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

FORM 10-Q

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

 FOR THE QUARTERLY PERIOD ENDED JUNESEPTEMBER 30, 2009

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

Commission File Number:  333-108057

COMMONWEALTH INCOME & GROWTH FUND V
(Exact name of registrant as specified in its charter)

Pennsylvania65-1189593
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)

Brandywine Bldg. One, Suite 200
2 Christy Drive
Chadds Ford, PA 19317
(Address, including zip code, of principal executive offices)

(610) 594-9600
(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (ii) has been subject to such filing requirements for the past 90 days:
YES  T      NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).YES  ¨      NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "accelerated filer, “large accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company T
 (Do not check if a smaller reporting company.) 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      YES  ¨ NO T
 
 

1


FORM 10-Q
JUNESEPTEMBER 30, 2009

TABLE OF CONTENTS

 PART I 
Item 1.Financial Statements3
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations14
Item 3.Quantitative and Qualitative Disclosures About Market Risk18
Item 4T.Controls and Procedures18
 PART II 
Item 1.Legal Proceedings18
Item 1 A.Risk Factors19
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds19
Item 3.Defaults Upon Senior Securities19
Item 4.Submission of Matters to a Vote of Securities Holders19
Item 5.Other Information19
Item 6.Exhibits19
   


2
 


Part I. FINANCIAL INFORMATION
Item 1. Financial Statements

Commonwealth Income & Growth Fund VCommonwealth Income & Growth Fund V Commonwealth Income & Growth Fund V 
Condensed Balance SheetsCondensed Balance Sheets Condensed Balance Sheets 
         
 June 30,  December 31,  September 30,  December 31, 
 2009  2008  2009  2008 
 (unaudited)     (unaudited)    
Assets            
            
Cash $140,025  $3,053,703  $495,866  $3,053,703 
Lease income receivable, net of reserve of $128,617 at June 30, 2009 and $115,617 and December 31, 2008, respectively  456,387   320,541 
Accounts receivable, General Partner  -   18,516 
Lease income receivable, net of reserve of $128,617 and $115,617 at September 30, 2009
and December 31, 2008, respectively
  499,203   320,541 
Accounts receivable, Commonwealth Capital Corp.  93,210   394,435       359,048 
Accounts receivable, affiliated limited partnerships  1,563   300   228   300 
Prepaid expenses  9,629   6,422   6,524   6,422 
  700,814   3,793,917   1,001,821   3,740,014 
                
Computer equipment, at cost  24,208,709   21,267,794   23,792,945   21,267,794 
Accumulated depreciation  (14,759,681)  (12,060,593)  (16,002,140)  (12,060,593)
  9,449,028   9,207,201   7,790,805   9,207,201 
                
Equipment acquisition costs and deferred expenses, net of accumulated amortization of $447,723 and
$518,860 at June 30, 2009 and December 31, 2008, respectively
  255,503   247,773 
Equipment acquisition costs and deferred expenses, net of accumulated amortization
of $378,213 and $518,860 at September 30, 2009 and December 31, 2008, respectively
  204,243   247,773 
Prepaid acquisition Fees  55,893   180,205   55,893   180,205 
  311,396   427,978   260,136   427,978 
                
Total Assets $10,461,238   13,429,096  $9,052,762  $13,375,193 
        
                
Liabilities and Partners' Capital                
                
Liabilities                
Accounts payable $140,686  $357,751  $110,917  $357,751 
Accounts payable, General Partner  27,709   41,112   67,211   22,596 
Accounts payable, Commonwealth Capital Corp.  -   35,387   14,252   - 
Other accrued expenses  18,895   11,302   17,239   11,302 
Unearned lease income  287,136   142,203   344,991   142,203 
Notes payable  815,356   1,551,477   528,203   1,551,477 
Total Liabilities  1,289,782   2,139,232   1,082,813   2,085,329 
                
Partners' Capital                
General partner  1,000   1,000   1,000   1,000 
Limited partners  9,170,456   11,288,864   7,968,949   11,288,864 
Total Partners' Capital  9,171,456   11,289,864   7,969,949   11,289,864 
                
Total Liabilities and Partners' Capital $10,461,238  $13,429,096  $9,052,762  $13,375,193 
 
see accompanying notes to condensed financial statements


3

Commonwealth Income & Growth Fund V 
Condensed Statements of Operations 
(unaudited) 
             
             
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2009  2008  2009  2008 
Revenue            
Lease $1,325,909  $1,623,117  $4,312,224  $5,190,395 
Interest and other  40,831   23,593   74,157   73,388 
Gain (loss) on sale of computer equipment  (2,120)  2,709   17,040   84,982 
Total revenue  1,364,620   1,649,419   4,403,421   5,348,765 
                 
Expenses                
Operating, excluding depreciation  266,140   327,542   1,000,680   1,123,480 
Equipment management fee, General Partner  66,295   81,156   215,611   259,520 
Interest  11,650   32,326   49,530   114,822 
Depreciation  1,549,182   1,330,147   4,381,119   4,088,315 
Amortization of equipment acquisition costs and deferred expenses  51,260   76,089   167,842   232,861 
Bad debt expense  -   30,818   13,000   30,818 
Total expenses  1,944,527   1,878,078   5,827,782   5,849,816 
                 
Net (loss) $(579,907) $(228,659) $(1,424,361) $(501,051)
                 
Net (loss) allocated to limited partners $(476,010) $(234,897) $(1,443,019) $(519,789)
                 
Net (loss) per equivalent limited partnership unit $(0.38) $(0.19) $(1.16) $(0.42)
                 
Weighted average number of equivalent limited partnership units outstanding during the period  1,243,204   1,248,010   1,243,960   1,249,082 


see accompanying notes to condensed financial statements



 
34
 


Commonwealth Income & Growth Fund V 
Condensed Statements of Operations 
(unaudited) 
             
             
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2009  2008  2009  2008 
Revenue            
Lease $1,458,570  $1,739,599  $2,986,315  $3,567,278 
Interest and other  12,418   21,125   33,326   49,795 
Gain on sale of computer equipment  17,674   87,240   19,160   82,274 
Total Revenue  1,488,662   1,847,964   3,038,801   3,699,347 
                 
Expenses                
Operating, excluding depreciation  359,879   422,466   734,540   795,940 
Equipment management fee, General Partner  72,324   92,059   149,316   178,364 
Interest  15,991   39,201   37,880   82,495 
Depreciation  1,454,353   1,395,027   2,831,937   2,758,168 
Amortization of equipment acquisition costs and deferred expenses  55,909   78,992   116,582   156,772 
Bad debt expense  -   -   13,000   - 
Total expenses  1,958,456   2,027,745   3,883,255   3,971,739 
                 
Net (loss) $(469,794) $(179,781) $(844,454) $(272,392)
                 
Net (loss) allocated to limited partners $(476,010) $(186,031) $(856,896) $(284,892)
                 
Net (loss) per equivalent limited partnership unit $(0.38) $(0.15) $(0.69) $(0.23)
                 
Weighted average number of equivalent limited partnership units outstanding during the period  1,243,852   1,248,951   1,244,352   1,248,951 
Commonwealth Income & Growth Fund V
Condensed Statements of Partners' Capital
For the nine months ended September 30, 2009
(unaudited)
 
 
 General
Partner Units
 Limited
Partner Units
 General
Partner
 Limited
Partner
 Total
Balance, January 1, 2009                          50               1,245,852 $               1,000 $       11,288,864 $      11,289,864
Net Income (loss)                             -                                -                     18,658             (1,443,019)          (1,424,361)
Redemptions                             -                       (2,648)                             -                  (29,654)                (29,654)
Distributions                             -                                -                   (18,658)             (1,847,242)          (1,865,900)
Balance, September 30, 200950               1,243,204 $                  1,000 $         7,968,949 $        7,969,949


see accompanying notes to condensed financial statements



5


Commonwealth Income & Growth Fund V 
Condensed Statements of Cash Flow 
(unaudited) 
       
  Nine Months ended  Nine Months ended 
  September 30,  September 30, 
  2009  2008 
       
Net cash provided by operating activities $2,285,399  $1,708,949 
         
Investing activities:        
Capital expenditures  (3,107,805)  (770,973)
Acquisition fees paid to General Partner  -  $(14,039)
Net proceeds from the sale of computer equipment  160,123   545,652 
Net cash (used in) investing activities  (2,947,682)  (239,360)
         
Financing activities:        
Redemptions  (29,654)  (49,119)
Distributions to partners  (1,865,900)  (1,873,347)
Debt placement fee paid to General Partner  -   (2,916)
Net cash (used in) financing activities  (1,895,554)  (1,925,382)
         
Net (decrease) in cash  (2,557,837)  (455,793)
Cash beginning of period  3,053,703   4,114,953 
         
Cash end of period $495,866  $3,659,160 

see accompanying notes to condensed financial statements


 
46
 




Commonwealth Income & Growth Fund V
Condensed Statements of Partners' Capital
For the six months ended June 30, 2009
(unaudited)
 
  General Partner Units Limited Partner Units General Partner Limited Partner Total
Balance, January 1, 2009                          50               1,245,852 $                  1,000 $       11,288,864 $      11,289,864
Net Income (loss)                             -                                -                     12,442                (856,896)             (844,454)
Redemptions                             -                       (2,648)                             -                  (29,654)                (29,654)
Distributions                             -                                -                   (12,442)             (1,231,858)          (1,244,300)
Balance, June 30, 200950               1,243,204 $                  1,000 $         9,170,456 $        9,171,456

see accompanying notes to condensed financial statements


5



Commonwealth Income & Growth Fund V 
Condensed Statements of Cash Flow 
(unaudited) 
       
  Six Months ended  Six Months ended 
  June 30,  June 30, 
  2009  2008 
       
Net cash provided by operating activities $1,414,880  $1,019,161 
         
Investing activities:        
Capital Expenditures  (3,107,805)  (583,599)
Prepaid acquisition fees  -   (14,039)
Net proceeds from the sale of computer equipment  53,201   507,602 
Net cash (used in) investing activities  (3,054,604)  (90,036)
         
Financing activities:        
Redemptions  (29,654)  (15,192)
Distributions to partners  (1,244,300)  (1,249,576)
Debt placement fee paid to General Partner  -   (2,916)
Net cash (used in) financing activities  (1,273,954)  (1,267,684)
         
Net (decrease) in cash  (2,913,678)  (338,559)
Cash beginning of period  3,053,703   4,114,953 
         
Cash end of period $140,025  $3,776,394 
see accompanying notes to condensed financial statements

6

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Business

Commonwealth Income & Growth Fund V (the “Partnership”) is a limited partnership organized in the Commonwealth of Pennsylvania on May 19, 2003.  The Partnership offered for sale up to 1,250,000 units of the limited partnership at the purchase price of $20 per unit (the “Offering”).  The Partnership reached the minimum amount in escrow and commenced operations on March 14, 2005.  As of February 24, 2006, the Partnership was fully subscribed.

The Partnership used the proceeds of the Offering to acquire, own and lease various types of information technology (I.T.) equipment and other similar capital equipment, which is leased primarily to U.S. corporations and institutions.  Commonwealth Capital Corp. (“CCC”), on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors.

The Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of CCC.  CCC is a member of the Investment Program Association (IPA), Financial Planning Association (FPA), and the Equipment Leasing and Finance Association (ELFA).  Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its computer equipment, make final distributions to partners and to dissolve.  Unless sooner terminated, the Partnership will continue until December 31, 2015.

2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

In June 2009, the FASB issued Statementan accounting standard codified within Accounting Standards Codification (“ASC”) ASC 105,, Generally Accepted Accounting Principles, (“ASC 105” and formerly referred to as SFAS No. 168, The168), which establishes the FASB Accounting Standards Codification (Codification) and the Hierarchy of GAAP (“SFAS 168”), which replaces SFAS No. 162, The Hierarchy of GAAP and establishes the Codification as the single source of authoritative U.S. GAAPaccounting principles recognized by the FASB to be applied by nongovernmental entities.  SEC rules and interpretive releases are also sourcesentities in the preparation of authoritative GAAPfinancial statements in conformity with GAAP.  ASC 105 is effective for SEC registrants.  SFAS 168 modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative.  SFAS 168 is effectivefinancial statements issued for interim and annual periods ending after September 15, 2009. As SFAS 168ASC 105 is not intended to change or alter existing GAAP, it will not impact the Partnership’s condensed financial statements.  The Partnership will adjusthas adjusted historical GAAP references in its third quarter 2009 Form 10-Q to reflect accounting guidance references included in the Codification.

In JuneSeptember 2009, the FASB issued SFASAccounting Standards Update No. 167,2009-07 (“ASC Update 2009-07”) AmendmentsAccounting for Various Topics - Technical Corrections to SEC Paragraphs.  This ASU represents technical corrections to various ASC Topics containing SEC guidance.  The technical corrections resulted from external comments received, and consisted principally of paragraph referencing and minor wording changes.   In the third quarter of 2009, the Partnership adopted this FASB Interpretation No. 46(R) (“SFAS 167”), which amended certain requirements of FIN 46R to improve financial reporting disclosure by companies involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. SFAS 167 is effective for annual reporting periods beginning after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter, with early adoption prohibited.ASU.  The Partnership is currently evaluating the potential impact of the adoption of SFAS 167this ASU did not have any impact on itsthe condensed financial statements.statements included herein.

7
In August 2009, the FASB issued Accounting Standards Update No 2009-05 (“ASC Update 2009-05”), an update to FASB ASC 820, Fair Value Measurements and Disclosures.  This update provides amendments to reduce potential ambiguity in financial reporting when measuring the fair value of liabilities.  Among other provisions, this update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the valuation techniques described in ASC Update 2009-05.  ASC Update 2009-05 will become effective for the Partnership’s annual financial statements for the year ended December 31, 2009.  The Partnership has not determined the impact that this update may have on its financial statements.

In June 2009, the FASB issued SFASFAS 167 “Amendments to FASB Interpretation No.46(R),” which has yet to be codified with the ASC. Once codified, the standard would amend ASC 810, “Consolidation” to address the elimination of the concept of a qualifying special purpose entity.  This guidance is effective for the Partnership beginning in the first quarter of fiscal year 2010.  The Partnership is currently evaluating the impact that the adoption of ASC 810 will have on its condensed financial statements.

In June 2009, the FASB issued FAS No. 166, “Accounting for Transfers of Financial Assets, Assets—an amendment of FASB Statement No. 140 140.”(“SFAS 166”), which was issued to improve   This pronouncement has not yet been incorporated into the relevance, representational faithfulness, and comparability of theFASB’s codification. This standard will require more information that a reporting entity provides in its financial statements about (1) a transfer of itstransferred financial assets, (2)including securitization transactions, and where entities have continuing exposure to the effects of such a transfer on its financial position, financial performance, and cash flows, and (3) a reporting entity’s continuing involvement, if any, in therisks related to transferred financial assets. SFAS 166This standard is effective for annual reporting periodsat the start of a Partnership’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for interim periods within that first annualcompanies reporting period, and for interim and annual reporting periods thereafter, with early adoption prohibited.earnings on a calendar-year basis. The Partnership is currently evaluatinganalyzing the potential impact of the adoption of SFAS 166, but does not believe that it will have a material impact onthis statement, if any, to its condensed financial statements.

In May 2009, the FASB issued an accounting standard codified within ASC 855,” Subsequent Events”, (“ASC 855” and formerly referred to as SFAS No. 165, Subsequent Events (“SFAS 165”)165), which sets forth principles and requirements formodified the subsequent event guidance.  The three modifications to the subsequent events specifically (1)guidance are: 1) To name the period during which management should evaluatetwo types of subsequent events either as recognized or non-recognized subsequent events, 2) To modify the definition of subsequent events to refer to events or transactions that may occur for potential recognition and disclosure, (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date, but before the financial statement are issued or available to be issued and (3)3) To require entities to disclose the disclosures thatdate through which an entity should make abouthas evaluated subsequent events and transactions occurring after the balance sheet date. SFAS 165basis for that date, i.e. whether that date represents the date the financial statements were issued or were available to be issued.  This guidance is effective for interim reportingor annual financial periods ending after June 15, 2009.2009, and should be applied prospectively.  The Partnership adopted SFAS 165ASC 855 during the second quarter ofended June 30, 2009 and it did not have a material impact on the Partnership’s condensed financial statements.

In April 2009, the FASB issued an accounting standard codified within ASC 320 (formerly referred to as FSP No. FAS 115-2, FAS124-2 and FAS 124-2,EITF 99-20-2), “Recognition and Presentation of Other-Than-Temporary ImpairmentsOther-Than-Temporary-Impairment.”  (“FAS 115-2ASC 320 (i) changes existing guidance for determining whether an impairment is other than temporary to debt securities and FAS 124-2”).  This FSP provides(ii) replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired security until recovery with a frameworkrequirement that management assert: (a) it does not have the intent to perform an other-than-temporary impairment analysis,sell the security; and (b) it is more likely than not it will not have to sell the security before recovery of its cost basis.  Under ASC 320, declines in compliance with GAAP, which determines whether the holder of an investment in a debt or equity security, for which changes in fair value of held-to-maturity and available-for-sale securities below their cost that are not regularlydeemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses.  The amount of impairment related to other factors is recognized in earnings, should recognize a loss in earnings when the investment is impaired.  Additionally this FSP amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.   FAS 115-2other comprehensive income.  ASC 320 is effective for interim reportingand annual periods ending after June 15, 2009.  The Partnership adopted FAS 115-2 and FAS 124-2ASC 320 in the quarter ended June 30, 2009.  The adoption did not have a material impact on the Partnership’s condensed financial statements.

8
In April 2009, the FASB issued an accounting standard codified within ASC 825, “Financial Accounting Standards Board (FASB) issued Staff Position (FSP)Instruments,” (“ASC 825”), ASC 825-10-65, Transition and Open Effective Date Information, (“ASC 825-10-65” and formerly referred to as FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APBOpinion No. 28-1), which amends Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about Fair Value of Financial Instruments, to requirerequires disclosures about the fair value of financial instruments for interim reporting periods as well as in annual financial statements.  This guidance also requires those disclosures in summarized financial information at interim reporting periods.  FSP FAS 107-1 and APB 28-1 areASC 825-10-65 is effective prospectively for all interim and annual reporting periods ending after June 15, 2009 and shall be applied prospectively.2009.  The Partnership adopted FSP 107-1ASC 825 in the second quarter ofended June 30, 2009. Except for the disclosure requirements, the adoption of FSP 107-1 and APB 28-1ASC 825 did not have a material impact on the Partnership’s condensed financial statements.

In April 2009, the FASB issued FSP No. FAS 157-4,an accounting standard codified within Determining ASC 820, “Fair Value WhenMeasurements and Disclosures,” ( “ASC 820” and formerly referred to as FSP FAS 157-4), ASC 820 affirms the Volume and Levelobjective of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FAS 157-4”).  This FSP provides additional guidance for estimating fair value in accordance with FASB Statement No. 157 when the volume and level of activity for the asset or liability have significantly decreased and provides guidance on identifying circumstances that indicate a transactionmarket is not orderly.  FAS 157-4active, clarifies and includes additional factors for determining whether there has been a significant decrease in market activity, eliminates the presumption that all transactions are distressed unless proven otherwise, and requires an entity to disclose a change in valuation technique.  ASC 820 is effective for interim reportingand annual periods ending after June 15, 2009.  The Partnership adopted FAS 157-4ASC 820 in the quarter ended June 30, 2009.  The adoption did not have a material impact on the Partnership’s condensed financial statements.statements

In January 2009, FASB issued FSP EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20 (“FSP EITF 99-20-1”). FSP EITF 99-20-1 is effective for interim and annual periods ending after December 15, 2008. Retroactive application is not permitted. The adoption of FSP EITF 99-20-1 did not have a significant impact on the Partnership’s financial position or results of operations. 

In February 2008,  FASB issued FSP FAS 157-2 to provide a one-year deferral of the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed in financial statements at fair value on a recurring basis (that is, at least annually).   The Partnership adopted the provisions of FSP FAS 157-2 in the quarter ended March 31, 2009.  The required provisions did not have a material impact on the Partnership’s condensed financial statements.
8
Basis of Presentation

The financial information presented as of any date other than December 31, 2008 has been prepared from the books and records without audit.  Financial information as of December 31, 2008 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by generally accepted accounting principles to be included in audited financial statements.  In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included.  For further information regarding the Partnership’s accounting policies, refer to the financial statements and related notes included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2008.  Operating results for the sixnine months ended JuneSeptember 30, 2009 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2009.

Pursuant to Statement of Financial Accounting Standards No. 165 (“FASB No. 165”)ASC 855, “Subsequent Events”, subsequent events have been evaluated through AugustNovember 12, 2009, the date these financial statements were available to be issued, and there were no subsequent events to be reported.

Disclosure of Fair Value of Financial Instruments

Effective April 2009, the Partnership has adopted ASC 825, Financial Accounting Standards Board Staff Position SFAS 107-1Instruments, (“ASC 825”), ASC 825-10-65, Transition and Accounting Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP SFAS 107-1Open Effective Date Information, (“ASC 825-10-65” and APB 28-1)formerly referred to as “SFAS 107-1” and “APB 28-1”).   The FSP amends SFAS 107 to requireThis ASC requires disclosures about fair value of financial instruments in bothfor interim andreporting periods as well as in annual financial statements.  This FSPguidance also amends APB 28 to requirerequires those disclosures in summarized financial information at interim reporting periods.

9
Estimated fair value was determined by management using available market information and appropriate valuation methodologies.  However, judgment was necessary to interpret market data and develop estimated fair value.  The partnership holds no financial instruments, except notes payable. Cash, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of JuneSeptember 30, 2009 and December 31, 2008.

The Partnership’s long-term debt consists of notes payable, which are secured by specific computer equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at JuneSeptember 30, 2009 and December 31, 2008 approximates the carrying value of these instruments, due to the interest rates approximating current market values.

Disclosure about fair value of financial instruments is based on pertinent information available to management as of JuneSeptember 30, 2009 and December 31, 2008. 

9
Long-Lived Assets

The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.  The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset.  If the estimated undiscounted cash flows are less than the carrying value of the asset, then an impairment exists.  The amount of the impairment is determined based on the difference between the carrying value and the fair value.  Fair value is determined based on estimated discounted cash flows to be generated by the asset.   The Partnership determined that no impairment existed at June 30, 2009.  The Partnership determined that impairment in the amount of approximately $87,000 and $15,000 existed as of Junefor the period ended September 30, 2008. 2009 and 2008, respectively.    Such amounts have been included in depreciation expense in the accompanying financial statements.

Depreciation on computer equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of three toor four years.

Reimbursable Expenses

Reimbursable expenses, which are charged to the Partnership by CCC in connection with the administration and operation of the Partnership, are allocated to the Partnership based upon several factors including, but not limited to, the number of investors, compliance issues, and the number of existing leases.  For example, if the Partnership has more investors than another program sponsored by CCC, then higher amounts of expenses related to investor services, mailing and printing costs will be allocated to the Partnership.  Also, while a Partnership is in its offering stage, higher compliance costs are allocated to it than to a program not in its offering stage, as compliance resources are utilized to review incoming investor suitability and proper documentation.  Finally, lease related expenses, such as due diligence, correspondence, collection efforts and analysis staff costs, increase as programs purchase more leases, and decrease as leases terminate and equipment is sold. All of these factors contribute to CCC’s determination as to the amount of expenses to allocate to the Partnership or to other sponsored programs.  For the Partnership, all reimbursable expenses are expensed as they are incurred.

Cash

At JuneSeptember 30, 2009, cash was held in two accounts maintained at one financial institution. The accounts were, in the aggregate, federally insured for up to $250,000.  At JuneSeptember 30, 2009, the total cash balance was as follows:

At June 30, 2009   
Total bank balance $651,954 
FDIC insurable limit $250,000 
Uninsured amount $401,954 
At September 30, 2009Bank A
Total bank balance $          1,003,978
FDIC insurable limit $          (250,000)
Uninsured amount $             753,978

The Partnership mitigates thisbank failure risk by only depositing funds with major a financial institutions.institution.  The Partnership deposits its funds with a Moody's Aaa-Rated banking institution which is one of only three Aaa-Rated banks listed on the New York Stock Exchange.  The Partnership has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk. The amount in such accounts will fluctuate throughout 2009 due to many factors, including the pace of additional revenues, equipment acquisitions and distributions. 

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Net Income (Loss) Per Equivalent Limited Partnership Unit

The net income (loss) per equivalent limited partnership unit is computed based upon net income (loss) allocated to the limited partners and the weighted average number of equivalent units outstanding during the period.

Reclassification

Certain prior amounts have been reclassified to conform to the current presentation. The net results of the reclassifications did not have an impact on the Partnership’s previously reported financial position, cash flows, or results of operations.

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3. Computer Equipment

The Partnership is the lessor of equipment under operating leases with periods generally ranging from 12 to 48 months.  In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.

Through JuneSeptember 30, 2009, the Partnership has only entered into operating leases.  Lease revenue is recognized on the monthly straight-line basis which is generally in accordance with the terms of the operating lease agreements.  The company’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.

Remarketing fees are paid to the leasing companies from which the Partnership purchases leases.  These are fees that are earned by the leasing companies when the initial terms of the lease have been met and the equipment is re-leased or sold.  The General Partner believes that this strategy adds value since it entices the leasing company to "stay with the lease" for potential extensions, remarketing or sale of equipment.  This strategy potentially minimizes any conflicts the leasing company may have with a potential new lease and will potentially assist in maximizing overall portfolio performance.  The remarketing fee is tied into lease performance thresholds and is factored in the negotiation of the fee.  Remarketing fees incurred in connection with lease extensions are accounted for as operating costs.  Remarketing fees incurred in connection with the sale of computer equipment are included in our gain or loss calculations.  For the sixnine months ended JuneSeptember 30, 2009 and 2008, the Partnership incurred remarketing fees of approximately $33,000$51,000 and $5,000,$51,000, respectively. For the sixnine months ended JuneSeptember 30, 2009 and 2008 the Partnership paid approximately $25,000$37,000 and $22,000, respectively, in such fees.  No such fees were paid for the six months ended June 30, 2008.

The Partnership’s share of the computer equipment in which it participates with other partnerships at JuneSeptember 30, 2009 and December 31, 2008 was approximately $10,328,000$11,564,000 and $9,480,000, respectively, and is included in the Partnership’s fixed assets on its balance sheet.  The total cost of the equipment shared by the Partnership with other partnerships at JuneSeptember 30, 2009 and December 31, 2008 was approximately $25,884,000$34,907,000 and $23,272,000, respectively.  The Partnership’s share of the outstanding debt associated with this equipment at JuneSeptember 30, 2009 and December 31, 2008 was $681,000$435,000 and $1,183,000, respectively.  The total outstanding debt related to the equipment shared by the Partnership at JuneSeptember 30, 2009 and December 31, 2008 was approximately $2,142,000$1,547,000 and $3,349,000, respectively.

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The following is a schedule of future minimum rentals on noncancellablenon-cancellable operating leases at JuneSeptember 30, 2009:
 
  Amount 
    
Six months ending December 31, 2009 $2,016,502 
Year ended December 31, 2010  1,992,898 
Year ended December 31, 2011  1,189,000 
Year ended December 31, 2012  303,886 
  $5,502,286 
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Amount
Three Months ended December 31, 2009 $                         925,475
Year ended December 31, 2010                                                    2,015,859
Year ended December 31, 2011                                                    1,212,108
Year ended December 31, 2012                                                       303,886
 $                      4,457,328
 
4. Related Party Transactions

Receivables/Payables

As of JuneSeptember 30, 2009, the Partnership’s related party receivables and payables are short term, unsecured, and non-interest bearing.

Reimbursable Expenses
Nine Months Ended September 30,20092008
   
Reimbursable expenses  
Reimbursable expenses, which are charged to the Partnership by CCC in connection with the administration and operation of the Partnership, are allocated to the Partnership based upon several factors including, but not limited to, the number of investors, compliance issues, and the number of existing leases.  See “Summary of Significant Accounting Policies - Reimbursable Expenses, “above. $                926,000 $           1,068,000
   
Equipment Acquisition fee  
The General Partner earned an equipment acquisition fee of 4% of the purchase price of each item of equipment purchased as compensation for the negotiation of the acquisition of the equipment and lease thereof or sale under a conditional sales contract.   At September 30, 2009, the remaining balance of prepaid acquisition fees was approximately $56,000, which will be earned in future periods. $                124,000 $                42,000
   
Debt Placement fee  
As compensation for arranging term debt to finance the acquisition of equipment by the Partnership, the General Partner is paid a fee equal to 1% of such indebtedness, provided, however, that such fee shall be reduced to the extent the Partnership incurs such fees to third parties, unaffiliated with the General Partner or the lender, with respect to such indebtedness and no such fee will be paid with respect to borrowings from the General Partner or its affiliates. $                            - $                  3,000
   
Equipment management fee  
The General Partner is entitled to be paid for managing the equipment portfolio a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 5% of the gross lease revenues attributable to equipment which is subject to operating and capital leases. $                216,000 $              260,000
   
Equipment liquidation fee  
With respect to each item of equipment sold by the General Partner (other than in connection with a conditional sales contract), a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price for such equipment is payable to the General Partner.  The payment of such fee is subordinated to the receipt by the limited partners of (i) a return of their net capital contributions and a 10% per annum cumulative return, compounded daily, on adjusted capital contributions and (ii) the net disposition proceeds from such sale in accordance with the Partnership Agreement.  Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties. $                     5,000 $                18,000
   

See “Summary of Significant Accounting Policies- Reimbursable Expenses,” above. During the six months ended June 30, 2009 and 2008, the Partnership recorded approximately $691,000 and $750,000, respectively, for reimbursement of expenses to the General Partner.

Equipment Acquisition Fee

The General Partner is entitled to be paid an equipment acquisition fee of 4% of the purchase price of each item of equipment purchased as compensation for the negotiation of the acquisition of the equipment and lease thereof or sale under a conditional sales contract.  For the six months ended June 30, 2009 and 2008, equipment acquisition fees of approximately $124,000 and $35,000, respectively, were earned.  At June 30, 2009, the remaining balance was approximately $56,000 and will be earned in future periods.

Debt Placement Fee

As compensation for arranging term debt to finance the acquisition of equipment by the Partnership, the General Partner is paid a fee equal to 1% of such indebtedness; provided, however, that such fee shall be reduced to the extent the Partnership incurs such fees to third parties, unaffiliated with the General Partner or the lender, with respect to such indebtedness and no such fee will be paid with respect to borrowings from the General Partner or its affiliates.  There were no debt placement fees earned by the General Partner for the six months ended June 30, 2009. For the six months ended June 30, 2008, the General Partner earned approximately $3,000 in such fees.

Equipment Management Fee

The General Partner is entitled to be paid a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 5% of the gross lease revenues attributable to equipment which is subject to operating and capital leases.  For the six months ended June 30, 2009, and 2008, equipment management fees of approximately $149,000 and $178,000, respectively, were earned by the General Partner.

Equipment Liquidation Fee

With respect to each item of equipment sold by the General Partner (other than in connection with a conditional sales contract), a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price for such equipment is payable to the General Partner.  The payment of such fee is subordinated to the receipt by the limited partners of (i) a return of their net capital contributions and a 10% per annum cumulative return, compounded daily, on adjusted capital contributions and (ii) the net disposition proceeds from such sale in accordance with the Partnership Agreement.  Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties.  For the six months ended June 30, 2009 and 2008, equipment liquidation fees of approximately $1,700 and $17,000, respectively, were earned by the General Partner.

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5. Notes Payable

Notes payable consisted of the following:

       September 30, 2009  December 31, 2008 
 June 30, 2009  December 31, 2008       
Installment notes payable to banks; interest ranging from 5.25% to 6.20% due in quarterly or monthly installments ranging from $6,589 to $134,671, including interest, with final payments from January through October 2009 $401,098  $989,358 
Installment notes payable to banks; interest ranging from 5.25% to 6.20% due in quarterly or monthly
installments ranging from $6,588 to $134,671, including interest, with final payments from January through October 2009
 $190,041  $989,358 
                
Installment notes payable to banks; interest ranging from 5.40% to 5.85% due in quarterly installments ranging from $23,643 to $31,661, including interest, with final payments from January through July 2010  220,059   322,037   167,998   322,037 
                
Installment note payable to bank; interest at 5.75% due in quarterly installments of $22,756 including interest, with final payment in January 2011  150,515   190,829   129,923   190,829 
                
Installment note payable to bank; interest at 6.21%, due in monthly installments of $1,368, including interest, with final payment in May 2012.  43,684   49,253   40,241   49,253 
 $815,356  $1,551,477  $528,203  $1,551,477 
These notes are secured by specific computer equipment and are nonrecourse liabilities of the Partnership.  As such, the notes do not contain any debt covenants with which we must comply on either an annual or quarterly basis.  Aggregate maturities of notes payable for each of the periods subsequent to JuneSeptember 30, 2009 are as follows:

  Amount 
    
Six months ending December 31, 2009 $554,372 
Year ended December 31, 2010  216,348 
Year ended December 31, 2011  37,903 
Year ended December 31, 2012  6,733 
  $815,356 
Amount
Three months ending December 31, 2009 $                               267,218
Year ended December 31, 2010216,349
Year ended December 31, 201137,903
Year ended December 31, 20126,733
 $                               528,203


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6. Supplemental Cash Flow Information

Other noncash activities included in the determination of net loss are as follows:

Six months ended June 30, 2009  2008 
Nine months ended September 30,20092008
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $      1,023,374 $    1,495,243
        
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $736,121  $997,491 

No interest or principal on notes payable was paid by the Partnership because direct payment was made by lessee to the bank in lieu of collection of lease income and payment of interest and principal by the Partnership.

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Noncash investing and financing activities include the following:following:

Six months ended June 30, 2009  2008 
Nine months ended September 30,20092008
Debt assumed in connection with purchase of computer equipment $-  $291,642  $                     - $       291,642
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees $124,312  $35,010  $       124,312 $         42,505
        

The Partnership wrote-off fully amortized acquisition and finance fees of approximately $188,000$309,000 for the sixnine months ended JuneSeptember 30, 2009.  Additionally, the partnership wrote-off obsolete equipment with a net book value of approximately $15,000 for the nine months ended September 30, 2009.

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

FORWARD LOOKING STATEMENTS

Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by law, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected.

CRITICAL ACCOUNTING POLICIES

The Partnership's discussion and analysis of its financial condition and results of operations are based upon its financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Partnership believes that its critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements.

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COMPUTER EQUIPMENT
 
Commonwealth Capital Corp., on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease revenue and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors. Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of three to four years.

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REVENUE RECOGNITION

Through JuneSeptember 30, 2009, the Partnership has only entered into operating leases.  Lease revenue is recognized on a monthly straight-line basis which is generally in accordance with the terms of the operating lease agreement. The Partnership’s leases do not contain any step-rent provisions or escalation clauses nor are lease revenues adjusted based on any index.

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

LONG-LIVED ASSETS

The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.  The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset.  If the estimated undiscounted cash flows are less than the carrying value of the asset, anand impairment exists.  The amount of the impairment is determined based on the difference between the carrying value and the fair value.  Fair value is determined based on estimated discounted cash flows to be generated by the asset.   The Partnership determined that no impairment existed at June 30, 2009.  The Partnership determined that impairment in the amount of approximately $87,000 and $15,000 existed as of Junefor the period ended September 30, 2008. 2009 and 2008, respectively.    Such amounts have been included in depreciation expense in the accompanying financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s primary source of cash for the sixnine months ended JuneSeptember 30, 2009 and 2008 was cash provided by operating activities of approximately $1,415,000$2,285,000 and $1,019,000,$1,709,000, respectively.  During the sixnine months ended JuneSeptember 30, 2009 equipment was purchased in the amount of approximately $3,108,000 and distributions were paid in the amount of approximately $1,244,000.$1,866,000.   Equipment was purchased in the amount of approximately $584,000$771,000 during the sixnine months ended JuneSeptember 30, 2008 and distributions were paid in the amount of approximately $1,250,000.$1,873,000.  

The Partnership intends to invest approximately $1,000,000$500,000 in additional equipment for the remainder of 2009.  The acquisition of this equipment will be funded by debt financing and cash flows from lease rental payments.

For the sixnine months ended JuneSeptember 30, 2009, the Partnership generated cash flows from operating activities of approximately $1,415,000,$2,285,000, which includes a net loss of approximately $844,000,$1,424,000, a gain on sale of computer equipment of approximately $19,000$17,000 and depreciation and amortization expenses of approximately $2,949,000.$4,549,000.  Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $736,000.$1,023,274.

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For the sixnine months ended JuneSeptember 30, 2008, the Partnership generated cash flows from operating activities in the amount of approximately $1,019,000,$1,709,000 which includes a net loss of approximately $272,000, a gain on sale of computer equipment of approximately $82,000$501,000, and depreciation and amortization expenses of approximately $2,915,000.$4,321,000.  Other non-cash activities included in the determination of net incomeloss include direct payments of lease income by lessees to banks of approximately $997,000.$1,495,000.

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At JuneSeptember 30, 2009, cash was held in two accounts maintained at one financial institution. The accounts were, in the aggregate, federally insured for up to $250,000.  At JuneSeptember 30, 2009, the total cash balance was as follows:

At June 30, 2009   
Total bank balance $651,954 
FDIC insurable limit $250,000 
Uninsured amount $401,954 
At September 30, 2009Bank A
Total bank balance $          1,003,978
FDIC insurable limit $          (250,000)
Uninsured amount $             753,978

The Partnership mitigates thisbank failure risk by only depositing funds with major a financial institutions.institution.  The Partnership deposits its funds with a Moody's Aaa-Rated banking institutions which is one of only three Aaa-Rated banks listed on the New York Stock Exchange.  The Partnership has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk. The amount in such accounts will fluctuate throughout 2009 due to many factors, including the pace of additional revenues, equipment acquisitions and distributions. 

The Partnership's investment strategy of acquiring computer equipment and generally leasing it under “triple-net leases” to operators who generally meet specified financial standards minimizes the Partnership's operating expenses.  As of JuneSeptember 30, 2009, the Partnership had future minimum rentals on non-cancelable operating leases of approximately $2,017,000$925,000 for the balance of the year ending December 31, 2009 and approximately $3,486,000$3,532,000 thereafter.  As of JuneSeptember 30, 2009, the Partnership’s outstanding debt was approximately $815,000$528,000 with interest rates ranging from 5.25% to 6.21%, and will be payable through May 2012.

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

RESULTS OF OPERATIONS

Three months ended JuneSeptember 30, 2009 compared to three monthsThree Months ended JuneSeptember 30, 2008

For the three months ended JuneSeptember 30, 2009, the Partnership recognized revenue of approximately $1,489,000$1,365,000 and expenses of approximately $1,958,000,$1,945,000, resulting in a net loss of approximately $469,000.$580,000.  For the three months ended JuneSeptember 30, 2008, the Partnership recognized revenue of approximately $1,848,000$1,649,000 and expenses of approximately $2,028,000,$1,878,000, resulting in a net loss of approximately $180,000.  $229,000.  

Lease revenue decreased 16%18% to approximately $1,459,000$1,326,000 for the three months ended JuneSeptember 30, 2009, from approximately $1,740,000$1,623,000 for the three months ended JuneSeptember 30, 2008.  This decrease was primarily attributable more lease agreements ending versus new leases commencing, during the three months ended JuneSeptember 30, 2009.

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Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership.  These expenses decreased 15%19% to approximately $360,000$266,000 for the three months ended JuneSeptember 30, 2009 from approximately $422,000$328,000 for the three months ended JuneSeptember 30, 2008 primarily due to decreases in reimbursable expenses and Partnership taxes. See “Summary of Significant Accounting Policies-Policies - Reimbursable Expenses,” in note 2.

The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee decreased 21%18% to approximately $72,000$66,000 for the three months ended JuneSeptember 30, 2009, from approximately $92,000$81,000 for the three months ended JuneSeptember 30, 2008, which is consistent with the decrease in lease revenue.

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Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses slightly increased to approximately $1,510,000$1,600,000 for the three months ended JuneSeptember 30, 2009, from $1,474,000$1,406,000 for the three months ended JuneSeptember 30, 2008. This increase is primarily attributable to the acquisition of new equipment associated with the purchase of new leases.

The Partnership sold computer equipment with a net book value of approximately $25,000$109,000 for the three months ended JuneSeptember 30, 2009, for a net gainloss of approximately $18,000.$2,000.  The Partnership sold computer equipment with a net book value of approximately $416,000$35,000 for the three months ended JuneSeptember 30, 2008, for a net gain of approximately $87,000.$3,000.  

SixNine months ended JuneSeptember 30, 2009 compared to Six monthsNine Months ended JuneSeptember 30, 2008

For the sixnine months ended JuneSeptember 30, 2009, the Partnership recognized revenue of approximately $3,039,000,$4,403,000, and expenses of approximately $3,883,000$5,828,000 resulting in a net loss of approximately $844,000.$1,425,000.  For the sixnine months ended JuneSeptember 30, 2008, the Partnership recognized revenue of approximately $3,699,000,$5,349,000, and expenses of approximately $3,972,000,$5,850,000 resulting in a net loss of approximately $272,000.  $501,000.

Lease revenue decreased 16%17% to $2,986,000$4,312,000 for the sixnine months ended JuneSeptember 30, 2009, from $3,567,000,$5,190,000, for the sixnine months ended JuneSeptember 30, 2008. This decrease was primarily attributable more lease agreements ending versus new leases commencing, during the sixnine months ended JuneSeptember 30, 2009.

Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC, a related party, for administration and operation of the Partnership.  These expenses decreased to approximately $735,000$1,001,000 for the sixnine months ended JuneSeptember 30, 2009, from $796,000approximately $1,123,000 for the sixnine months ended JuneSeptember 30, 2009, primarily due to decreases in reimbursable expenses and Partnership taxes.   This decrease was partially offset by in increase in outside services of approximately $11,000.  See “Summary of Significant Accounting Policies-Policies - Reimbursable Expenses,” in note 2.
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The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee decreased to approximately $149,000$216,000 for the sixnine months ended JuneSeptember 30, 2009, from $178,000$260,000 for the sixnine months ended JuneSeptember 30, 2008, which is consistent with the decrease in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses slightly increased to approximately $2,949,000$4,549,000 for the sixnine months ended JuneSeptember 30, 2009, from $2,915,000$4,321,000 for the sixnine months ended JuneSeptember 30, 2008. This increase was due to the acquisition of new equipment attributable to the purchase of new leases.

The Partnership sold computer equipment with a net book value of approximately $34,000$143,000 for the sixnine months ended JuneSeptember 30, 2009, for a net gain of approximately $19,000.$17,000.  The Partnership sold computer equipment with a net book value of approximately $425,000$461,000 for the sixnine months ended JuneSeptember 30, 2008, for a net gain of approximately $82,000.$85,000.  

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Item 3. Quantitative3.Quantitative and Qualitative Disclosures About Market Risk

N/A

Item 4T.  Controls and Procedures

Our management, under the supervision and with the participation of the principal executive officer and principal financial offer, have evaluated the effectiveness of our controls and procedures related to our reporting and disclosure obligations as of JuneSeptember 30, 2009 which is the end of the period covered by this Quarterly Report on Form 10-Q.  Based on that evaluation, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are sufficienteffective to provide that (a) material information relating to us, including our consolidated affiliates is made known to these officers by us and our consolidated affiliates’ other employees, particularly material information related to the period for which this periodic report is being prepared; and (b) this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and forms promulgated by the Securities and Exchange Commission.  There have been no significant changes in the General Partner’s internal controls or in other factors that could significantly affect our disclosure controls and procedures in the secondthird quarter of 2009 or subsequent to the date of the evaluation.

Part II:   OTHER INFORMATION

Item 1.                                Legal Proceedings

To date, the Partnership has recorded a reserve against all outstanding rentals for Quick Loan Funding in the amount of $43,000.  As of June 30, 2009, the equipment has a net book value of zero.  Additionally, in July, known assets of Quick Loan Funding were sold at auction in Orange County, CA and were purchased by our General Partner.  The General Partner is in the process of reselling certain assets with value, with resale proceeds to be delivered to the Partnership, in an attempt to reduce equity lost on this lease transaction.  Please see the description of the Quick Loan Funding proceeding in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 under the heading “Legal Proceedings.”

The Partnership’s legal proceedings against Mobile Pro, Inc. and the City of Tempe, Arizona remain open.  Please see the description of the MobilePro and Tempe proceedings in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 under the heading “Legal Proceedings” for a more complete description of this matter.  The parties continue to prepare forare engaged in the discovery process and have set a tentative trial date of September 13, 2010.  To date, the Partnership has taken reserves against outstanding rentals of approximately $31,000 to cover potential loss exposure.

As of JuneSeptember 30, 2009, the Partnership has approximately $307,000$374,000 in accounts receivable due from Chrysler. We believe a portion of that amount may be uncollectible. To date, the Partnership has recorded a reserve against all outstanding rentals for Chrysler in the amount of $55,000.  We are currently negotiatinghave entered into a cure resolution agreement with Chrysler, pursuant to which Chrysler is expected to agreehas agreed to pay certainapproximately $125,000 of past due amounts and cure its pre-bankruptcy defaults under its leases. We expect that upon signingUpon receipt of the cure resolution agreement,amount, which is due on or before November 25, 2009, we will recover a meaningful percentagehave recovered 82.1 % of the outstanding receivables.   Therefore, as we have not yet reached a definitive agreement on the cure amounts, we believe the current amount of reserve is adequate through the quarter ended June 30, 2009.  We may, however, determine that additional reserves may need to be taken to cover potential loss exposure at a later time.


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Item 1A.                      Risk Factors

Changes in economic conditions could materially and negatively affect our business.
 
Our business is directly impacted by factors such as economic, political, and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government monetary and fiscal policies, and inflation, all of which are beyond our control.  Beginning in 2008 and continuing through the secondthird quarter of 2009, general worldwide economic conditions experienced a downturn due to the sequential effects of the subprime lending crisis, general credit market crisis, collateral effects on the finance and banking industries, increased energy costs, concerns about inflation, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns.  A deterioration in economic conditions, whether caused by national or local concerns, especially within our market area, could result in the following consequences, any of which could hurt business materially: lease delinquencies may increase; problem leases and defaults could increase; and demand for information technology products generally may decrease as businesses attempt to reduce expenses.

18
 
Item 2.            Unregistered Sales of Equity Securities and Use of Proceeds
                       N/A
  
Item 3.            Defaults Upon Senior Securities
                       N/A
  
Item 4.Submission of Matters to a Vote of Securities Holders
 N/A
  
Item 5.Other Information
 N/A
  
Item 6.Exhibits


31.1 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
31.2 THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
32.1 SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
32.2 SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

SIGNATURE



SIGNATURES

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

 COMMONWEALTH INCOME & GROWTH FUND V
 BY: COMMONWEALTH INCOME & GROWTH FUND, INC., General Partner


August 13,November 16, 2009
By: /s/ Kimberly A. Springsteen-Abbott
DateKimberly A. Springsteen-Abbott
 Chief Executive Officer
  
August 13,November 16, 2009By: /s/  Lynn A. Franceschina
DateLynn A. Franceschina
 Executive Vice President, Chief Operating Officer