UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2016

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

For the transition period from ______ to ______

Commission File Number 033-89968

INDEPENDENCE TAX CREDIT PLUS L.P. IV

(Exact name of registrant as specified in its charter)

Delaware		13-3809869
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1225 17th Street, Denver, Colorado		80202
(Address of principal executive offices)		(Zip Code)

(303) 927-5000

Registrant’s telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

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

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

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if a smaller reporting company)		Smaller reporting company ☑

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

Table of Contents


		Page Numbers

Part I
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statement of Changes in Partners’ (Deficit) Capital	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19

Part II
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20

Signatures		21

Table of Contents

Item 1. Financial Statements.

INDEPENDENCE TAX CREDIT PLUS L.P. IV

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	June 30,		March 31,
	2016		2016
	(Unaudited)		(Audited)
ASSETS

Operating assets
Property and equipment - (at cost, net of accumulated depreciation of $7,948,911 and $7,946,808, respectively)	$	179,049	$	181,152
Cash and cash equivalents		823,225		867,364
Cash held in escrow		628,198		622,020
Other assets		56,369		80,560

Total assets	$	1,686,841	$	1,751,096

LIABILITIES AND PARTNERS’ (DEFICIT) CAPITAL

Operating liabilities
Mortgage notes payable (net of deferred costs of $100,916 and $102,389, respectively)	$	4,738,297	$	4,776,876
Accounts payable		113,887		124,790
Accrued interest payable		65,648		63,220
Security deposits payable		144,181		147,226
Due to local general partners and affiliates (Note 2)		630,137		607,082
Due to general partners and affiliates (Note 2)		155,079		85,547

Total liabilities		5,847,229		5,804,741

Commitments and contingencies

Partners’ (deficit) capital
Limited partners (45,844 BACs issued and outstanding)		(3,917,952)		(3,812,073)
General partner		(429,674)		(428,605)

Independence Tax Credit Plus L.P. IV total		(4,347,626)		(4,240,678)

Noncontrolling interests		187,238		187,033

Total partners’ (deficit) capital		(4,160,388)		(4,053,645)

Total liabilities and partners’ (deficit) capital	$	1,686,841	$	1,751,096

See accompanying notes to condensed consolidated financial statements.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
	June 30,
	2016		2015*

Revenues
Rental income	$	408,138	$	399,999
Other		22,267		20,136

Total revenues		430,405		420,135

Expenses
General and administrative		221,376		179,191
General and administrative-related parties (Note 2)		89,775		83,824
Repairs and maintenance		74,394		132,936
Operating and other		58,955		41,044
Real estate taxes		26,043		25,104
Insurance		20,133		15,669
Interest		42,896		42,374
Depreciation and amortization		3,576		6,625

Total expenses		537,148		526,767

Loss from operations		(106,743)		(106,632)
Income from discontinued operations (including gain on sale of property) (Note 5)		—		4,980,090

Net (loss) income		(106,743)		4,873,457

Net (income) loss attributable to noncontrolling interests from operations		(205)		341
Net (income) loss attributable to noncontrolling interests from discontinued operations		—		(486,349)

Net (income) loss attributable to noncontrolling interests		(205)		(486,008)

Net (loss) income attributable to Independence Tax Credit Plus L.P. IV	$	(106,948)	$	4,387,449

Loss from operations – limited partners		(105,879)		(105,228)
Income from discontinued operations – limited partners		—		4,448,803

Net (loss) income – limited partners	$	(105,879)	$	4,343,575

Number of BACs outstanding		45,844		45,844

Loss from operations per weighted average BAC	$	(2.31)	$	(2.30)
Income from discontinued operations per weighted average BAC		—		97.04

Net (loss) income per weighted average BAC	$	(2.31)	$	94.74

* Reclassified for comparative purposes.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV

AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Partners’ (Deficit) Capital

(Unaudited)


			Limited		General		Noncontrolling
	Total		Partners		Partner		Interests

Partners’ (deficit) capital – April 1, 2016	$	(4,053,645)	$	(3,812,073)	$	(428,605)	$	187,033

Net (loss) income		(106,743)		(105,879)		(1,069)		205

Partners’ (deficit) capital – June 30, 2016	$	(4,160,388)	$	(3,917,952)	$	(429,674)	$	187,238

See accompanying notes to condensed consolidated financial statements.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	June 30,
	2016		2015

Cash flows from operating activities:
Net (loss) income	$	(106,743)	$	4,873,457
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		3,576		11,032
Gain on sale of property		—		(4,876,136)
Changes in assets and liabilities:
Decrease (increase) in cash held in escrow		4,763		(33,258)
Decrease in due from local general partners and affiliates		—		427
Decrease (increase) in other assets		24,191		(20,941)
(Decrease) increase in accounts payable		(10,903)		35,567
Increase in accrued interest payable		2,428		5,251
(Decrease) increase in security deposit payable		(3,045)		3,471
Increase in due to local general partners and affiliates		23,055		3,921
Increase (decrease) in due to general partner and affiliates		69,532		(1,904,796)
Total adjustments		113,597		(6,775,462)

Net cash provided by (used in) operating activities		6,854		(1,902,005)

Cash flows from investing activities:
Increase in cash held in escrow		(10,941)		(18,952)
Acquisition of property and equipment		—		(3,548)
Proceeds from sale of property		—		2,824,686
Costs paid relating to sale of property		—		(2,723)

Net cash (used in) provided by investing activities		(10,941)		2,799,463

Cash flows from financing activities:
Repayments of mortgage notes		(40,052)		(46,737)
Distributions to noncontrolling interests		—		(71,993)

Net cash used in financing activities		(40,052)		(118,730)

Net (decrease) increase in cash and cash equivalents		(44,139)		778,728
Cash and cash equivalents at beginning of period		867,364		706,652
Cash and cash equivalents at end of period	$	823,225	$	1,485,380


Summarized below are the components of the gain on sale of property:
Proceeds from sale of property	$	—	$	(2,824,686)
Costs paid relating to sale of property		—		2,723
Property and equipment, net of accumulated depreciation		—		849,230
Deferred costs		—		105,789
Other assets		—		122,012
Cash held in escrow		—		110,288
Accounts payable		—		(38,351)
Mortgage payable		—		(3,100,587)
Accrued interest		—		(13,252)
Security deposits		—		(16,296)
Due to local general partners and affiliates		—		5,368
Due to general partners and affiliates		—		(58,374)
Interest rate swap		—		(20,000)
Capital contributions (distributions)		—		—

See accompanying notes to condensed consolidated financial statements.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

NOTE 1 – General

The condensed consolidated financial statements, as of June 30, 2016, include the accounts of Independence Tax Credit Plus L.P. IV (the “Partnership”) and two other limited partnerships (“subsidiary partnerships”, “subsidiaries” or “Local Partnerships”) owning affordable apartment complexes (“Properties”) that are eligible for the low-income housing tax credits. As of June 30, 2016, the Partnership has ownership interests in two investments. The general partner of the Partnership is Related Independence L.L.C., a Delaware limited liability company (the “General Partner”). Centerline Holding Company (“Centerline”) was the ultimate parent of Centerline Affordable Housing Advisors LLC (“CAHA”), the sole member of the Manager of the General Partner. On April 15, 2015, Alden Torch Financial LLC, a newly formed Delaware limited company (“ATF”), became the indirect owner of 100% of the equity interests in Centerline. Since April 15, 2015, ATF has been the ultimate parent and indirect owner of 100% of the equity interests in CAHA. Through the rights of the Partnership and/or an affiliate of the General Partner, which affiliate has a contractual obligation to act on behalf of the Partnership to remove the general partner of each of the subsidiary partnerships (each “Local General Partner”) and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships.

For financial reporting purposes, the Partnership’s fiscal quarter ends June 30th. The Local Partnerships’ fiscal quarter ends March 31st. Accounts of the subsidiaries have been adjusted for intercompany transactions from April 1st through June 30th. The Partnership’s fiscal quarter ends three months after the subsidiaries in order to allow adequate time for the subsidiaries’ financial statements to be prepared and consolidated. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation.

The net income attributable to noncontrolling interests amounted to approximately $205 and $486,008 for the three months ended June 30, 2016 and 2015, respectively. The Partnership’s investment in each subsidiary is equal to the respective subsidiary’s partners’ equity less noncontrolling interest capital, if any.

Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted or condensed. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2016.

The books and records of the Partnership are maintained on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. In the opinion of the General Partner of the Partnership, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the condensed consolidated financial position of the Partnership as of June 30, 2016 and the results of their operations and their cash flows for the three months ended June 30, 2016 and 2015. However, the operating results and cash flows for the three months ended June 30, 2016 may not be indicative of the results for the entire year.

Recently Issued Accounting Pronouncements

In March of 2016, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Shared Based Payment Accounting: Topic 718” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of how companies account for share-based compensation, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statements of cash flows. ASU 2016-09 is affective for annual periods beginning after December 15, 2016 and early

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

adoption is permitted. The new guidance will not have an impact on the Partnership’s condensed consolidated financial statements.

In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02 “Leases – Topic 842” (“ASU 2016-02”). ASU 2016-02 requires recognition of lease assets and lease liabilities by lessees for all leases greather than one year in duration and classified as operating leases under previous GAAP. ASU 2016.02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. The new guidance will not have an impact on the Partnership’s condensed consolidated financial statements.

In May 2015, the FASB issued Accounting Standards Update No. 2015-07 ("ASU 2015-07") regarding ASC Topic 820 "Fair Value Measurement: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." The amendments in ASU 2015-07 remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments in ASU 2015-07 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments should be applied retrospectively by removing from the fair value hierarchy any investments for which fair value is measured using the net asset value per share practical expedient. The Partnership does not expect ASU 2015-07 to have a material impact on its consolidated financial statements.

In February 2015, the Financial Accounting Standards Board issued Accounting Standard Update 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The ASU modifies existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties on the primary beneficiary determination, and (iv) certain investment funds. These changes are expected to limit the number of consolidation models and place more emphasis on risk of loss when determining a controlling financial interest. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2015 and early adoption is permitted. The new guidance will not have an impact on the Partnership’s condensed consolidated financial statements.

In May 14, 2014, FASB and IASB issued a new joint revenue recognition standard that supersedes nearly all US GAAP guidance on revenue recognition. The core principal of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Partnership for the fiscal year beginning April 1, 2018 and the effects of the standard on the Partnership’s condensed consolidated financial statements are not known at this time.

In August 2014, FASB issued ASU No 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. This standard update provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as going concern and to provide related footnote disclosure. The new guidance is effective for all annual and interim periods ending after December 16, 2016. The new guidance will not have an impact on the Partnership’s consolidated financial statements.

Use of Estimates

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

NOTE 2 – Related Party Transactions

A)Related Party Expenses

An affiliate of the General Partner, Independence SLP IV L.P., has a 0.01% interest as a special limited partner in each of the Local Partnerships.

The costs incurred to related parties from operations for the three months ended June 30, 2016 and 2015 were as follows:


	Three Months Ended
	June 30,
	2016		2015*
Partnership management fees (a)	$	24,500	$	33,396
Expense reimbursement (b)		39,145		27,181
Local administrative fee (c)		3,157		1,240
Total general and administrative-General Partners		66,802		61,817
Property management fees incurred to affiliates of the subsidiary partnerships’ general partners		22,973		22,007

Total general and administrative-related parties	$	89,775	$	83,824

*Reclassified for comparative purposes.

The costs incurred to related parties from discontinued operations for the three months ended June 30, 2016 and 2015 were as follows:


	Three Months Ended
	June 30,
	2016		2015*
Local administrative fee (c)	$	—	$	1,404
Total general and administrative-General Partner		—		1,404
Property management fees incurred to affiliates of the subsidiary partnerships' general partners		—		6,072

Total general and administrative-related parties	$	—	$	7,476

*Reclassified for comparative purposes.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

(a)

The General Partner is entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the annual local administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership Agreement), for administering the affairs of the Partnership. Subject to the foregoing limitation, the partnership management fee will be determined by the General Partner in its sole discretion based upon its review of the Partnership’s investments. Unpaid partnership management fees for any year are deferred without interest and will be payable out of sales or refinancing proceeds only to the extent of available funds after payments on all Partnership liabilities have been made other than those owed to the General Partner and its affiliates. Partnership management fees owed to the General Partner amounting to approximately $36,000 and $12,000 were accrued and unpaid as of June 30, 2016 and March 31, 2016, respectively. Current year partnership management fees may be paid out of operating reserves or refinancing and sales proceeds. However, the General Partner cannot demand payment of the deferred fees beyond the Partnership’s ability to pay them.

(b)

The Partnership reimburses the General Partner and its affiliates for actual Partnership operating expenses incurred by the General Partner and its affiliates on the Partnership’s behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partner performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships’ performance. Expense reimbursements and asset monitoring fees owed to the General Partner and its affiliates amounting to approximately $39,000 and $0 were accrued and unpaid as of June 30, 2016 and March 31, 2016, respectively. The General Partner does not intend to demand payment of the deferred payables beyond the Partnership’s ability to pay them. The Partnership anticipates that these will be paid, if at all, from working capital reserves or future sales proceeds.

(c)

Independence SLP IV L.P., a special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $5,000 per year from each subsidiary partnership. Local administrative fees owed to Independence SLP IV L.P. amounting to $76,000 and $73,000 were accrued and unpaid as of June 30, 2016 and March 31, 2016, respectively. These fees have been deferred in certain cases and the Partnership anticipates that they will be paid, if at all, from working capital reserves or future sales proceeds.

As of June 30, 2016 and March 31, 2016, the Partnership owed $4,000 and $1,000, respectively, to the General Partner for expenses it paid on its behalf.

B)Due to/from Local General Partners and Affiliates

The amounts due to Local General Partners and affiliates from operating liabilities consist of the following:


	June 30,		March 31,
	2016		2016
Development fee payable	$	481,597	$	481,597
Consulting fee payable		—		—
Operating advances		148,540		125,485
Management and other fees		—		—

	$	630,137	$	607,082

NOTE 3– Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments (all of which are held for nontrading purposes) for which it is practicable to estimate that value:

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

Cash and Cash Equivalents and Cash Held in Escrow

The carrying amount approximates fair value.

Accounts Payable and Other Liabilities

The carrying amounts approximate fair value due to their short-term nature.

Mortgage Notes Payable

The Partnership has categorized the fair value of financial assets and liabilities based upon the fair value hierarchy specified by ASC Topic 820, Fair Value Measurements (“ASC 820”). This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). This standard provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1:		Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:		Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:		Unobservable inputs that reflect the Partnership’s own assumptions.

The estimated fair value of mortgage notes payable has been determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The following are financial instruments for which the Partnership’s estimate of fair value differs from the carrying amounts:


	At June 30, 2016				At March 31, 2016
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value

LIABILITIES:
Mortgage notes	$	4,839,213	$	3,757,523	$	4,879,265	$	3,794,072

For the mortgage notes, fair value is estimated using Level 3 inputs and calculated using present value cash flow models based on a discount rate. The Partnership has not been active in the tender option bond market, through which these bonds have been securitized in the past. To assist in valuing these notes, the Partnership held separate discussions with various third party investment banks who are leaders in the municipal bond business. The discussions produced assumptions that were based on market conditions as well as the credit quality of the underlying property partnerships, which held the mortgage notes, to determine what discount rates to utilize.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

Due to General Partner and Affiliates and Due to/from Local General Partners and Affiliates

Management believes it is not practical to estimate the fair value of due to General Partner and affiliates and due to/from Local General Partners and affiliates because market information on such obligations is not currently available.

NOTE 4 – Sale of Properties

The Partnership has developed a plan to dispose of its two remaining investments. It is anticipated that this process will take from 12 to 24 months. Through June 30, 2016, the Partnership has sold its limited partnership interest in eight Local Partnerships and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its two remaining investments or the amount of proceeds which may be received. However, based on the historical operating results of the Local Partnerships and the current economic conditions, it is unlikely that the proceeds from such sales received by the Partnership will be sufficient to return to the limited partners their original investments. All gains and losses on sales are included in discontinued operations.

On July 27, 2015, the Partnership sold its limited partnership interest in First African Kanisa Apartments (“First African”) to an affiliate of the Local General Partner for a sales price of $1. The sale resulted in a gain of approximately $1,603,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended September 30, 2015. An adjustment to the gain of approximately $88,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $1,515,000.

On June 1, 2015, the Partnership sold its limited partnership interest in KSD Village Apartments Phase II, Ltd. (“KSD Village”) to an unaffiliated third party purchaser for a sales price of $1. The sale resulted in a gain of approximately $293,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $61,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $232,000.

On June 15, 2015, the property and the related assets and liabilities of Kaneohe Limited Partnership (“Kaneohe”) were sold to an unaffiliated third party purchaser for a sales price of $10,100,000. The Partnership received $2,893,000 as a distribution from this sale after the repayment of the mortgages, other liabilities and closing costs of approximately $7,207,000. The sale resulted in a gain of approximately $4,587,000 which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $4,073,000 was recorded during the quarter ended September 30, 2015 due to a distribution from this sale in the form of a Security Agreement to the Local General Partner in the amount of $4,069,000. Additional adjustments to the gain of approximately $1,000 and $196,000 were recorded during the quarter ended March 31, 2016 and December 31, 2015, respectively resulting in an overall gain of $8,857,000.

NOTE 5 – Discontinued Operations

The following table summarizes the results of operations of the Local Partnerships that are classified as discontinued operations. For the three months ended June 30, 2016, there were no assets classified as discontinued operations in the condensed consolidated financial statements. For the three months ended June 30, 2015, First African Kanisa, which was sold in July 2015, KSD Village and Kaneohe, which were sold in June 2015, in order to present comparable results to the

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

three months ended June 30, 2016, were classified as discontinued operations in the condensed consolidated financial statements.

Condensed Consolidated Statements of Discontinued Operations:


	Three Months Ended
	June 30,
	2016		2015*

Revenues

Rental income	$	—	$	322,508
Other		—		3,213
Gain on sale of property (Note 4)		—		4,876,136
Total revenue		—		5,201,857

Expenses
General and administrative		—		62,807
General and administrative-related parties (Note 2)		—		7,476
Repairs and maintenance		—		24,698
Operating and other		—		52,282
Insurance		—		11,417
Interest		—		58,680
Depreciation and amortization		—		4,407
Total expenses		—		221,767

Income (loss) from discontinued operations	$	—	$	4,980,090

Noncontrolling interest in income of subsidiaries from discontinued operations		—		(486,349)

Income (loss) from discontinued operations – Independence Tax Credit Plus L.P. IV	$	—	$	4,493,741

Income (loss) from discontinued operations – limited partners	$	—	$	4,448,803

Number of BACs outstanding		45,844		45,844

Income (loss) from discontinued operations per weighted average BAC	$	—	$	97.04

*Reclassified for comparative purpose.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

Cash Flows from Discontinued Operations:


	Three Months Ended
	June 30,
	2016		2015 *

Net cash (used in) provided by operating activities	$	—	$	2,126,432

Net cash provided by (used in) investing activities	$	—	$	1,032,104

Net cash used in financing activities	$	—	$	(3,191,695)

*Reclassified for comparative purposes.

NOTE 6 – Commitments and Contingencies

a) Liquidity

At June 30, 2016, the Partnership’s liabilities exceeded assets by $4,160,388 and for the three months ended June 30, 2016, the Partnership incurred a net loss of $106,743. As discussed in Note 2, partnership management fees of approximately $36,000 will be payable out of sales or refinancing proceeds only to the extent of available funds after payments on all other Partnership liabilities have been made other than those owed to the General Partner and its affiliates. As such, the General Partner cannot demand payment of these deferred fees beyond the Partnership’s ability to pay them.

All of the mortgage notes payable, net of deferred costs balance of $4,738,297 and the accrued interest payable balance of $65,648 is of a nonrecourse nature and secured by the respective properties. The Partnership is currently in the process of developing a plan to dispose of all of its investments. Historically, the mortgage notes and accrued interest thereon have been assumed by the buyer in instances of sales of the Partnership’s interest or have been paid off from sales proceeds in instances of sales of the property. In most instances when the Partnership’s interest was sold and liabilities were assumed, the Partnership recognized a gain from the sale. The Partnership owns the limited partner interest in all its investments, and as such has no financial responsibility to fund operating losses incurred by the Local Partnerships. The maximum loss the Partnership would incur is its net investment in the respective Local Partnerships and the potential recapture of the Tax Credits if the investment is lost before the expiration of the Compliance Period. Dispositions of any investment in a Local Partnership are not anticipated to impact the future results of liquidity or financial condition of the Partnership.

The Partnership has unconsolidated cash reserves of approximately $448,000 at June 30, 2016. Such amount is considered sufficient to cover the Partnership’s day to day operating expenses, excluding fees to the General Partner, for at least the next year. The Partnership’s operating expenses, excluding the Local Partnerships’ expenses and related party expenses amounted to approximately $93,000 for the three months ended June 30, 2016.

Management believes the above mitigating factors enable the Partnership to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Table of Contents

INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

June 30, 2016

(Unaudited)

b) Uninsured Cash and Cash Equivalents

The Partnership maintains its cash and cash equivalents in various banks. The accounts at each bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per entity per institution. At times, the balances exceed the FDIC insurance limit.

c) Cash Distributions

Cash distributions from the Local Partnerships to the Partnership are restricted by the provisions of the respective agreements of limited partnership of the Local Partnerships and/or the U.S. Department of Housing and Urban Development.

d) Property Management Fees

Property management fees incurred by the Local Partnerships amounted to $23,000 and $34,000 for the three months ended June 30, 2016 and 2015, respectively. Of these fees, $23,000 and $28,000 were incurred to the Local General Partners for the three months ended June 30, 2016 and 2015, respectively, which include $0 and $6,000 of fees relating to discontinued operations for the three months ended June 30, 2016 and 2015, respectively.

e) Other

The Partnership is subject to risks incidental to potential losses arising from the management and ownership of real estate. The Partnership can also be affected by poor economic conditions generally. Of the remaining two properties one is located in New Jersey while the other is located in Washington. There are also substantial risks associated with owning properties receiving government assistance, for example the possibility that Congress may not appropriate funds to enable the U.S. Department of Housing and Urban Development (“HUD”) to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owners’ equity contribution. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence without HUD’s approval. Furthermore there may not be market demand for apartments at full market rents when the rental assistance contract expires.

The Partnership and BACs holders began to recognize Tax Credits with respect to a Property when the Credit Period for such Property commenced (generally ten years from the date of investment or, if later, the date the Property is leased to qualified tenants). Because of the time required for the acquisition, completion and rent-up of Properties, the amount of Tax Credits per BAC gradually increased over the first three years of the Partnership. Tax Credits not recognized in the first three years were recognized in the 11th through 13th years. As of December 31, 2012, all the Local Partnerships had completed their Credit Periods. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Periods will continue through December 31, 2017 with respect to the Properties depending upon when the Compliance Period commenced.

f) Subsequent Events

The Partnership evaluated all subsequent events from the date of the condensed consolidated balance sheet through the issuance date of these financial statements and determined that there were no events or transactions occurring during the subsequent event reporting period which require recognition or disclosure in the condensed consolidated financial statements.

Table of Contents

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

Liquidity and Capital Resources

The Partnership originally invested all of its net proceeds in fourteen Local Partnerships of which, approximately $82,000 remains to be paid to the Local Partnerships (including approximately $82,000 being held in escrow). The Partnership is currently in the process of developing a plan to dispose of all its investments. Through June 30, 2016, the Partnership has sold its limited partnership interests in eight Local Partnerships and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its two remaining investments or the amount of proceeds which may be received. However, based on the historical operating results of the Local Partnerships and the current economic conditions, it is unlikely that the proceeds from such sales received by the Partnership will be sufficient to return to the limited partners their original investments. All gains and losses on sales are included in discontinued operations.

Short-Term

The Partnership’s primary sources of funds include: (i) working capital reserves; (ii) interest earned on the working capital reserves; (iii) cash distributions from operations of the Local Partnerships; and (iv) sales and/or refinance proceeds and distributions. Such funds, although minimal (other than possible sales and/or refinance proceeds and distributions), are available to meet the obligations of the Partnership. During the three months ended June 30, 2016 and 2015, there were no distributions from operations of the Local Partnerships. In addition, during the three months ended June 30, 2016 and 2015, distributions to the Partnership from sales proceeds amounted to approximately $0 and $2,825,000, respectively. The Partnership does not anticipate providing cash distributions to BACs holders in circumstances other than refinancing or sales.

During the three months ended June 30, 2016, cash and cash equivalents of the Partnership and its consolidated Local Partnerships decreased approximately $44,000. This decrease was due to an increase in cash held in escrow relating to investing activities of approximately ($11,000) and repayment of mortgage notes of approximately ($40,000), which exceeded cash provided by operating activities of approximately ($7,000). Included in the adjustments to reconcile the net loss to net cash (used in) provided by operating activities is depreciation and amortization in the amount of approximately ($3,500).

Total expenses from operations for the three months ended June 30, 2016 and 2015, excluding depreciation and amortization, interest and general and administrative-related parties, totaled $400,901 and $393,944, respectively.

Accounts payable from operations as of June 30, 2016 and March 31, 2016 were $113,887 and $124,790, respectively. Accounts payable are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and in certain circumstances advances from the Partnership. Accrued interest payable from operations as of June 30, 2016 and March 31, 2016 was $65,648 and $63,220, respectively. Such amount represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership’s investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnerships. In addition, each Local Partnership’s mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. The maximum loss the Partnership would incur is its net investment in the respective Local Partnership.

Table of Contents

At June 30, 2016, the Partnership’s liabilities exceeded assets by $4,160,388 and for the three months ended June 30, 2016, the Partnership incurred a net loss of $106,743. However, because 1) the provisions of the secondary loans defer the payment of accrued interest of the respective Local Partnerships and will be made from future refinancing or sales proceeds of the respective Local Partnerships, 2) the General Partner continues to defer (pending the Partnership’s receipt of sales and refinancing proceeds) the payment of fees as discussed below and in Note 2 to the Financial Statements, and 3) the Partnership has sufficient unconsolidated working capital reserves to cover the Partnership’s day to day operating expenses, the Partnership (and the applicable Local Partnerships) believes it has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term.

Long-Term

Partnership management fees owed to the General Partner amounting to approximately $36,000 and $12,000 were accrued and unpaid as of June 30, 2016 and March 31, 2016, respectively, and are included in the line item Due to general partners and affiliates in the consolidated balance sheets. Unpaid partnership management fees for any year are to be deferred without interest and will be payable out of sales or refinancing proceeds only to the extent of available funds after payments on all Partnership liabilities have been made other than to those owed to the General Partner and its affiliates.

All other payables are expected to be paid, if at all, from working capital reserves. See Note 2 in Item 1 for further discussion of amounts due to the General Partner and its affiliates. The General Partner does not anticipate making any future advances of operating funds to any of the Local Partnerships in which the Partnership has invested. Even if a situation arose where the General Partner and its affiliates needed to but were not able to make operating advances in the future due to lack of funds, the only impact on the Partnership would be that it would lose its investment in that particular Local Partnership. The Partnership’s ability to continue its operations would not be affected.

The Partnership’s liquidity considerations are discussed in Note 6a in Item 1.

Since the maximum loss the Partnership would be liable for is its net investment in the respective subsidiary partnerships, the resolution of any existing contingencies is not anticipated to impact future liquidity or the financial condition of the Partnership in a material way. However, the Partnership’s loss of its investment in a Local Partnership may result in recapture of Tax Credits if the investment is lost before expiration of the Compliance Period.

Except as described above, management is not aware of any trends or events, commitments or uncertainties, which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The two remaining properties are located in New Jersey and Washington so if one area of the country is experiencing downturns in the economy, the other Property in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. The Partnership had originally invested the proceeds of its Offering in 14 Local Partnerships, all of which had their Tax Credits fully in place during the Credit Periods. As of December 31, 2012, all the Local Partnerships have completed their Credit Periods. However, each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of the Tax Credits. The Compliance Periods will continue through December 31, 2017 with respect to the Properties depending upon when the Compliance Period commenced.

Results of Operations

The Partnership’s results of operations for the three and three months ended June 30, 2016 and 2015, consisted primarily of the results of the Partnership’s investment in Local Partnerships. The following discussion excludes the Partnership’s results of its discontinued operations, which are not reflected below.

Rental income increased approximately 2% for the three and three months ended June 30, 2016, as compared to the corresponding period ended June 30, 2015, primarily due to a slight increase in occupancy at one of its remaining Local Partnerships.

Table of Contents

Total expenses, excluding general and administrative-related parties, general and admisnistrative expenses for non-related parties, operating expenses and repairs and maintenance, remained fairly consistent with an increase of approximately 3% for the three months ended June 30, 2016, as compared to the corresponding period ended June 30, 2015.

General and administrative-related parties’ expenses increased approximately $6,000 for the three months ended June 30, 2016, as compared to the corresponding periods ended June 30, 2015, primarily due to an increase in expense reimbursements offset by a decrease in partnership management fees resulting from the sale of properties at the Partnership level.

General and administrative for non-related parties’ expenses increased approximately $42,000 for the three months ended June 30, 2016, as compared to the corresponding periods ended June 30, 2015, primarily due to an increase in salaries and benefits expense at one Local Partnerhip, an increase in legal expenses and tenant eviction expenses at a second Local Partnership and an increase in legal expenses at the Partnership level.

Operating and other expenses increased approximately $18,000 for the three months ended June 30, 2016, as compared to the corresponding periods ended June 30, 2015, primarily due to an overall increase in utility expenses at one Local Partnership.

Repairs and maintenance expense decreased approximately $59,000 for the three months ended June 30, 2016, as compared to the corresponding periods ended June 30, 2015, primarily due to an decrease in major repairs expenses and turnover supplies expenses at one Local Partnership.

Depreciation and amortization decreased approximately $3,000 for the three months ended June 30, 2016, as compared to the corresponding periods ended June 30, 2015, primarily due to an adjustment in the calculation of depreciation due to impairments.

Off-Balance Sheet Arrangements

The Partnership has no off-balance sheet arrangements.

Fair Value Measurements

See Note 3 in Item 1 for methods and assumptions used to estimate the fair value of each class of financial instruments (all of which are held for nontrading purposes) for which it is practicable to estimate that value.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of certain accounting estimates considered critical by the Partnership. The summary should be read in conjunction with the more complete discussion of the Partnership’s accounting policies included in Item 8, Note 2 to the consolidated financial statements in the Partnership’s Annual Report on Form 10-K for the year ended March 31, 2016.

Property and Equipment

Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the Properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The Partnership complies with ASC 360, Property, Plant and Equipment. A loss on impairment of assets is recorded when

Table of Contents

management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. At that time, Property investments themselves are reduced to estimated fair value (using the fair market value based on comparative sales) when the Property is considered to be impaired and the depreciated cost exceeds estimated fair value.

At the time management commits to a plan to dispose of a specific asset, said asset is adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. Property and equipment that are held for sale are included in discontinued operations. There are no assets classified as property and equipment-held for sale as of June 30, 2016.

During the three months ended June 30, 2016, the Partnership has not recorded any loss on impairment of assets. Through June 30, 2016, the Partnership has recorded approximately $35,686,000 as an aggregate loss on impairment of property.

Revenue Recognition

Rental income is earned primarily under standard residential operating leases and is typically due the first day of each month, but can vary by Property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants’ accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which it is earned.

Other revenues are recorded when earned and consist of the following items: interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items.

Income Taxes

The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership’s year end is December 31.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The President (Principal Executive Officer) and Chief Financial Officer of Related Independence L.L.C, the general partner of the Partnership, have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”) as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls over Financial Reporting. During the period ended June 30, 2016, there were no changes in the Partnership’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings. – None

Item 1A.	Risk Factors. – No changes

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds. – None

Item 3.	Defaults upon Senior Securities. – None

Item 4.	Mine Safety Disclosures. – None

Item 5.	Other Information. – None

Item 6.	Exhibits.

	(4)	Form of Amended and Restated Agreement of Limited Partnership of the Partnership (attached to the Prospectus as Exhibit A)*

	(10A)	Form of Subscription Agreement (attached to the Prospectus as Exhibit B)*

	(10B)	Form of Escrow Agreement between the Partnership and the Escrow Agent**

	(10C)	Form of Purchase and Sales Agreement pertaining to the Partnership’s acquisition of Local Partnership Interests**

	(10D)	Form of Amended and Restated Agreement of Limited Partnership of Local Partnerships**

	(31.1)+	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

	(31.2)+	Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

	(32.1)+	Certification Pursuant to Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350)

	(32.2)+	Certification Pursuant to Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350)

	101+	The following items from this Quarterly Report on Form 10-Q formatted in Extensible Business Reporting Language:
		(i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statement of Operations (unaudited), (iii) Consolidated
		Statement of Changes in Partner's (Deficit) Capital (unaudited), (iv) Consolidated Statement of Cash Flows (unaudited),
		and (v) Notes to the Consolidated Financial Statements.

*Incorporated herein by reference to the final Prospectus as filed pursuant to Rule 424 under the Securities Act of 1933.

**Filed as an exhibit to the Registration Statement on Form S-11 of the Partnership (File No. 33-89968) and incorporated herein by reference thereto.

+Filed herewith.

Table of Contents

SIGNATURES

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

INDEPENDENCE TAX CREDIT PLUS L.P. IV

(Registrant)

	By:	RELATED INDEPENDENCE L.L.C.,
		General Partner

	By:	CENTERLINE MANAGER LLC,
		Manager

	By:	CENTERLINE AFFORDABLE HOUSING ADVISORS LLC,
		Sole Member

	By:	CENTERLINE CAPITAL GROUP LLC,
		Sole Member


Date:	August 15, 2016	By:	/s/ Mark B. Hattier
			Mark B. Hattier
			Chief Financial Officer



Date:	August 15, 2016	By:	/s/ Alan T. Fair
			Alan T. Fair
			President (Principal Executive Officer)

INDEPENDENCE TAX CREDIT PLUS LP IV 10-Q