form10q.htm

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PART I
Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
PART II
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures	12
Item 5.	Other Information	12
Item 6.	Exhibits	12

Commonwealth Income & Growth Fund V
Condensed Balance Sheets

	June 30,			December 31,
	2012			2011
	(unaudited)
ASSETS
Cash and cash equivalents	$	71,760		$	203,066
Lease income receivable, net of reserve of approximately $154,000 at June 30, 2012 and December 31, 2011		65,190			109,177
Other receivables		11,684			26,395
Escrow - Restricted Cash		-			960,000
Prepaid expenses		413			620
		149,047			1,299,258

Equipment, at cost		12,188,446			10,972,410
Accumulated depreciation		(9,742,424	)		(9,402,459	)
		2,446,022			1,569,951

Equipment acquisition costs and deferred expenses, net of accumulated amortization of approximately $35,000 and $130,000 at June 30, 2012 and December 31, 2011, respectively		83,000			55,461
Prepaid acquisition fees		-			20,224
		83,000			75,685

Total Assets	$	2,678,069		$	2,944,894

LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES
Accounts payable	$	132,794		$	209,667
Accounts payable, General Partner		458,878			410,180
Accounts payable, Commonwealth Capital Corp.		498,729			358,090
Contingency accrual		-			564,000
Payable to Affiliate		105,465			512,114
Other accrued expenses		41,327			38,186
Unearned lease income		48,173			55,169
Notes payable		1,049,060			358,090
Total Liabilities		2,334,426			2,505,496

PARTNERS' CAPITAL
General Partner		1,000			1,000
Limited Partners		342,643			438,398
Total Partners' Capital		343,643			439,398

Total Liabilities and Partners' Capital	$	2,678,069		$	2,944,894


see accompanying notes to condensed financial statements

Commonwealth Income & Growth Fund V
Condensed Statements of Operations
(unaudited)

		Three Months Ended						Six Months Ended
	June 30,							June 30,
		2012			2011			2012			2011
Revenue
Lease		$	327,027		$	365,954		$	616,851		$	775,668
Interest and other			164			335			339			4,175
Gain on sale of equipment			16,495			5,262			19,186			50,570
Total revenue			343,686			371,551			636,376			830,413

Expenses
Operating, excluding depreciation			74,322			151,419			138,176			349,165
Legal			17,845			196,889			17,969			209,028
Contingency loss			-			176,000			-			176,000
Equipment management fee, General Partner			8,175			9,139			15,833			19,382
Interest			14,664			4,841			22,428			9,757
Depreciation			289,420			342,899			525,210			846,711
Amortization of equipment acquisition costs and deferred expenses			13,932			17,565			29,500			36,101
Other			207			-			3,015			-
Total expenses			418,565			898,752			752,131			1,646,144

Net loss		$	(74,879	)	$	(527,201	)	$	(115,755	)	$	(815,731	)

Net loss allocated to Limited Partners		$	(74,879	)	$	(527,201	)	$	(115,755	)	$	(817,153	)

Net loss per equivalent Limited Partnership unit		$	(0.06	)	$	(0.43	)	$	(0.09	)	$	(0.66	)

Weighted average number of equivalent Limited Partnership units outstanding during the period			1,236,608			1,236,608			1,236,608			1,236,973


see accompanying notes to condensed financial statements

Commonwealth Income & Growth Fund V
Condensed Statement of Partners' Capital
For the six months ended June 30, 2012
(unaudited)

	General Partner Units		Limited Partner Units		General Partner		Limited Partner			Total
Balance, January 1, 2012		50		1,236,608	$	1,000	$	438,398		$	439,398
Net loss		-		-		-		(115,755	)		(115,755	)
Cash Contributions - CCC		-		-		-		20,000			20,000
Balance, June 30, 2012		50		1,236,608		1,000		342,643			343,643

see accompanying notes to condensed financial statements

Commonwealth Income & Growth Fund V
Condensed Statements of Cash Flow
(unaudited)

	Six Months ended
	June 30, 2012			June 30, 2011

Net cash (used in) provided by operating activities	$	(217,656	)	$	621,940

Investing activities:
Capital expenditures		(489,045	)		(77,706	)
Equipment acquisition fees, General Partner		(30,583	)		-
Net proceeds from the sale of computer equipment		38,861			295,771
Net cash (used in) provided by investing activities		(480,767	)		218,065

Financing activities:
Redemptions		-			(5,299	)
Release of escrow - Restricted Cash		960,000			-
Payments on payable to affiliate		(406,649	)		-
Cash Contributions - CCC		20,000			-
Debt placement fee paid to the General Partner		(6,234	)		-
Distributions to partners		-			(448,249	)
Net cash provided by (used in) financing activities		567,117			(453,548	)

Net (decrease) increase in cash		(131,306	)		386,457

Cash and cash equivalents at beginning of period		203,066			79,118

Cash and cash equivalents at end of period	$	71,760		$	465,575

see accompanying notes to condensed financial statements

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

The Partnership used the proceeds of the offering to acquire, own and lease various types of information technology, medical technology, telecommunications technology, inventory management equipment and other similar capital equipment, which is leased primarily to U.S. corporations and institutions.

Commonwealth Capital Corp. (“CCC”), on behalf of the Partnership and other affiliated partnerships, acquires equipment subject to associated debt obligations and lease agreements and allocate a participation in the cost, debt and lease revenue to the various partnerships that it manages based on certain risk factors.

The Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of CCC. Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its equipment, make final distributions to partners, and to dissolve. Unless sooner terminated, the Partnership will continue until February 4, 2017.

As a result of a jury’s verdict in favor of the City of Tempe, the Partnership has temporarily suspended distributions, beginning with the second quarter of 2011 and continuing through third quarter 2012. Although litigation was ultimately settled in March 2012, the General Partner will continue to reassess the funding of limited partner distributions throughout the remainder of 2012. If available cash flow or net disposition proceeds are insufficient to cover the Partnership expenses and liabilities on a short or long term basis, the Partnership may attempt to obtain additional funds by refinancing equipment, or by borrowing within its permissible limits.

The financial information presented as of any date other than December 31, 2011 has been prepared from the books and records without audit. Financial information as of December 31, 2011 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by generally accepted accounting principles to be included in audited financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included. For further information regarding the Partnership’s accounting policies, refer to the financial statements and related notes included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2011. Operating results for the six months ended June 30, 2012 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2012.

Estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, judgment was necessary to interpret market data and develop estimated fair value. Cash and cash equivalents, receivables, accounts payable and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of June 30, 2012 and December 31, 2011 due to the short term nature of these financial instruments.

The Partnership’s long-term debt consists of notes payable, which are secured by specific equipment and are nonrecourse liabilities of the Partnership. The estimated fair value of this debt at June 30, 2012 and December 31, 2011 approximates the carrying value of these instruments, due to the interest rates on the debt approximating current market interest rates. The Partnership classifies the fair value of its notes payable within Level 2 of the valuation hierarchy based on the observable inputs used to estimate fair value.

At June 30, 2012, cash was held in three accounts maintained at one financial institution with an aggregate balance of approximately $74,000. Bank accounts are federally insured up to $250,000, while pursuant to the Dodd/Frank Act of 2010, some accounts are fully insured by the FDIC. At June 30, 2012, the total cash bank balance was as follows:

The Partnership’s bank balances are fully insured by the FDIC as of June 30, 2012. The Partnership deposits its funds with a Moody's Aaa-Rated banking institution which is one of only three Aaa-Rated banks listed on the New York Stock Exchange. The Partnership has not experienced any losses in such accounts, and believes it is not exposed to any significant credit risk. The amount in such accounts will fluctuate throughout 2012 due to many factors, including the pace of additional cash receipts, equipment acquisitions, interest rates and distributions to investors.

In May 2011, the FASB issued ASU No. 2011-04 (“ASC Update 2011-04”), Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRS. This ASU is intended to update the fair value measurement and disclosure requirements in US GAAP for measuring fair value and for disclosing information about fair value measurements. Some of the amendments clarify the Board’s intent about application of existing fair value measurement requirements, while others change a particular principle or requirement for measuring or disclosing fair value measurement information. The amendments in this update are for interim and annual periods beginning after December 15, 2011. The Partnership adopted the provisions of this ASU during the first quarter of 2012, and the required changes in presentation and disclosure requirements have been included in its financial statements. The adoption did not have a material impact on the Partnership’s financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-11 (“ASC Update 2011-11”), Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose information about offsetting and related arrangements to enable user of its financial statements to understand the effect of those arrangements on its financial position. The amendments in this update are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Partnership is currently evaluating the effect this ASU will have on its financial statements.

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 remain actively involved with the lessee and encourages potential extensions, remarketing or sale of equipment. This strategy is designed to minimize any conflicts the leasing company may have with a new lessee and may assist in maximizing overall portfolio performance. The remarketing fee is tied into lease performance thresholds and is a factor in the negotiation of the fee. Remarketing fees incurred in connection with lease extensions are accounted for as operating costs. Remarketing fees incurred in connection with the sale of computer equipment are included in our gain or loss calculations. For the six months ended June 30, 2012 and 2011, the Partnership incurred remarketing fees of approximately $20,000 and $45,000, respectively. For the six months ended June 30, 2012 and 2011 the Partnership paid approximately $21,000 and $30,000, respectively, in such fees.

CCC, on behalf of the Partnership and on behalf of other affiliated partnerships, acquires equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors. The Partnership’s share of the equipment in which it participates with other partnerships at June 30, 2012 was approximately $9,791,000 and is included in the Partnership’s fixed assets on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at June 30, 2012 was approximately $30,405,000. The Partnership’s share of the outstanding debt associated with this equipment at June 30, 2012 was approximately $624,000. The total outstanding debt related to the equipment shared by the Partnership at June 30, 2012 was approximately $1,374,000.

The Partnership’s share of the equipment in which it participates with other partnerships at December 31, 2011 was approximately $9,280,000 and is included in the Partnership’s fixed assets on its balance sheet. The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2011 was approximately $29,772,000. The Partnership’s share of the outstanding debt associated with this equipment at December 31, 2011 was approximately $351,000. The total outstanding debt related to the equipment shared by the Partnership at December 31, 2011 was approximately $952,000.

As the Partnership and the other programs managed by the General Partner continue to acquire new equipment for the portfolio, opportunities for shared participation are expected to continue. Sharing in the acquisition of a lease portfolio gives the fund an opportunity to acquire additional assets and revenue streams, while allowing the fund to remain diversified and reducing its overall risk with respect to one portfolio.

During the year ended December 31, 2011, the Partnership recorded a payable to an affiliate in the amount of approximately $512,000, including interest. The balance is approximately $105,000 at June 30, 2012. The payable carries an annual interest rate of 6.25%. The payable is expected to be paid back during 2012.

Six months ended June 30,	2012		2011

Reimbursable expenses
Reimbursable expenses, including legal fees, which are charged to the Partnership by CCC in connection with the administration and operation of the Partnership, are allocated to the Partnership based upon several factors including, but not limited to, the number of investors, compliance issues, and the number of existing leases.	$	134,000	$	400,000

Equipment acquisition fee
The General Partner earned an equipment acquisition fee of 4% of the purchase price of each item of equipment purchased as compensation for the negotiation of the acquisition of the equipment and lease thereof or sale under a conditional sales contract. At June 30, 2012, the remaining balance of prepaid acquisition fees was $0, as all equipment acquisition fees have been earned. For the six months ended June 30, 2012, approximately $6,000 of acquisition fees were waived by the General Partner.	$	51,000	$	3,000

Debt placement fee
As compensation for arranging term debt to finance our acquisition of equipment, we will pay the general partner a fee equal to one percent of such indebtedness; provided, however, that such fee shall be reduced to the extent we incur such fees to third parties unaffiliated with the general partner or the lender with respect to such indebtedness. No such fee will be paid with respect to borrowings from the general partner or its affiliates. We intend to initially acquire leases on an all cash basis with the proceeds of this offering, but may borrow funds after the offering proceeds have been invested. The amount we borrow, and therefore the amount of the fee, will depend upon interest rates at the time of a loan, and the amount of leverage we determine is appropriate at the time. We do not intend to use more than 30% leverage overall in our portfolio. Fees will increase as the amount of leverage we use increases, and as turnover in the portfolio increases and additional equipment is purchased using leverage. During the six months ended June 30, 2012, the General Partner waived approximately $3,000 of debt placement fees.		$	6,000			$	-

Equipment management fee
The General Partner is entitled to be paid for managing the equipment portfolio a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 2.5% of the gross lease revenues attributable to equipment which is subject to operating leases. In an effort to increase future cash flow for the fund our General Partner had elected to reduce the percentage of equipment management fees paid to it from 5% to 2.5% of the gross lease revenues attributable to equipment which is subject to operating leases. The reduction was effective beginning in July 2010.		$	16,000			$	19,000

Equipment liquidation fee
With respect to each item of equipment sold by the General Partner (other than in connection with a conditional sales contract), a fee equal to the lesser of (i) 50% of the competitive equipment sale commission or (ii) three percent of the sales price for such equipment is payable to the General Partner. The payment of such fee is subordinated to the receipt by the limited partners of (i) a return of their net capital contributions and a 10% per annum cumulative return, compounded daily, on adjusted capital contributions and (ii) the net disposition proceeds from such sale in accordance with the Partnership Agreement. Such fee will be reduced to the extent any liquidation or resale fees are paid to unaffiliated parties. During the six months ended June 30, 2012, the General Partner waived approximately $1,000 of equipment liquidation fees.		$	-			$	5,000

	June 30, 2012		December 31, 2011
Installment note payable to bank; interest at 6.21% due in monthly installments of $1,368, including interest, with final payment in May 2012	$	-		$	7,000
Installment notes payable to bank; interest rates ranging from 5.89% to 7.50%, due in monthly installments of $6,666 and $7,104, respectively, including interest, with final payment in April 2013		92,000			163,000
Installment notes payable to bank; interest at 3.95%, due in quarterly installments ranging from $6,824 to $9,657, including interest, with final payment in July 2014		141,000			188,000
Installment notes payable to bank; interest at 3.95%, due in quarterly installments ranging from $4,517 to $9,795, including interest, with final payment in December 2014		345,000			-
Installment notes payable to bank: interest at 5.25%, due in monthly installments of $4,813, including interest, with final payment in March 2015		291,000			-
Installment notes payable to bank; interest at 5.60%, due in monthly installments ranging from $868 to $2,069, including interest, with final payment in April 2015		180,000			-
	$	1,049,000		$	358,000

These notes are secured by specific computer equipment and are nonrecourse liabilities of the Partnership. As such, the notes do not contain any debt covenants with which we must comply on either an annual or quarterly basis. Aggregate maturities of notes payable for each of the periods subsequent to June 30, 2012 are as follows:

As previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2011, management had fully impaired all equipment and reserved for all accounts receivable related to the lease to Allied Health Care Services, Inc. (“Allied”), due to the bankruptcy of Allied and the criminal conviction of its founder for fraud. There have been no material changes in the status of Allied’s bankruptcy or in the likelihood of recovering available assets since the date of the Partnership’s annual report. The bankruptcy trustee has begun to pursue adversary claims against certain creditors, seeking the return of pre-petition payments made by Allied in excess of such creditors’ losses. Since the Partnership's losses to Allied exceed payments received from Allied, management believes that the Partnership’s exposure to such potential claims remains remote at this time.

Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking 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.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base these 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.

Commonwealth Capital Corp., on our behalf and on behalf of other affiliated partnerships, acquires 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 equipment for financial statement purposes is based on the straight-line method estimated generally over useful lives of two to four years.

The Equipment Lease Finance Association ("ELFA") Monthly Leasing and Finance Index which reports economic activity for the $628 billiion equipment finance sector, showed overall new business volume for the 2nd quarter of 2012 increased 14.5% relative to the same period of 2011. Credit quality continued to improve as the rate of receivables aged in excess of 30 days declined slightly when compared to data from the 2nd quarter of 2011. Additionally, charge-offs declined 45.4% in the 2nd quarter of 2012, relative to the same period in 2011. More than 65% of ELFA reporting members reported submitting more transactions for approval during March, a 62% increase over the previous month. For 2012, the ELFA has forecast a 4.1% increase in finance volume year over year.

Lease income receivable includes current lease income receivable net of allowances for uncollectible accounts, if any. The Partnership monitors lease income receivable to ensure timely and accurate payment by lessees. Its Lease Relations department is responsible for monitoring lease income receivable and, as necessary, resolving outstanding invoices. Lease revenue is recognized on a monthly straight-line basis which is in accordance with the terms of the lease agreement.

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 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 impairment exists. The amount of the impairment is determined based on the difference between the carrying value and the fair value and is included in depreciation expense in the accompanying financial statements. The fair value of equipment is calculated using income or market approaches.

Our primary source of cash for the six months ended June 30, 2012 was from the proceeds from the sale of equipment of approximately $39,000, a cash contribution from CCC of approximately $20,000 and from the return of the escrow restricted cash of approximately $960,000. This compares to the six months ended June 30, 2011 where our primary source of cash was from operating activities of approximately $622,000 and proceeds from the sale of equipment were approximately $296,000.

Our primary use of cash for the six months ended June 30, 2012 was for operating activities of approximately $218,000 for the purchase of new equipment of approximately $489,000, payments on a payable to Affiliate of approximately $407,000 and for equipment acquisition fees of approximately $31,000. For the six months ended June 30, 2011, our primary uses of cash were for distributions to partners of approximately $448,000, and for capital expenditures of approximately $78,000.

Capital expenditures are expected to occur during the remainder of 2012, as management focuses on additional equipment acquisitions. We intend to invest approximately $700,000 in additional equipment during the remainder of 2012. The acquisition of this equipment will be primarily funded by debt financing. Any debt service will be funded from cash flows from lease rental payments, and not from public offering proceeds.

Cash was used in operating activities for the six months ended June 30, 2012 of approximately $218,000, which includes a net loss of approximately $116,000 and depreciation and amortization expenses of approximately $555,000. Other non-cash activities included in the determination of net loss include direct payments of lease income by lessees to banks of approximately $241,000. Additionally, we had a gain on the sale of equipment in the amount of approximately $19,000. For the six months ended June 30, 2011 cash was generated by operating activities of approximately $622,000, which includes a net loss of approximately $816,000 and depreciation and amortization expenses of approximately $883,000. Other non-cash activities included in the determination of net loss include direct payments of lease income by lessees to banks of approximately $97,000. Additionally we had a gain on the sale of equipment in the amount of approximately $51,000.

The Partnership’s bank balances are fully insured by the FDIC as of June 30, 2012. The Partnership has not experienced any losses in our accounts, and believes it is not exposed to any significant credit risk. The amounts in such accounts will fluctuate throughout 2012 due to many factors, including the pace of additional limited partner contributions, cash receipts, equipment acquisitions, interest rates and distributions to limited partners.

Our investment strategy of acquiring equipment and generally leasing it under triple-net leases to operators who generally meet specified financial standards minimizes our operating expenses. As of June 30, 2012, we had future minimum rentals on non-cancelable operating leases of approximately $536,000 for the balance of the year ending December 31, 2012 and approximately $1,508,000 thereafter.

Our cash from operations is expected to continue to be adequate to cover all operating expenses, liabilities, and distributions to Partners during the next 12-month period. If available cash flow or net disposition proceeds are insufficient to cover our expenses and liabilities on a short and long term basis, we will attempt to obtain additional funds by disposing of or refinancing equipment, or by borrowing within our permissible limits. As a result of the litigation with the City of Tempe, the Partnership had temporarily suspended distributions, beginning with the second quarter of 2011. The General Partner will continue to reassess the funding of limited partner distributions throughout the remainder of 2012. The General Partner and CCC will determine if related party payables owed to them by the Partnership may be deferred (if deemed necessary) in an effort to increase the Partnership’s cash flow.

We sold equipment with a net book value of approximately $15,000 for the three months ended June 30, 2012, for a net gain of approximately $16,000. This compared to equipment that we sold for the three months ended June 30, 2011 with a net book value of approximately $140,000, for a net gain of approximately $5,000.

Our operating and legal expenses, excluding depreciation, primarily consist of accounting and legal fees, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership. Operating expenses decreased to approximately $74,000 for the three months ended June 30, 2012, from approximately $151,000 for the three months ended June 30, 2011. This decrease is primarily attributable to a decrease in various administrative expenses. Legal expenses decreased to approximately $18,000 for the three months ended June 30, 2012 from approximately $197,000 for the three months ended June 30, 2011. The decrease in legal expenses is due to the settlement in March 2012 of the MobilePro/Tempe litigation that was ongoing during 2011.

We pay an equipment management fee to our general partner for managing our equipment portfolio. The equipment management fee is approximately 2.5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee decreased to approximately $8,000 for the three months ended June 30, 2012 from approximately $9,000 for the three months ended June 30, 2011, which is consistent with the decrease in lease revenue.

Depreciation and amortization expenses consist of depreciation on equipment and amortization of equipment acquisition fees. These expenses decreased to approximately $303,000 for the three months ended June 30, 2012, from $360,000 for the three months ended June 30, 2011. This decrease was due to equipment and acquisition fees being fully depreciated/amortized and not being replaced with as many new equipment purchases.

For the three months ended June 30, 2012, we recognized revenue of approximately $344,000 and expenses of approximately $419,000, resulting in a net loss of approximately $75,000. For the three months ended June 30, 2011, we recognized revenue of approximately $372,000 and expenses of approximately $899,000, resulting in a net loss of approximately $527,000. This change in net loss is due to the changes in revenue and expenses as described above.

Our lease revenue decreased to approximately $617,000 for the six months ended June 30, 2012, from approximately $776,000 for the six months ended June 30, 2011. This decrease was primarily due to more lease agreements ending versus new lease agreements being acquired during the six months ended June 30, 2012.

We sold equipment with a net book value of approximately $20,000 for the six months ended June 30, 2012, for a net gain of approximately $19,000. This compared to equipment that we sold for the six months ended June 30, 2011 with a net book value of approximately $245,000, for a net gain of approximately $51,000.

Our operating and legal expenses, excluding depreciation, primarily consist of accounting and legal fees, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership. Operating expenses decreased to approximately $138,000 for the six months ended June 30, 2012, from approximately $349,000 for the six months ended June 30, 2011. This decrease is primarily attributable to a decrease in various administrative expenses. Legal expenses decreased to approximately $18,000 for the six months ended June 30, 2012 from approximately $209,000 for the six months ended June 30, 2011. The decrease in legal expenses is due to the settlement in March 2012 of the MobilePro/Tempe litigation that was ongoing during 2011.

We pay an equipment management fee to our general partner for managing our equipment portfolio. The equipment management fee is approximately 2.5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee decreased to approximately $16,000 for the six months ended June 30, 2012 from approximately $19,000 for the six months ended June 30, 2011, which is consistent with the decrease in lease revenue.

Depreciation and amortization expenses consist of depreciation on equipment and amortization of equipment acquisition fees. These expenses decreased to approximately $555,000 for the six months ended June 30, 2012, from $883,000 for the six months ended June 30, 2011. This decrease was due to equipment and acquisition fees being fully depreciated/amortized and not being replaced with as many new equipment purchases.

For the six months ended June 30, 2012, we recognized revenue of approximately $636,000 and expenses of approximately $752,000, resulting in a net loss of approximately $116,000. For the six months ended June 30, 2011, we recognized revenue of approximately $830,000 and expenses of approximately $1,646,000, resulting in a net loss of approximately $816,000. This change in net loss is due to the changes in revenue and expenses as described above.

Our management, under the supervision and with the participation of the Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures related to our reporting and disclosure obligations as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that, as of June 30, 2012, our disclosure controls and procedures are effective in ensuring that information relating to us which is required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934 is (a) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There were no changes in the Partnership’s internal control over financial reporting during the second quarter of 2012 that have materially affected or are reasonably likely to materially affect its internal control over financial reporting.

Commonwealth Capital Corp. ("Commonwealth") has settled the litigation in which it was involved on the Partnership's behalf with the City of Tempe, Arizona related to a default by a lessee, MobilePro Corp. MobilePro was a lessee that had defaulted on its lease of wi-fi equipment installed throughout the City of Tempe as part of a municipal broadband wireless network. Commonwealth and the City of Tempe agreed to settle the dispute at a mediation held on March 9, 2012, with Commonwealth agreeing to pay a reduced judgment of $1,175,000, of which the Partnership’s share is approximately $564,000. The final settlement agreement was signed in March 30, 2012, and payment made to the City of Tempe on April 3, 2012. The remainder of the bond collateral, after payment of banking fees, was returned to Commonwealth and the Partnership’s proportionate share (approximately $395,000) was allocated back to the Partnership.

	COMMONWEALTH INCOME & GROWTH FUND V
	BY: COMMONWEALTH INCOME & GROWTH FUND, INC., General Partner
August 14, 2012	By: /s/ Kimberly A. Springsteen-Abbott
Date	Kimberly A. Springsteen-Abbott
	Chief Executive Officer

August 14, 2012	By: /s/ Lynn A. Franceschina
Date	Lynn A. Franceschina
	Executive Vice President, Chief Operating Officer

Pennsylvania	65-1189593
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company T
(Do not check if a smaller reporting company.)

At June 30, 2012	Amount
Total bank balance	$	74,000
FDIC insured		(74,000	)
Uninsured amount	$	-

	Amount
Six Months ended December 31, 2012	$	536,000
Year ended December 31, 2013		825,000
Year ended December 31, 2014		626,000
Year ended December 31, 2015		57,000
	$	2,044,000

	Amount
Six months ending December 31, 2012	$	223,000
Year ended December 31, 2013		407,000
Year ended December 31, 2014		374,000
Year ended December 31, 2015		45,000
	$	1,049,000