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 June 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 or other jurisdiction            (I.R.S. Employer
of incorporation or organiza-           Identification No.)
tion)


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


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

    Notes to Condensed Financial Statements                 5-8

  Item 2.  Management's Discussion and Analysis
             of Financial Condition and
             Results of Operations                          9-13


Part II

  Other Information                                         14


<PAGE>



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


                                         June 30,              December 31,
               ASSETS                      1998                    1997
                                        -----------            --------

Land and buildings on operating
  leases, less accumulated
  depreciation and allowance
  for loss on land and building         $16,563,159             $18,097,997
Net investment in direct
  financing leases                        1,250,921               1,269,389
Investment in joint ventures              2,441,566               2,708,012
Cash and cash equivalents                   700,653                 876,452
Receivables, less allowance for
  doubtful accounts of $296,161
  and $295,580                               27,976                  37,669
Prepaid expenses                             14,659                  11,115
Lease costs, less accumulated
  amortization of $19,980 and
  $17,956                                    19,564                  21,588
Accrued rental income                       280,114                 287,466
Other assets                                    200                     200
                                        -----------             -----------

                                        $21,298,812             $23,309,888
                                        ===========             ===========

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                        $     4,992             $     8,576
Accrued construction costs payable               -                  250,000
Accrued and escrowed real estate
  taxes payable                              61,023                  65,176
Distributions payable                       600,000                 690,000
Due to related parties                      142,926                  93,854
Rents paid in advance and deposits           58,723                  49,983
                                        -----------             -----------
    Total liabilities                       867,664               1,157,589

Partners' capital                        20,431,148              22,152,299
                                        -----------             -----------

                                        $21,298,812             $23,309,888
                                        ===========             ===========


            See accompanying notes to condensed financial statements.

                                        1

<PAGE>



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

<TABLE>
<CAPTION>

                                                            Quarter Ended                      Six Months Ended
                                                              June 30,                           June 30,
                                                      1998           1997               1998             1997
                                                    --------       --------          ----------       -------
<S> <C>
Revenues:
  Rental income from
    operating leases                                $511,225       $501,859          $1,051,001       $1,050,111
  Earned income from direct
    financing leases                                  31,872         32,784              63,981           65,780
  Contingent rental income                            15,546         20,661              37,207           44,604
  Interest and other income                            8,347          4,864              21,192           11,471
                                                    --------       --------          ----------       ----------
                                                     566,990        560,168           1,173,381        1,171,966
                                                    --------       --------          ----------       ----------

Expenses:
  General operating and
    administrative                                    41,090         36,751              75,715           79,666
  Bad debt expense                                        -          12,794                  -            12,794
  Professional services                               26,397          8,864              32,645           14,090
  Real estate taxes                                       -           4,357              20,755           28,027
  State and other taxes                                  106            134              15,747           16,451
  Depreciation and amorti-
    zation                                           107,626        113,231             222,777          226,462
                                                    --------       --------          ----------       ----------
                                                     175,219        176,131             367,639          377,490
                                                    --------       --------          ----------       ----------

Income Before Equity in
  Earnings (Loss) of Joint
  Ventures, Gain on Sale of
  Land and Buildings and
  Provision for Loss on Land
  and Building                                       391,771        384,037             805,742          794,476

Equity in Earnings (Loss)
  of Joint Ventures                                 (191,062)        64,772            (148,888)         119,981

Gain on Sale of Land and
  Buildings                                               -              -              120,915               -

Provision for Loss on Land
  and Building                                       (65,172)            -              (65,172)              -
                                                    --------       --------          ----------       ---------

Net Income                                          $135,537       $448,809          $  712,597       $  914,457
                                                    ========       ========          ==========       ==========

Allocation of Net Income:
  General partners                                  $    (66)      $  4,488          $    2,417       $    9,144
  Limited partners                                   135,603        444,321             710,180          905,313
                                                    --------       --------          ----------       ----------

                                                    $135,537       $448,809          $  712,597       $  914,457
                                                    ========       ========          ==========       ==========

Net Income Per Limited
  Partner Unit                                      $   2.26       $   7.41          $    11.84       $    15.09
                                                    ========       ========          ==========       ==========

Weighted Average Number of
  Limited Partner Units
  Outstanding                                         60,000         60,000              60,000           60,000
                                                    ========       ========          ==========       ==========
</TABLE>



            See accompanying notes to condensed financial statements.

                                        2

<PAGE>



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


                                 Six Months Ended             Year Ended
                                     June 30,                December 31,
                                       1998                      1997
                                 ----------------            --------

General partners:
  Beginning balance               $   756,354                $   446,657
  Contribution                             -                     294,000
  Net income                            2,417                     15,697
                                  -----------                -----------
                                      758,771                    756,354
                                  -----------                -----------


Limited partners:
  Beginning balance                21,395,945                 22,450,974
  Net income                          710,180                  1,704,971
  Distributions ($40.56 and
    $46.00 per limited
    partner unit, respectively)    (2,433,748)                (2,760,000)
                                  -----------                -----------
                                   19,672,377                 21,395,945
                                  -----------                -----------

Total partners' capital           $20,431,148                $22,152,299
                                  ===========                ===========


            See accompanying notes to condensed financial statements.

                                        3

<PAGE>



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


                                                    Six Months Ended
                                                        June 30,
                                                1998                  1997
                                            -----------            -------

Increase (Decrease) in Cash and Cash
  Equivalents:

    Net Cash Provided by Operating
      Activities                            $ 1,154,124            $ 1,142,182
                                            -----------            -----------

    Cash Flows from Investing
      Activities:
        Additions to land and build-
          ings on operating leases             (275,000)                    -
        Proceeds from sale of land
          and building                        1,468,825                     -
        Other                                        -                   8,007
                                            -----------            -----------
            Net cash provided by
              investing activities            1,193,825                  8,007
                                            -----------            -----------

    Cash Flows from Financing
      Activities:
        Contributions from general
          partner                                    -                 138,000
        Distributions to limited
          partners                           (2,523,748)            (1,380,000)
                                            -----------            -----------
            Net cash used in
              financing activities           (2,523,748)            (1,242,000)
                                            -----------            -----------

Net Decrease in Cash and Cash
  Equivalents                                  (175,799)               (91,811)

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

Cash and Cash Equivalents at End of
  Period                                    $   700,653            $   462,782
                                            ===========            ===========

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
                                            ===========            ===========



            See accompanying notes to condensed financial statements.

                                        4

<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
              Quarters and Six Months Ended June 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 six months ended June 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.

         The general partners are in the process of analyzing the effects of the
         consensus reached by the Financial  Accounting  Standards Board in EITF
         98-9, entitled "Accounting for Contingent Rent in the Interim Financial
         Periods,"  issued in May 1998. The general  partners do not expect that
         the  conclusions  reached in this consensus will 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:

                                             June 30,             December 31,
                                               1998                   1997

                  Land                      $ 7,795,540            $ 8,328,572
                  Buildings                  12,651,749             13,684,194
                                            -----------            -----------
                                             20,447,289             22,012,766
                  Less accumulated
                    depreciation             (3,748,621)            (3,844,432)
                                            -----------            -----------
                                             16,698,668             18,168,334
                  Less allowance for loss
                    on land and building       (135,509)               (70,337)
                                            -----------            -----------

                                            $16,563,159            $18,097,997
                                            ===========            ===========



                                        5

<PAGE>



                            CNL INCOME FUND IV, LTD.
                         (A Florida Limited Partnership)
               NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
              Quarters and Six Months Ended June 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).

         At June 30,  1998 and  December  31,  1997,  the  Partnership  recorded
         provisions  for losses on land and  building  in the amounts of $65,172
         and  $70,337  for  financial  reporting  purposes  for the  property in
         Leesburg,  Florida. The allowance at December 31, 1997, represented the
         difference  between the property's  carrying value at December 31, 1997
         and the estimated net  realizable  value for this property  based on an
         anticipated sales price. The allowance at June 30, 1998, represents the
         difference between (i) the property's  carrying value at June 30, 1998,
         and (ii) the net  realizable  value  of the  property  based on the net
         sales proceeds received in July 1998 from the sale of the property (see
         Note 5).

3.       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").



                                        6

<PAGE>



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


3.       Allocations and Distributions - Continued:

         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 six months  ended June 30,  1998 and 1997,  the  Partnership
         declared  distributions  to the  limited  partners  of  $2,433,748  and
         $1,380,000,  respectively ($600,000 and $690,000 for the quarters ended
         June 30, 1998 and 1997,  respectively).  This represents  distributions
         for the six months  ended  June 30,  1998 and 1997 of $40.56 and $23.00
         per unit,  respectively  ($10.00  and $11.50 per unit for the  quarters
         ended June 30, 1998 and 1997, respectively).  Distributions for the six
         months  ended June 30,  1998,  includes  $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.

4.       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 six months
         ended June 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 six months ended June 30, 1997.

                                        7

<PAGE>



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


5.       Subsequent Event:

         In July 1998, the Partnership  sold its Property in Leesburg,  Florida,
         to a third  party for  $565,000  and  received  net sales  proceeds  of
         $529,288,  resulting  in a loss  of  $65,172  for  financial  reporting
         purposes  (see Note 2). The  Partnership  intends to  reinvest  the net
         sales proceeds in a replacement property.


                                        8

<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 June 30,
1998,  the  Partnership  owned  38  Properties,   including  interests  in  five
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 six months  ended June 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 $1,154,124 and $1,142,182, respectively. The increase
in cash from  operations  for the six months ended June 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 six
months ended June 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 six months  ended June 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. 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.


                                        9

<PAGE>



Liquidity and Capital Resources - Continued

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 as a special
distribution  of net sales  proceeds  from the sale of Properties to the limited
partners.

         In  addition,  in July  1998,  the  Partnership  sold its  Property  in
Leesburg,  Florida for $565,000  and  received  net sales  proceeds of $529,288,
resulting in a loss of $65,172 for financial reporting purposes. The Partnership
intends to reinvest the net sales proceeds in a replacement Property.

         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 June 30, 1998,
the Partnership had $700,653 invested in such short-term investments as compared
to $876,452 at December  31,  1997.  The  decrease in cash and cash  equivalents
during the six months ended June 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 funds remaining at June 30, 1998, will be used toward the
payment of distributions and other liabilities.

         Total liabilities of the Partnership,  including distributions payable,
decreased to $867,664 at June 30, 1998,  from  $1,157,589  at December 31, 1997,
primarily as a result of the payment  during the six months ended June 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. The
decrease  in  total   liabilities  was  also   attributable  to  a  decrease  in
distributions  payable to limited  partners  at June 30,  1998,  as  compared to
December 31, 1997. Total liabilities at June 30, 1998, to the extent they exceed
cash and cash  equivalents at June 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.

         Based on current and  anticipated  future cash from  operations and for
the six months  ended June 30,  1998,  net sales  proceeds  from the sale of the
Properties in Fort Myers,  Florida,  and Union  Township,  Ohio, and to a lesser
extent, for the six months ended June 30, 1997, additional capital contributions
from the  corporate  general  partner  received  in April  and  July  1997,  the
Partnership  declared  distributions  to  limited  partners  of  $2,433,748  and
$1,380,000  for the six  months  ended  June  30,  1998 and  1997,  respectively
($600,000  and  $690,000  for  the  quarters  ended  June  30,  1998  and  1997,
respectively).  This represents  distributions for the six months ended June 30,
1998 and 1997 of $40.56 and $23.00 per unit, respectively ($10.00 and $11.50 per
unit for the quarters


                                       10

<PAGE>



Liquidity and Capital Resources - Continued

ended June 30, 1998 and 1997,  respectively).  Distributions  for the six months
ended June 30, 1998,  include  $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
six months  ended  June 30,  1998.  No  distributions  were made to the  general
partners  for the  quarters  and six  months  ended June 30,  1998 and 1997.  No
amounts  distributed  to the limited  partners for the six months ended June 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 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 six months ended June 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 six months ended June
30, 1998, the Partnership owned and leased 34 wholly owned Properties (including
two  Properties,  one in each of Union Township,  Ohio and Fort Myers,  Florida,
which  were  sold in March  1998),  generally  to  operators  of  fast-food  and
family-style  restaurant chains. In connection therewith,  during the six months
ended June 30, 1998 and 1997, the Partnership  earned $1,114,982 and $1,115,891,
respectively,  in rental  income from  operating  leases and earned  income from
direct  financing leases from these  Properties,  $543,097 and $534,643 of which
was earned during the quarters ended June 30, 1998 and 1997,  respectively.  The
decrease in rental and earned  income for the six months ended June 30, 1998 was
primarily  due to the  sales  of the  Properties  in  Douglasville,  Georgia  in
November 1997 and the sale of the  Properties  in Fort Myers,  Florida and Union
Township,  Ohio in March 1998.  During the six months ended June 30,  1998,  the
Partnership  used  the net  sales  proceeds  from the  sale of the  Property  in
Douglasville, Georgia, to fund renovation costs for two Properties

                                       11

<PAGE>



Results of Operations - Continued

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."

         The decrease in rental and earned  income for the six months ended June
30, 1998 was  partially  offset by, and the increase in rental and earned income
for the quarter  ended June 30, 1998 was  primarily  due to the fact that during
the quarter and six months ended June 30, 1997,  the  Partnership  increased its
allowance for doubtful accounts for the Properties  located in Palm Bay, Florida
and Portland and Winchester,  Indiana due to financial  difficulties the tenants
were experiencing.  No such allowance was established during the quarter and six
months ended June 30, 1998, due to the fact that the Partnership re-leased these
Properties to new tenants for which rent commenced subsequent to June 30, 1997.

         During the six months  ended June 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 connection therewith,  during the six months ended June 30,
1998 and 1997,  the  Partnership  recognized  a loss of  $148,888  and income of
$119,981, respectively,  attributable to net income and net loss earned by these
joint ventures, a loss of $191,062 and income of $64,772 of which was recognized
during the quarters ended June 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  in the profits and
losses of the joint venture)  established an allowance for doubtful  accounts of
approximately  $50,800 and $65,900  during the quarter and six months ended June
30, 1998,  respectively,  in  accordance  with its  collection  policy.  No such
allowance was established during the quarter and six months ended June 30, 1997.
In addition,  during the quarter and six months  ended June 30, 1998,  the joint
venture  established  an allowance  for loss on land and net  investment  in the
direct financing lease for its Property in Kingsville,  Texas for  approximately
$316,000.  The  allowance  represents  the  difference  between  the  Property's
carrying  value at June 30, 1998 and the estimated net  realizable  value of the
Property.  Kingsville  Real Estate Joint Venture is currently  seeking  either a
replacement tenant or purchaser for this Property.

         Operating expenses,  including  depreciation and amortization  expense,
were  $367,639  and  $377,490  for the six months  ended June 30, 1998 and 1997,
respectively,  of which  $175,219  and $176,131  were  incurred for the quarters
ended June 30, 1998 and 1997, respectively.



                                       12

<PAGE>



Results of Operations - Continued

         As a result of the former  tenant of the Property in Leesburg,  Florida
defaulting  under the  terms of its lease in  September  1994,  the  Partnership
incurred certain expenses,  such as real estate taxes, insurance and maintenance
during the quarters and six months ended June 30, 1998 and 1997. The Partnership
sold this Property in July 1998, as described below.

         During the quarter and six months ended June 30, 1998, the  Partnership
recorded a provision  for loss on land and building in the amount of $65,172 for
financial  reporting  purposes  for  the  Property  in  Leesburg,  Florida.  The
allowance at June 30, 1998,  represents  the  difference  between the Property's
carrying  value at June 30, 1998 and the net  realizable  value of the  Property
based on the net  sales  proceeds  received  in July  1998  from the sale of the
Property.

         As a result of the sales of the Properties in Fort Myers,  Florida, and
Union  Township,  Ohio,  the  Partnership  recognized  a gain  of  $120,915  for
financial  reporting  purposes  during the six months  ended June 30,  1998.  No
Properties were sold during the six months ended June 30, 1997.

         The general partners are in the process of analyzing the effects of the
consensus  reached by the  Financial  Accounting  Standards  Board in EITF 98-9,
entitled  "Accounting  for  Contingent  Rent in the Interim  Financial  Period,"
issued in May 1998.  The general  partners  do not expect  that the  conclusions
reached  in this  consensus  will have a  material  effect on the  Partnership's
financial position or results of operations.

                                       13

<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 June 30, 1998.

                                       14

<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 13th day of August, 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)