10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

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, L.P.

(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction of
incorporation or organization)
65-1189593
(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   NO 

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

Large accelerated filer   Accelerated filer   Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES    NO

1

FORM 10-Q

SEPTEMBER 30, 2006

TABLE OF CONTENTS

	PART I
Item 1.	Condensed Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
	PART II
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Securities Holders	18
Item 5.	Other Information	18
Item 6.	Index to Exhibits	18
	Signatures
	Certifications

2

Commonwealth Income & Growth Fund V, L.P.

Condensed Balance Sheet

	September 30, 2006			December 31, 2005
	(unaudited)
Assets
Cash and cash equivalents	$	8,559,522		$	10,722,300
Lease income receivable, net of reserves of $0 as of September 30, 2006 and December 31, 2005		246,167			91,047
Other receivable – Affiliates		120,531			71,259
Other receivables - CCC		3,572			94,293
Prepaid fees		7,761			—
		8,937,553			10,978,899
Computer equipment, at cost		12,853,266			5,480,291
Accumulated depreciation		(2,062,875	)		(289,811	)
		10,790,391			5,190,480
Equipment acquisition costs and deferred expenses, net		422,457			211,190
Prepaid acquisition fees		444,231			483,504
		866,688			694,694
Total Assets	$	20,594,632		$	16,864,073
Liabilities and Partners’ Capital
Liabilities
Accounts payable	$	195,205		$	138,832
Accounts payable - General Partner		48,475			61,224
Accounts payable – Commonwealth Capital Corp.		—			39,258
Unearned lease income		79,729			45,867
Notes payable		1,926,998			785,157
Total liabilities		2,250,407			1,070,338
Partners’ Capital
General partner		1,000			1,000
Limited partners		18,343,225			15,792,735
Total Partners’ Capital		18,344,225			15,793,735
Total Liabilities and Partners’ Capital	$	20,594,632		$	16,864,073

see accompanying notes to condensed financial statements

3

Commonwealth Income & Growth Fund V

Condensed Statements of Operations

						Nine Months Ended September 30, 2006			For the period of March 14, 2005 (Commencement of Operations) - September 30, 2005
	Three Months Ended
	September 30, 2006		September 30, 2005
	(unaudited)					(unaudited)
Income
Lease	$	1,022,145	$	84,282		$	2,388,849		$	101,759
Interest and other		106,215		14,481			273,838			14,483
Total income		1,128,360		98,763			2,662,687			116,242
Expenses
Operating		248,219		253,543			860,535			481,203
Organizational costs		—		44,568			36,751			124,368
Equipment management fee - General Partner		48,013		4,214			120,091			5,088
Interest		28,506		—			65,564			—
Depreciation		745,646		63,580			1,773,063			77,055
Amortization of equipment
Acquisition costs and deferred expenses		41,739		3,735			99,175			4,454
Total expenses		1,112,123		369,640			2,955,179			692,168
Net income (loss)	$	16,237	$	(270,877	)	$	(292,492	)	$	(575,926	)
Net income (loss) allocated to limited partners	$	9,339	$	(274,483	)	$	(310,635	)	$	(580,551	)
Net income (loss) per equivalent limited partnership unit	$	0.01	$	(0.51	)	$	(0.25	)	$	(1.56	)
Weighted average number of equivalent limited partnership units outstanding during the period		1,249,950		535,174			1,212,899			371,096

see accompanying notes to condensed financial statements

4

Commonwealth Income & Growth Fund V, L.P.

Condensed Statements of Partners’ Capital

For the nine months ended September 30, 2006

(unaudited)

	General Partner Units	Limited Partner Units	General Partner			Limited Partners			Total
Balance, December 31, 2005	50	985,494	$	1,000		$	15,792,735		$	15,793,735
Contributions		264,456					5,254,658			5,254,658
Offering costs							(593,264	)		(593,264	)
Net income (loss)				18,143			(310,635	)		(292,492	)
Distributions				(18,143	)		(1,800,269	)		(1,818,412	)
Balance, September 30, 2006	50	1,249,950	$	1,000		$	18,343,225		$	18,344,225

see accompanying notes to condensed financial statements

5

Commonwealth Income & Growth Fund V, L.P.

Condensed Statements of Cash Flow

For the nine months ended September 30, 2006 and the period of March 14, 2005 (Commencement of
Operations) through September 30, 2005

	2006 (unaudited)			2005 (unaudited)
Net cash provided by (used in) operating activities	$	1,086,121		$	(402,619	)
Capital expenditures		(5,820,712	)		(1,287,558	)
Prepaid acquisition fees		39,273			(379,949	)
Equipment acquisition fees paid to General Partner		(294,919	)		(66,651	)
Net cash (used in) investing activities		(6,076,358	)		(1,734,158	)
Contributions		5,254,658			12,766,790
Distributions		(1,818,412	)		(341,296	)
Offering costs		(593,264	)		(1,524,839	)
Debt Placement fees paid to General Partner		(15,523	)		(3,787	)
Net cash provided by financing activities		2,827,459			10,896,868
Net (decrease) increase in cash and cash equivalents		(2,162,778	)		8,760,091
Cash and cash equivalents, beginning of period		10,722,300			1,067
Cash and cash equivalents, end of period	$	8,559,522		$	8,761,158

see accompanying notes to condensed financial statements

6

NOTES TO CONDENSED FINANCIAL STATEMENTS

1.	Business	Commonwealth Income & Growth Fund V (the “Partnership”) is a limited partnership which was 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 uses the proceeds of the Offering to acquire, own and lease various types of computer information technology equipment and other similar capital equipment, which will be leased primarily to U.S. corporations and institutions. Commonwealth Capital Corp, (“CCC”), on behalf of the Partnership and other affiliated partnerships, will acquire computer equipment subject to associated debt obligations and lease agreements and allocate a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors. The Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of Commonwealth Capital Corp. 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	Basis of Presentation The financial information presented as of any date other than December 31, 2005 has been prepared from the books and records without audit. Financial information as of December 31, 2005 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by accounting principles generally accepted in the United States of America. 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, 2005. Operating results for the nine month period ended September 30, 2006 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2006.

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		Reclassification
		Certain amounts in 2005 were reclassified to conform to the 2006 presentation.
		Long-Lived Assets
		The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable. The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset. If the estimated undiscounted cash flows are less than the carrying value of the asset, then an impairment exists. The amount of the impairment is determined based on the difference between the carrying value and the fair value. Fair value is determined based on estimated discounted cash flows to be generated by the asset. The partnership determined that no impairment existed as of September 30, 2006.
		Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of 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 limited partner units outstanding during the period.
3.	Computer Equipment	The Partnership is the lessor of equipment under operating leases with periods ranging from 14 to 38 months. In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee.
		Through September 30, 2006, the Partnership’s leasing operations consisted of operating leases. Operating lease revenue is recognized on a monthly basis in accordance with the terms of the lease agreement.
		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. 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. No remarketing fees were paid for the periods ended September 30, 2006 and 2005.

8

		The Partnership’s share of the computer equipment in which it participates with other partnerships at September 30, 2006 and December 31, 2005 was approximately $2,848,000 and $932,000, respectively, and is included in the Partnership’s fixed assets on its balance sheet. And the total cost of the equipment shared by the Partnership with other partnerships at September 30, 2006 and December 31, 2005 was approximately $6,482,000 and $2,177,000, respectively. The Partnership’s share of the outstanding debt associated with this equipment at September 30, 2006 and December 31, 2005 was $416,000 and $0 respectively. The total outstanding debt at September 30, 2006 and December 31, 2005 was $942,000 and $0, respectively.
		The following is a schedule of future minimum rentals on noncancellable operating leases at September 30, 2006:
				Amount
			Three months ending December 31, 2006	$	964,922
			Year ended December 31, 2007		3,797,577
			Year ended December 31, 2008		3,153,974
			Year ended December 31, 2009		546,101
				$	8,462,574
4.	Related Party Transactions	Receivables/Payables
		As of September 30, 2006, 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 nine months ended September 30, 2006, the Partnership recorded $678,000 for reimbursement of expenses to the General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, the Partnership recorded $257,000 for reimbursement of expenses to the General Partner.

9

Offering Costs

Offering costs are payments for selling commissions, dealer manager fees, professional fees and other offering expenses relating to the syndication. 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 period ended September 30, 2006, equipment acquisition fees of approximately $295,000 were earned bythe General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, equipment acquisition fees of approximately$67,000 were earned bythe General Partner.

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 period ended September 30, 2006, debt placement fees of approximately $16,000 were earned by the General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, debt placement fees of approximately $4,000 were earned by the General Partner

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 nine months ended September 30, 2006, equipment management fees of approximately $120,000 were earned by the General Partner. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, equipment management fees of approximately $5,100 were earned bythe General Partner.

10

5. Notes Payable Notes payable 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 September 30, 2006 are as follows:

	September30, 2006		December31, 2005
Installment note payable to bank; interest at 4.61%, due in monthly installments of $160, including interest, with final payment in December 2007.	$	773	—
Installment notes payable to banks; interest ranging from 4.65% to 6.3%, due in monthly installments ranging from $1,095 to $14,239, including interest, with final payments from February through October 2008.		820,816	785,157
Installment notes payable to banks; interest ranging from 6.08% to 6.2%, due in monthly installments ranging from $8,944 to $22,990, including interest, with final payment in June 2009.		1,105,409	—
	$	1,926,998	785,157

Payments on the above notes are due as follows:

	Amount
Three months ended December 31, 2006	$	199,063
Year ended December 31, 2007		858,071
Year ended December 31, 2008		719,213
Year ended December 31, 2009		150,651
	$	1,926,998

11

6. Supplemental
Cash Flow
Information Other noncash activities included in the determination of net loss are as follows:

Nine months Ended September 30,	2006		2005
Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank	$	410,423	$	—

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:

Nine months Ended September 30,		2006		2005
Debt assumed in connection with purchase of computer equipment	$	1,552,263	$	378,710
Equipment acquisition fees earned by General Partner upon purchase of equipment from prepaid acquisition fees	$	39,273	$	(379,949	)

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

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.

12

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

FORWARD LOOKING STATEMENTS

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

COMPUTER EQUIPMENT

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

REVENUE RECOGNITION

Through September 30, 2006, the Partnership’s leasing operations consisted of operating leases. Operating lease revenue is recognized on a monthly basis in accordance with the terms of the lease agreement.

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, 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.

13

Liquidity and Capital Resources

The Partnership’s primary source of capital for the nine months ended September 30, 2006 and the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, was contributions of approximately $5,300,000 and $12,800,000, respectively. Equipment in the amount of approximately $5,800,000 was purchased during the nine months ended September 30, 2006 and distributions in the amount of $1,800,000 were paid during that same period. Equipment in the amount of $1,288,000 was purchased and distributions were paid in the amount of $341,000 during the period of March 14, 2005 (Commencement of Operations) through September 30, 2005.

For the nine months ended September 30, 2006, cash was provided from operations in the amount of $1,100,000 that includes a net loss of $292,000 and depreciation and amortization expenses of approximately $1,872,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $410,000.

For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, the Partnership used cash for operating activities of approximately $403,000, which includes a net loss of approximately $576,000, and depreciation and amortization expenses of approximately $81,000.

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 September 30, 2006, the Partnership had future minimum rentals on non-cancelable operating leases of $965,000 for the balance of the year ending December 31, 2006 and $7,497,000 thereafter.

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 are deemed necessary.

Results of Operations

Three months ended September 30, 2006 compared to three months ended September 30, 2005

For the three months ended September 30, 2006, the Partnership recognized income of approximately $1,128,000 and expenses of approximately $1,112,000, resulting in net income of approximately $16,000. For the three months ended September 30, 2005, the Partnership recognized income of approximately $99,000 and expenses of approximately $370,000, resulting in a net loss of approximately $271,000.

14

Lease income increased to approximately $1,022,000 for the three months ended September 30, 2006, from $84,000 for the three months ended September 30, 2005, primarily due to lease agreements being entered into since the nine months ended September 30, 2005 as the fund commenced operations.

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 decreased 2% to approximately $248,000 for the quarter ended September 30, 2006, versus $254,000 for the quarter ended September 30, 2005.

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 approximately $48,000 for the quarter ended September 30, 2006, versus $4,000 for the quarter ended September 30, 2005, and is consistent with the increase in lease income.

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses increased to approximately $787,000 for the quarter ended September 30, 2006, from $67,000 for the quarter ended September 30, 2005 due to additional equipment being purchased and associated acquisition and finance fees being recorded by the Partnership since the quarter ended September 30, 2005.

Nine months ended September 30, 2006 compared to March 14, 2005 (Commencement of Operations) through September 30, 2005

For the nine months ended September 30, 2006, the Partnership recognized income of approximately $2,663,000 and expenses of approximately $2,955,000 resulting in a net loss of approximately $292,000. For the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, the Partnership recognized income of approximately $116,000 and expenses of approximately $692,000, resulting in a net loss of approximately $576,000.

Lease income increased to $2,389,000 for the nine months ended September 30, 2006, versus $102,000 for the period of to March 14, 2005 (Commencement of Operations) through September 30, 2005, primarily due to more lease agreements being entered into since the period from September 30, 2005 as the fund commenced operations.

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 to approximately $861,000 for the nine months ended September 30, 2006, from $481,000 for the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, primarily due to an LP expenses of approximately $333,000, an increase in insurance costs of approximately $16,000 and an increase in accounting fees of approximately $11,000. Such expenses increased due to commencement of operations and further activity within the fund.

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 approximately $120,000 for the nine months ended September 30, 2006, from $5,000 for the period of March 14, 2005 (Commencement of Operations) through September 30, 2005, and is consistent with the increase in lease income.

15

Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses increased to approximately $1,870,000 for the nine months ended September 30, 2006 from $81,000 for the period ended September 30, 2005, due to additional equipment being purchased and the associated acquisition and finance fees being recorded by the Partnership since the period ended September 30, 2005.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership believes its exposure to market risk is not material due to the fixed interest rate of its long-term debt. There are no material changes to this disclosure related to these items since the filing of our Annul Report on Form 10-K for the year ended December 31, 2005.

Item 4. Controls and Procedures

The Chief Executive Officer and Financial Officer of the General Partner has conducted a review of the General Partner’s disclosure controls and procedures as of September 30, 2006.

The Company’s disclosure controls and procedures include the General Partner’s controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended (the “ Exchange Act”) is accumulated and communicated to the General partner’s management, including its chief executive officer and a financial officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported with the required time periods.

Based upon this review, the General Partner’s Chief Executive Officer and Financial Officer has concluded that the General Partner’s disclosure controls (as defined pursuant to Rule 13a-14 c promulgated under the Exchange Act) are sufficiently effective to ensure that the information required to be disclosed by the General Partner in the reports it files under the Exchange Act is recorded, processed, summarized and reported with adequate timeliness.

There have been no changes in the General Partner’s internal controls or in other factors that could materially affect our disclosure controls and procedures in the quarter ended September 30, 2006, that have materially affected or are reasonably likely to materially affect the General Partner’s internal controls over financial reporting.

Part II: OTHER INFORMATION

Commonwealth Income & Growth Fund V

Item 1. Legal Proceedings.

N/A

Item 1A. Risk Factors

16

THERE IS NO PUBLIC MARKET FOR THE UNITS, AND YOU MAY BE UNABLE TO SELL OR TRANSFER YOUR UNITS AT A TIME AND PRICE OF YOUR CHOOSING

There exists no public market for the units, and the General Partner does not expect a public market for units to develop. The units cannot be pledged or transferred without the consent of the General Partner. The units should be purchased as a long-term investment only. The General Partner intends to limit the number of transfers to no more than that number permitted by one of the safe harbors available under the tax laws and regulations to prevent CIGF5 from being taxed as a corporation. Generally, these safe harbors require that all nonexempt transfers and redemptions of units in any calendar year not exceed two percent of the outstanding interests in the capital or profits of CIGF5.

The General Partner has sole discretion in deciding whether we will redeem units in the future. Consequently, you may not be able to liquidate your investment in the event of an emergency. You must be prepared to hold your units for the life of CIGF5. CIGF5’s life cycle will last approximately 10 to 12 years, and any extension of this period will require an amendment to the partnership agreement, which must be approved by a majority of the Limited Partners. You may be able to resell your units, if at all, only at a discount to the offering price, which may be significant, and the redemption or sale price may be less than the price you originally paid for your units.

INFORMATION TECHNOLOGY EQUIPMENT WE PURCHASE WILL DEPRECIATE IN VALUE AND/OR BECOME OBSOLETE OR LOSE VALUE AS NEW TECHNOLOGY IS DEVELOPED, WHICH CAN REDUCE THE VALUE OF YOUR UNITS AND YOUR ULTIMATE CASH RETURN.

Residual value is the amount realized upon the sale or release of equipment when the original lease has expired. The residual value of our equipment may decline if technological advancements make it obsolete or change market preferences. The residual value depends on, among other factors, the condition of the equipment, the cost of comparable new equipment, the technological obsolescence of the equipment and supply and demand for the equipment.

In either of these events, the equipment we purchased may have little or no residual value. This will result in insufficient assets for us to distribute cash in a total amount equal to the invested capital of the Limited Partners over the term of our existence. Also, such an occurrence may reduce the value of the units. Although currently we expect CIGF5 to acquire predominantly new equipment, CIGF5 may purchase used equipment. There is no limitation on the amount of used equipment which CIGF5 may acquire. The acquisitions of used equipment may increase the risk that such equipment will become obsolete so that it will have little or no residual value.

WE PAY SIGNIFICANT FEES TO THE GENERAL PARTNER AND AFFILIATES, WHICH WILL REDUCE CASH AVAILABLE FOR DISTRIBUTIONS.

The General Partner and its affiliates, including Commonwealth Capital Securities Corp.(“CCSC”), will receive substantial fees. Some fees will be paid without regard to the amount of distributions paid or the success or profitability of CIGF5’s operations and investments. For example, an increase in portfolio turnover or the amount of leverage used to purchase equipment may increase the fees we pay to the General Partner. Such compensation and fees were established by the General Partner and are not based on arm’s-length negotiations.

17

CIGF5 HAS A LIMITED OPERATING HISTORY UPON WHICH YOU CAN EVALUATE PERFORMANCE. THERE CAN BE NO ASSURANCE THAT ANY OF THE INVESTMENT OBJECTIVES WILL BE ATTAINED.

Our operations may not ultimately be successful and we may be unable to meet our stated investment objectives. Specifically, sufficient cash may ultimately not be available for distribution to investors. Our General Partner sponsors four other public equipment leasing programs with investment objectives similar to CIGF5. The General Partner has also sponsored several privately held equipment leasing programs. Results for these prior public and private programs have in some cases been lower than originally anticipated.

ANY DELAY IN ACQUIRING EQUIPMENT WILL DIMINISH OUR RETURNS.

Due to competition with other lessors, we may experience difficulty in obtaining and leasing appropriate equipment. Our ability to acquire and lease equipment may also be adversely affected by interest rates, the availability of capital or increases in corporate liquidity, since prospective lessees may prefer to raise capital, incur debt or use internally-generated cash to purchase equipment rather than enter the leasing market.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

N/A

Item 3. Defaults Upon Senior Securities.

N/A

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

N/A

Item 5. Other Information.

N/A

Item 6. Exhibits and Reports on Form 8-K

a) Exhibits

31.1 THE RULE 15d-14(a)

31.2 THE RULE 15d-14(a)

32.1 SECTION 1350 CERTIFICATION OF CEO

32.2 SECTION 1350 CERTIFICATION OF CFO

b) N/A

18

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
November 14, 2006	By:	/s/ Kimberly A. Springsteen
Date
	Kimberly A. Springsteen
	Chief Executive Officer

19

EX-31.1

31.1 THE RULE 15d-14(a)

I, Kimberly A. Springsteen certify that:

1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income & Growth Fund V (the Registrant);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Kimberly A. Springsteen

Kimberly A. Springsteen
Chief Executive Officer
November 14, 2006

EX-31.2

31.2 THE RULE 15d-14(a)

I, Kimberly A. Springsteen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Commonwealth Income & Growth Fund V (the Registrant);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Kimberly A. Springsteen

Kimberly A. Springsteen
Principal Financial Officer
November 14, 2006

EX-32.1

32.1 SECTION 1350 CERTIFICATION OF CEO

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Commonwealth Income & Growth Fund V, (the “Company”) on Form 10-Q for the quarter ending September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kimberly A. Springsteen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kimberly A. Springsteen

Kimberly A. Springsteen
Chief Executive Officer
November 14, 2006

EX-32.2

32.2 SECTION 1350 CERTIFICATION OF CFO

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Commonwealth Income & Growth Fund V, (the “Company”) on Form 10-Q for the quarter ending September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kimberly A. Springsteen, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kimberly A. Springsteen

Kimberly A. Springsteen
Principal Financial Officer
November 14, 2006