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                  June 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 l.  Financial Statements.
  -------  ---------------------

            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1998 AND DECEMBER 31, 1997
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                              June 30,      December 31,
                                                                1998            1997
                                                            ------------    ------------
<S>                                                         <C>             <C>         
                                         ASSETS
                                         ------

CASH AND CASH EQUIVALENTS                                   $  2,354,699    $  2,402,680

RECEIVABLES FROM LESSEES                                         157,000         161,608

SECURED NOTES RECEIVABLE                                          84,729         100,569

DEFERRED COSTS                                                    13,146            --

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                         12,291,288      12,253,903
                                                            ------------    ------------

                                                              22,557,762      24,815,472
                                                            ------------    ------------

                  Total assets                              $ 25,167,336    $ 27,480,329
                                                            ============    ============


                           LIABILITIES AND PARTNERS' CAPITAL
                           ---------------------------------

DISTRIBUTION PAYABLE TO LIMITED PARTNERS                    $  1,319,539    $  1,366,497

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                          43,969          52,297

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

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

                  Total liabilities                            1,579,482       1,533,194
                                                            ------------    ------------

MINORITY INTEREST                                                (15,112)        (16,239)
                                                            ------------    ------------

PARTNERS' CAPITAL (DEFICIT):
      General partner                                           (160,949)       (171,205)
      Limited partners                                        23,763,915      26,134,579
                                                            ------------    ------------

                  Total partners' capital                     23,602,966      25,963,374
                                                            ------------    ------------

                  Total liabilities and partners' capital   $ 25,167,336    $ 27,480,329
                                                            ============    ============
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

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

<TABLE>
<CAPTION>
                                            Three Months   Three Months   Six Months   Six Months
                                                Ended          Ended         Ended        Ended
                                               6/30/98        6/30/97       6/30/98      6/30/97
                                            ------------   ------------   ----------   ----------
<S>                                          <C>            <C>           <C>          <C>       
REVENUES:                                                                
      Rental                                 $  994,100     $1,072,248    $2,031,925   $2,144,495
      Participating rentals                     485,184        478,870       945,510      892,111
      Interest and other                         34,896         28,480        82,440       54,632
      Gain on sale of property                     --             --       1,725,741         --
                                             ----------     ----------    ----------   ----------
                                                                         
                                              1,514,180      1,579,598     4,785,616    3,091,238
                                             ----------     ----------    ----------   ----------
                                                                         
EXPENSES:                                                                
      General partner fees                      131,771        138,432       367,681      269,955
      Depreciation                              296,727        329,134       597,667      658,268
      Operating                                  48,540         39,899       100,077       88,676
                                             ----------     ----------    ----------   ----------
                                                                         
                                                477,038        507,465     1,065,425    1,016,899
                                             ----------     ----------    ----------   ----------
                                                                         
MINORITY INTEREST                                                        
      IN INCOME                                   1,215          1,232         4,172        2,400
                                             ----------     ----------    ----------   ----------
                                                                         
NET INCOME                                   $1,035,927     $1,070,901    $3,716,019   $2,071,939
                                             ==========     ==========    ==========   ==========
                                                                         
                                                                         
NET INCOME ALLOCATED TO:                                                 
      General partner                        $   10,359     $   10,709    $   37,160   $   20,719
      Limited partners                        1,025,568      1,060,192     3,678,859    2,051,220
                                             ----------     ----------    ----------   ----------
                                                                         
                                             $1,035,927     $1,070,901    $3,716,019   $2,071,939
                                             ==========     ==========    ==========   ==========
                                                                         
                                                                         
NET INCOME PER LIMITED                                                   
    PARTNERSHIP UNIT (based on                                           
    51,687 units held by limited partners)   $    19.84     $    20.51    $    71.18   $    39.69
                                             ==========     ==========    ==========   ==========
                                                                        
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

             CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
                     FOR THE SIX MONTHS ENDED JUNE 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                        37,160            --        3,678,859       3,716,019

      Distribution to partners,
          cash from operations         (26,904)           --       (2,663,739)     (2,690,643)

      Return of capital to
          limited partners                --              --       (3,385,784)     (3,385,784)
                                  ------------    ------------   ------------    ------------

BALANCE, June 30, 1998            $   (160,949)         51,687   $ 23,763,915    $ 23,602,966
                                  ============    ============   ============    ============
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE

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

<TABLE>
<CAPTION>
                                                                   1998           1997
                                                               -----------    -----------
<S>                                                            <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                $ 3,716,019    $ 2,071,939
     Adjustments to net income:
        Depreciation                                               597,667        658,268
        Gain on sale of property                                (1,725,741)          --
        Minority interest in income                                  4,172          2,400
        Change in assets and liabilities:
           Decrease (increase) in receivables from lessees           4,608        (15,594)
           Increase in deferred costs                              (13,146)          --
           Increase (decrease) in payable to general partner       101,574        (10,304)
           Decrease in accounts payable and
               accrued liabilities                                  (8,328)        (4,953)
                                                               -----------    -----------

               Net cash provided by operating activities         2,676,825      2,701,756
                                                               -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sale of property                              3,385,784           --
     Principal collections on secured notes receivable              15,840         14,994
                                                               -----------    -----------

               Net cash provided by investing activities         3,401,624         14,994
                                                               -----------    -----------

CASH FLOWS FOR FINANCING ACTIVITIES:
     Partner distributions declared                             (2,690,643)    (2,729,546)
     Return of capital to limited partners declared             (3,385,784)          --
     Increase (decrease) in distribution payable                   (46,958)        64,663
     Distributions to minority interest                             (3,045)        (3,058)
                                                               -----------    -----------

               Net cash used in financing activities            (6,126,430)    (2,667,941)
                                                               -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH
     EQUIVALENTS                                                   (47,981)        48,809

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

CASH AND CASH EQUIVALENTS, end of period                       $ 2,354,699    $ 2,395,180
                                                               ===========    ===========
</TABLE>
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

                    Note to Consolidated Financial Statements
                    -----------------------------------------

                                  June 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
                ---------------------------------------------

      As of June  30,  1998,  Participating  Income  Properties  1986,  L.P.,  a
      Delaware limited partnership,  (the Registrant),  had received $51,687,000
      in gross  proceeds  from its offering of Units.  Net funds  available  for
      investment,  after payment of sales  commissions,  organization  costs and
      acquisition  fees,  amounted to $45,232,790.  The offering of Units is the
      Registrant's  sole  source of  capital,  and since  the final  closing  of
      limited  partnership units was held on April 16, 1987, the Registrant will
      not receive  additional funds from the offering.  The Registrant was fully
      invested in eleven travel plaza  properties by September 1988 and does not
      anticipate any further capital expenditures.

      On February 2, 1998, 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.  The  sale  is  subject  to  certain
      conditions  specified in the letter of intent,  including the  negotiation
      and execution of definitive sale and financing  agreements with respect to
      the assets of the Registrant  and the approval,  by vote, of a majority of
      the  limited  partner  interests.   In  accordance  with  the  partnership
      agreement,  sale  of  substantially  all  of the  assets  will  result  in
      dissolution  of  the  Registrant  and  liquidation  of  the   Registrant's
      remaining assets, net of liabilities.  There can be no assurance as to the
      final  terms of the  proposed  transaction,  that the  conditions  will be
      satisfied  or that  the  proposed  transaction  will be  consummated.  The
      limited  partners  will  receive a proxy  statement  containing a complete
      description of the proposed transaction.

      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  $1,319,034  for the quarter ended June 30, 1998 (the
      period), which, combined with the first quarter distribution of $1,344,705
      amounts to $2,663,739  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).

      Total  revenues  during  the six  months  ended  June 30,  1998  increased
      $1,694,378  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 six month  period  which  resulted in an
      increase in interest and other income of $27,808 over the  comparable  six
      month period in 1997.  During the quarter ended June 30, 1998, base rental
      revenue from the travel plaza leases  decreased to $994,100 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 six month  period was
      similarly  affected).  The  Registrant  received or accrued  participating
      rentals  of  $485,184  for  the  period   representing  an  increase  over
      participating  rentals of $478,870 for the comparable  period of the prior
      year. On June 1, 1996, CFJ Properties (a lessee of the Registrant's travel
      plazas)  curtailed  its  relationship  with a large  third  party  billing
      company for the trucking  industry.  The billing company requested changes
      to its contract that were  unacceptable to CFJ Properties'  management due
      to the significant  long-term  ramifications of the proposed change on CFJ
      Properties' future business.  This resulted in reduced volume and margins,
      which  contributed  to low  participating  rental  revenues in the quarter
      ended June 30,  1997 as  compared  to the  quarter  ended  June 30,  1998.
      Participating  rentals for the  corresponding  year-to-date  periods  were
      similarly  affected,  although to a greater extent.  For the quarter ended
      June 30, 
<PAGE>
      1998,   total  expenses   decreased  by  $30,427  due  to  a  decrease  in
      depreciation  expense  related  to the  sale  of  travel  plaza  property.
      Year-to-date  total  expenses  increased by $48,526  primarily  due to the
      accrual of the general  partner's  subordinated  disposition fee described
      above, 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.

      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 - JUNE 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: August 3, 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: August 3, 1998                        By /s/ John Barravecchia
                                       -----------------------------------------
                                       John Barravecchia, President