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

                                    FORM 10-Q

(Mark One)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

For the quarterly period ended            September 30, 1998
                               -------------------------------------------------

[ ]     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 0-16720
                         Commission file number 0-16721

                   PARTICIPATING INCOME PROPERTIES 1986, L.P.
                                       and
                    FFCA INVESTOR SERVICES CORPORATION 86-B
--------------------------------------------------------------------------------
               (Exact Name of Co-Registrants as Specified in Their
                            Organizational Documents)


            Delaware                                         86-0570015
--------------------------------------------------------------------------------
(Partnership State of Organization)                 (Partnership I.R.S. Employer
                                                       Identification Number)

            Delaware                                         86-0557949
--------------------------------------------------------------------------------
(Corporation State of Incorporation)                (Corporation I.R.S. Employer
                                                       Identification Number)

The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona                                                     85255
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (zip code)


Co-Registrants' telephone number including area code        (602) 585-4500
                                                     ---------------------------


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 [ ]
<PAGE>
PART 1 - FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS.

            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            September 30,   December 31,
                                                                1998            1997
                                                            ------------    ------------
<S>                                                         <C>             <C>         
                                         ASSETS

CASH AND CASH EQUIVALENTS                                   $  2,230,931    $  2,402,680

RECEIVABLES FROM LESSEES                                         172,000         161,608

SECURED NOTES RECEIVABLE                                          78,232         100,569

DEFERRED COSTS                                                   161,123            --

PROPERTY SUBJECT TO OPERATING LEASES, at cost
      Land                                                     5,766,190       6,773,272
      Buildings                                               28,456,079      29,669,322
      Equipment                                                  626,781         626,781
                                                            ------------    ------------
                                                              34,849,050      37,069,375
      Less - Accumulated depreciation                         12,588,015      12,253,903
                                                            ------------    ------------

                                                              22,261,035      24,815,472
                                                            ------------    ------------

                  Total assets                              $ 24,903,321    $ 27,480,329
                                                            ============    ============

                           LIABILITIES AND PARTNERS' CAPITAL

DISTRIBUTION PAYABLE TO LIMITED PARTNERS                    $  1,367,549    $  1,366,497

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                          28,673          52,297

PAYABLE TO GENERAL PARTNER (Note 1)                              101,574            --

RENTAL DEPOSITS                                                  114,400         114,400
                                                            ------------    ------------

                  Total liabilities                            1,612,196       1,533,194
                                                            ------------    ------------

MINORITY INTEREST                                                (15,408)        (16,239)
                                                            ------------    ------------

PARTNERS' CAPITAL (DEFICIT):
      General partner                                           (163,915)       (171,205)
      Limited partners                                        23,470,448      26,134,579
                                                            ------------    ------------

                  Total partners' capital                     23,306,533      25,963,374
                                                            ------------    ------------

                  Total liabilities and partners' capital   $ 24,903,321    $ 27,480,329
                                                            ============    ============
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

                        CONSOLIDATED STATEMENTS OF INCOME
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                             Three Months   Three Months   Nine Months   Nine Months
                                                 Ended          Ended         Ended         Ended
                                                9/30/98        9/30/97       9/30/98       9/30/97   
                                             ------------   ------------   -----------   -----------
<S>                                          <C>            <C>            <C>           <C>        
REVENUES:
      Rental                                 $    994,099   $  1,072,248   $ 3,026,024   $ 3,216,742
      Participating rentals                       531,026        529,171     1,476,536     1,421,282
      Interest and other                           29,444         28,033       111,884        82,666
      Gain on sale of property                       --             --       1,725,741          --
                                             ------------   ------------   -----------   -----------

                                                1,554,569      1,629,452     6,340,185     4,720,690
                                             ------------   ------------   -----------   -----------
EXPENSES:
      General partner fees                        136,570        142,900       504,251       412,855
      Depreciation                                296,727        329,133       894,394       987,401
      Operating                                    35,593         40,058       135,670       128,734
                                             ------------   ------------   -----------   -----------

                                                  468,890        512,091     1,534,315     1,528,990
                                             ------------   ------------   -----------   -----------
MINORITY INTEREST
      IN INCOME                                     1,239          1,285         5,411         3,685
                                             ------------   ------------   -----------   -----------

NET INCOME                                   $  1,084,440   $  1,116,076   $ 4,800,459   $ 3,188,015
                                             ============   ============   ===========   ===========
NET INCOME ALLOCATED TO:
      General partner                        $     10,844   $     11,161   $    48,005   $    31,880
      Limited partners                          1,073,596      1,104,915     4,752,454     3,156,135
                                             ------------   ------------   -----------   -----------

                                             $  1,084,440   $  1,116,076   $ 4,800,459   $ 3,188,015
                                             ============   ============   ===========   ===========
NET INCOME PER LIMITED
    PARTNERSHIP UNIT (based on
    51,687 units held by limited partners)   $      20.77   $      21.38   $     91.95   $     61.06
                                             ============   ============   ===========   ===========
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

             CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Limited Partners
                                     General      ---------------------------
                                     Partner         Number                         Total
                                     Amount         of Units        Amount          Amount   
                                  ------------    ------------   ------------    ------------

<S>                               <C>             <C>            <C>             <C>         
BALANCE, December 31, 1997        $   (171,205)         51,687   $ 26,134,579    $ 25,963,374

      Net income                        48,005            --        4,752,454       4,800,459

      Return of capital                   --              --       (3,385,784)     (3,385,784)

      Distributions to partners        (40,715)           --       (4,030,801)     (4,071,516)
                                  ------------    ------------   ------------    ------------

BALANCE, September 30, 1998       $   (163,915)         51,687   $ 23,470,448    $ 23,306,533
                                  ============    ============   ============    ============
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   1998           1997
                                                               -----------    -----------
<S>                                                            <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                $ 4,800,459    $ 3,188,015
     Adjustments to net income:
        Depreciation                                               894,394        987,401
        Gain on sale of property                                (1,725,741)          --
        Minority interest in income                                  5,411          3,685
        Change in assets and liabilities:
           Increase in receivables from lessees                    (10,392)       (28,915)
           Increase in deferred costs                             (161,123)          --
           Increase (decrease) in payable to general partner       101,574        (10,304)
           Decrease in accounts payable and
               accrued liabilities                                 (23,624)           (44)
                                                               -----------    -----------

               Net cash provided by operating activities         3,880,958      4,139,838
                                                               -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sale of property                              3,385,784           --
     Principal collections on secured notes receivable              22,337         22,776
                                                               -----------    -----------

               Net cash provided by investing activities         3,408,121         22,776
                                                               -----------    -----------

CASH FLOWS FOR FINANCING ACTIVITIES:
     Partner distributions declared                             (4,071,516)    (4,174,427)
     Return of capital to limited partners declared             (3,385,784)          --
     Increase in distribution payable                                1,052        109,367
     Distributions to minority interest                             (4,580)        (4,673)
                                                               -----------    -----------

               Net cash used in financing activities            (7,460,828)    (4,069,733)
                                                               -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
     EQUIVALENTS                                                  (171,749)        92,881

CASH AND CASH EQUIVALENTS, beginning of period                   2,402,680      2,346,371
                                                               -----------    -----------

CASH AND CASH EQUIVALENTS, end of period                       $ 2,230,931    $ 2,439,252
                                                               ===========    ===========
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

                    NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1998



1)       TRANSACTIONS WITH RELATED PARTIES:

         A subordinated  real estate  disposition  fee equal to three percent of
the selling price on the  disposition  of any real property  (subject to certain
limitations) is payable to FFCA  Management  Company  Limited  Partnership  (the
general partner of Participating Income Properties 1986, L.P. (the Partnership))
only after the limited  partners have received an amount equal to their Adjusted
Capital Contribution, as defined, and a cumulative, non-compounded return of 10%
per annum on their Adjusted  Capital  Contribution.  A subordinated  real estate
disposition  fee  amounting  to  $101,574  has been  accrued by the  Partnership
representing  three  percent of the  selling  price of the Boise,  Idaho  travel
plaza, which was sold in February 1998 for a cash sales price of $3,385,784.
<PAGE>
PART I  -  FINANCIAL INFORMATION

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF OPERATIONS
              ---------------------------------------------

      On February 2, 1998, Participating Income Properties 1986, L.P. a Delaware
      limited  partnership,  (the  Registrant),  entered into a letter of intent
      with Flying J. Inc. to sell  substantially all of the Registrant's  assets
      for  cash of  approximately  $52  million.  Subsequently,  the  Registrant
      entered into  purchase  agreements  with  respect  thereto on September 4,
      1998. In accordance with the partnership agreement,  sale of substantially
      all of the assets  would  result in  dissolution  of the  partnership  and
      liquidation of the Registrant's remaining assets, net of liabilities.  The
      limited  partners have received a proxy statement  describing the proposed
      transaction  and were  asked to  consent to the  proposed  transaction  by
      October 26, 1998. The following is a summary of the results of the voting:
      32,591 units For, 4,124 units Against, 1,354 units Abstain. An affirmative
      vote of limited partners  holding a majority of the partnership  units was
      achieved.  In addition to the majority vote,  certain other conditions and
      contingencies  must now be satisfied prior to the consummation of the sale
      transaction  as set forth in the letter of intent  between the  Registrant
      and  Flying  J.  Inc.  Among  these  conditions  are the  finalization  of
      financing  arrangements  by Flying J. Inc. in order for it to complete the
      purchase  of the  assets  of  the  Registrant.  The  sale  and  subsequent
      liquidation of the  Registrant  will occur as soon as practical if, and to
      the extent that, all conditions and  contingencies  have been satisfied or
      waived.  There can be no assurance  as to whether or when the  transaction
      will be consummated.

      In February 1998, the Registrant  sold the Boise,  Idaho travel plaza (the
      Boise Plaza) to CFJ Properties  for a cash sales price of $3,385,784.  The
      above-negotiated  sale  price  of  approximately  $52  million  originally
      included  the Boise  Plaza and since this travel  plaza was sold,  the $52
      million sale price will be reduced by approximately $3.4 million. Proceeds
      from the Boise  Plaza sale were $65.50 per  limited  partnership  unit and
      were distributed to the limited partners in April 1998 as a partial return
      of  their  adjusted  capital   contribution.   The  Registrant  accrued  a
      subordinated  real estate  disposition  fee equal to three  percent of the
      selling  price of the Boise,  Idaho travel plaza  (amounting  to $101,574)
      payable to the general partner of the Registrant.

      The Registrant  also declared a cash  distribution  from operations to the
      limited  partners of $1,367,062  for the quarter ended  September 30, 1998
      (the  period),   which,   combined  with  the  first  and  second  quarter
      distributions of $2,663,739 amounts to $4,030,801 year-to-date. During the
      period,  all net  proceeds  not  invested in real estate were  invested in
      Government Agency discount notes and bank repurchase agreements (which are
      secured by United States Treasury and Government obligations).

      During the quarter ended  September 30, 1998, base rental revenue from the
      travel plaza leases  decreased to $994,099 from the prior period amount of
      $1,072,248 due to the February 1998 sale of the Boise,  Idaho travel plaza
      (base rental  revenue for the nine month period was  similarly  affected).
      The Registrant received or accrued  participating  rentals of $531,026 for
      the period  representing a slight increase over  participating  rentals of
      $529,171 for the comparable period of the prior year. Participating rental
      revenue  increased,  despite the sale of the Boise,  Idaho travel plaza in
      February  1998,  due to  increased  volume at the  remaining  travel plaza
      properties.  Participating  rentals  for  the  corresponding  year-to-date
      periods were 
<PAGE>
      similarly affected.  Total revenues during the nine months ended September
      30, 1998 increased by $1,619,495  primarily due to the gain on the sale of
      the  Boise,  Idaho  travel  plaza of  $1,725,741.  Proceeds  from the sale
      generated a higher average cash balance during the nine month period which
      resulted in an increase in interest  and other  income of $29,218 over the
      comparable  nine month period in 1997. For the quarter ended September 30,
      1998,   total  expenses   decreased  by  $43,201  due  to  a  decrease  in
      depreciation  expense  related  to the  sale  of  travel  plaza  property.
      Year-to-date  total  expenses  increased  by $5,325  primarily  due to the
      accrual of the general  partner's  subordinated  disposition fee described
      above, mostly offset by a decrease in depreciation  expense related to the
      sale of travel plaza property.

      The  decrease in total  assets  reflected  in the  Registrant's  financial
      statements  filed with this Report is mainly  attributable  to the sale of
      the Boise, Idaho travel plaza and the distribution to the limited partners
      of the  cash  proceeds  from  the  sale,  and  also  to  the  depreciation
      allowance,  which is deducted for accounting purposes from the cost of the
      assets on the Registrant's books.

      In the opinion of management,  the financial  information included in this
      report reflects all adjustments necessary for fair presentation.  All such
      adjustments are of a normal recurring nature.
<PAGE>
                     FFCA INVESTOR SERVICES CORPORATION 86-B


                       BALANCE SHEET - SEPTEMBER 30, 1998




                                     ASSETS


Cash                                                                        $100
Investment in Participating Income Properties 1986, L.P., at cost            100
                                                                            ----

                  Total Assets                                              $200
                                                                            ====


                                    LIABILITY

Payable to Parent                                                           $100


                              STOCKHOLDER'S EQUITY


Common Stock; $l par value; 100 shares authorized,
     issued and outstanding                                                  100
                                                                            ----

                  Liability and Stockholder's Equity                        $200
                                                                            ====



Note: FFCA Investor  Services  Corporation 86-B (86-B) was organized on June 23,
1986 to act as the assignor limited partner in Participating  Income  Properties
1986, L.P. (PIP-86).

     The  assignor  limited  partner  is the  owner  of  record  of the  limited
partnership units of PIP-86. All rights and powers of 86-B have been assigned to
the holders,  who are the registered and beneficial  owners of the units.  Other
than to serve as assignor  limited  partner,  86-B has no other business purpose
and will not engage in any other activity or incur any debt.
<PAGE>
                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrants  have  caused  this  report  to be  signed  on their  behalf  by the
undersigned thereunto duly authorized.

                                  PARTICIPATING INCOME PROPERTIES 1986, L.P.

                                  By FFCA MANAGEMENT COMPANY LIMITED PARTNERSHIP
                                  General Partner


                                  By PERIMETER CENTER MANAGEMENT COMPANY
                                  Corporate General Partner


Date:  October 30, 1998                       By /s/ John Barravecchia
                                     ------------------------------------------
                                     John Barravecchia, Chief Financial Officer
<PAGE>
                                   SIGNATURES

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

                                     FFCA INVESTOR SERVICES CORPORATION 86-B



Date:  October 30, 1998                       By /s/ John Barravecchia
                                     ------------------------------------------
                                     John Barravecchia, Chief Financial Officer