Township, Ohio, to an unrelated
third party for $680,000 and received net sales proceeds of $674,135,  resulting
in a loss of $104,987 for financial reporting  purposes.  In connection with the
sale of these Properties, the Partnership incurred deferred,  subordinated, real
estate disposition fees of $45,663.  In April 1998, the Partnership  distributed
$1,233,748  of the  net  sales  proceeds  from  these  Properties  as a  special
distribution to the limited partners.



                                       11
<PAGE>


Liquidity and Capital Resources - Continued

         In  addition,  in July  1998,  the  Partnership  sold its  Property  in
Leesburg,  Florida for $565,000  and  received  net sales  proceeds of $523,931,
resulting in a total loss for financial  reporting purposes of $135,509.  Due to
the fact that at December 31, 1997,  the  Partnership  recorded a provision  for
loss on the land and  building in the amount of $70,337 for this  Property,  the
Partnership  recognized  the remaining  loss of $65,172 for financial  reporting
purposes at July 1998,  relating to the sale. In September 1998, the Partnership
contributed  $498,953 of the net sales proceeds from the sale of the Property in
Leesburg,  Florida,  to a joint venture,  Warren Joint Venture,  to purchase and
hold one  restaurant  property.  The  Partnership  has an approximate 36 percent
interest  in the profits and losses of Warren  Joint  Venture and the  remaining
interest in this joint venture is held by an affiliate of the general partners.

         In  September  1998,  the  Partnership  sold its  Property  in  Naples,
Florida,  to a third  party for  $563,000  and  received  net sales  proceeds of
$533,598, resulting in a gain of $170,281 for financial reporting purposes. This
Property was originally  acquired by the  Partnership in December 1988 and had a
cost of approximately  $410,500  excluding  acquisition  fees and  miscellaneous
acquisition  expenses;   therefore,   the  Partnership  sold  the  Property  for
approximately $123,100 in excess of its original purchase price. The Partnership
intends to reinvest  the net sales  proceeds in a  replacement  Property.  As of
September   30,   1998,   the  net  sales   proceeds   were  being  held  in  an
interest-bearing   escrow  account.   The  general  partners  believe  that  the
transaction,  or a portion  thereof,  relating  to the sale of the  Property  in
Naples,   Florida  will  be  structured  to  qualify  as  a  like-kind  exchange
transaction  for federal  income tax purposes.  However,  the  Partnership  will
distribute  amounts sufficient to enable the limited partners to pay federal and
state  income  taxes,  if any,  (at a level  reasonably  assumed by the  general
partners) resulting from the sale.

         Currently,  rental  income from the  Partnership's  Properties  and net
sales  proceeds  are invested in money  market  accounts  and other  short-term,
highly liquid  investments  pending the  Partnership's  use of such funds to pay
Partnership expenses or to make distributions to the partners.  At September 30,
1998, the  Partnership had $765,359  invested in such short-term  investments as
compared  to  $876,452  at  December  31,  1997.  The  decrease in cash and cash
equivalents  during  the nine  months  ended  September  30,  1998 is  primarily
attributable to the payment of  construction  costs accrued at December 31, 1997
relating to the  Partnership's  Properties  located in Winchester  and Portland,
Indiana,  as  described  above.  The decrease in cash and cash  equivalents  was
partially  offset by an increase in rents paid in advance at September 30, 1998,
as compared to December 31, 1997. The funds remaining at September 30, 1998 will
be used toward the payment of distributions and other liabilities.

         Total liabilities of the Partnership,  including distributions payable,
decreased to $902,520 at September  30, 1998,  from  $1,157,589  at December 31,
1997,  primarily  as a  result  of the  payment  during  the nine  months  ended
September 30, 1998 of  construction  costs accrued at December 31, 1997 relating
to the Partnership's Properties located in Winchester and Portland,  Indiana, as
described  above.  Total  liabilities  at September 30, 1998, to the extent they
exceed cash and cash equivalents at September 30, 1998, will be paid from future
cash  from  operations,  and in the  event the  general  partners  elect to make
additional contributions, from future general partner contributions.


                                       12
<PAGE>


Liquidity and Capital Resources - Continued

         During August 1998, the  Partnership  entered into an agreement with an
unrelated third party to sell the Taco Bell property in Edgewood,  Maryland. The
general  partners  believe  that the  anticipated  sales  price will  exceed the
Partnership's  cost  attributable  to the Property;  however,  as of November 6,
1998, the sale had not occurred.

         Based on (i) current and  anticipated  future cash from operations (ii)
for the nine months ended  September 30, 1998,  net sales proceeds from the sale
of the Properties in Fort Myers, Florida, and Union Township, Ohio, and (iii) to
a lesser  extent,  for the nine months  ended  September  30,  1997,  additional
capital  contributions  from the corporate  general  partner  received in April,
July,  and October  1997,  the  Partnership  declared  distributions  to limited
partners of $3,033,748 and  $2,070,000  for the nine months ended  September 30,
1998 and 1997,  respectively  ($600,000  and  $690,000  for the  quarters  ended
September 30, 1998 and 1997,  respectively).  This represents  distributions for
the nine months  ended  September  30,  1998 and 1997,  of $50.56 and $34.50 per
unit,  respectively ($10.00 and $11.50 per unit for the quarters ended September
30,  1998 and  1997,  respectively).  Distributions  for the nine  months  ended
September 30, 1998 included  $1,233,748 as a result of the  distribution  of net
sales proceeds from the sale of the Properties in Fort Myers,  Florida and Union
Township,  Ohio. This special distribution was effectively a return of a portion
of  the  limited  partners'   investment,   although,  in  accordance  with  the
Partnership agreement,  it was applied to the limited partners' unpaid preferred
return.  As a result  of the sale of the  Properties,  the  Partnership's  total
revenue was reduced, while the majority of the Partnership's  operating expenses
remained fixed. Therefore,  distributions of net cash flow were adjusted for the
nine months ended September 30, 1998. No distributions  were made to the general
partners for the quarters and nine months ended  September 30, 1998 and 1997. No
amounts  distributed to the limited partners for the nine months ended September
30, 1998 and 1997 are required to be or have been treated by the  Partnership as
a return of capital for purposes of calculating the limited  partners' return on
their adjusted  capital  contributions.  The Partnership  intends to continue to
make distributions of cash available for distribution to the limited partners on
a quarterly basis.

         The general  partners  have been  informed by CNL  American  Properties
Fund, Inc.  ("APF"),  an affiliate of the general  partners,  that it intends to
significantly  increase its asset base by proposing to acquire affiliates of the
general partners which have similar restaurant  property  portfolios,  including
the Partnership. APF is a real estate investment trust whose primary business is
the ownership of restaurant properties leased on a long-term, "triple-net" basis
to  operators  of national  and regional  restaurant  chains.  Accordingly,  the
general  partners  anticipate  that  APF  will  make an  offer  to  acquire  the
Partnership  in  exchange  for  securities  of APF.  The general  partners  have
recently retained  financial and legal advisors to assist them in evaluating and
negotiating  any offer that may be proposed by APF.  However,  at this time, APF
has made no such offer. In the event that an offer is made, the general partners
will  evaluate it and if the general  partners  believe  that the offer is worth
pursuing,  the general partners will promptly inform the limited  partners.  Any
agreement  to sell the  Partnership  would be  subject  to the  approval  of the
limited partners in accordance with the terms of the partnership agreement.

                                       13

<PAGE>


Liquidity and Capital Resources - Continued

         The Partnership's  investment strategy of acquiring Properties for cash
and generally  leasing them under  triple-net  leases to operators who generally
meet  specified  financial  standards  minimizes  the  Partnership's   operating
expenses. The general partners believe that the leases will continue to generate
cash flow in excess of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

Results of Operations

         During the nine months ended September 30, 1997, the Partnership  owned
and leased 35 wholly owned  Properties  (including one Property in Douglasville,
Georgia,  which was sold in November  1997),  and during the nine  months  ended
September 30, 1998, the Partnership  owned and leased 34 wholly owned Properties
(including four Properties, which were sold during 1998), generally to operators
of fast-food and family-style restaurant chains. In connection therewith, during
the nine months  ended  September  30,  1998 and 1997,  the  Partnership  earned
$1,694,465 and $1,657,307,  respectively, in rental income from operating leases
and earned income from direct financing leases from these  Properties,  $579,483
and $541,416 of which was earned  during the quarters  ended  September 30, 1998
and 1997, respectively. The increase in rental and earned income for the quarter
and nine months ended  September  30, 1998,  was  partially due to the fact that
during the quarter and nine months ended  September  30, 1997,  the  Partnership
increased its allowance for doubtful  accounts for the Property  located in Palm
Bay, Florida due to financial difficulties the tenant was experiencing.  No such
allowance was established during the quarter and nine months ended September 30,
1998,  due to the fact that the  Partnership  re-leased  this  Property to a new
tenant for which rent  commenced  subsequent to September 30, 1997. In addition,
the  Partnership  collected and recognized as income past due rental amounts for
which the  Partnership  had  previously  established  an allowance  for doubtful
accounts during the quarter and nine months ended September 30, 1998.

         In addition,  the increase in rental and earned  income for the quarter
and nine months  ended  September  30, 1998 was  partially  due to the fact that
during the quarter and nine months ended  September  30, 1997,  the  Partnership
increased  its  allowance for doubtful  accounts for the  Properties  located in
Portland and Winchester,  Indiana due to financial difficulties the tenants were
experiencing.  No such  allowance  was  established  during the quarter and nine
months ended September 30, 1998, due to the fact that the Partnership  re-leased
these Properties to new tenants for which rent commenced subsequent to September
30, 1997.

         The  increase  in rental and earned  income  for the  quarter  and nine
months ended September 30, 1998 was partially offset by a decrease in rental and
earned  income  due to the sale of the  Property  in  Douglasville,  Georgia  in
November  1997,  the sale of the  Properties  in Fort  Myers,  Florida and Union
Township, Ohio in March 1998, and the sale of the Property in Naples, Florida in
September 1998. During the nine months ended September 30, 1998, the Partnership
used the net  sales  proceeds  from the sale of the  Property  in  Douglasville,
Georgia to

                                       14
<PAGE>


Results of Operations - Continued

fund  renovation  costs for two Properties and for other  Partnership  purposes.
Rental and earned  income are expected to remain at reduced  amounts as a result
of distributing  the net sales proceeds from the 1998 sales of the Properties in
Fort  Myers,  Florida  and Union  Township,  Ohio to the  limited  partners,  as
described above in "Liquidity and Capital Resources."

         For the nine months ended  September 30, 1998 and 1997, the Partnership
also earned  $37,207 and $65,265,  respectively,  in contingent  rental  income,
$20,661 of which was earned  during the quarter ended  September  30, 1997.  The
decrease in contingent  rental income during the nine months ended September 30,
1998,  as compared to the nine months ended  September  30,  1997,  is primarily
attributable to the Partnership  adjusting  estimated  contingent rental amounts
accrued at December 31,  1997,  to actual  amounts  during the nine months ended
September  30, 1998.  The decrease in  contingent  rental income for the quarter
ended September 30, 1998 was primarily due to the fact that no contingent  rents
were  recorded  during the quarter  ended  September 30, 1998 as a result of the
Partnership  adopting EITF 98-9, a consensus reached by the Financial Accounting
Standards  Board  entitled  "Accounting  for  Contingent  Rent  in  the  Interim
Financial  Periods,"  which  states that a lessor  should defer  recognition  of
contingent  rental income in interim  periods  until the  specified  target that
triggers the  contingent  rental income is achieved.  Adoption of this consensus
did not have a  material  effect  on the  Partnership's  financial  position  or
results of operations.

         In October  1998,  the tenant of one Boston Market  Property  filed for
bankruptcy.  If the lease is eventually  rejected,  the Partnership  anticipates
that rental income  relating to this Property will terminate  until a new tenant
is located or until the Property is sold and the  proceeds  from such a sale are
reinvested  in an  additional  Property.  However,  the general  partners do not
anticipate  that any decrease in rental income due to lost revenues  relating to
this  Property  will  have a  material  effect  on the  Partnership's  financial
position or results of operations.

         During  the  nine  months  ended  September  30,  1998  and  1997,  the
Partnership  also owned and leased  five  Properties  indirectly  through  joint
venture  arrangements and one Property as  tenants-in-common  with affiliates of
the general  partners.  In addition,  during the nine months ended September 30,
1998,  the  Partnership  owned and leased  one  additional  Property  indirectly
through a joint venture arrangement.  In connection  therewith,  during the nine
months ended September 30, 1998 and 1997, the  Partnership  recognized a loss of
$143,612 and income of $172,340,  respectively,  attributable  to net income and
net loss earned by these joint  ventures,  income of $5,276 and $52,359 of which
was  recognized   during  the  quarters  ended  September  30,  1998  and  1997,
respectively.  The  decrease  in net  income is  primarily  due to the fact that
Kingsville  Real Estate Joint  Venture (in which the  Partnership  owns a 68.87%
interest)  established  an allowance for loss on the land and net  investment in
the direct  financing lease for its Property for  approximately  $316,000 during
the  nine  months  ended  September  30,  1998.  The  allowance  represents  the
difference  between the Property's  carrying value at September 30, 1998 and the
estimated net realizable value of the Property.  In addition,  the joint venture
established  an allowance  for doubtful  accounts of  approximately  $21,900 and
$87,800   during  the  quarter  and  nine  months  ended   September  30,  1998,
respectively,  in accordance with its collection  policy.  No such allowance was
established  during the  quarter  and nine  months  ended  September  30,  1997.
Kingsville Real Estate Joint Venture is currently seeking either a new tenant or
purchaser for this Property.

                                       15

<PAGE>


Results of Operations - Continued

         The  decrease  during the quarter and nine months ended  September  30,
1998 in net income earned by joint  ventures is also due to the fact that during
July 1997,  the  operator of the  Property  owned by  Titusville  Joint  Venture
vacated the Property and ceased  operations.  During the quarter and nine months
ended  September 30, 1998,  Titusville  Joint Venture (in which the  Partnership
owns a  26.60%  interest)  established  an  allowance  for  loss on the land and
building for its Property, of approximately  $139,300.  The allowance represents
the  difference  between the Property's net carrying value at September 30, 1998
and the estimated net realizable value of the Property. Titusville Joint Venture
is currently seeking either a replacement tenant or purchaser for this Property.

         Operating expenses,  including  depreciation and amortization  expense,
were  $550,017 and $532,282  for the nine months  ended  September  30, 1998 and
1997,  respectively,  of which  $182,378  and  $154,792  were  incurred  for the
quarters  ended  September  30,  1998 and 1997,  respectively.  The  increase in
operating  expenses during the quarter and nine months ended September 30, 1998,
as  compared  to the  quarter  and nine months  ended  September  30,  1997,  is
primarily attributable to the fact that during the quarter and nine months ended
September  30, 1998,  the  Partnership  recorded  approximately  $21,600 in real
estate  tax  expense  due to the fact that in  October  1998,  the tenant of the
Boston Market Property in Richmond,  Virginia filed for bankruptcy, as described
above.  As a result,  if the tenant decides to reject the lease the  Partnership
will continue to incur certain  expenses,  such as real estate taxes,  insurance
and maintenance until a replacement tenant or buyer for the Property is located.

         As a result of the former  tenant of the Property in Leesburg,  Florida
defaulting  under the  terms of its  lease,  the  Partnership  incurred  certain
expenses,  such as real  estate  taxes,  insurance  and  maintenance  during the
quarters and nine months ended September 30, 1998 and 1997. The Partnership sold
this Property in July 1998, as described  above,  therefore the Partnership does
not anticipate incurring such expenses in future periods.

         As a result  of the sales of the  Properties  in Fort  Myers,  Florida,
Union Township, Ohio, and Leesburg, Florida the Partnership recognized a gain of
$55,742 for financial  reporting purposes during the nine months ended September
30, 1998.  In addition,  during the quarter and nine months ended  September 30,
1998,  the  Partnership  recognized a gain of $170,281 for  financial  reporting
purposes  as a  result  of the  sale of its  Property  in  Naples,  Florida.  No
Properties  were sold during the quarter and nine  months  ended  September  30,
1997.

         The Year 2000 problem is the result of information  technology  systems
and embedded  systems  (products which are made with  microprocessor  (computer)
chips such as HVAC systems,  physical  security  systems and elevators)  using a
two-digit  format,  as  opposed  to four  digits,  to  indicate  the year.  Such
information  technology and embedded systems may be unable to properly recognize
and process date-sensitive information beginning January 1, 2000.

         The  Partnership  does  not have any  information  technology  systems.
Affiliates  of the general  partners  provide all services  requiring the use of
information  technology  systems  pursuant to a  management  agreement  with the
Partnership.  The maintenance of embedded systems,  if any, at the Partnership's
properties is the responsibility of the tenants of the properties

                                       16
<PAGE>


Results of Operations - Continued

in accordance with the terms of the Partnership's  leases.  The general partners
and  affiliates  have  established  a team  dedicated to reviewing  the internal
information technology systems used in the operation of the Partnership, and the
information  technology and embedded  systems and the Year 2000 compliance plans
of the Partnership's tenants, significant suppliers,  financial institutions and
transfer agent.

         The  information  technology  infrastructure  of the  affiliates of the
general  partners  consists of a network of personal  computers and servers that
were  obtained   from  major   suppliers.   The   affiliates   utilize   various
administrative  and financial  software  applications on that  infrastructure to
perform the business functions of the Partnership.  The inability of the general
partners  and  affiliates  to identify  and timely  correct  material  Year 2000
deficiencies  in  the  software  and/or   infrastructure   could  result  in  an
interruption in, or failure of, certain of the Partnership's business activities
or operations.  Accordingly,  the general partners and affiliates have requested
and are evaluating  documentation from the suppliers of the affiliates regarding
the Year  2000  compliance  of  their  products  that  are used in the  business
activities or operations of the  Partnership.  The costs expected to be incurred
by the general  partners and  affiliates to become Year 2000  compliant  will be
incurred by the general  partners and  affiliates;  therefore,  these costs will
have no impact on the Partnership's financial position or results of operations.

         The  Partnership  has  material  third  party  relationships  with  its
tenants,  financial  institutions and transfer agent. The Partnership depends on
its  tenants  for  rents  and  cash  flows,   its  financial   institutions  for
availability  of cash and its  transfer  agent to  maintain  and track  investor
information.  If any of these third parties are unable to meet their obligations
to the  Partnership  because of the Year 2000  deficiencies,  such a failure may
have a material impact on the  Partnership.  Accordingly,  the general  partners
have requested and are evaluating  documentation from the Partnership's tenants,
financial  institutions,   and  transfer  agent  relating  to  their  Year  2000
compliance  plans.  At this time,  the general  partners  have not yet  received
sufficient   certifications   to  be  assured   that  the   tenants,   financial
institutions,  and  transfer  agent  have fully  considered  and  mitigated  any
potential material impact of the Year 2000 deficiencies.  Therefore, the general
partners do not, at this time, know of the potential costs to the Partnership of
any  adverse  impact  or effect of any Year  2000  deficiencies  by these  third
parties.

         The general  partners  currently  expect that all year 2000  compliance
testing  and any  necessary  remedial  measures  on the  information  technology
systems used in the business  activities and operations of the Partnership  will
be completed prior to June 30, 1999.  Based on the progress the general partners
and affiliates  have made in identifying and addressing the  Partnership's  Year
2000 issues and the plan and timeline to complete the  compliance  program,  the
general  partners  do  not  foresee   significant   risks  associated  with  the
Partnership's  Year 2000 compliance at this time.  Because the general  partners
and affiliates  are still  evaluating the status of the systems used in business
activities  and  operations  of the  Partnership  and the  systems  of the third
parties with which the Partnership  conducts its business,  the general partners
have not yet  developed  a  comprehensive  contingency  plan and are  unable  to
identify "the most  reasonably  likely worst case scenario" at this time. As the
general partners identify  significant  risks related to the Partnership's  Year
2000 compliance or if the Partnership's Year 2000 compliance  program's progress
deviates  substantially from the anticipated timeline, the general partners will
develop appropriate contingency plans.


                                       17

<PAGE>


                           PART II. OTHER INFORMATION


Item 1.          Legal Proceedings.  Inapplicable.

Item 2.          Changes in Securities.  Inapplicable.

Item 3.          Defaults upon Senior Securities.  Inapplicable.

Item 4.          Submission of Matters to a Vote of Security Holders.

                      Inapplicable.

Item 5.          Other Information.  Inapplicable.

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

                 (a)  Exhibits - None.

                 (b)  No reports on Form 8-K were filed during the quarter ended
                      September 30, 1998.

                                       18
<PAGE>


                                   SIGNATURES


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

           DATED this 10th day of November, 1998.


                            CNL INCOME FUND IV, LTD.

                            By: CNL REALTY CORPORATION
                                General Partner


                                 By:  /s/ James M. Seneff, Jr.
                                      ------------------------------
                                      JAMES M. SENEFF, JR.
                                      Chief Executive Officer
                                      (Principal Executive Officer)


                                 By:  /s/ Robert A. Bourne
                                      ------------------------------
                                      ROBERT A. BOURNE
                                      President and Treasurer
                                      (Principal Financial and
                                      Accounting Officer)