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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the year ended December 31, 2004

OR

For the transition period from              to             

Commission file number: 0-14207

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

Partnership’s telephone number, including area code (650) 343-9300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Units of Limited Partnership Interest

(Title of class)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x  

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  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

No market for the Limited Partnership Units exists and therefore a market value for such Units cannot be determined.

DOCUMENTS INCORPORATED BY REFERENCE:

Exhibits: The index of exhibits is contained herein on page number 36.

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INDEX

RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP

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Part I

Item 1. Business

Rancon Realty Fund IV, a California Limited Partnership, (the “Partnership”) was organized in accordance with the provisions of the California Uniform Limited Partnership Act for the purpose of acquiring, developing, operating and selling real property. The Partnership was organized in 1984 and reached final funding in July 1987. The general partners of the Partnership are Daniel L. Stephenson and Rancon Financial Corp. (“RFC”), hereinafter referred to as the Sponsor or the General Partner. RFC is wholly-owned by Daniel L. Stephenson. The Partnership has no employees.

The Partnership’s initial acquisition of property between December 1984 and August 1985 consisted of approximately 76.56 acres of partially developed and unimproved land located in San Bernardino, California. The property is part of a master-planned development of 153 acres known as Tri-City Corporate Centre (“Tri-City”) and is zoned for mixed commercial, office, hotel, transportation-related, and light industrial uses and all of the parcels thereof are separately owned by the Partnership and Rancon Realty Fund V (“Fund V”), a partnership sponsored by the General Partner of the Partnership. Since the acquisition of the land, the Partnership has constructed twelve projects at Tri-City consisting of three office, one industrial property, and eight commercial properties. In 2002, one office building was sold. The Partnership’s properties are more fully described in Item 2.

As of December 31, 2004, the Partnership owned eleven rental properties, approximately one acre of land which is under construction, and approximately 16 acres of unimproved land (“Tri-City Properties”), all in the Tri-City master-planned development in San Bernardino, California.

In April 1996, the Partnership formed RRF IV Tri-City Limited Partnership, a Delaware limited partnership (“RRF IV Tri-City”). The limited partner of RRF IV Tri-City is the Partnership and the General Partner is RRF IV, Inc. (“RRF IV, Inc.”), a corporation wholly owned by the Partnership. Since the Partnership owns 100% of RRF IV, Inc. and indirectly owns 100% of RRF IV Tri-City, the Partnership considers all assets owned by RRF IV, Inc. and RRF IV Tri-City to be owned by the Partnership.

In 2003, a total of 1,307 Units were redeemed at an average price of $375. In 2004, a total of 1,285 Units were redeemed at an average price of $437. As of December 31, 2004, there were 68,954 Units outstanding.

Competition Within The Market

The Partnership competes in the leasing of its properties primarily with other available properties in the local real estate market. Management is not aware of any specific competitors of the Partnership’s properties doing business on a significant scale in the local market. Management believes that characteristics influencing the competitiveness of a real estate project include the geographic location of the property, the professionalism of the property manager, the maintenance and appearance of the property and rental rates, in addition to external factors such as general economic circumstances, trends, and the existence of new, competing properties in the vicinity. Additional competitive factors with respect to commercial and industrial properties include the ease of access to the property, the adequacy of related facilities, such as parking, and the ability to provide rent concessions and tenant improvements commensurate with local market conditions. Although management believes the Partnership’s properties are competitive with comparable properties as to those factors within the Partnership’s control, over-building and other external factors could adversely affect the ability of the Partnership to attract and retain tenants. The marketability of the properties may also be affected (either positively or negatively) by these factors as well as by changes in general or local economic conditions, including prevailing interest rates. Depending on market and economic conditions, the Partnership may be required to retain ownership of its properties for periods longer than anticipated, or may need to sell earlier than anticipated or refinance a property, at a time or under terms and conditions that are less advantageous than would be the case if unfavorable economic or market conditions did not exist.

Working Capital

The Partnership’s practice is to maintain cash reserves for normal repairs, replacements, working capital and other contingencies. The Partnership knows of no statistical information which allows comparison of its cash reserves to those of its competitors.

Other Factors

Approximately 15 acres of the Tri-City Corporate Centre land owned by the Partnership was part of a landfill operated by the City of San Bernardino (“the City”) from approximately 1950 to 1960. The City is responsible for the landfill and the gas-monitoring program as prescribed by the Santa Ana Regional Water Quality Control Board (“RWQCB”). Under a Limited Access Agreement with the Partnership, methane monitoring is handled directly by the City. Although there is no requirement by the RWQCB or the County for Clean Closure which would include removal of all landfill, the City is required to place both a “Cover Improvement System” and a “Gas Extraction System” at the site. The City started the installation of the Cover Improvement System in October 2004. The schedule has been delayed due to the weather conditions since December 2004. Currently, approximately 42% of the work has been completed. The estimated completion date is sometime during the second quarter of 2005. The City was directed by the County of San Bernardino Local Enforcement Agency under a Notice and Order of Compliance to install the Gas Extraction System after the Cover Improvement System is in place. No assurance can be made that circumstances will not arise which could impact the Partnership’s responsibility related to the land. At this time, the Partnership believes that development of this land is not practical.

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Item 2. Properties

Tri-City Corporate Centre

Between December 24, 1984 and August 19, 1985, the Partnership acquired a total of 76.56 acres of partially developed land in Tri-City for an aggregate purchase price of $9,917,000. During that time, Fund V acquired the remaining 76.21 acres within Tri-City.

Tri-City is located at the northeastern quadrant of the intersection of Interstate 10 (San Bernardino Freeway) and Waterman Avenue in the southernmost part of the City of San Bernardino, and is in the heart of the Inland Empire, the most densely populated area of San Bernardino and Riverside Counties.

The Inland Empire is generally broken down into two major markets, Inland Empire East and Inland Empire West. Tri-City is located within the Inland Empire East market, which consists of approximately 12.4 million square feet of office space and an overall vacancy rate of approximately 11% as of December 31, 2004, according to research conducted by an independent broker.

Within the Tri-City at December 31, 2004, the Partnership has approximately 155,000 square feet of office space with no vacancy, approximately 178,000 square feet of retail space with an average vacancy rate of 0.7%, and approximately 62,000 square feet of R & D space with no vacancy.

Tri-City Properties

The Partnership’s improved properties in the Tri-City are as follows:

These eleven operating properties total approximately 395,000 square feet and offer a wide range of retail, commercial, R&D and office products to the market.

Occupancy rates for the Partnership’s Tri-City buildings for each of the five years ended December 31, 2004, expressed as a percentage of the total net rentable square feet were as follows:

In 2004, management renewed seven leases totaling 12,348 square feet, and executed three new leases totaling 27,638 square feet. During 2005, there were eight leases totaling 53,458 square feet that were due to expire. Seven tenants with 46,413 total square feet of leased space have extended their leases beyond 2005. One tenant with 7,045 square feet of space has indicated that they will renew their lease. Terms and conditions are being negotiated.

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The annual effective rents per square foot for each of the five years ended December 31, 2004 were as follows:

Annual effective rent is calculated by dividing the aggregate of annualized current monthly rental income for each tenant by the total square feet occupied at the property.

The Partnership’s Tri-City properties had the following tenants which occupied a significant portion of the net rentable square footage as of December 31, 2004:

In April 2004, ITT Education Center purchased two unimproved lots known as Brier Business Center I and Brier Plaza from the Partnership. At the end of their lease term, ITT vacated their space in Carnegie Business Center I and moved to a new building constructed on the land purchased from the Partnership. Management is actively marketing this office space at Carnegie Business Center I to minimize the risk of an extended vacancy period.

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The Partnership’s Tri-City Properties are owned by the Partnership, in fee, subject to the following first deeds of trust as of December 31, 2004:

The note payable may be prepaid with a penalty based on a yield maintenance formula. There are no prepayment penalties if the note is repaid within six months of the maturity dates. The prepayment penalty period ends on November 1, 2005.

In April 2004, the maturity date on the Partnership’s line of credit was extended for three years to April 15, 2007, and the credit availability was increased to $11,400,000 from $7,200,000 to provide the funding for the construction costs at Vanderbilt Plaza.

Tri-City Land

At the beginning of 2004, the Partnership owned approximately 21.5 acres of land. In August 2003, construction commenced on an approximately one-acre parcel, and the core and shell of the building was completed in September 2004. Approximately 5.5 acres were sold in April 2004. The remaining 16 acres are undeveloped.

On January 22, 2004, the Partnership entered into a contract with ITT Educational Center, a tenant located at Carnegie Business Center I, for the sale of two lots totaling approximately 5.5 acres for a price of $1,929,500. The two lots are known as Brier Business Center I and Brier Plaza. On April 19, 2004, the sale closed and generated net proceeds of approximately $1,778,000, and a gain on sale of approximately $1,347,000. The Partnership added the proceeds to its cash reserves for the development of Vanderbilt Plaza. ITT Educational Center is not an affiliate of the Partnership.

As of December 31, 2004, the Partnership owns approximately 16 acres of land held for development. Approximately 15 acres are part of a landfill monitoring program handled by the City of San Bernardino (as discussed below). As a result, at this time the Partnership believes that development of this landfill is not practical. The remaining one-acre is currently undeveloped. Occupancies and rental rates in the Tri-City market remain consistently high. The Partnership intends to develop more properties on the remaining one-acre of unimproved land to generate more operating income for the Partnership in this fast-growing market

Approximately 15 acres of the Tri-City Corporate Centre land owned by the Partnership was part of a landfill operated by the City of San Bernardino (“the City”) from approximately 1950 to 1960. The City is responsible for the landfill and the gas-monitoring program as prescribed by the Santa Ana Regional Water Quality Control Board (“RWQCB”). Under a Limited Access Agreement with the Partnership, methane monitoring is handled directly by the City. Although there is no requirement by the RWQCB or the County for Clean Closure which would include removal of all landfill, the City is required to place both a “Cover Improvement System” and a “Gas Extraction System” at the site. The City started the installation of the Cover Improvement System in October 2004. The schedule has been delayed due to the weather conditions since December 2004. Currently, approximately 42% of the work has been completed. The estimated completion date is sometime during the second quarter of 2005. The City was directed by the County of San Bernardino Local Enforcement Agency under a Notice and Order of Compliance to install the Gas Extraction System after the Cover Improvement System is in place. No assurance can be made that circumstances will not arise which could impact the Partnership’s responsibility related to the land. At this time, the Partnership believes that development of this land is not practical.

Item 3. Legal Proceedings

Certain claims and lawsuits have arisen against the Partnership in its normal course of business. The Partnership believes that such claims and lawsuits will not in the future have a material adverse effect on the Partnership’s financial position, cash flow or results of operations.

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

None.

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Part II

Item 5. Market for Partnership’s Common Equity and Related Stockholder Matters

Market Information

There is no established trading market for the Units issued by the Partnership.

Holders

As of December 31, 2004, there were 8,421 holders of Partnership Units.

Distributions

Distributions are paid from either Cash From Operations or Cash From Sales or Refinancing (as such terms are defined in the Partnership Agreement).

Cash From Operations includes all cash receipts from operations in the ordinary course of business (except for the sale, refinancing, exchange or other disposition of real property in the ordinary course of business) after deducting payments for operating expenses. All distributions of Cash From Operations are paid in the ratio of 90% to the Limited Partners and 10% to the General Partner.

Cash From Sales or Refinancing is the net cash realized by the Partnership from the sale, disposition or refinancing of any property after redemption of applicable mortgage debt and all expenses related to the transaction, together with interest on any notes taken back by the Partnership upon the sale of a property. Distributions of Cash From Sales or Refinancing are generally allocated as follows: (i) first, 1 percent to the General Partner and 99 percent to the Limited Partners until the Limited Partners have received an amount equal to their capital contributions, plus a 12 percent return on their unreturned capital contributions (less prior distributions of Cash from Operations); (ii) second, to Limited Partners who purchased their units of limited partnership interest prior to April 1, 1985, to the extent they receive an additional return (depending on the date on which they purchased the units) on their unreturned capital of either 9 percent, 6 percent or 3 percent (calculated through October 31, 1985); and (iii) third, 20 percent to the General Partner and 80 percent to the Limited Partners. A more detailed statement of these distribution policies is set forth in the Partnership Agreement.

In 2004, the Partnership distributed from operations $1,227,000 to the Limited Partners and distributed and accrued $184,000 for General Partner.

In 2003, the Partnership distributed $1,068,000 and $119,000 to the Limited Partners and General Partner from the proceeds of the sale of the Two Vanderbilt property, respectively.

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Item 6. Selected Financial Data

The following is selected financial data for each of the five years ended December 31, 2004 (in thousands, except per Unit data):

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements and the notes thereto included in Item 15 of Part IV.

Results Of Operations

Comparison of the year ended December 31, 2004 to the year ended December 31, 2003

Revenue

Rental income for the year ended December 31, 2004 decreased $79,000, compared to the year ended December 31, 2003, primarily due to refunds to tenants for the 2003 operating expense reconciliations completed in 2004.

Occupancy rates at the Partnership’s Tri-City properties at the end of each of the five years ended December 31, 2004 were as follows:

As of December 31, 2004, tenants at Tri-City occupying substantial portions of leased rental space included: (i) ITT Educational Center with a lease through December 2004; (ii) Countrywide Home Loan with a lease through August 2008; (iii) CompUSA with a lease through August 2008; (iv) Fidelity National Title with a lease through August 2008; (v) PetsMart with a lease through January 2009; (vi) Inland Regional Center with a lease through July 2009; (vii) The University of Phoenix, Inc. with a lease through August 2009; (viii) Office Max with a lease through October 2013; and (ix) Circuit City with a lease through January 2018. These nine tenants, in the aggregate, occupied approximately 293,000 square feet of the 395,000 total leasable square feet at Tri-City and accounted for approximately 73% of the rental income of the Partnership in 2004.

In April 2004, ITT Education Center purchased two unimproved lots known as Brier Business Center I and Brier Plaza from the Partnership. At the end of their lease term, ITT vacated their space (39,380 square feet) in Carnegie Business Center I and moved to a new building constructed on the land purchased from the Partnership. ITT’s annual rent in 2004 was $474,000. Management is actively marketing this office space at Carnegie Business Center I to minimize the risk of an extended vacancy period.

The 5% increase in occupancy from December 31, 2003 to December 31, 2004 at One Vanderbilt was due to leasing 3,900 square feet of space to a new tenant.

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Expenses

Depreciation and amortization increased $118,000, or 8%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, primarily due to additions to tenant improvements and lease commissions.

Expenses associated with undeveloped land decreased $79,000, or 28%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, primarily due to property taxes and insurance capitalized during construction at Vanderbilt Plaza.

General and administrative expenses increased $83,000, or 7%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, primarily due to an increase in investor service expenses related to printing, postage and investor open house expenses.

Non-operating income / expenses

The $1,347,000 gain on sale of land held for development for the year ended December 31, 2004 was generated from the sale of two lots known as Brier Business Center I and Brier Plaza in April 2004 (as discussed above).

Interest and other income for the year ended December 31, 2004 decreased $47,000 from the year ended December 31, 2003, primarily due to a lower average invested cash balance as a result of distributions made to the partners in November 2003 and 2004, as well as decreases in interest rates.

Interest expense decreased $339,000, or 43%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, primarily due to interest capitalized during construction at Vanderbilt Plaza.

Comparison of the year ended December 31, 2003 to the year ended December 31, 2002

Revenue

Rental income for the year ended December 31, 2003 increased $762,000, compared to the year ended December 31, 2002, primarily due to increases in revenue from operating expense reimbursements.

Occupancy rates at the Partnership’s Tri-City properties at the end of each of the five years ended December 31, 2003 were as follows:

As of December 31, 2003, tenants at Tri-City occupying substantial portions of leased rental space included: (i) ITT Educational Center with a lease through December 2004; (ii) Countrywide Home Loan with a lease through August 2005; (iii) CompUSA with a lease through August 2008; (iv) Fidelity National Title with a lease through August 2008; (v) PetsMart with a lease through January 2009; (vi) Inland Regional Center with a lease through July 2009; (vii) The University of Phoenix, Inc. with a lease through August 2009; (viii) Office Max with a lease through October 2013; and (ix) Circuit City with a lease through January 2018. These nine tenants, in the aggregate, occupied approximately 293,000 square feet of the 395,000 total leasable square feet at Tri-City and accounted for approximately 74% of the rental income of the Partnership in 2003.

The 4% decrease in occupancy from December 31, 2002 to December 31, 2003 at One Vanderbilt was due to a 3,900 square foot tenant moving out when its lease term expired.

Expenses

Expenses associated with undeveloped land decreased $544,000, or 66%, during the year ended December 31, 2003, compared to the year ended December 31, 2002, primarily due to a decrease in property taxes resulting from early payoff in 2002 of an annual

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assessment levied by the City of San Bernardino. The City of San Bernardino issued bonds, which were used to fund land infrastructure costs. The Partnership benefited from these improvements and was responsible for a portion of the annual bond service costs. In 2002, the bonds were repaid which required the Partnership to incur a larger expense.

Non-operating income / expenses

Interest and other income for the year ended December 31, 2003 decreased $14,000 from the year ended December 31, 2002, primarily due to a lower average invested cash balance as a result of distributions made to the partners in November 2002 and 2003, as well as decreases in interest rates.

Interest expense decreased $73,000, or 9%, for the year ended December 31, 2003, compared to the year ended December 31, 2002, primarily due to a pay down on the Partnership’s line of credit in March 2002.

Liquidity and Capital Resources

As of December 31, 2004, the Partnership had cash and cash equivalents of $701,000.

As discussed above, the Partnership generated net proceeds of approximately $1,778,000 upon the sale of Brier Business Center I and Brier Plaza. The Partnership added the proceeds to its cash reserves for the development of Vanderbilt Plaza.

The Partnership’s primary liabilities at December 31, 2004 included a note payable and a line of credit, totaling approximately $13,236,000 secured by properties with an aggregate net book value of approximately $18,096,000 and with maturity dates of May 1, 2006 and April 15, 2007, respectively. The note requires monthly principal and interest payments of $53,000, and bears a fixed interest rate of 8.74%. The line of credit requires monthly interest-only payments, bears interest at Prime Rate (5.25% and 4% as of December 31, 2004 and December 31, 2003, respectively), and had an outstanding balance of $7,660,000 and $0 at December 31, 2004 and December 31, 2003, respectively. In April 2004, the Partnership extended the line of credit maturity date from April 15, 2004 to April 15, 2007, and increased the availability from $7,200,000 to $11,400,000.

In October 2004, the Partnership used its existing cash reserves to repay the note secured by One Vanderbilt in full.

The Partnership is contingently liable for subordinated real estate commissions payable to the General Partner in the aggregate amount of $643,000 at December 31, 2004, for sales that transpired in previous years. The subordinated real estate commissions are payable only after the Limited Partners have received distributions equal to their original invested capital plus a cumulative non-compounded return of 6% per annum on their adjusted invested capital. Since the conditions under which these commissions would be payable have not been achieved, the liability has not been recognized in the accompanying consolidated financial statements; however, the amount will be recorded when and if it becomes payable.

Operationally, the Partnership’s primary source of funds consists of cash provided by its rental activities. Other sources of funds may include permanent financing, draws on the line of credit, property sales, interest income on certificates of deposit and other deposits of funds invested temporarily. Cash generated from property sales is generally added to the Partnership’s cash reserves, pending use in the development of properties or distribution to the partners.

Contractual Obligations

At December 31, 2004, we had contractual obligations as follows (in thousands):

Management expects that the Partnership’s cash and cash equivalents as of December 31, 2004, together with cash from operations, sales and financing, will be sufficient to finance the Partnership’s and the properties’ continued operations and development plans on a short-term basis and for the reasonably foreseeable future. There can be no assurance that the Partnership’s results of operations will not fluctuate in the future and at times affect its ability to meet its operating requirements.

The Partnership knows of no demands, commitments, events or uncertainties, which might affect its capital resources in any material respect. In addition, the Partnership is not subject to any covenants pursuant to its secured debt that would constrain its ability to obtain additional capital.

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Operating Activities

During the year ended December 31, 2004, the Partnership’s cash provided by operating activities totaled $2,531,000.

The $12,000 increase in accounts receivable during 2004 was primarily due to the collection of tenant rents receivable which were outstanding at December 31, 2003.

The $259,000 increase in deferred costs during 2004 was primarily due to lease commissions paid for a new lease at Vanderbilt Plaza, as well as other new and renewal leases.

The $82,000 decrease in prepaid expenses and other during 2004 was primarily due to a decrease in impound accounts as result of property tax payments.

The $76,000 increase in accounts payable and other liabilities during 2004 was primarily due to an increase in accruals for interest expense on the line of credit.

The $23,000 decrease in prepaid rents at December 31, 2004 was due to January 2004 rents received in December 2003, offset by January 2005 rents received in December 2004.

Investing Activities

During the year ended December 31, 2004, the Partnership’s cash used for investing activities totaled $8,573,000, which included $271,000 used primarily for building and tenant improvements at Inland Regional Center, Carnegie Business Center I, and Service Retail, and $10,080,000 used for construction costs at Vanderbilt Plaza, offset by $1,778,000 of proceeds from the sale of land held for development (as discussed above).

Financing Activities

During the year ended December 31, 2004, the Partnership’s cash provided by financing activities totaled $3,431,000, which consisted of $7,660,000 in line of credit draws, offset by $2,206,000 in principal payments on notes payable, $217,000 in loan fees paid for the line of credit extension, $507,000 used for the redemption of 1,285 limited partnership Units, of which $54,000 was accrued at December 31, 2004 for final settlement in the first quarter of 2005, $1,227,000 for distributions to the Limited Partners, and $72,000 for distribution to the General Partner.

In January 2004, the General Partner received a distribution true-up totaling $72,000 which applied to the years of 2001 and 2002. The true-up primarily resulted from the difference between estimated and actual revenue and expenses for the month of December in 2001 and 2002 which were used to calculate the General Partner distribution in 2003.

Critical Accounting Policies

Revenue recognized on a straight-line basis

The Partnership recognizes rental revenue on a straight-line basis at amounts that it believes it will collect on a tenant by tenant basis. The estimation process may result in higher or lower levels from period to period as the Partnership’s collection experience and the credit quality of the Partnership’s tenants’ changes. Actual amounts collected could be lower or higher than the amounts recognized on a straight-line basis if specific tenants are unable to pay rent that the Partnership has previously recognized as revenue.

Carrying value of rental properties and land held for development

The Partnership’s rental properties, including the related land, are stated at cost unless events or circumstances indicate that cost cannot be recovered, in which case, the carrying value of the property is reduced to its estimated fair value. Estimated fair value is based upon (i) the Partnership’s plans for the continued operations of each property, and (ii) is computed using estimated sales price, as determined by prevailing market values for comparable properties and/or the use of capitalization rates multiplied by annualized rental income based upon the age, construction and use of the building. The fulfillment of the Partnership’s plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to continue to hold and operate the properties prior to their eventual sale. Due to uncertainties inherent in the valuation process and in the economy, it is reasonably possible that the actual results of operating and disposing of the Partnership’s properties could be materially different than current expectations.

Land held for development is stated at cost unless events or circumstances indicate that cost cannot be recovered, in which case, the carrying value is reduced to estimated fair value. Estimated fair value: (i) is based on the Partnership’s plans for the development of each property; (ii) is computed using estimated sales price, based upon market values for comparable properties; and (iii) considers the cost to complete and the estimated fair value of the completed project. The fulfillment of the Partnership’s plans related to each of its properties is dependent upon, among other things, the presence of economic conditions which will enable the Partnership to either hold the properties for eventual sale or obtain financing to further develop the properties.

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The actual value of the Partnership’s portfolio of properties and land held for development could be significantly higher or lower than their carrying amounts.

Accounting Pronouncements Issued But Not Yet Adopted

In December 2004, the FASB issued SFAS No. 123 revised 2004, “Share-Based Payment”. This Statement is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, and supersedes APB No. 25, “Accounting for Stock Issued to Employees”. The Statement requires companies to recognize in the income statement the grant-date fair value of stock options and other equity based compensation issued to employees. This Statement is effective as of the beginning of the first interim or annual period that commences after June 15, 2005. The Partnership anticipates that the adoption of SFAS No. 123 revised 2004 will have no impact on its financial position, net earnings or cash flows.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets an amendment of APB No. 29”. This Statement amends APB Opinion No. 29, “Accounting for Non-Monetary Transactions” to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. That exception required that some non-monetary exchanges be recorded on a carryover basis versus this Statement, which requires that an entity record a non-monetary exchange at fair value and recognize any gain or loss if the transaction has commercial substance. This Statement is effective for fiscal years beginning after June 15, 2005. The Partnership anticipates that the adoption of SFAS No. 153 will not have a material impact on its financial position, net earnings or cash flows.

In November 2004, the FASB issued EITF Issue No. 03-13, “Applying the Conditions in Paragraph 42 of FASB Statement No. 144, Accounting for Impairment or Disposal of Long-Lived Assets, in Determining Whether to Report Discontinued Operations” (EITF No. 03-13). This issue assists in the development of a model for evaluating (a) which cash flows are to be considered in determining whether cash flows have been or will be eliminated and (b) what types of continuing involvement constitute significant continuing involvement. The guidance in this issue should be applied to a component of an enterprise that is either disposed of or classified as held for sale in fiscal periods beginning after December 15, 2004. Previously reported operating results related to disposal transactions initiated within an enterprise’s fiscal year that includes the date that this consensus was ratified (November 30, 2004) may be reclassified. The adoption of EITF No. 03-13 on January 1, 2005, had no impact on the Partnership’s financial position, net earnings or cash flows.

Forward Looking Statements; Factors That May Affect Operating Results

This Report on Form 10-K contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934, including statements regarding the Partnership’s expectations, hopes, intentions, beliefs and strategies regarding the future. These forward looking statements include statements relating to:

All forward-looking statements included in this document are based on information available to the Partnership on the date hereof. Because these forward looking statements involve risk and uncertainty, there are important factors that could cause our actual results to differ materially from those stated or implied in the forward-looking statements. Those important factors include:

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The forward-looking statements in this Annual Report on Form 10-K are subject to additional risks and uncertainties further discussed below under Risk Factors. The Partnership assumes no obligation to update or supplement any forward looking-statement.

Risk Factors

Market Fluctuations in Rental Rates and Occupancy Could Adversely Affect Our Operations

As leases turn over, our ability to re-lease the space to existing or new tenants at rates equal to or greater than those realized historically is impacted by, among other things, the economic conditions of the market in which a property is located, the availability of competing space (including sublease space offered by tenants who have vacated space in competing buildings prior to the expiration of their lease term), and the level of improvements which may be required at the property. We cannot assure you that the rental rates we obtain in the future will be equal to or greater than those obtained under existing contractual commitments. If we cannot lease all or substantially all of the expiring space at our properties promptly, or if the rental rates are significantly lower than expected, then our results of operations and financial condition could be negatively impacted.

Tenants’ Defaults Could Adversely Affect Our Operations

Our ability to manage our assets is subject to federal bankruptcy laws and state laws that limit creditors’ rights and remedies available to real property owners to collect delinquent rents. If a tenant becomes insolvent or bankrupt, we cannot be sure that we could recover the premises from the tenant promptly or from a trustee or debtor-in-possession in any bankruptcy proceeding relating to that tenant. We also cannot be sure that we would receive rent in the proceeding sufficient to cover our expenses with respect to the premises. If a tenant becomes bankrupt, the federal bankruptcy code will apply, which in some instances may restrict the amount and recoverability of our claims against the tenant. A tenant’s default on its obligations to us could adversely affect our results of operations and financial condition.

We May Suffer Adverse Consequences If Our Revenues Decline Since Our Operating Costs Do Not Necessarily Decline In Proportion To Our Revenue

We earn a significant portion of our income from renting our properties. Our operating costs, however, do not necessarily fluctuate in relation to changes in our rental revenue. This means that our costs will not necessarily decline even if our revenues do. Our operating costs could also increase while our revenues do not. If our operating costs increase but our rental revenues do not, we may be forced to borrow to cover our costs, we may incur losses and we may not have cash available for distributions to our partners.

Potential Liability Due to Environmental Matters

Under federal, state and local laws relating to protection of the environment, or Environmental Laws, a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of petroleum products or other hazardous or toxic substances on the property. These owners may be required to investigate and clean-up the contamination on the property as well as the contamination which has migrated from the property. Environmental Laws typically impose liability and clean-up responsibility without regard to whether the owner or operator knew of, or was responsible for, the presence of the contamination. This liability may be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. In addition, the owner or operator of a property may be subject to claims by third parties based on personal injury, property damage and/or other costs, including investigation and clean-up costs, resulting from environmental contamination. Environmental Laws may also impose restrictions on the manner in which a property may be used or transferred or in which businesses may be operated. These restrictions may require expenditures. Under the Environmental Laws, any person who arranges for the transportation, disposal or treatment of hazardous or toxic substances may also be liable for the costs of investigation or clean-up of those substances at the disposal or treatment facility, whether or not the facility is or ever was owned or operated by that person.

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Our tenants generally are required by their leases to operate in compliance with all applicable Environmental Laws, and to indemnify us against any environmental liability arising from their activities on the properties. However, we could be subject to strict liability by virtue of our ownership interest in the properties. Also, tenants may not satisfy their indemnification obligations under the leases. We are also subject to the risk that:

Any one of these conditions could have an adverse effect on our results of operations and financial condition. Moreover, future environmental laws, ordinances or regulations may have an adverse effect on our results of operations and financial condition. Also, the current environmental condition of those properties may be affected by tenants and occupants of the properties, by the condition of land or operations in the vicinity of the properties (such as the presence of underground storage tanks), or by third parties unrelated to us.

Environmental Liabilities May Adversely Affect Operating Costs and Ability to Borrow

The obligation to pay for the cost of complying with existing Environmental Laws as well as the cost of complying with future legislation may affect our operating costs. In addition, the presence of petroleum products or other hazardous or toxic substances at any of our properties, or the failure to remediate those properties properly, may adversely affect our ability to borrow by using those properties as collateral. The cost of defending against claims of liability and the cost of complying with Environmental Laws, including investigation or clean-up of contaminated property, could materially adversely affect our results of operations and financial condition.

General Risks of Ownership of Real Estate

We are subject to risks generally incidental to the ownership of real estate. These risks include:

Should any of these events occur, our results of operations and financial condition could be adversely affected.

Uninsured Losses May Adversely Affect Operations

We, or in certain instances, tenants of our properties, carry property and liability insurance with respect to the properties. This coverage has policy specification and insured limits customarily carried for similar properties. However, certain types of losses (such as from earthquakes and floods) may be either uninsurable or not economically insurable. Further, certain of the properties are located in areas that are subject to earthquake activity and floods. Should a property sustain damage as a result of an earthquake or flood, we may incur losses due to insurance deductibles, co-payments on insured losses or uninsured losses. Additionally, we have elected to obtain insurance coverage for “certified acts of terrorism” as defined in the Terrorism Risk Insurance Act of 2002; however, our policies of insurance may not provide coverage for other acts of terrorism. Any losses from such other acts of terrorism might be uninsured. Should an uninsured loss occur, we could lose some or all of our capital investment, cash flow and anticipated profits related to one or more properties. This could have an adverse effect on our results of operations and financial condition.

Illiquidity of Real Estate May Limit Our Ability to Vary Our Portfolio

Real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio quickly in response to changes in economic or other conditions.

Potential Liability Under the Americans With Disabilities Act

All of our properties are required to be in compliance with the Americans With Disabilities Act. The Americans With Disabilities Act generally requires that places of public accommodation be made accessible to people with disabilities to the extent readily achievable. Compliance with the Americans With Disabilities Act requirements could require removal of access barriers. Non-compliance could result in imposition of fines by the federal government, an award of damages to private litigants and/or a court order to remove access barriers. Because of the limited history of the Americans With Disabilities Act, the impact of its application to our properties, including the extent and timing of required renovations, is uncertain. Pursuant to lease agreements with tenants in certain of the

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“single-tenant” properties, the tenants are obligated to comply with the Americans With Disabilities Act provisions. If our costs are greater than anticipated or tenants are unable to meet their obligations, our results of operations and financial condition could be adversely affected.

Risks of Litigation

Certain claims and lawsuits have arisen against us in our normal course of business. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flow or results of operations.

Item 7A. Qualitative and Quantitative Disclosures about Market Risk

Interest Rates

The Partnership’s primary market risk exposure is to changes in interest rates obtainable on its secured borrowings. The Partnership expects that changes in market interest rates will not have a material impact on the performance or fair value of its portfolio.

For debt obligations, the table below presents principal cash flows and related weighted average interest rates by expected maturity dates.

A change of 1/8% in the index rate to which the Partnership’s variable rate debt is tied would not have a material impact on the annual interest incurred by the Partnership, based upon the balances outstanding on variable rate instruments at December 31, 2004.

As of December 31, 2004, the Partnership had no investments in interest-bearing certificates of deposit. The Partnership does not own any derivative instruments.

Item 8. Financial Statements and Supplementary Data

For information with respect to this item, see Financial Statements and Financial Statement Schedule as included in Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision of the General Partner’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the General Partner’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in alerting him on a timely basis to material information required to be included in this report. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

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Part III

Item 10. Directors and Executive Officers of the Partnership

Daniel L. Stephenson and Rancon Financial Corporation (“RFC”) are the general partners of the Partnership. The executive officer and director of RFC is Daniel L. Stephenson who is Director, President, Chief Executive Officer and Chief Financial Officer.

Mr. Stephenson founded RFC (formerly known as Rancon Corporation) in 1971 for the purpose of establishing a commercial, industrial and residential property syndication, development and brokerage concern. Mr. Stephenson has, from inception, held the position of Director. In addition, Mr. Stephenson was President and Chief Executive Officer of RFC from 1971 to 1986, from August 1991 to September 1992, and from March 31, 1995 to present. Mr. Stephenson is Chairman of the Board of PacWest Group, Inc., a real estate firm which has acquired a portfolio of assets from the Resolution Trust Corporation.

Item 11. Executive Compensation

The Partnership has no executive officers. For information relating to fees, compensation, reimbursement and distributions paid to related parties, reference is made to Item 13 below.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

No person is known by the Partnership to be the beneficial owner of more than 5% of the Units outstanding.

Security Ownership of Management

Changes in Control

The Limited Partners have no right, power or authority to act for or bind the Partnership. However, the Limited Partners generally have the power to vote upon the following matters affecting the basic structure of the Partnership, passage of each of which requires the approval of Limited Partners holding a majority of the outstanding Units: (i) amendment of the Partnership Agreement; (ii) termination and dissolution of the Partnership; (iii) sale, exchange or pledge of all or substantially all of the assets of the Partnership; (iv) removal of the General Partner or any successor General Partner; (v) election of a new General Partner or General Partner upon the removal, redemption, death, insanity, insolvency, bankruptcy or dissolution of the General Partner or any successor General Partner; and (vi) extension of the term of the Partnership.

Item 13. Certain Relationships and Related Transactions

During the year ended December 31, 2004, the Partnership did not incur any expenses or costs reimbursable to RFC, Mr. Stephenson or any other affiliate of the Partnership.

Item 14. Principal Accountant Fees and Services

The Partnership was billed $71,000, $67,500 and $62,300 in 2004, 2003 and 2002, respectively for professional services rendered by the principal accountant in connection with the audit of the annual financial statements included on Form 10-K and review of the quarterly financial statements included on Form 10-Q. In 2002, the Partnership was also billed $64,500 for the re-audit of the fiscal years ended December 31, 2001 and 2000.

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Part IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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INDEX TO FINANCIAL STATEMENTS

AND SCHEDULE

All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

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Report of Independent Registered Public Accounting Firm

The General Partner

RANCON REALTY FUND IV, a California Limited Partnership:

We have audited the accompanying consolidated balance sheets of RANCON REALTY FUND IV, a California Limited Partnership, and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, partners’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the consolidated financial statements, we have also audited the financial statement schedule listed in the accompanying index to the financial statements and schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RANCON REALTY FUND IV, a California Limited Partnership, and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

San Francisco, California

March 23, 2005

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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP, and SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2004 and 2003

(in thousands, except units outstanding)

The accompanying notes are an integral part of these consolidated financial statements

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RANCON REALTY FUND IV,

A CALIFORNIA LIMITED PARTNERSHIP, and SUBSIDIARIES

Consolidated Statements of Operations

For the years ended December 31, 2004, 2003 and 2002

(in thousands, except per unit amounts and units outstanding)