AMERICAN INCOME PARTNERS V

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
ANNUAL REPORT TO THE PARTNERS, DECEMBER 31, 1998

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
INDEX TO ANNUAL REPORT TO THE PARTNERS

PAGE
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SELECTED FINANCIAL DATA................................................................................... 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................... 3-8

FINANCIAL STATEMENTS:

Report of Independent Auditors............................................................................ 9

Statement of Financial Position at December 31, 1998 and 1997............................................. 10

Statement of Operations for the years ended December 31, 1998, 1997 and 1996.............................. 11

Statement of Changes in Partners' Capital for the years ended December 31, 1998, 1997 and 1996............ 12

Statement of Cash Flows for the years ended December 31, 1998, 1997 and 1996.............................. 13

Notes to the Financial Statements......................................................................... 14-24

ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash Generated to Cost of Equipment Disposed..................... 25

Statement of Cash and Distributable Cash From Operations, Sales and Refinancings.......................... 26

Schedule of Costs Reimbursed to the General Partner and its Affiliates as Required by Section 10.4 of the
Amended and Restated Agreement and Certificate of Limited Partnership................................... 27

SELECTED FINANCIAL DATA

The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.

For each of the five years in the period ended December 31, 1998:

SUMMARY OF
OPERATIONS 1998 1997 1996 1995 1994
- ------------------------------------------- ------------ ------------ ------------ ------------ ------------

Lease revenue.............................. $ 695,210 $ 1,192,858 $ 2,994,157 $ 3,617,207 $ 5,021,135
Net income................................. $ 735,038 $ 563,044 $ 2,350,010 $ 1,781,012 $ 554,771
Per Unit:

Net income............................... $ 0.75 $ 0.57 $ 2.40 $ 1.82 $ 0.57
Cash distributions....................... $ 0.34 $ 0.42 $ 4.97 $ 2.00 $ 2.37

FINANCIAL POSITION
- -------------------------------------------
Total assets............................... $ 3,244,118 $ 2,387,283 $ 2,642,076 $ 5,978,807 $ 8,276,250
Total long-term obligations................ $ -- $ -- $ 329,370 $ 786,755 $ 2,684,559
Partners' capital.......................... $ 2,678,829 $ 2,274,364 $ 2,124,515 $ 4,644,639 $ 4,822,454

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1997 AND THE YEAR ENDED DECEMBER 31, 1997
COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

Certain statements in this annual report of American Income Partner's V-C
Limited Partnership (the "Partnership") that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to a variety of risks and
uncertainties. There are a number of important factors that could cause actual
results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
outcome of the Class Action Lawsuit described in Note 6 to the accompanying
financial statements, the collection of all rents due under the Partnership's
lease agreements and the remarketing of the Partnership's equipment.

YEAR 2000 ISSUE

The Year 2000 Issue generally refers to the capacity of computer programming
logic to correctly identify the calendar year. Many companies utilize computer
programs or hardware with date sensitive software or embedded chips that could
interpret dates ending in "00" as the year 1900 rather than the year 2000. In
certain cases, such errors could result in system failures or miscalculations
that disrupt the operations of the affected businesses. The Partnership uses
information systems provided by EFG and has no information systems of its own.
EFG has adopted a plan to address the Year 2000 Issue that consists of four
phases: assessment, remediation, testing, and implementation and has elected to
utilize principally internal resources to perform all phases. EFG completed
substantially all of its Year 2000 project by December 31, 1998 at an aggregate
cost of less than $50,000 and at a di minimus cost to the Partnership. Remaining
items are expected to be minor and be completed by March 31, 1999. All costs
incurred in connection with EFG's Year 2000 project have been expensed as
incurred.

EFG's primary information software was coded by IBM at the point of original
design to use a four-digit field to identify calendar year. All of the
Partnership's lease billings, cash receipts and equipment remarketing processes
are performed using this proprietary software. In addition, EFG has gathered
information about the Year 2000 readiness of significant vendors and third party
servicers and continues to monitor developments in this area. All of EFG's
peripheral computer technologies, such as its network operating system and
third-party software applications, including payroll, depreciation processing,
and electronic banking, have been evaluated for potential programming changes
and have required only minor modifications to function properly with respect to
dates in the year 2000 and thereafter. EFG understands that each of its and the
Partnership's significant vendors and third-party servicers are in the process,
or have completed the process, of making their systems Year 2000 compliant.
Substantially all parties queried have indicated that their systems would be
Year 2000 compliant by the end of 1998.

Presently, EFG is not aware of any outside customer with a Year 2000 Issue
that would have a material effect on the Partnership's results of operations,
liquidity, or financial position. The Partnership's equipment leases were
structured as triple net leases, meaning that the lessees are responsible for,
among other things, (i) maintaining and servicing all equipment during the lease
term, (ii) ensuring that all equipment functions properly and is returned in
good condition, normal wear and tear excepted, and (iii) insuring the assets
against casualty and other events of loss. Non-compliance with lease terms on
the part of a lessee, including failure to address Year 2000 Issues, could
result in lost revenues and impairment of residual values of the Partnership's
equipment assets under a worst-case scenario.

EFG believes that its Year 2000 compliance plan will be effective in
resolving all material Year 2000 risks in a timely manner and that the Year 2000
Issue will not pose significant operational problems with respect to its
computer systems or result in a system failure or disruption of its or the
Partnership's

business operations. However, EFG has no means of ensuring that all customers,
vendors and third-party servicers will conform ultimately to Year 2000
standards. The effect of this risk to the Partnership is not determinable.

OVERVIEW

The Partnership was organized in 1989 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment subject
to lease agreements with third parties. The value of the Partnership's equipment
portfolio decreases over time due to depreciation resulting from age and usage
of the equipment, as well as technological changes and other market factors. In
addition, the Partnership does not replace equipment as it is sold; therefore,
its aggregate investment value in equipment declines from asset disposals
occurring in the normal course of business. Presently, the Partnership is a
Nominal Defendant in a Class Action Lawsuit, the outcome of which could
significantly alter the nature of the Partnership's organization and its future
business operations. See Note 6 to the accompanying financial statements.
Pursuant to the Restated Agreement, as amended, the Partnership is scheduled to
be dissolved by December 31, 2001.

RESULTS OF OPERATIONS

For the year ended December 31, 1998, the Partnership recognized lease
revenue of $695,210 compared to $1,192,858 and $2,994,157 for the years ended
December 31, 1997 and 1996, respectively. The decrease in lease revenue from
1996 to 1998 resulted principally from lease term expirations and the sale of
equipment. Lease revenue for the year ended December 31, 1996 includes the
receipt of $872,305 of lease termination rents received in connection with the
sale of the Partnership's interest in two Boeing 727-Advanced aircraft in July
1996 (see below). The Partnership also earns interest income from temporary
investments of rental receipts and equipment sales proceeds in short-term
instruments.

The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest. In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by EFG. Proportionate equipment ownership enabled the Partnership to
further diversify its equipment portfolio at inception by participating in the
ownership of selected assets, thereby reducing the general levels of risk which
could have resulted from a concentration in any single equipment type, industry
or lessee. The Partnership and each affiliate individually report, in proportion
to their respective ownership interests, their respective shares of assets,
liabilities, revenues, and expenses associated with the equipment.

In 1998, the Partnership sold equipment having a net book value of $180,901
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $536,195 compared to a net gain of $60,576 in
1997 on equipment having a net book value of $78,990 and a net gain of $710,612
in 1996 on equipment having a net book value of $2,532,852. The 1996 equipment
sales included the sale of the Partnership's interest in two Boeing 727-Advanced
jet aircraft with an original cost and net book value of $7,779,992 and
$1,238,414, respectively, which the Partnership sold to the existing lessee in
July 1996. In connection with these sales, the Partnership realized sale
proceeds of $2,019,055, which resulted in a net gain, for financial statement
purposes, of $780,641. These aircraft were sold prior to the expiration of the
related lease term. The Partnership also realized lease termination rents equal
to $872,305 relating to these aircraft. In addition, equipment sales in 1996
included the Partnership's interest in a vessel with an original cost and net
book value of $2,782,137 and $1,230,287, respectively, which the Partnership
sold to a third party in September 1996. In connection with this sale, the
Partnership realized net sale proceeds of $944,213, which resulted in a net
loss, for financial statement purposes, of $286,074. This equipment was sold
prior to the expiration of the related lease term. This sale was effected in
connection with a joint remarketing effort involving 15 individual leasing
programs sponsored by EFG, consisting of the Partnership and 14 affiliates.

It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Partnership classifies
such residual rental payments as lease revenue. Consequently, the amount of gain
or loss reported in the financial statements is not necessarily indicative of
the total residual value the Partnership achieved from leasing the equipment.

Depreciation expense was $106,304, $524,664 and $1,097,986 for the years
ended December 31, 1998, 1997 and 1996, respectively. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the
Partnership depreciates the difference between (i) the cost of the asset and
(ii) the estimated residual value of the asset on a straight-line basis over
such term. For purposes of this policy, estimated residual values represent
estimates of equipment values at the date of primary lease expiration. To the
extent that an asset is held beyond its primary lease term, the Partnership
continues to depreciate the remaining net book value of the asset on a
straight-line basis over the asset's remaining economic life.

Interest expense was $4,589 or less than 1% of lease revenue in 1997 and
$51,188 or 1.7% of lease revenue in 1996. The Partnership's notes payable were
fully amortized during the year ending December 31, 1997.

Management fees were approximately 4.9%, 4% and 4.8% of lease revenue during
the years ended December 31, 1998, 1997 and 1996, respectively. Management fees
for the year ended December 31, 1996 included $7,731, resulting from an
underaccrual in 1995. Management fees are based on 5% of gross lease revenue
generated by operating leases and 2% of gross lease revenue generated by full
payout leases.

Operating expenses were $474,591, $194,847 and $174,966 for the years ended
December 31, 1998, 1997 and 1996, respectively. During the year ended December
31, 1998, the Partnership incurred or accrued approximately $286,600 for certain
legal and administrative expenses related to Class Action Lawsuit described in
Note 6 to the financial statements. In addition, the Partnership's expensed
$22,440 in 1998 related to the refurbishment of an aircraft engine and engine
leasing costs (see Notes 3 and 6 to the financial statements). Other operating
expenses consist principally of administrative charges, professional service
costs, such as audit and other legal fees, as well as printing, distribution and
remarketing expenses. In certain cases, equipment storage or repairs and
maintenance costs may be incurred in connection with equipment being remarketed.

LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS

The Partnership by its nature is a limited life entity. As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Accordingly, the Partnership's principal source of
cash from operations is generally provided by the collection of periodic rents.
These cash inflows are used to pay management fees and operating costs and prior
to 1998, were used to satisfy debt service obligations associated with leveraged
leases. Operating activities generated net cash inflows of $647,263, $947,760
and $2,940,262 for the years ended December 31, 1998, 1997, and 1996,
respectively.

Future renewal, re-lease and equipment sale activities will cause a decline in
the Partnership's lease revenue and corresponding sources of operating cash.
Overall, expenses associated with rental activities, such as management fees,
and net cash flow from operating activities will also decline as the Partnership
experiences a higher frequency of remarketing events.

Cash expended for equipment acquisitions and cash realized from asset
disposal transactions are reported under investing activities on the
accompanying Statement of Cash Flows. During 1998, the Partnership realized
$717,096 in equipment sale proceeds compared to $118,000 and $3,243,464 in 1997
and 1996, respectively. Future inflows of cash from asset disposals will vary in
timing and amount and will be influenced by many factors including, but not
limited to, the frequency and timing of lease expirations, the type of equipment
being sold, its condition and age, and future market conditions. During the year
ended December 31, 1996, the Partnership expended $65,700 to replace certain
aircraft engines to facilitate the re-lease of an aircraft, in which the
Partnership has an ownership interest, to Transmeridian Airlines. There were no
equipment acquisitions during the corresponding periods in 1997 or 1998.

In November 1998, the Partnership and certain affiliated investment programs
(collectively, the "Programs") entered into an agreement to sell their ownership
interests in a Boeing 727-251 ADV aircraft and three engines (collectively the
"Aircraft") to a third party (the "Purchaser"). The Programs will receive gross
sale proceeds of $4,350,000. Previously, the Aircraft had been leased to
Transmeridian Airlines ("Transmeridian"). In December 1998, the Purchaser
remitted $3,350,000 for the Aircraft, excluding one of three engines which had
been damaged while the Aircraft was leased to Transmeridian. (See Note 6
regarding legal action undertaken by the Programs related to Transmeridian and
the damaged engine). The Purchaser also deposited $1,000,000 into a third-party
escrow account (the "Escrow") pending repair of the damaged engine and
re-installation of the refurbished engine on the Aircraft. Upon installation,
the escrow agent will transfer the Escrow amount plus interest thereon to the
Programs. Currently, the engine is being refurbished at the expense of the
Programs. The associated cost is estimated to be approximately $260,000, of
which the Partnership's share is approximately $15,600. All of the Partnership's
costs were accrued at December 31, 1998 in connection with the Partnership's
legal action against Transmeridian discussed in Note 6.

The Programs also are required to reimburse the Purchaser for its cost to
lease a substitute engine during the period that the damaged engine is being
repaired. This cost is expected to be approximately $114,000, of which the
Partnership's share is $6,840, all of which has been accrued in 1998 in
connection with the litigation referenced above. If the engine repair and
re-installation do not occur on or before May 11, 1999, the Escrow plus all
interest thereon will be returned to the Purchaser and the Programs' obligation
to pay for the cost of a substitute engine will be terminated.

In addition, the purchase and sale agreement permits the Purchaser to return
the Aircraft to the Programs, subject to a number of conditions, for $4,350,000,
reduced by an amount equivalent to $450 multiplied by the number of flight hours
since the Aircraft's most recent C Check. Among the conditions precedent to the
Purchaser's returning the Aircraft, the Purchaser must have completed its
intended installation of hush-kitting on the Aircraft to conform to Stage 3
noise regulations. This work was completed in January 1999. In addition, the
Escrow funds must have been released to the Programs, assuming the repaired
engine is reinstalled on the Aircraft by May 11, 1999. The Purchaser's return
option expires on May 15, 1999.

Due to the contingent nature of the sale, the Partnership has deferred
recognition of the sale and a resulting gain at December 31, 1998 until
expiration of the Purchaser's return option on May 15, 1999. The Partnership's
share of the December proceeds was $201,000, which amount was deposited into
EFG's customary escrow account and transferred to the Partnership, together with
the Partnership's other December rental receipts, in January 1999. At December
31, 1998, the entire amount was classified as accounts receivable--affiliate,
with an equal amount reflected in other liabilities on the accompanying
Statement of Financial Position. The remainder of the sale consideration, or
$1,000,000, will be paid to the

programs upon release of the Escrow discussed above. The Partnership's share of
this payment will be $60,000. Based upon current information, the Partnership
expects to recognize a gain for financial reporting purposes of approximately
$261,000 in connection with this transaction. The Partnership's interest in the
Aircraft had a cost of $648,738 and was fully depreciated at December 31, 1998.

Pursuant to a purchase option contained in the lease agreement, the lessee,
Sunworld International Airlines, Inc., purchased the Partnership's interest in a
Boeing 727-251 ADV aircraft for approximately $147,000 in January 1999, at the
expiration of the existing lease term (see Note 7 Subsequent Event for
additional discussion).

At December 31, 1998, the Partnership was due aggregate future minimum lease
payments of $383,963 from contractual lease agreements (see Note 2 to the
financial statements). At the expiration of the individual renewal lease terms
underlying the Partnership's future minimum lease payments, the Partnership will
sell the equipment or enter re-lease or renewal agreements when considered
advantageous by the General Partner and EFG. Such future remarketing activities
will result in the realization of additional cash inflows in the form of
equipment sale proceeds or rents from renewals and re-leases, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of remarketing events often is dependent upon the needs and interests
of the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third-party.
Accordingly, as the terms of the currently existing contractual lease agreements
expire, the cash flows of the Partnership will become less predictable. In
addition, the Partnership will need cash outflows to pay management fees and
operating expenses.

The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. The Partnership's notes payable
were fully amortized during the year ending December 31, 1997.

There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket equipment upon lease expiration. Liquidity is
especially important as the Partnership matures and sells equipment, because the
remaining equipment base consists of fewer revenue-producing assets that are
available to cover prospective cash disbursements. Insufficient liquidity could
inhibit the Partnership's ability to sustain its operations or maximize the
realization of proceeds from remarketing its remaining assets. In particular,
the Partnership's ownership interests in commercial aircraft involve unique
risks resulting from the specialized nature of these assets and the potential
for the Partnership to incur significant remarketing costs at lease expiration.
Accordingly, the General Partner has maintained significant cash reserves within
the Partnership in order to minimize the risk of a liquidity shortage primarily
in connection with the Partnership's aircraft. At December 31, 1998, the
Partnership owned interests in two Boeing 727 aircraft, one of which was under
contract to be sold to a third party buyer subject to the buyer's right to
return the aircraft on or before May 15, 1999. See Notes 3 and 7 of the
accompanying financial statements concerning this aircraft. See also Note 6 of
the accompanying financial statements concerning the sale of the second aircraft
in January 1999.

In addition, the Partnership is a Nominal Defendant in a Class Action
Lawsuit described in Note 6 to the accompanying financial statements. A
preliminary settlement agreement will allow the Partnership to invest in new
equipment or other activities, subject to certain limitations, effective March
22, 1999. To the extent that the Partnership has exposure to aircraft
investments that could require capital reserves, the General Partner does not
anticipate that the Partnership will invest in new assets, regardless of its
authority to do so. Until the Class Action Lawsuit is adjudicated, the General
Partner does not expect that the level of future quarterly cash distributions
paid by the Partnership will be increased above amounts paid in the

fourth quarter of 1998. In addition, the proposed settlement, if effected, will
materially change the future organizational structure and business interests of
the Partnership, as well as its cash distribution policies. See Note 6 to the
accompanying financial statements.

Cash distributions to the General Partner and Recognized Owners are declared
and generally paid within fifteen days following the end of each calendar
quarter. The payment of such distributions is presented as a component of
financing activities. For the year ended December 31, 1998, the Partnership
declared total cash distributions of $330,573. In accordance with the Restated
Agreement, as amended, the Recognized Owners were allocated 95% of these
distributions, or $314,044, and the General Partner was allocated 5%, or
$16,529. The forth quarter 1998 cash distribution was paid on January 15, 1999.

Cash distributions paid to the Recognized Owners consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date.

The Partnership's capital account balances for federal income tax and for
financial reporting purposes are different primarily due to differing treatments
of income and expense items for income tax purposes in comparison to financial
reporting purposes (generally referred to as permanent or timing differences;
see Note 5 to the financial statements). For instance, selling commissions,
organization and offering costs pertaining to syndication of the Partnership's
limited partnership units are not deductible for federal income tax purposes,
but are recorded as a reduction of partners' capital for financial reporting
purposes. Therefore, such differences are permanent differences between capital
accounts for financial reporting and federal income tax purposes. Other
differences between the bases of capital accounts for federal income tax and
financial reporting purposes occur due to timing differences. Such items consist
of the cumulative difference between income or loss for tax purposes and
financial statement income or loss, the difference between distributions
(declared vs. paid) for income tax and financial reporting purposes, and the
treatment of unrealized gains or losses on investment securities, if any, for
book and tax purposes. The principal component of the cumulative difference
between financial statement income or loss and tax income or loss results from
different depreciation policies for book and tax purposes.

For financial reporting purposes, the General Partner has accumulated a
capital deficit at December 31, 1998. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital contribution
of $1,000 and its allocation of financial statement net income or loss.
Ultimately, the existence of a capital deficit for the General Partner for
financial reporting purposes is not indicative of any further capital
obligations to the Partnership by the General Partner. The Amended and Restated
Agreement and Certificate of Limited Partnership requires that, upon the
dissolution of the Partnership, the General Partner will be required to
contribute to the Partnership an amount equal to any negative balance which may
exist in the General Partner's tax capital account. At December 31, 1998, the
General Partner had a positive tax capital account balance.

The future liquidity of the Partnership will be influenced by, among other
factors, prospective market conditions, technological changes, the ability of
EFG to manage and remarket the assets, and many other events and circumstances,
that could enhance or detract from individual asset yields and the collective
performance of the Partnership's equipment portfolio. However, the outcome of
the Class Action Lawsuit described in Note 6 to the accompanying financial
statements will be the principal factor in determining the future of the
Partnership's operations.

REPORT OF INDEPENDENT AUDITORS

To the Partners of American Income Partners V-C Limited Partnership:

We have audited the accompanying statements of financial position of
American Income Partners V-C Limited Partnership, as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Income Partners V-C
Limited Partnership at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Additional Financial Information
identified in the Index to Annual Report to the Partners is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

ERNST & YOUNG LLP

Boston, Massachusetts
March 10, 1999

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 1998 AND 1997

1998 1997
------------ ------------

ASSETS

Cash and cash equivalents............................................................. $ 2,913,800 $ 1,880,014

Rents receivable...................................................................... 17,052 21,479

Accounts receivable--affiliate........................................................ 260,794 146,113

Equipment at cost, net of accumulated depreciation of $6,710,529 and $7,522,412 at
December 31, 1998 and 1997, respectively............................................ 52,472 339,677
------------ ------------
Total assets.................................................................... $ 3,244,118 $ 2,387,283
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL

Accrued liabilities................................................................... $ 270,940 $ 9,200
Accrued liabilities--affiliate........................................................ 8,236 16,056
Deferred rental income................................................................ 2,470 5,020
Other liabilities..................................................................... 201,000 --
Cash distributions payable to partners................................................ 82,643 82,643
------------ ------------
Total liabilities............................................................... 565,289 112,919
------------ ------------
Partners' capital (deficit):
General Partner..................................................................... (897,569) (917,792)
Limited Partnership Interests (930,443 Units; initial purchase price of $25 each)... 3,576,398 3,192,156
------------ ------------
Total partners' capital......................................................... 2,678,829 2,274,364
------------ ------------
Total liabilities and partners' capital......................................... $ 3,244,118 $ 2,387,283
------------ ------------
------------ ------------

The accompanying notes are an integral part of
these financial statements

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1998 1997 1996
---------- ------------ ------------

Income:
Lease revenue.......................................................... $ 695,210 $ 1,192,858 $ 2,994,157
Interest income........................................................ 118,339 81,917 113,568
Gain on sale of equipment.............................................. 536,195 60,576 710,612
---------- ------------ ------------
Total income....................................................... 1,349,744 1,335,351 3,818,337
---------- ------------ ------------
Expenses:
Depreciation........................................................... 106,304 524,664 1,097,986
Interest expense....................................................... -- 4,589 51,188
Equipment management fees--affiliate................................... 33,811 48,207 144,187
Operating expenses--affiliate.......................................... 474,591 194,847 174,966
---------- ------------ ------------
Total expenses..................................................... 614,706 772,307 1,468,327
---------- ------------ ------------
Net income............................................................... $ 735,038 $ 563,044 $ 2,350,010
---------- ------------ ------------
---------- ------------ ------------
Net income per limited partnership unit.................................. $ 0.75 $ 0.57 $ 2.40
---------- ------------ ------------
---------- ------------ ------------
Cash distributions declared per limited partnership unit................. $ 0.34 $ 0.42 $ 4.97
---------- ------------ ------------
---------- ------------ ------------

The accompanying notes are an integral part of
these financial statements

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

GENERAL RECOGNIZED OWNERS
PARTNER ------------------------
AMOUNT UNITS AMOUNT TOTAL
----------- --------- ------------- -------------

Balance at December 31, 1995................................ $ (799,277) 930,443 $ 5,443,916 $ 4,644,639
Net income--1996.......................................... 117,500 -- 2,232,510 2,350,010
Cash distributions declared............................... (243,507) -- (4,626,627) (4,870,134)
----------- --------- ------------- -------------
Balance at December 31, 1996................................ (925,284) 930,443 3,049,799 2,124,515
Net income--1997.......................................... 28,152 -- 534,892 563,044
Cash distributions declared............................... (20,660) -- (392,535) (413,195)
----------- --------- ------------- -------------
Balance at December 31, 1997................................ (917,792) 930,443 3,192,156 2,274,364
Net income--1998.......................................... 36,752 -- 698,286 735,038
Cash distributions declared............................... (16,529) -- (314,044) (330,573)
----------- --------- ------------- -------------
Balance at December 31, 1998................................ $ (897,569) 930,443 $ 3,576,398 $ 2,678,829
----------- --------- ------------- -------------
----------- --------- ------------- -------------

The accompanying notes are an integral part of
these financial statements

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1998 1997 1996
------------ ------------- -------------

Cash flows from (used in) operating activities:
Net income............................................................ $ 735,038 $ 563,044 $ 2,350,010
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation...................................................... 106,304 524,664 1,097,986
Gain on sale of equipment......................................... (536,195) (60,576) (710,612)
Decrease in allowance for doubtful accounts....................... -- (15,000) --
Changes in assets and liabilities:
Decrease (increase) in:
Rents receivable.................................................. 4,427 31,132 141,020
Accounts receivable--affiliate.................................... (114,681) (69,339) 41,557
Increase (decrease) in:
Accrued interest.................................................. -- (2,609) (3,335)
Accrued liabilities............................................... 261,740 (17,750) 6,950
Accrued liabilities--affiliate.................................... (7,820) 1,242 8,049
Deferred rental income............................................ (2,550) (7,048) 8,637
Other liabilities................................................. 201,000 -- --
------------ ------------- -------------
Net cash from operating activities.............................. 647,263 947,760 2,940,262
------------ ------------- -------------
Cash flows from (used in) investing activities:
Purchase of equipment............................................... -- -- (65,700)
Proceeds from equipment sales....................................... 717,096 118,000 3,243,464
------------ ------------- -------------
Net cash from investing activities.............................. 717,096 118,000 3,177,764
------------ ------------- -------------
Cash flows used in financing activities:
Principal payments--notes payable................................... -- (329,370) (457,385)
Distributions paid.................................................. (330,573) (440,736) (5,249,657)
------------ ------------- -------------
Net cash used in financing activities........................... (330,573) (770,106) (5,707,042)
------------ ------------- -------------
Net increase in cash and cash equivalents............................. 1,033,786 295,654 410,984
Cash and cash equivalents at beginning of year........................ 1,880,014 1,584,360 1,173,376
------------ ------------- -------------
Cash and cash equivalents at end of year.............................. $ 2,913,800 $ 1,880,014 $ 1,584,360
------------ ------------- -------------
------------ ------------- -------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.............................. $ -- $ 7,198 $ 54,523
------------ ------------- -------------
------------ ------------- -------------

Supplemental schedule of non-cash activity:

At December 31, 1996, $21,566 representing an equipment purchase option was
classified as deferred rental income on the Statement of Financial Position.
During the year ended December 31, 1997, the Partnership sold the equipment and
such funds were recognized as sales proceeds.

The accompanying notes are an integral part of
these financial statements

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1988

NOTE 1--ORGANIZATION AND PARTNERSHIP MATTERS

American Income Partners V-C Limited Partnership (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on December 27, 1989 for the purpose of
acquiring and leasing to third parties a diversified portfolio of capital
equipment. Partners' capital initially consisted of contributions of $1,000 from
the General Partner (AFG Leasing IV Incorporated) and $100 from the Initial
Limited Partner (AFG Assignor Corporation). On May 21, 1990, the Partnership
issued 930,443 units, representing assignments of limited partnership interests
(the "Units"), to 1,550 investors. Unitholders and Limited Partners (other than
the Initial Limited Partner) are collectively referred to as Recognized Owners.
The Partnership has one General Partner, AFG Leasing IV Incorporated, a
Massachusetts corporation and an affiliate of Equis Financial Group Limited
Partnership (formerly known as American Finance Group), a Massachusetts limited
partnership ("EFG"). The common stock of the General Partner is owned by AF/AIP
Programs Limited Partnership, of which EFG and a wholly-owned subsidiary are the
99% limited partners, and AFG Programs, Inc., which is wholly-owned by Geoffrey
A. MacDonald, is the 1% general partner. The General Partner is not required to
make any other capital contributions except as may be required under the Uniform
Act and Section 6.1(b) of the Amended and Restated Agreement and Certificate of
Limited Partnership (the "Restated Agreement, as amended").

Significant operations commenced May 22, 1990 when the Partnership made its
initial equipment purchase. Pursuant to the Restated Agreement, as amended,
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Recognized Owners and 5% to the
General Partner.

Under the terms of a management agreement between the Partnership and AF/AIP
Programs Limited Partnership and the terms of an identical management agreement
between AF/AIP Programs Limited Partnership and EFG (collectively, the
"Management Agreement"), management services are provided by EFG to the
Partnership at fees which the General Partner believes to be competitive for
similar services (see Note 4).

EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the "Other Investment Programs"). The Company arranges to broker or originate
equipment leases, acts as remarketing agent and asset manager, and provides
leasing support services, such as billing, collecting, and asset tracking.

The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Mr. Engle
established Equis Corporation and GDE LP in December 1994 for the sole purpose
of acquiring the business of AFG.

In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group", and its acronym, to a third-party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Partnership and the Other Investment Programs and to continue managing all
assets owned by the Partnership and the Other Investment Programs.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

STATEMENT OF CASH FLOWS

The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and reverse repurchase agreements with overnight maturities.
Under the terms of the agreements, title to the underlying securities passes to
the Partnership. The securities underlying the agreements are book entry
securities. At December 31, 1998, the Partnership had $2,802,850 invested in
federal agency discount notes and in reverse repurchase agreements secured by
U.S. Treasury Bills or interests in U.S. Government securities.

REVENUE RECOGNITION

Rents are payable to the Partnership monthly or quarterly and no significant
amounts are calculated on factors other than the passage of time. The leases are
accounted for as operating leases and are noncancellable. Rents received prior
to their due dates are deferred. Future minimum rents of $383,963 are due as
follows:

For the year ending December 31,
1999 ............................................. $ 326,403
2000 ............................................. 49,648
2001 ............................................. 7,912
---------
Total ............................................. $ 383,963
---------
---------

Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1998, 1997, and 1996 are as
follows:

1998 1997 1996
---------- ---------- ------------

Zeigler Cole Holding Company............................................... $ 198,000 $ -- $ --
Westinghouse Electric Company.............................................. $ 163,640 $ 194,081 $ --
Rose's Stores, Inc......................................................... $ 89,785 $ -- $ --
Shell Oil Company.......................................................... $ -- $ 346,564 $ 346,564
Ford Motor Company......................................................... $ -- $ 146,643 $ --
Transnet Limited........................................................... $ -- $ 120,836 $ --
Northwest Airlines, Inc.................................................... $ -- $ -- $ 1,581,666
Gearbulk Shipowning Ltd.................................................... $ -- $ -- $ 336,440

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

EQUIPMENT ON LEASE

All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment Cost means the actual cost paid by the
Partnership to acquire the equipment, including acquisition fees. Where
equipment was acquired from EFG or an Affiliate, Equipment Cost reflects the
actual price paid for the equipment by EFG or the Affiliate plus all actual
costs incurred by EFG or the Affiliate while carrying the equipment, including
all liens and encumbrances, less the amount of all primary term rents earned by
EFG or the Affiliate prior to selling the equipment. Where the seller of the
equipment was a third party, Equipment Cost reflects the seller's invoice price.

DEPRECIATION

The Partnership's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset is
held on primary lease term, the Partnership depreciates the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term. For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of primary
lease expiration. To the extent that an asset is held beyond its primary lease
term, the Partnership continues to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. Adjustments to
reduce the net carrying value of equipment are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.

ACCRUED LIABILITIES--AFFILIATE

Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities--Affiliate (see Note 4).

ALLOCATION OF PROFITS AND LOSSES

For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the
Recognized Owners and 5% to the General Partner). See Note 5 concerning
allocation of income or loss for income tax purposes.

NET INCOME AND CASH DISTRIBUTIONS PER UNIT

Net income and cash distributions per Unit are based on 930,443 units
outstanding during the years ended December 31, 1998, 1997 and 1996 and computed
after allocation of the General Partner's 5% share of net income and cash
distributions.

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

PROVISION FOR INCOME TAXES

No provision or benefit from income taxes is included in the accompanying
financial statements. The Partners are responsible for reporting their
proportionate shares of the Partnership's taxable income or loss and other tax
attributes on their tax returns.

NOTE 3--EQUIPMENT

The following is a summary of equipment owned by the Partnership at December
31, 1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1998 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.

REMAINING
LEASE TERM EQUIPMENT
EQUIPMENT TYPE (MONTHS) AT COST LOCATION
- --------------------------------------------- ------------- ------------ ---------------------------------------

Construction and mining...................... 7-24 $ 2,345,427 DE/IN/WY
Communications............................... 6 1,278,350 FL
Aircraft..................................... 0-1 1,231,776 KY/TX
Retail store fixtures........................ 0 1,144,958 AL/DE/GA/KY/MD/MS/NC/SC/ TN/ VA/WV
Materials handling........................... 0-3 550,472 GA/MI/NC/NY/SC/OH
Motor vehicles............................... 2 212,018 NJ
------------
Total equipment cost 6,763,001
Accumulated depreciation (6,710,529)
------------
Equipment, net of accumulated depreciation $ 52,472
------------
------------

In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or an
affiliated equipment leasing program sponsored by EFG. The Partnership and each
affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment. Proportionate equipment ownership
enabled the Partnership to further diversify its equipment portfolio at
inception by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could have resulted from a concentration in any
single equipment type, industry or lessee. At December 31, 1998, the
Partnership's equipment portfolio included equipment having a proportionate
original cost of $1,231,776, representing approximately 18% of total equipment
cost.

Generally, the costs associated with maintaining, insuring and operating the
Partnership's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Partnership.

As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms.

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

At December 31, 1998, the Partnership had fully depreciated equipment held
for sale with a cost of approximately $1,232,000. This equipment represents the
Partnership's proportionate interests in two Boeing 727-251 ADV aircraft. In
January 1999, at the expiration of the existing lease term, the Partnership sold
its interest in one of these aircraft having a cost of $583,038 (see Note 7
Subsequent Event). See below for discussion related to the Partnership's
interest in the second aircraft. The summary above also includes equipment being
leased on a month to month basis.

DEFERRED SALE

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

$60,000. The Partnership's interest in the Aircraft had a cost of $648,738 and
was fully depreciated at December 31, 1998.

NOTE 4--RELATED PARTY TRANSACTIONS

All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during the years ended December 31,
1998, 1997 and 1996 which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:

1998 1997 1996
---------- ---------- ----------

Equipment management fees.................................................... $ 33,811 $ 48,207 $ 144,187
Administrative charges....................................................... 55,692 52,926 32,746
Reimbursable operating
Expenses due to third parties.............................................. 418,899 141,921 142,220
---------- ---------- ----------
Total.................................................................... $ 508,402 $ 243,054 $ 319,153
---------- ---------- ----------
---------- ---------- ----------

As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership. Such services include acquisition and
management of equipment. For acquisition services, EFG is compensated by an
amount equal to 2.23% of Equipment Base Price paid by the Partnership. For
management services, EFG is compensated by an amount equal to 5% of gross
operating lease rental revenue and 2% of gross full payout lease rental revenue
received by the Partnership. Both acquisition and management fees are subject to
certain limitations defined in the Management Agreement.

Administrative charges represent amounts owed to EFG, pursuant to Section
10.4 of the Restated Agreement, as amended, for persons employed by EFG who are
engaged in providing administrative services to the Partnership. Reimbursable
operating expenses due to third parties represent costs paid by EFG on behalf of
the Partnership which are reimbursed to EFG at actual cost.

All equipment was acquired from EFG, one of its affiliates, including other
equipment leasing programs sponsored by EFG, or from third-party sellers. The
Partnership's Purchase Price was determined by the method described in Note 2,
Equipment on Lease.

All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At December 31, 1998, the Partnership was owed $260,794 by EFG for such funds
and the interest thereon, including the proceeds form the sale of the
Partnership's interest in a Boeing 727-251 (see Note 3). These funds were
remitted to the Partnership in January 1999.

Certain affiliates of the General Partner own Units in the Partnership as
follows:

NUMBER OF PERCENT OF TOTAL
AFFILIATE UNITS OWNED OUTSTANDING UNITS
- --------------------------------------------------------------------------------- ------------- -------------------

Atlantic Acquisition Limited Partnership......................................... 59,877 6.44%
Old North Capital Limited Partnership............................................ 7,850 0.84%

Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC") are both Massachusetts limited partnerships formed
in 1995 and affiliates of EFG. The general

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

partners of AALP and ONC are controlled by Gary D. Engle. In addition, the
limited partnership interests of ONC are owned by Semele Group, Inc. ("Semele").
Gary D. Engle is Chairman and CEO of Semele.

NOTE 5--INCOME TAXES

The Partnership is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Partnership.

For financial statement purposes, the Partnership allocates net income or
loss to each class of partner according to their respective ownership
percentages (95% to the Recognized Owners and 5% to the General Partner). This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended. For income tax purposes, the Partnership allocates net income or net
loss, in accordance with the provisions of such agreement. The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account. At December 31, 1998, the General Partner had a positive tax
capital balance.

The following is a reconciliation between net income reported for financial
statement and federal income tax reporting purposes for the years ended December
31, 1998, 1997 and 1996:

1998 1997 1996
---------- ---------- -------------

Net income................................................................. $ 735,038 $ 563,044 $ 2,350,010
Financial statement depreciation in excess of (less than) tax
depreciation........................................................... (21,717) 309,119 365,958
Deferred rental income................................................... (2,550) (28,614) 8,637
Other.................................................................... 148,783 48,044 (1,791,731)
---------- ---------- -------------
Net income for federal income tax reporting purposes....................... $ 859,554 $ 891,593 $ 932,874
---------- ---------- -------------
---------- ---------- -------------

The principal component of "Other" consists of the difference between the
tax gain and loss on equipment disposals and the financial statement gain or
loss on disposals.

The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1998 and 1997:

1998 1997
------------ ------------

Partners' capital..................................................................... $ 2,678,829 $ 2,274,364
Add back selling commissions and organization and offering costs.................... 2,611,871 2,611,871
Financial statement distributions in excess of tax distributions.................... 4,132 4,132
Cumulative difference between federal income tax and financial statement income
(loss)............................................................................ 158,985 34,469
------------ ------------
Partners' capital for federal income tax reporting purposes........................... $ 5,453,817 $ 4,924,836
------------ ------------
------------ ------------

Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

NOTE 6--LEGAL PROCEEDINGS

In January 1998, certain plaintiffs (the "Plaintiffs") filed a class and
derivative action, captioned LEONARD ROSENBLUM, ET AL. V. EQUIS FINANCIAL GROUP
LIMITED PARTNERSHIP, ET AL., in the United States District Court for the
Southern District of Florida (the "Court") on behalf of a proposed class of
investors in 28 equipment leasing programs sponsored by EFG, including the
Partnership (collectively, the "Nominal Defendants"), against EFG and a number
of its affiliates, including the General Partner, as defendants (collectively,
the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned LEONARD ROSENBLUM, ET AL. V. EQUIS
FINANCIAL GROUP LIMITED PARTNERSHIP, ET AL., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit".

The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.

On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth terms pursuant to which a settlement of
the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The Stipulation of Settlement was based upon and superseded a
Memorandum of Understanding between the parties dated March 9, 1998 which
outlined the terms of a possible settlement. The Stipulation of Settlement was
filed with the Court on July 23, 1998 and was preliminarily approved by the
Court on August 20, 1998 when the Court issued its "Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
for Notice of, and Hearing on, the Proposed Settlement" (the "August 20 Order").
Prior to issuing a final order, the Court will hold a fairness hearing that will
be open to all interested parties and permit any party to object to the
settlement. The investors of the Partnership and all other plaintiff class
members in the Class Action Lawsuit will receive a Notice of Settlement and
other information pertinent to the settlement of their claims that will be
mailed to them in advance of the fairness hearing. Since first executing the
Stipulation of Settlement, the Court has scheduled two fairness hearings, the
first on December 11, 1998 and the second on March 19, 1999, each of which was
postponed because of delays in finalizing certain information materials that are
subject to regulatory review prior to being distributed to investors.

On March 15, 1999, counsel for the Plaintiffs and the Defendants entered
into an amended stipulation of settlement (the "Amended Stipulation") which was
filed with the Court on March 15, 1999. The Amended Stipulation was
preliminarily approved by the Court by its "Modified Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
For Notice of, and Hearing On, the Proposed Settlement" dated March 22, 1999
(the "March 22 Order"). The Amended Stipulation, among other things, divides the
Class Action Lawsuit into two separate sub-classes that can be settled
individually. This revision is expected to expedite the settlement of one
sub-class by the middle of 1999. However, the second sub-class, involving the
Partnership and 10 affiliated partnerships (collectively referred to as the
"Exchange Partnerships"), is expected to remain pending for a longer period due,
in part, to the complexity of the proposed settlement pertaining to this class.

Specifically, the settlement of the second sub-class is premised on the
consolidation of the Exchange Partnerships' net assets (the "Consolidation"),
subject to certain conditions, into a single successor

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

company ("Newco"). Under the proposed Consolidation, the partners of the
Exchange Partnerships would receive both common stock in Newco and a cash
distribution; and thereupon the Exchange Partnerships would be dissolved. In
addition, EFG would contribute certain management contracts, operations
personnel, and business opportunities to Newco and cancel its current management
contracts with all of the Exchange Partnerships. Newco would operate as a
finance company specializing in the acquisition, financing and servicing of
equipment leases for its own account and for the account of others on a contract
basis. Newco also would use its best efforts to list its shares on the Nasdaq
National Market or another national exchange or market as soon after the
Consolidation as Newco deems that market conditions and its business operations
are suitable for listing its shares and Newco has satisfied all necessary
regulatory and listing requirements. The potential benefits and risks of the
Consolidation will be presented in a Solicitation Statement that will be mailed
to all of the partners of the Exchange Partnerships as soon as the associated
regulatory review process is completed and at least 60 days prior to the
fairness hearing. A preliminary Solicitation Statement was filed with the
Securities and Exchange Commission on August 24, 1998 and remains pending. Class
members will be notified of the actual fairness hearing date when it is
confirmed.

One of the principal objectives of the Consolidation is to create a company
that would have the potential to generate more value for the benefit of existing
limited partners than other alternatives, including continuing the Partnership's
customary business operations until all of its assets are disposed in the
ordinary course of business. To facilitate the realization of this objective,
the Amended Stipulation provides, among other things, that commencing March 22,
1999, the Exchange Partnerships may collectively invest up to 40% of the total
aggregate net asset values of all of the Exchange Partnerships in any
investment, including additional equipment and other business activities that
the general partners of the Exchange Partnerships and EFG reasonably believe to
be consistent with the anticipated business interests and objectives of Newco,
subject to certain limitations, including that the Exchange Partnerships retain
sufficient cash balances to pay their respective shares of the cash distribution
referenced above in connection with the proposed Consolidation.

In the absence of the Court's authorization to enter into such activities,
the Partnership's Restated Agreement, as amended, would not permit new
investment activities without the approval of limited partners owning a majority
of the Partnership's outstanding Units. Accordingly, to the extent that the
Partnership invests in new equipment, the Manager (being EFG) will (i) defer,
until the earlier of the effective date of the Consolidation or December 31,
1999, any acquisition fees resulting therefrom and (ii) limit its management
fees on all such assets to 2% of rental income. In the event that the
Consolidation is consummated, all such acquisition and management fees will be
paid to Newco. To the extent that the Partnership invests in other business
activities not consisting of equipment acquisitions, the Manager will forego any
acquisition fees and management fees related to such investments. In the event
that the Partnership has acquired new investments, but the Partnership does not
participate in the Consolidation, Newco will acquire such new investments for an
amount equal to the Partnership's net equity investment plus an annualized
return thereon of 7.5%. Finally, in the event that the Partnership has acquired
new investments and the Consolidation is not effected, the General Partner will
use its best efforts to divest all such new investments in an orderly and timely
fashion and the Manager will cancel or return to the Partnership any acquisition
or management fees resulting from such new investments.

The Amended Stipulation and previous Stipulation of Settlement prescribe
certain conditions necessary to effecting final settlements, including providing
the partners of the Exchange Partnerships with the opportunity to object to the
participation of their partnership in the Consolidation. Assuming the proposed
settlement is effected according to present terms, the Partnership's share of
legal fees and expenses related

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

to the Class Action Lawsuit is estimated to be approximately $62,700, all of
which was accrued and expensed by the Partnership in 1998. In addition, the
Partnership's share of fees and expenses related to the proposed Consolidation
is estimated to be approximately $223,900, all of which was accrued and expensed
by the Partnership in 1998.

While the Court's August 20 Order enjoined certain class members, including
all of the partners of the Partnership, from transferring, selling, assigning,
giving, pledging, hypothecating, or otherwise disposing of any Units pending the
Court's final determination of whether the settlement should be approved, the
March 22 Order permits the partners to transfer Units to family members or as a
result of the divorce, disability or death of the partner. No other transfers
are permitted pending the Court's final determination of whether the settlement
should be approved. The provision of the August 20 Order which enjoined the
General Partners of the Exchange Partnerships from, among other things,
recording any transfers not in accordance with the Court's order remains
effective.

There can be no assurance that settlement of either sub-class of the Class
Action Lawsuit will receive final Court approval and be effected. There also can
be no assurance that all or any of the Exchange Partnerships will participate in
the Consolidation because if limited partners owning more than one-third of the
outstanding Units of a partnership object to the Consolidation, then that
partnership will be excluded from the Consolidation. The General Partner and its
affiliates, in consultation with counsel, concur that there is a reasonable
basis to believe that final settlements of each sub-class will be achieved.
However, in the absence of final settlements approved by the Court, the
Defendants intend to defend vigorously against the claims asserted in the Class
Action Lawsuit. Neither the General Partner nor its affiliates can predict with
any degree of certainty the cost of continuing litigation to the Partnership or
the ultimate outcome

In addition to the foregoing, the Partnership is a party to other lawsuits
that have arisen out of the conduct of its business, principally involving
disputes or disagreements with lessees over lease terms and conditions. The
following actions had not been finally adjudicated at December 31, 1998:

ACTION INVOLVING NORTHWEST AIRLINES, INC.

On September 22, 1995, Investors Asset Holding Corp. and First Security
Bank, N.A., trustees of the Partnership and certain affiliated investment
programs (collectively, the "Plaintiffs"), filed an action in United States
District Court for the District of Massachusetts against a lessee of the
Partnership, Northwest Airlines, Inc. ("Northwest"). The Complaint alleges that
Northwest did not fulfill its maintenance obligations under its Lease Agreements
with the Plaintiffs and seeks declaratory judgment concerning Northwest's
obligations and monetary damages. Northwest filed an Answer to the Plaintiffs'
Complaint and a motion to transfer the venue of this proceeding to Minnesota.
The Court denied Northwest's motion. On June 29, 1998, a United States
Magistrate Judge recommended entry of partial summary judgment in favor of the
Plaintiffs. Northwest appealed this decision and a hearing was scheduled for
January 1999 by the District Judge to consider arguments and review the
Magistrate's recommendation. A ruling by the District Judge remains pending. The
General Partner believes that the Plaintiff's claims ultimately will prevail and
that the Partnership's financial position will not be adversely affected by the
outcome of this action.

ACTION INVOLVING TRANSMERIDIAN AIRLINES

On November 9, 1998, First Security Bank, N.A., as trustee of the
Partnership and certain affiliated investment programs (collectively, the
"Plaintiffs), filed an action in Superior Court of the Commonwealth

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS

(CONTINUED)

of Massachusetts in Suffolk County against Prime Air, Inc. d/b/a Transmeridian
Airlines ("Transmeridian"), Atkinson & Mullen Travel, Inc., and Apple Vacations,
West, Inc., both d/b/a Apple Vacations, asserting various causes of action for
declaratory judgment and breach of contract. The action subsequently was removed
to United States District Court for the District of Massachusetts. Transmeridian
filed counterclaims for breach of contract, quantum meruit, conversion, breach
of the implied covenant of good faith and fair dealing, and violation of M.G.L.
c. 93A. The Plaintiffs subsequently filed an Amended Complaint asserting claims
for breaches of contract and covenant of faith and fair dealing against
Transmeridian and breach of guaranty against Apple Vacations.

The Plaintiffs are seeking damages for, among other things, breach of
contract arising out of Transmeridian's refusal to repair or replace burned
engine blades found in one engine during a pre-return inspection of an aircraft
leased by Transmeridian from the Plaintiffs, a Boeing 727-251 ADV aircraft (the
"Aircraft"). The estimated cost to repair the engine and lease a substitute
engine during the repair period is approximately $374,000. The Plaintiffs intend
to enforce written guarantees issued by Apple Vacations that absolutely and
unconditionally guarantee Transmeridian's performance under the lease agreement
and are seeking recovery of all costs, lost revenue and monetary damages in
connection with this matter. Notwithstanding the foregoing, the Plaintiffs will
be required to advance the cost of repairing the engine and leasing a substitute
engine and cannot be certain whether the guarantees will be enforced. Therefore,
the Partnership has accrued and expensed its share of these costs, or $22,440,
in 1998. Discovery has not yet commenced, and although the General Partner plans
to vigorously pursue this action, it is too early to predict the Plaintiffs'
likelihood of success. This Aircraft was fully depreciated at December 31, 1998
for financial reporting purposes. (See Note 3 concerning the remarketing of this
Aircraft.)

NOTE 7--SUBSEQUENT EVENT

On January 19, 1999, at the expiration of the aircraft's lease term, the
Partnership sold its proportional interest in a Boeing 727-251 aircraft to the
lessee, Sunworld International Airlines, Inc. The Partnership received net sale
proceeds of approximately $147,000 for its interest in this aircraft which had a
cost of $583,038 and was fully depreciated at December 31, 1998.

ADDITIONAL FINANCIAL INFORMATION

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
OF EQUIPMENT DISPOSED

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

The Partnership classifies all rents from leasing equipment as lease
revenue. Upon expiration of the primary lease terms, equipment may be sold,
rented on a month-to-month basis or re-leased for a defined period under a new
or extended lease agreement. The proceeds generated from selling or re-leasing
the equipment, in addition to any month-to-month revenues, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition, may not reflect the aggregate residual proceeds
realized by the Partnership for such equipment.

The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1998, 1997 and 1996.

1998 1997 1996
------------ ------------ -------------

Rents earned prior to disposal of equipment, net of interest
charges............................................................. $ 1,285,390 $ 1,191,798 $ 12,065,562
Sale proceeds realized upon disposition of equipment.................. 717,096 139,566 3,243,464
------------ ------------ -------------
Total cash generated from rents and equipment sale proceeds........... 2,002,486 1,331,364 15,309,026
Original acquisition cost of equipment disposed....................... 1,099,088 974,537 13,446,782
------------ ------------ -------------
Excess of total cash generated to cost of equipment disposed.......... $ 903,398 $ 356,827 $ 1,862,244
------------ ------------ -------------
------------ ------------ -------------

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
SALES AND REFINANCINGS

FOR THE YEAR ENDED DECEMBER 31, 1998

SALES AND
OPERATIONS REFINANCINGS TOTAL
------------ ------------ ------------

Net income.............................................................. $ 198,843 $ 536,195 $ 735,038
Add:
Depreciation.......................................................... 106,304 -- 106,304
Management fees....................................................... 33,811 -- 33,811
Book value of disposed equipment...................................... -- 180,901 180,901
------------ ------------ ------------
Cash from operations, sales and refinancings.......................... 338,958 717,096 1,056,054
Less:
Management fees....................................................... (33,811) -- (33,811)
------------ ------------ ------------
Distributable cash from operations, sales and refinancings............ 305,147 717,096 1,022,243
Other sources and uses of cash:
Cash at beginning of year............................................. 1,880,014 -- 1,880,014
Net change in receivables and accruals................................ 342,116 -- 342,116
Less:
Cash distributions paid............................................... -- (330,573) (330,573)
------------ ------------ ------------
Cash at end of year..................................................... $ 2,527,277 $ 386,523 $ 2,913,800
------------ ------------ ------------
------------ ------------ ------------

AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP

SCHEDULE OF COSTS REIMBURSED TO THE
GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
BY SECTION 10.4 OF THE AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP

DECEMBER 31, 1998

For the year ended December 31, 1998, the Partnership reimbursed the General
Partner and its Affiliates for the following costs:

Operating expenses................................................ $ 220,466