UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
                          -----------------
                                      OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from               to 
                               -------------    -------------         
Commission file number 0-14352
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                         BALCOR CURRENT INCOME FUND-85
                       A REAL ESTATE LIMITED PARTNERSHIP
           ------------------------------------------------------- 
            (Exact name of registrant as specified in its charter)

           Illinois                                     36-3344227
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(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

       2355 Waukegan Road
      Bannockburn, Illinois                              60015
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(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------
Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:

                         Limited Partnership Interests
                         -----------------------------
                               (Title of class)

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 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 ]
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Operations
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Summary of Operations
---------------------

During 1996, Balcor Current Income Fund-85 A Real Estate Limited Partnership
(the "Partnership") sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility and recognized significant gains on these sales which
resulted in net income during 1996 as compared to a net loss during each of
1995 and 1994. During 1994, the Partnership determined that the asset value of
the American Way Mall had been impaired. Accordingly, the Partnership
recognized a provision for investment property write-down which contributed to
the net loss generated by the Partnership during 1994. Further discussion of
the Partnership's operations are summarized below.

1996 Compared to 1995
---------------------

Rental and service income decreased in 1996 as compared to 1995 primarily due
to the sales of El Dorado Hills Apartments and Willow Lawn Self-Storage
Facility in August 1996 and a decrease in occupancy at American Way Mall.

Interest expense on mortgage notes payable decreased in 1996 as compared to
1995 due to the sale of El Dorado Hills Apartments and due to lower interest
rates as a result of the 1995 refinancing described below. In September 1995,
the Partnership refinanced the mortgage loan secured by the Providence Square
Apartments, Storage USA of Norcross and Willow Lawn self-storage facilities.
The Partnership obtained a new mortgage loan secured by the Providence Square
Apartments, which carried a lower interest rate than the prior financing.  

Depreciation expense decreased in 1996 as compared to 1995 due to the sales of
El Dorado Hills Apartments and Willow Lawn Self-Storage Facility.

Amortization of deferred expenses decreased in 1996 as compared to 1995 due to
the sale of El Dorado Hills Apartments and due to the 1995 refinancing.

Real estate tax expense decreased during 1996 as compared to 1995 due to the
sales of El Dorado Hills Apartments and Willow Lawn Self-Storage Facility and
due to a reduction in the assessed value of American Way Mall received from the
taxing authority in the second quarter of 1996.

Property management fees decreased in 1996 as compared to 1995 due to the sales
of El Dorado Hills Apartments and Willow Lawn Self-Storage Facility.

Administrative expenses decreased in 1996 as compared to 1995 due to lower
portfolio management, professional and legal fees relating to the unsuccessful
sale negotiations for American Way Mall in 1995.
<PAGE>
The Partnership sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility and recognized gains on the sales of these properties
totaling $9,666,645 in 1996. 
 
In connection with the sale of El Dorado Hills Apartments, the Partnership
wrote off the remaining unamortized deferred expenses in the amount of
$291,995. This amount was recognized as an extraordinary item and is classified
as debt extinguishment expense in 1996. During 1995, the first mortgages
collateralized by El Dorado Hills and Providence Square apartment complexes and
the Storage USA at Norcross and Willow Lawn self-storage facilities were
refinanced, and prepayment penalties of $490,747 were incurred. In conjunction
with the refinancing of the Partnership's mortgage loans, the remaining
unamortized deferred expenses of $48,724 relating to the previous loans were
written off. These amounts were recognized as an extraordinary item and
classified as debt extinguishment expenses in 1995.

1995 Compared to 1994
---------------------

Rental and service income decreased during 1995 as compared to 1994 primarily
as a result of a decrease in occupancy at American Way Mall. The lower
occupancy at American Way Mall resulted in overall decrease of approximately
$809,000 in rental income which was partially offset by an increase of
approximately $321,000 in rental income at Providence Square Apartments, due to
increased average rental rates and occupancy.

Increased cash available for short-term investment, primarily from the net
proceeds received in connection with the Partnership's mortgage loan
refinancings, and higher average interest rates were the primary reasons for an
increase in interest income on short-term investments during 1995 as compared
to 1994.

During the latter part of 1994, the Partnership determined that the value of
the American Way Mall had been impaired. As a result, the property was written
down to the Partnership's best estimate of the property's fair value, and a
$6,700,000 provision for investment property write-down was recognized in 1994.
Due to the property write-down recognized in 1994 on American Way Mall,
depreciation expense decreased in 1995 as compared to 1994.

The Partnership refinanced its mortgage loans during 1995 and the fees
associated with the refinancing are being amortized over the term of the new
mortgage loans. Since the terms of the new mortgage loans were longer than the
terms of the prior mortgage loans, amortization of deferred expenses decreased
during 1995 as compared to 1994.

Due to the completion of the repair and renovation program at the Providence
Square Apartments, property operating expense decreased in 1995 as compared to
1994.

Real estate tax expense increased during 1995 as compared to 1994 due to an
increase in the tax rates at the American Way Mall and refunds of 1992 and 1993
real estate taxes received in 1994 resulting from a reduction in the assessed
value of the El Dorado Hills apartment complex.
<PAGE>
Administrative expense increased during 1995 as compared to 1994 due to
increases in accounting fees and additionally, legal and professional fees
relating primarily to the potential sale of American Way Mall.

Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership decreased by approximately $2,966,000 as
of December 31, 1996 when compared to December 31, 1995 primarily due to the
distribution of cash reserves and proceeds from the August 1996 property sales.
In 1996, the Partnership received cash totaling approximately $1,604,000 from
its operating activities which consisted primarily of cash flow generated from
property operations which was partially offset by the payment of administrative
expenses. The Partnership also received cash of approximately $17,452,000 from
investing activities consisting of proceeds received from the sales of the El
Dorado Hills Apartments and Willow Lawn Self-Storage Facility. The Partnership
used cash of approximately $22,021,000 to fund its financing activities which
consisted primarily of the payment of distributions of approximately
$22,237,000 to Limited Partners.  

The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments, unless otherwise indicated. A deficit
is considered significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures, which include debt service
payments where applicable. Providence Square Apartments is the only property
that had underlying debt at December 31, 1996, and El Dorado Hills Apartments
had underlying debt prior to its sale in August 1996. During  1996 and 1995,
the Providence Square Apartments and the Storage USA at Norcross Self-Storage
Facility generated positive cash flow after applicable debt service payments.
The American Way Mall, which does not have underlying debt, generated a
significant cash flow deficit during 1996 as compared to a marginal cash flow
deficit during the same period in 1995 due to lower rental and service income
resulting from lower occupancy. The El Dorado Hills Apartments and the Willow
Lawn Self-Storage Facility, which were sold in August 1996, both generated
positive cash flow in 1995, and during 1996 prior to their sale. As of December
31, 1996, the occupancy rates at the Providence Square Apartments, Storage USA
of Norcross Self-Storage Facility and American Way Mall were 91%, 78% and 31%,
respectively. These properties were sold in 1997.  

As discussed below, during 1996, the Partnership sold the El Dorado Hills
Apartments and the Willow Lawn Self-Storage Facility and during 1997, sold its
remaining properties, the American Way Mall, Providence Square Apartments and
Storage USA of Norcross Self-Storage Facility. A majority of the proceeds from
the sales will be distributed to Limited Partners in 1997. The Partnership will
retain a portion of the cash to satisfy obligations of the Partnership as well
as establish a reserve for contingencies. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exists or may arise. Such
contingencies may include legal and other fees stemming from litigation
<PAGE>
involving the Partnership including, but not limited to, the lawsuit discussed
in Item 3 "Legal Proceedings". In the absence of any such contingency, the
reserves will be paid within twelve months of the last property sale. In the
event a contingency arises, reserves may be held by the Partnership for a
longer period of time.

In August 1996, the Partnership sold the  El Dorado Hills Apartments for
$29,350,000. The purchaser of the El Dorado Hills Apartments took title subject
to the existing first mortgage loan in the amount of $16,771,749. From the
proceeds of the sale, the Partnership paid $707,859 in selling costs. The
remainder of the proceeds were distributed as a special distribution to the
Limited Partners in October 1996. See Note 10 of Notes to Financial Statements
for additional information.

In August 1996, the Partnership sold the Willow Lawn Storage Facility in an all
cash sale for $5,603,470. From the proceeds of the sale, the Partnership paid
$21,770 in selling costs. The remainder of the proceeds were distributed as a
special distribution to Limited Partners in October 1996. See Note 10 of Notes
to Financial Statements for additional information.

In January 1997, the Partnership sold the American Way Mall in an all cash sale
for $5,500,000. From the proceeds of the sale, the Partnership paid $204,082 in
selling costs. The remainder of the available proceeds will be distributed to
the Limited Partners in 1997. See Note 14 of Notes to the Financial Statements
for additional information.

In February 1997, the Partnership sold the Providence Square Apartments and the
personal property located thereon for a net price of $25,010,000. The purchaser
of the property took title subject to the existing first mortgage loan in the
amount of $16,789,620. From the proceeds of the sale, the Partnership paid
$751,659 in selling costs. Pursuant to the terms of the sale, $250,000 of the
proceeds will be retained by the Partnership until May 1997. A majority of the
remaining available proceeds will be distributed to the Limited Partners in
1997. See Note 14 of Notes to the Financial Statements for additional
information.

In February 1997, the Partnership sold the Storage USA of Norcross Self-Storage
Facility in an all cash sale for $3,250,000. From the proceeds of the sale, the
Partnership paid $24,803 in selling costs. The remainder of the available
proceeds will be distributed to the Limited Partners in 1997. See Note 14 of
Notes to the Financial Statements for additional information.

The Partnership made distributions totaling $389.62 and $12.31 per Interest in
1996 and 1995, respectively. See Statement of Partner's Capital for additional
information. Distributions were comprised of $21.81 per Interest of Net Cash
Receipts and $367.81 per Interest of Net Cash Proceeds in 1996 and, $12.31 per
Interest of Net Cash Receipts in 1995.
<PAGE>
In January 1997, the Partnership made a distribution of $240,650 ($4.22 per
Interest) to the holders of Limited Partnership Interests representing a
quarterly distribution of Net Cash Receipts. Including the January 1997
distribution, Limited Partners have received distributions of Net Cash Receipts
of $173.34 and Net Cash Proceeds of $382.81, totaling $556.15 per $1,000
Interest. In light of results to date, the General Partner does not anticipate
that investors will recover all of their original investment.

Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.

Certain statements in this Form 10-K constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements may include projections of revenues, income or losses, capital
expenditures, plans for future operations, financing plans or requirements, and
plans relating to properties of the Partnership, as well as assumptions
relating to the foregoing.

The forward-looking statements made by the Partnership are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to differ materially
from any future results, performance or achievements expressed or implied by
the forward-looking statements.
<PAGE>
SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.

                           BALCOR CURRENT INCOME FUND-85
                           A REAL ESTATE LIMITED PARTNERSHIP


                           By:  /s/ Jayne A. Kosik
                               --------------------------------
                                Jayne A. Kosik
                                Managing Director and Chief
                                Financial Officer (Principal Accounting
                                Officer) of Balcor Current
                                Income Partners-85, the General Partner

Date: April 4, 1997
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Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

     Signature                      Title                      Date    
----------------------	---------------------------------  -------------
                        President and Chief Executive
                        Officer (Principal Executive
                        Officer) of Balcor Current Income
/s/ Thomas E. Meador    Partners-85, the General Partner   April 4, 1997
----------------------                                     -------------
    Thomas E. Meador

                        Managing Director and Chief
                        Financial Officer (Principal
                        Accounting Officer) of Balcor
                        Current Income Partners-85,
/s/ Jayne A. Kosik      the General Partner                April 4, 1997
--------------------                                       -------------
    Jayne A. Kosik
<PAGE>