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

 FOR THE QUARTERLY PERIOD ENDED JUNESEPTEMBER 30, 2008or

¨ 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 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
 
 

 
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FORM 10-Q
JUNESEPTEMBER 30, 2008

TABLE OF CONTENTS

 PART I 
Item 1.
Financial Statements
3
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
1211
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
1514
Item 4T.
Controls and Procedures
15
 PART II 
Item 1.
Legal Proceedings
15
Item 1 A.
Risk Factors
15
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
1615
Item 3.
Defaults Upon Senior Securities
1615
Item 4.
Submission of Matters to a Vote of Securities Holders
1615
Item 5.
Other Information
1615
Item 6.
Exhibits
16
   


 
2
 


Part I. FINANCIAL INFORMATIONINFORMATION
Item 1. Financial Statements

Commonwealth Income & Growth Fund V 
Condensed Balance Sheets 
  
  June 30,  
December 31,
 
  2008  2007 
  (unaudited)    
Assets      
       
Cash and cash equivalents $3,776,394  $4,114,953 
Lease income receivable, net of reserves of  $42,800 as of June 30, 2008 and December 31, 2007  275,163   211,207 
Other receivable, Commonwealth Capital Corp.  320,833   55,740 
Other receivable, affiliated limited partnerships  1,578   1,903 
Prepaid expenses  11,572   1,745 
   4,385,540   4,385,548 
         
Computer equipment, at cost  21,183,440   21,299,239 
Accumulated depreciation  (10,111,495)  (7,919,040)
   11,071,945   13,380,199 
         
Equipment acquisition costs and deferred expenses, net of accumulated amortization of $156,638 and $284,601 at June 30, 2008 and December 31, 2008
  344,403   463,248 
Prepaid acquisition fees, General Partner  226,965   247,936 
   571,368   711,184 
         
Total assets $16,028,853  $18,476,931 
         
Liabilities and Partners' Capital        
         
Liabilities        
Accounts payable $37,088  $292,491 
Accounts payable, General Partner  46,054   9,734 
Other accrued expenses  -   2,182 
Unearned lease income  173,227   157,032 
Notes payable  2,428,370   3,134,218 
Total liabilities  2,684,739   3,595,657 
         
Partners' Capital        
General partner  1,000   1,000 
Limited partners  13,343,114   14,880,274 
Total Partners' Capital  13,344,114   14,881,274 
         
Total Liabilities and Partners' Capital $16,028,853  $18,476,931 

see accompanying notes to condensed financial statements

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Commonwealth Income & Growth Fund V 
Condensed Statements of Operations 
             
  Three months Ended  Six months Ended 
  June 30,  June 30, 
  2008  2007  2008  2007 
  (unaudited)  (unaudited) 
             
Revenue            
Lease $1,739,599  $1,737,452  $3,567,278  $3,115,734 
Interest and other  21,125   46,808   49,795   121,289 
Gain on sale of computer equipment  87,240   -   82,274   - 
Total revenue  1,847,964   1,784,260   3,699,347   3,237,023 
                 
Expenses                
Operating  422,466   369,762   795,940   655,984 
Equipment management fee, General Partner  92,059   86,873   178,364   155,787 
Interest  39,201   40,676   82,495   68,739 
Depreciation  1,395,027   1,300,867   2,758,168   2,340,095 
Amortization of equipment acquisition costs and deferred expenses  78,992   74,345   156,772   133,260 
Loss on sale of computer equipment  -   38   -   38 
Total expenses  2,027,745   1,872,561   3,971,739   3,353,903 
                 
Net (loss) $(179,781) $(88,301) $(272,392) $(116,880)
                 
Net (loss) allocated to limited partners $(186,031) $(94,547) $(284,892) $(129,376)
                 
Net (loss) per equivalent limited partnership unit $(0.15) $(0.08) $(0.23) $(0.10)
                 
Weighted average number of equivalent limited partnership units outstanding during the period  1,249,951   1,249,951   1,249,951   1,249,951 
Commonwealth Income & Growth Fund V 
Condensed Balance Sheets 
  
  September 30,  December 31, 
  2008  2007 
  (unaudited)    
Assets      
Cash and cash equivalents $3,659,160  $4,114,953 
Lease income receivable, net of reserves of $73,600 and $42,800 as of        
   September 30, 2008 and December 31, 2007  135,197   211,207 
Other receivable, Commonwealth Capital Corp.  368,997   55,740 
Other receivable, General Partner  18,516   - 
Other receivable, affiliated limited partnerships  300   1,903 
Prepaid expenses  6,016   1,745 
   4,188,186   4,385,548 
         
Computer equipment, at cost  21,259,701   21,299,239 
Accumulated depreciation  (11,365,872)  (7,919,040)
   9,893,829   13,380,199 
         
Equipment acquisition costs and deferred expenses, net of accumulated        
   amortization of $633,924 and $284,601 at September 30, 2008 and December 31, 2007  275,808   463,248 
Prepaid acquisition fees, General Partner  219,470   247,936 
   495,278   711,184 
         
Total assets $14,577,293  $18,476,931 
         
Liabilities and Partners' Capital        
         
Liabilities        
Accounts payable $11,515  $292,491 
Accounts payable, General Partner  19,919   9,734 
Other accrued expenses  12,208   2,182 
Unearned lease income  145,278   157,032 
Notes payable  1,930,616   3,134,218 
Total liabilities  2,119,536   3,595,657 
         
Partners' Capital        
General partner  1,000   1,000 
Limited partners  12,456,757   14,880,274 
Total Partners' Capital  12,457,757   14,881,274 
         
Total Liabilities and Partners' Capital $14,577,293  $18,476,931 

see accompanying notes to condensed financial statements


 
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Commonwealth Income & Growth Fund V 
Condensed Statements of Partners’ Capital 
For the Six Months ended June 30, 2008 
(unaudited) 
  
                
  General  Limited          
  Partner  Partner  General  Limited    
  Units  Units  Partner  Partners  Total 
Balance, January 1, 2008  50   1,249,951  $1,000  $14,880,274  $14,881,274 
Net income (loss)  -   -   12,500   (284,892)  (272,392)
Redemptions  -   (1,000)  -   (15,192)  (15,192)
Distributions  -   -   (12,500)  (1,237,076)  (1,249576)
Balance, June 30, 2008  50   1,248,951  $1,000  $13,343,114  $13,344,114 
Commonwealth Income & Growth Fund V 
Condensed Statements of Operations 
(unaudited) 
             
  Three months Ended  Nine months Ended 
  September 30,  September 30, 
  2008  2007  2008  2007 
Revenue            
Lease $1,623,117  $1,716,760  $5,190,395  $4,832,494 
Interest and other  23,593   56,993   73,388   178,282 
Gain on sale of computer equipment  2,709   -   84,982   - 
Total revenue  1,649,419   1,773,753   5,348,765   5,010,776 
                 
Expenses                
Operating  327,542   277,359   1,123,480   933,343 
Equipment management fee-
 General Partner
  81,156   85,838   259,520   241,625 
Interest  32,326   41,977   114,822   110,715 
Depreciation  1,330,147   1,350,370   4,088,315   3,690,465 
Amortization of equipment acquisition
   costs and deferred expenses
  76,089   74,848   232,861   208,108 
Bad debt expense  30,818   38,461   30,818   38,461 
Loss on sale of computer equipment  -   4,854   -   4,892 
Total expenses  1,878,078   1,873,707   5,849,816   5,227,609 
                 
Net (loss) $(228,659) $(99,954) $(501,051) $(216,833)
                 
Net (loss) allocated to limited partners $(234,897) $(106,204) $(519,789) $(235,579)
                 
Net (loss) per equivalent limited partnership unit $(0.19) $(0.08) $(0.42) $(0.19)
                 
Weighted average number of equivalent limited partnership units outstanding during the period  1,248,010   1,249,951   1,249,082   1,249,951 

see accompanying notes to condensed financial statements


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Commonwealth Income & Growth Fund V 
Condensed Statements of Partners’ Capital 
For the Nine Months ended September 30, 2008 
(unaudited) 
  
                
  General  Limited          
  Partner  Partner  General  Limited    
  Units  Units  Partner  Partners  Total 
Balance, January 1, 2008  50   1,249,951  $1,000  $14,880,274  $14,881,274 
Net income (loss)  -   -   18,738   (519,789)  (501,051)
Redemptions  -   (3,824)  -   (49,119)  (49,119)
Distributions  -   -   (18,738)  (1,854,609)  (1,873,347)
Balance, September  30, 2008  50   1,246,127  $1,000  $12,456,757  $12,457,757 

see accompanying notes to condensed financial statements


 
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Commonwealth Income & Growth Fund V 
Condensed Statements of Cash Flow 
  
  Six Months Ended 
  June 30, 
  2008  2007 
  (unaudited) 
       
       
Net cash provided by operating activities $1,019,161  $1,788,248 
         
Capital expenditures  (583,599)  (3,563,021)
Prepaid acquisition fees  20,971   129,060 
Net proceeds from the sale of computer equipment  507,602   744 
Equipment acquisition fees paid to General Partner  (35,010)  (231,319)
Net cash (used in) investing activities  (90,036)  (3,664,536)
         
Redemptions  (15,192)  - 
Distributions to partners  (1,249,576)  (1,249,545)
Debt Placement fees paid to General Partner  (2,916)  (22,200)
Net cash (used in) financing activities  (1,267,684)  (1,271,745)
         
Net (decrease) in cash and cash equivalents  (338,559)  (3,148,032)
Cash and cash equivalents, beginning of period  4,114,953   7,071,792 
         
Cash and cash equivalents, end of period $3,776,394  $3,923,760 

Commonwealth Income & Growth Fund V 
Condensed Statements of Cash Flow 
  
  Nine Months Ended 
  September 30, 
  2008  2007 
  (unaudited) 
       
Net cash provided by operating activities $1,708,949  $2,587,890 
         
Capital expenditures  (770,973)  (3,563,021)
Prepaid acquisition fees  28,466   129,060 
Net proceeds from the sale of computer equipment  545,652   4,715 
Equipment acquisition fees- General Partner  (42,505)  (231,319)
Net cash (used in) investing activities  (239,360)  (3,660,565)
         
Redemptions  (49,119)  - 
Distributions to partners  (1,873,347)  (1,874,520)
Debt Placement fees paid to General Partner  (2,916)  (22,200)
Net cash (used in) financing activities  (1,925,382)  (1,896,720)
         
Net (decrease) in cash and cash equivalents  (455,793)  (2,969,395)
Cash and cash equivalents, beginning of period  4,114,953   7,071,792 
         
Cash and cash equivalents, end of period $3,659,160  $4,102,397 
see accompanying notes to condensed financial statements

 
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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 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 variousPartnership and other affiliated partnerships based on certain risk factors.  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.

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

Management’s assessment of the following accounting pronouncements has changed since disclosed in its Form 10K for December 31, 2007

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to Audit Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Partnership is currently evaluating the potential impact, if any, of the adoption of SFAS 162 on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities, including an amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses will be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157 “Fair Value Measurements”.  As of January 1, 2008 the Partnership adopted SFAS No.159. The Partnership has not elected the fair value option for any assets or liabilities.
 
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In September 2006, the FASB issued Statement of Financial Accounting Standards 157, “Fair Value Measurements” (“SFAS 157”), which provides guidance on measuring the fair value of assets and liabilities. SFAS 157 applies to other accounting pronouncements that require or permit assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also requires additional disclosures in both annual and quarterly reports. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and will be adopted by the Partnership in the first quarter of its fiscal year 2008.   In February 2008, the FASB issued two Staff Positions on SFAS 157: (1) FASB Staff Position No. FAS 157-1 (FAS 157-1), “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement Under Statement 13,” and (2) FASB Staff Position No. FAS 157-2 (FAS 157-2), “Effective Date of FASB Statement No 157.” FAS 157-1 excludes FASB Statement No. 13, Accounting for Leases, as well as other accounting pronouncements that address fair value measurements on lease classification or measurement under Statement 13, from SFAS 157’s scope. FAS157-2 partially defers Statement 157’s effective date.  As of January 1, 2008 the Partnership partially adopted SFAS No. 157 for all financial assets.  Adoption of this pronouncement did not impact the financial statements of the Partnership at JuneSeptember 30, 2008.  In October 2008, the FASB issued FSP SFAS 157-3 "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active" ("FSP SFAS 157-3"), which is effective upon issuance for all financial statements that have not been issued. FSP SFAS 157-3 clarifies the application of SFAS 157, in a market that is not active. The Partnership is currently evaluating the potential impact, if any, of the adoption of FSP SFAS 157-3 on its financial statements.
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Basis of Presentation

The financial information presented as of any date other than December 31, 2007 has been prepared from the books and records without audit.  Financial information as of December 31, 2007 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, 2007.  Operating results for the sixnine months ended JuneSeptember 30, 2008 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2008.

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 in the amount of approximately $15,000 existed as of JuneSeptember 30, 2008.  NoThe Partnership recorded impairment was recordedcharges of approximately $41,000 (included in depreciation expense) for the six monthsperiod ended JuneSeptember 30, 2007.

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.

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.

3. Computer Equipment

The Partnership is the lessor of equipment under operating leases with periods ranging from 11 to 36 months.  In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.

Through JuneSeptember 30, 2008, the Partnership has only entered into operating leases.  Lease revenue is recognized on the monthly straight-line basis 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.

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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, 2008 and 2007 remarketing fees were incurred in the amount of approximately $5,000. No$51,000 and $1,000, respectively. For the nine months ended September 30, 2008 and 2007, remarketing fees were incurred forpaid in the six months ended June 30, 2007.amount of approximately $22,000 and $0, respectively.
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The Partnership’s share of the computer equipment in which it participates with other partnerships at JuneSeptember 30, 2008 and December 31, 2007 was approximately $8,991,000$9,149,000 and $8,381,000, respectively, which 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, 2008 and December 31, 2007 was approximately $20,827,000$21,355,000 and $17,371,000, respectively.  The Partnership’s share of the outstanding debt associated with this equipment at JuneSeptember 30, 2008 and December 31, 2007 was $1,457,000$1,202,000 and $1,683,000, respectively.  The total outstanding debt associated with this equipment at JuneSeptember 30, 2008 and December 31, 2007 was $3,585,000$3,012,000 and $3,187,000, respectively.

The following is a schedule of future minimum rentals on noncancellable operating leases at JuneSeptember 30, 2008:

  Amount 
    
S Six months ending December 31, 2008 $3,040,569 
Year ended December 31, 2009  3,131,282 
Year ended December 31, 2010  491,926 
Year ended December 31, 2011  33,235 
  $6,697,012 
     
  Amount
   
TtThree months ending December 31, 2008 $1,534,466
Year ended December 31, 2009  3,178,972
Year ended December 31, 2010  539,617
Year ended December 31, 2011  68,655
  $5,321,710
    

4. Related Party Transactions

Receivables/Payables

As of JuneSeptember 30, 2008, the Partnership’s related party receivables and payables are short term, unsecured, and non-interest bearing.

Reimbursable Expenses

The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of supplies and services obtained and used by the General Partner in connection with the administration and operation of the Partnership from third parties unaffiliated with the General Partner.  In addition, the General Partner and its affiliates are entitled to reimbursement for certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership.  During the sixnine months ended JuneSeptember 30, 2008 and 2007, the Partnership recorded approximately $769,000$1,068,000 and $664,000,$925,000, respectively, for reimbursement of expenses to the General Partner.

Offering Costs

Offering costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the syndication of the Partnership’s units.  Selling commissions are 8% of the partners’ contributed capital and dealer manager fees are 2% of the partners’ contributed capital.  These costs have been deducted from partnership capital in the accompanying financial statements.

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 sixnine months ended JuneSeptember 30, 2008 and 2007, equipment acquisition fees of approximately $35,000$42,000 and $231,000, respectively, were earned by the General Partner.
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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.  For the sixnine months ended JuneSeptember 30, 2008 and 2007 debt placement fees of approximately $3,000 and $22,000, respectively, were earned by the General Partner.

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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 sixnine months ended JuneSeptember 30, 2008 and 2007, equipment management fees of approximately $178,000,$260,000 and $156,000,$242,000, 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 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 sixnine months ended JuneSeptember 30, 2008 and 2007, equipment liquidation fees of approximately $17,000$18,000 and $23,$200, respectively, were earned by the General Partner.

5. Notes Payable

Notes payable consisted of the following:
  June 30, 2008  December 31, 2007 
Installment notes payable to banks; interest ranging from 4.65% to 6.30%, due in monthly installments ranging from $1,095 to $14,239,
including interest, with final payments from February through October 2008.
 $74,556  $275,143 
         
Installment notes payable to banks; interest ranging from 5.25% to 6.20% due in monthly installments ranging from $6,588 to $134,671,
including interest, with final payments from January through October 2009.
  1,699,009   2,337,462 
         
Installment notes payable to banks; interest ranging from 5.40% to 5.85%, due in monthly installments ranging from $23,643 to $31,661,
including interest, with final payments from January 2010 through July 2010.
  422,861   521,613 
         
Installment note payable to bank; interest of 5.75%, due in monthly installment of $22,756, including interest, with final payment in January 2011.  231,944   - 
  $2,428,370  $3,134,218 
         
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September 30,
 2008
  
December 31,
2007
Installment notes payable to banks; interest ranging from 4.65% to 6.30%, due in monthly installments ranging
from $1,095 to $14,239, including interest, with final payments from February through September 2008.
 $-  $275,143
        
Installment notes payable to banks; interest ranging from 5.25% to 6.20% due in monthly installments ranging
from $6,588 to $134,671, including interest, with final payments from January through October 2009.
  1,346,617   2,337,462
        
Installment notes payable to banks; interest ranging from 5.40% to 5.85%, due in monthly installments ranging
from $23,643 to $31,661, including interest, with final payments from January 2010 through July 2010.
  373,440   521,613
        
Installment note payable to bank; interest of 5.75%, due in monthly installment of $22,756, including interest,
with final payment in January 2011.
  210,559   -
  $1,930,616  $3,134,218
        

These notes are secured by specific computer equipment and are nonrecourse liabilities of the Partnership.  Aggregate maturities of notes payable for each of the periods subsequent to JuneSeptember 30, 2008 are as follows:
  Amount 
    
Six months ending December 31, 2008 $860,687 
Year ended December 31, 2009  1,278,705 
Year ended December 31, 2010  202,378 
Year ended December 31, 2011  86,600 
  $2,428,370 
     

  Amount
   
Three months ending December 31, 2008 $427,099
Year ended December 31, 2009  1,278,705
Year ended December 31, 2010  202,378
Year ended December 31, 2011  22,434
  $1,930,616
    

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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, 2008  2007 
       
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $997,491  $796,283 
         
Nine months ended September 30, 2008  2007
      
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $1,495,243  $1,265,975
        

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.

Noncash investing and financing activities include the following:

Six months ended June 30, 2008  2007 
 
Debt assumed in connection with purchase of computer equipment
 $291,642  $2,219,952 
 
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees
 $20,970  $129,060 
 
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees
 $20,970  $129,060 
         
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Nine months ended September 30, 2008  2007
 
Debt assumed in connection with purchase of computer equipment
 $291,642  $2,219,952
 
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees
 $42,505  $231,319
 
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees
 $42,505  $231,319
        

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,” “expect,” “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 affiliated partnerships based on certain risk factors. Depreciation on computer equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of three or four years.

REVENUE RECOGNITION

Through JuneSeptember 30, 2008, 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, 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 in the amount of approximately $15,000 existed as of JuneSeptember 30, 2008.  NoThe Partnership recorded impairment was recordedcharges of approximately $41,000 (included in depreciation expense) for the six monthsperiod ended JuneSeptember 30, 2007.
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LIQUIDITY AND CAPITAL RESOURCES

The Partnership’s primary source of capital for the sixnine months ended JuneSeptember 30, 2008 and 2007 was cash provided by operating activities of approximately $1,019,000$1,709,000 and $1,788,000.  Equipment was purchased in$2,588,000, respectively.  The primary uses of cash for the amount of approximately $584,000 during the sixnine months ended JuneSeptember 30, 2008 and distributions2007 were paid in the amountfor capital expenditures for new equipment of approximately $1,250,000.  Equipment was purchased in the amount$771,000 and $3,563,000 and for payment of distributions to partners of approximately $3,563,000 during the six months ended June 30, 2007$1,873,000 and distributions were paid in the amount of approximately $1,250,000.  $1,875,000 respectively.

The Partnership intends to invest approximately $2,000,000$1,800,000 in additional equipment for the remainder of 2008.  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, 2008, the Partnership generated cash flows from operating activities in the amount of approximately $1,019,000, which$1,709,000 and includes a net loss of approximately $272,000,$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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For the sixnine months ended JuneSeptember 30, 2007, the Partnership generated cash flows from operating activities in the amount of approximately $1,788,000,$2,588,000, which includes a net loss of approximately $117,000,$217,000, and depreciation and amortization expenses of approximately $2,473,000.$3,899,000.  Other non-cash activities included in the determination of net incomeloss include direct payments of lease income by lessees to banks of approximately $796,000.$1,266,000.

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, 2008, the Partnership had future minimum rentals on non-cancelable operating leases of approximately $3,041,000$1,534,000 for the balance of the year ending December 31, 2008 and approximately $3,656,000$3,788,000 thereafter.  As of JuneSeptember 30, 2008, the outstanding debt was approximately $2,428,000$1,931,000 with interest rates ranging from 4.65%5.25% to 6.30%6.20%, and will be payable through January 2011.

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.

The Partnership’s share of the computer equipment in which it participates with other partnerships at June 30, 2008 and December 31, 2007 was approximately $8,991,000 and $8,381,000, respectively, which 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 June 30, 2008 and December 31, 2007 was approximately $20,827,000 and $17,371,000, respectively.  The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2008 and December 31, 2007 was $1,457,000 and $1,683,000, respectively.  The total outstanding debt associated with this equipment at June 30, 2008 and December 31, 2007 was $3,585,000 and $3,187,000, respectively.
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RESULTS OF OPERATIONS

Three months ended JuneSeptember 30, 2008 compared to Three months ended JuneSeptember 30, 2007

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.  For the three months ended JuneSeptember 30, 2007, the Partnership recognized revenue of approximately $1,784,000$1,774,000 and expenses of approximately $1,873,000,$1,874,000, resulting in a net loss of approximately $89,000.  $100,000.

Lease income increaseddecreased by 5% to approximately $1,740,000$1,623,000 for the three months ended JuneSeptember 30, 2008, from approximately $1,737,000$1,717,000 for the three months ended JuneSeptember 30, 2007.  This increasedecrease was primarily due to more lease agreements ending versus new lease agreements being entered into versus lease agreements terminatingacquired during the three months ended JuneSeptember 30, 2008.
 
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.  The expenses increased 14%by 18% to approximately $422,000$328,000 for the three months ended JuneSeptember 30, 2008, from $370,000$277,000 for the three months ended JuneSeptember 30, 2007.  This increase is primarily attributable to an increase in Partnership taxes, limited partnershipremarketing, legal, administrative and other LP expenses and remarketing fees.is partially offset by decreases in bad debt, insurance and information technology related expenses for the three months ended September 30, 2008.

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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 increased 6%decreased 5% to approximately $92,000$81,000 for the three months ended JuneSeptember 30, 2008, from $87,000approximately $86,000 for the three months ended JuneSeptember 30, 2007, which is consistent with the increasedecrease in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses increased 7%decreased 1% to approximately $1,474,000$1,406,000 for the three months ended JuneSeptember 30, 2008, from $1,374,000$1,425,000 for the three months ended JuneSeptember 30, 2007. This increasedecrease was due to theequipment and acquisition offees being depreciated and amortized, as applicable, with no offset from new equipment attributable to the purchase of new leases.purchases.
 
SixNine months ended JuneSeptember 30, 2008 compared to SixNine months ended JuneSeptember 30, 2007

For the sixnine months ended JuneSeptember 30, 2008, the Partnership recognized incomerecogized 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.  For the sixnine months ended JuneSeptember 30, 2007, the Partnership recognized incomerevenue of approximately $3,237,000,$5,011,000, and expenses of approximately $3,354,000,$5,228,000, resulting in a net loss of approximately $117,000.  $217,000.

Lease income increased 14%7% to $3,567,000$5,190,000 for the sixnine months ended JuneSeptember 30, 2008, from $3,116,000,$4,832,000, for the sixnine months ended JuneSeptember 30, 2007, primarily due to morethe purchase of equipment that is subject to lease agreements entered into sinceduring the sixnine months ended JuneSeptember 30, 2007.2008.

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.  The expenses increased by 20% to approximately $796,000$1,123,000 for the sixnine months ended JuneSeptember 30, 2008, from $656,000$933,000 for the sixnine months ended JuneSeptember 30, 2007,2007.  This increase is primarily dueattributable to an increase in remarketing, legal, administrative, tax and other limited partnershipLP expenses Partnership taxes and legal fees.is partially offset by decreases in bad debt, insurance and information technology related expenses for the nine months ended September 30, 2008.
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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 increased to 7% to approximately $178,000$260,000 for the sixnine months ended JuneSeptember 30, 2008, from $156,000$242,000 for the sixnine months ended JuneSeptember 30, 2007, which is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. These expenses increased 18%11% to approximately $2,915,000$4,321,000 for the sixnine months ended JuneSeptember 30, 2008, from $2,473,000$3,899,000 for the sixnine months ended JuneSeptember 30, 2007. This increase was due to the acquisition of new equipment attributable to the purchase of new leases.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk

N/A

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Item 4T.  Controls and Procedures 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, 2008 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 effective 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 2008 or subsequent to the date of the evaluation.

Part II:   OTHER INFORMATION

Item 1.                                Legal Proceedings

In April 2007, our lessee Quick Loan Funding, Inc. began defaulting on its lease payments.  From April 2007 through the first quarter of 2008 we attempted several times to collect payment of outstanding lease payments and to recover the equipment from this lessee. On April 2, 2008, we filed suit in the Superior Court of Orange County, California (Docket No. 30-2008-00104785) against Quick Loan Funding, Inc. and its owner, Daniel Sadek, to recover the unpaid lease payments, late fees and the equipment. In July 2008, we recovered a portion of the equipment leased to Quick Loan Funding, and we are continuing to pursue all available means to recover the remainder of the equipment and the outstanding amounts owed to us.  We anticipate the entry ofOn September 24, 2008 we obtained a judgment against Quick Loan Funding for all amounts owed to us. We are currently in our favor during the third quarterprocess of 2008, and will then focus on enforcement of theexecuting this judgment against any available assets of Quick Loan Funding.   While we believe Quick Loan Funding is currently insolvent, to our knowledge no proceedings in bankruptcy have been initiated, and weinitiated. We believe, based on our physical inspection of Quick Loan’s physical assets during our repossession efforts, that Quick Loan Funding may have sufficient assets to cover our anticipated judgment lien against it.  To date, the Partnership has recorded a reserve against all outstanding rentals in the amount of approximately $43,000 and has impaired the equipment leased to Quick Loan Funding by 10% this quarter.$43,000.  The Partnership determined that impairment in the amount of approximately $15,000 existed as of JuneSeptember 30, 2008.  Prior to the first quarter of 2008, the Partnership had impaired these assets by approximately 15%.$18,000.

Item 1A.                       Risk Factors

Item 1A.
Risk Factors
N/A
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
N/A
15
 
Item 2.                                Unregistered Sales
Item 6.
Exhibitsof 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
31.2THE RULE 15d-14(a) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
32.1 SECTION 1350 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
32.2SECTION 1350 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER


SIGNATURE

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
November 14, 2008
By: /s/ Kimberly A. Springsteen-Abbott
DateKimberly A. Springsteen-Abbott
 Chief Executive Officer
  
 
By :/s/ Lynn A. Franceschina
 Lynn A. Franceschina
 Executive Vice President, Chief Operating Officer