SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

(Mark One)

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

         For the fiscal year ended December 31, 1997

                                       OR

[ ]      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                                     (Partnership I.R.S.
Organization)                                            Employer Identification
                                                         No.)

     Delaware                                                  86-0557949
     --------                                                  ----------
(Corporation State of                                     (Corporation I.R.S.
Incorporation)                                           Employer Identification
                                                         No.)

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

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)

                      Limited Partnership Depository Units
                      ------------------------------------
                                (Title of Class)

         Indicate by check mark  whether the  Co-Registrants  (1) have 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
Co-Registrants were required to file such reports), and (2) have 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 the Co-Registrants' 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]

         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates of the Co-Registrants: Not applicable.

         The  limited  partnership   depository  units  (the  "Units")  are  not
currently traded in any market.  Therefore,  there is no market price or average
bid and  asked  price for the  Units  within  60 days  prior to the date of this
filing.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>
                                     PART I

Item 1.  Business.

         Participating   Income   Properties  1986,  L.P.,  a  Delaware  limited
partnership  (the  "Partnership"),  was  organized  on June 23,  1986  under the
Delaware Revised Uniform Limited  Partnership  Act. The Partnership  serves as a
co-general  partner of  FFCA/PIP  1986  Property  Company,  a  Delaware  general
partnership  (the  "Company"),  which was  organized to acquire new and existing
travel plazas, including land, buildings and equipment, to be leased to Flying J
Inc. and to franchisees of Flying J Franchise Inc. The other co-general  partner
of the Company is Perimeter Center Management Company ("PCMC").  The Partnership
invests in the travel  plazas  through  the  Company to avoid  burdensome  state
filing requirements. The Partnership is entitled to 99.9% of all of the profits,
losses  and  disbursable  cash of the  Company.  Under  the  terms of the  First
Restated  Agreement  of  Partnership  of the  Company,  PCMC is  entitled to the
remaining 0.1% of the profits,  losses and disbursable cash of the Company.  The
general  partner  of  the   Partnership  is  FFCA  Management   Company  Limited
Partnership, a Delaware limited partnership (the "General Partner").

         FFCA Investor  Services  Corporation  86-B, a Delaware  corporation and
wholly-owned  subsidiary of PCMC, which is the corporate  general partner of the
General Partner, was incorporated on June 23, 1986, to serve as the assignor and
initial  limited  partner  of the  Partnership  and the  owner of  record of the
limited  partnership  interests  in the  Partnership.  The  limited  partnership
interests are assigned by FFCA Investor  Services  Corporation 86-B to investors
in the Partnership.  FFCA Investor  Services  Corporation 86-B conducts no other
business activity.  The Partnership and FFCA Investor Services  Corporation 86-B
are referred to collectively as the "Co-Registrants."

         On October 10, 1986, the Co-Registrants  commenced a public offering of
$75,000,000  in  limited  partnership  depository  units  (the  "Units")  in the
Partnership  pursuant  to a  Registration  Statement  on  Form  S-11  under  the
Securities Act of 1933, as amended.  The  Co-Registrants  sold a total of 51,687
Units to investors at $1,000 per Unit for a total of $51,687,000.  Purchasers of
the Units  (the  "Holders")  acquired  the  following  number of Units from FFCA
Investor Services  Corporation 86-B on each of the following dates: 19,865 Units
on January 15,  1987;  and 31,822 Units on April 16,  1987.  Subsequent  to that
date, no Holder has made any additional capital contribution.  The Holders share
in the benefits of ownership of the Partnership's assets, including its interest
in the Company's real and personal property investments, according to the number
of Units  held,  in  substantially  the same  manner as limited  partners of the
Partnership.

         After deducting  organizational and offering expenses,  including sales
commissions,  the net proceeds of the offering of the Units,  $45,613,778,  were
fully invested by the Partnership,  through its investment in the Company, as of
September  1988,  in eleven  "Flying J Travel  Plazas"  located in nine  states.
"Flying J Travel Plaza"  facilities  offer a full-service  operation,  generally
including fuel facilities,  a restaurant,  convenience store and other amenities
for use by the trucking industry and traveling public in general.

         As of  December  31,  1997,  eight of the  travel  plazas  owned by the
Partnership were leased to CFJ Properties, a general partnership formed pursuant
to a joint venture between Flying J Inc.,  through its subsidiary,  Big West Oil
Company ("Big  West"),  and Douglas Oil Company of  California,  a subsidiary of
Conoco Inc.  ("Douglas  Oil"),  one of the travel  plazas was leased to Flying J
Inc. and the remaining two were leased to franchisees of Flying J
<PAGE>
Franchise  Inc.  ("FJFI"),  a subsidiary of Flying J Inc. and the  franchisor of
Flying J Travel Plazas.  The Partnership and the Company are not affiliated with
CFJ Properties, Flying J Inc. or FJFI.

         The Partnership's  principal  objectives  through its investment in the
Company  are to (a)  preserve,  protect  and enhance  Partnership  capital;  (b)
provide partially tax-sheltered cash distributions to investors; (c) provide the
potential  for  increased  income  and  protection   against  inflation  through
participation in the gross revenues of Flying J Travel Plaza facilities; and (d)
obtain long-term appreciation in the value of its properties through real estate
ownership.

         Real estate owned by the Company is  generally  leased for a term of 20
years.  Equipment  is  generally  leased for a term of eight  years.  Of the two
equipment leases remaining at December 31, 1997, one will expire in 1998 and the
other lease is not subject to a purchase option.  Lessees must generally pay the
Company  annual rental  payments (in monthly  installments)  equal to 10% of the
Company's total investment in properties.  As additional rent under the terms of
the lease,  the  Company  is  entitled  to  receive a portion  of the  operating
revenues of the lessees  equal to (a) 4% of annual gross  receipts  derived from
the travel plaza facility,  excluding fuel sales; (b) 3/10 of $.01 per gallon of
fuel sold;  and (c) 4% of all amounts  received by the lessee for any lease year
pursuant  to any  sublease  by the  lessee of any part of its  leased  premises.
Reference  is made to Note (3) of the Notes to Financial  Statements  filed with
this Report for a schedule of the minimum  future lease  payments to be received
by the Company on its properties.

         The Partnership is dependent upon CFJ Properties, its principal lessee,
since an adverse change in its financial  condition could materially  affect its
ability to make lease  payments.  During 1997,  CFJ Properties and Flying J Inc.
together  contributed  approximately  88%  of the  Company's  total  rental  and
participating rental revenue for the year.

         On February 1, 1991,  Flying J Inc.,  through its  subsidiary Big West,
entered into a joint venture with Douglas Oil to form CFJ  Properties.  Flying J
Inc.  (and  subsidiaries)  is a fully  integrated  oil and gas  company  that is
engaged in the  production,  refining,  transportation,  wholesaling  and retail
marketing of petroleum products and other services through its travel plazas and
gasoline  stations.  Flying J Inc. operates all of CFJ Properties' travel plazas
and related facilities,  which included 72 interstate travel plaza properties as
of January 31, 1997. The Company owns eight of these properties. Under the terms
of the joint  venture,  Big West sold to  Douglas  Oil  certain  Flying J Travel
Plazas,  which Douglas Oil contributed  back to CFJ  Properties.  In addition to
this initial contribution, Douglas Oil also made additional contributions to CFJ
Properties. As its initial contribution,  Big West transferred to CFJ Properties
certain  leasehold  interests  and  Flying J  Travel  Plazas,  and  subsequently
contributed  to  CFJ  Properties   various  assets  including  working  capital,
inventories  and future  development  sites.  With the  exception  of the Butte,
Montana  travel plaza,  Flying J Inc.  assigned its  leasehold  interests in the
travel  plazas  owned by the Company to CFJ  Properties  and was released by the
Company with respect to its obligations under those leases.

         The Partnership's  leases with CFJ Properties are with full recourse to
the assets of CFJ Properties, but without recourse to Big West or Douglas Oil. A
default  on one  lease  constitutes  a default  on all other  leases to the same
lessee by the Partnership and two other partnerships  sponsored by affiliates of
the General  Partner,  all of whose travel plazas are leased to CFJ  Properties,
Flying J Inc. or franchisees of FJFI.
                                       2
<PAGE>
         For the fiscal year ended January 31, 1997, CFJ Properties reported net
income of $1.8  million on  revenues  of $1.2  billion.  Revenues  rose 25% from
$937.4 million the prior year. The higher revenues  resulted from the opening of
six new units and  increases in fuel  prices.  Net income  decreased  from $17.2
million in the prior year due to higher interest  expense and lower gross profit
margins.

         During the fiscal year ended January 31, 1997, CFJ Properties  reported
$22.3 million in net cash  provided by operating  activities.  This cash,  along
with  the cash  provided  by  financing  activities,  was  used to make  capital
expenditures.  As of January 31, 1997, CFJ Properties  reported cash balances of
approximately  $2.1 million,  with  liquidity  supported by net cash provided by
operating activities and a $150 million revolving line of credit with a bank. As
of January 31, 1997, CFJ Properties reported partners' capital of $139.5 million
and total assets of $412.9 million.

         CFJ Properties leases travel plazas and equipment under  non-cancelable
operating leases, which generally expire at various dates over the next 10 to 16
years.  Payments under these leases were $17.3 million in 1997 and $17.6 million
in 1996,  including  percentage  lease  payments.  Future  minimum  annual  rent
obligations  under  non-cancelable  leases,  as projected  through 2002,  remain
comparable to 1997 expense amounts.

         The nine  properties  operated by CFJ Properties and Flying J Inc., and
leased from the Partnership, generated a combined fuel and non-fuel gross profit
(including other income) of  approximately  $24.4 million during the fiscal year
ended January 31, 1997 as compared to $26.8  million in fiscal year 1996.  Total
travel plaza unit-level  income for these nine properties  (before  depreciation
and allocated  corporate overhead) totaled  approximately  $700,000 in 1997 with
three of the nine properties reporting positive unit-level income. The remaining
six properties  reported net losses  primarily due to lower total gross profits.
The combined result of the travel plaza  unit-level  income before  depreciation
and  allocated  corporate  overhead was down from $2.8 million in the prior year
due largely to CFJ's  curtailment  of its  relationship  with Comdata on June 1,
1996.  Comdata,  a large third party billing company for the trucking  industry,
requested  changes to its contract which were  unacceptable to CFJ's  management
due to the significant  long-term  ramifications of Comdata's proposed change on
CFJ's future business.  For CFJ Properties'  fiscal year ended January 31, 1997,
the average  unit-level base and participating  rents  approximated 14.1% of the
original cost of these properties.

         Those  properties  that each  represent  over 10% of the  Partnership's
total assets are located in Clive, Iowa, Amarillo, Texas and Cheyenne, Wyoming.

         On February 2, 1998,  the  Partnership  entered into a letter of intent
with Flying J Inc. to sell  substantially  all of the  Partnership'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
Partnership  and the  approval,  by vote,  of a majority of the limited  partner
interests.  In accordance with the Partnership's  limited partnership  agreement
(the  "Partnership  Agreement"),  sale of  substantially  all of the assets will
result  in  dissolution  of  the   Partnership   and  liquidation  of  remaining
Partnership  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.
                                       3
<PAGE>
         The  negotiated  sale price of  approximately  $52  million  would have
resulted in an estimated  book gain of $27 million had the  proposed  sale taken
place at December 31, 1997. Subsequent to the proposed asset sale and conversion
of other  Partnership  assets into cash upon  liquidation,  a  liquidating  cash
distribution  will be made to  investors  in  accordance  with  the  Partnership
Agreement.  Had the sale (as  proposed)  occurred at December  31,  1997,  it is
estimated that the liquidating cash distribution would have been in the range of
$965 to $990 per limited  partnership unit. The actual liquidating  distribution
to be  received by  investors  will depend upon the actual date and terms of the
sale and the actual costs of liquidating the Partnership.

         In February 1998, the Partnership sold its Boise, Idaho travel plaza to
CFJ Properties for approximately  $3,386,000 in cash. The Boise travel plaza was
a full-service  travel plaza,  built on a parcel  consisting of approximately 21
acres. The above negotiated sale price of approximately  $52 million did include
the Boise,  Idaho  travel  plaza as if the  proposed  sale of the  Partnership's
assets had taken place at December 31, 1997.

         The travel  plaza/truckstop  industry,  although highly fragmented,  is
also highly  competitive.  The  Partnership's  lessees are competing with, among
others, National Auto/Truckstops,  Petro and Pilot Corporation, as well as other
national,  regional  and  local  truckstop  operators,  some of  which  may have
substantially  greater financial  resources than the lessees.  The Partnership's
lessees also  compete with other  entities  that provide  hospitality  goods and
services to the trucking  industry and  traveling  public in general.  The major
competitive  factors  include,  among others,  location,  ease of access,  brand
identification, pricing, product and service selections, customer service, store
appearance,  cleanliness and safety.  The Flying J Travel Plaza facilities owned
by  the  Company  offer  a  full-service  operation,  generally  including  fuel
facilities, a restaurant, a convenience store and other amenities for use by the
trucking  industry and traveling  public in general.  Flying J Inc. reports that
the Flying J Travel Plaza network  consists of more than 100  facilities  across
the U.S.  interstate  highway system.  The travel plaza sites have been selected
based on traffic patterns and volumes, and access to interstate highways,  among
other criteria.

         According to the American Trucking  Association,  the trucking industry
generated more than $345 billion in gross freight revenues,  representing 82% of
the nation's  freight bill in 1996.  This was up 4% from the prior year. Over 21
million trucks  registered in the United States for business  purposes  consumed
approximately 41 billion gallons of fuel and transported over 60% of all primary
shipments made in 1996.

         Through ownership of the travel plazas, the Partnership and the Company
are subject to the risks  associated with the  underground  storage of petroleum
products such as gasoline. In this regard, the Partnership's lessees are subject
to various federal,  state and local regulations and  environmental  laws. These
laws and regulations  affect the storing,  dispensing and discharge of petroleum
and other  wastes and affect the  lessees  both in the  securing  of permits for
fueling operations and in the ongoing conduct of such operations.

         Federal,  state and local regulatory  agencies have adopted regulations
governing  underground  storage tanks  ("USTs")  that require the  Partnership's
lessees to make certain  expenditures  for  compliance.  In  particular,  at the
federal  level,  the  Resource   Conservation  and  Recovery  Act  requires  the
Environmental  Protection Agency ("EPA") to establish a
                                       4
<PAGE>
comprehensive  regulatory  program for the detection,  prevention and cleanup of
leaking USTs.  Regulations  enacted by the EPA in 1988 established  requirements
for (a) installing UST systems; (b) upgrading UST systems; (c) taking corrective
action in response to releases; (d) closing UST systems; (e) keeping appropriate
records;  and (f) maintaining  evidence of financial  responsibility  for taking
corrective action and compensating  third parties for bodily injury and property
damage  resulting from  releases.  These  regulations  permit states to develop,
administer and enforce their own regulatory programs, incorporating requirements
which are at least as  stringent as the federal  standards.  By the end of 1998,
all USTs must be corrosion  protected,  overfill/spill  protected  and have leak
detection.  These  environmental  laws impose  strict  liability  for owners and
operators  of  faulty  and  leaking  storage  tanks  resulting  in damage to the
environment or third parties.

         The  General  Partner  has taken  steps to (a) ensure  that the lessees
comply  with  applicable  rules and  regulations;  (b)  mitigate  any  potential
liabilities,  including the establishment of storage tank monitoring procedures;
and (c) require that lessees  indemnify the Partnership for all such liabilities
and obtain liability  insurance,  if reasonably  available.  The General Partner
requires each lessee to obtain an annual  environmental  audit,  performed by an
environmental  consulting  and  engineering  firm,  which includes the following
procedures, among others: month-end cumulative fuel inventory variance analysis;
tank tightness tests; automatic tank gauging and leak detection system operation
and  calibration  tests;  UST  excavation  zone  groundwater  and/or  soil vapor
monitoring well analysis;  piping system tightness tests; piping excavation zone
ground water and/or soil vapor  monitoring  well  analysis;  pipe leak  detector
inspection and calibration  tests;  corrosion  protection system tests;  on-site
sanitary  sewer  treatment  plant  effluent  analysis;  and oil/water  separator
inspections. The consulting and engineering firm hired by the General Partner to
conduct such audits also reviews on-site environmental correspondence;  visually
inspects the UST system, tank and piping excavation zone monitoring wells, areas
adjacent to all petroleum  above-ground  tanks,  the  stormwater  and wastewater
control systems, and the travel plaza facility;  and discusses employee training
procedures,  recent  significant  environmental  events  (if  any),  repair  and
maintenance activities, and regulatory compliance with travel plaza personnel.

         The most  recent  annual  environmental  audits  of the  travel  plazas
indicate that some remediation is necessary at one or more of the travel plazas.
Under  each  travel  plaza  lease,  the  lessee  is  responsible  for all  costs
associated with correcting  problems  identified by such audits and is obligated
to indemnify the Partnership and the Company for all liabilities  related to the
operation of the travel  plazas,  including  those related to  remediation.  The
lessees  are in the  process of  reviewing  such  environmental  audits and have
commenced  appropriate  corrective actions. The General Partner does not believe
that the corrective  actions  recommended in the audits will affect the lessees'
ability to make their  scheduled  lease  payments to the  Partnership  or have a
material adverse effect upon the Partnership.

         The  Partnership  believes that its lessees are in compliance  with all
applicable  regulatory  requirements,  except  as  discussed  above and that its
lessees have all  governmental  licenses and permits required for their business
operations.  Management  knows  of  no  pending  or  threatened  proceedings  or
investigations  under federal or state environmental  laws; however,  management
cannot  predict  the impact on the  Partnership's  lessees  of new  governmental
regulations and  requirements.  Although the General Partner has taken necessary
steps,  as discussed  above,  to ensure  lessee  compliance  with  environmental
regulations,  there can be no assurance that  significant  cleanup or compliance
costs may not be incurred  which may affect the  lessees'  ability
                                       5
<PAGE>
to make their scheduled lease payments to the Partnership.

         As of December 31, 1997, the Partnership, through its investment in the
Company,  has invested in real estate  located in nine states in the western and
central  portions  of the United  States,  and no real  estate  investments  are
located  outside of the United States.  A presentation  of revenues or assets by
geographic   region  is  not   applicable  and  would  not  be  material  to  an
understanding of the Partnership's business taken as a whole.

         The  Partnership  does not believe  that any aspect of its  business is
significantly seasonal in nature.

         No portion of the Partnership's business is subject to renegotiation of
profits or  termination  of  contracts  or  subcontracts  at the election of the
United States Government.  The Partnership does not manufacture any products and
therefore does not require any raw materials in order to conduct its business.

         The  Partnership is managed by the General Partner and therefore has no
employees of its own. FFCA Investor  Services  Corporation 86-B has no employees
because it does not conduct any business operations.

         The  Partnership  pays an  affiliate  of the  General  Partner  for the
maintenance  of the books  and  records  of the  Partnership  and for  computer,
investor and legal services  performed for the  Partnership.  During 1997,  this
affiliate  of the  General  Partner  completed  the  design of a new  accounting
information  system  that was begun in 1996 and was  implemented  on  January 1,
1998. The new system is "Year 2000"  compliant  which means that the system will
be able to handle any dates that refer to the 21st century.  By the end of 1998,
all of the  affiliate's  significant  information  systems that would impact the
Partnership  will be "Year 2000"  compliant.  The affiliate is in the process of
assessing the key suppliers that it relies upon in addition to any other systems
that are sensitive to dates (such as the telephone and power systems, elevators,
security systems, and so on), and has developed a plan for any such systems that
are found to be noncompliant.

         A five-phase process was adopted by the affiliate to address the issues
associated with the year 2000 including:  (1) an inventory and assessment of the
systems and electronic  devices that may be at risk; (2) the  identification  of
potential  solutions;  (3) the  implementation  of upgrades or  replacements  to
affected  systems or devices;  (4) the verification of compliance and testing of
the revised systems;  and (5) the training of users on the new systems. To date,
the inventory and assessment  phase of all critical  computer  hardware has been
completed, as have the operating system and database software, and statements of
"Year  2000"  compliance  have  been  received  from the  related  vendors.  The
verification  of "Year 2000"  compliance  through  testing of these  systems and
training of users is nearly complete.

         As  discussed  previously,  the  Partnership  entered  into a letter of
intent with Flying J Inc. to sell substantially all of the Partnership's assets.
In accordance with the Partnership  Agreement,  sale of substantially all of the
assets  will  result  in  dissolution  of the  Partnership  and  liquidation  of
remaining Partnership assets, net of liabilities. Under these circumstances, the
"Year 2000" issue is not anticipated to have any effect on the Partnership.
                                       6
<PAGE>
Factors Affecting Future Operating Results

         The provisions of the Private Securities  Litigation Reform Act of 1995
(the "Act"), became effective in December 1995. The Act provides a "safe harbor"
for  companies  that  make  forward-looking   statements  providing  prospective
information. The "safe harbor" under the Act relates to protection for companies
with  respect  to  litigation  filed  on  the  basis  of  such   forward-looking
statements.

         The  Partnership   wishes  to  take  advantage  of  the  "safe  harbor"
provisions of the Act and is therefore  including  this section.  The statements
contained herein, if not historical,  are forward-looking statements and involve
risks and  uncertainties  which are  described  below  that could  cause  actual
results to differ materially from the results,  financial or otherwise, or other
expectations described in such forward-looking statements.  These statements are
identified with the words "anticipated,"  "expected,"  "intends," or "plans," or
words of similar meaning.  Therefore,  forward-looking  statements should not be
relied upon as a prediction of actual future results or occurrences.

         The  Partnership's  future  results may be subject to certain risks and
uncertainties including the following:

         o        On February 2, 1998, the Partnership  entered into a letter of
                  intent  with Flying J Inc.  to sell  substantially  all of the
                  Partnership'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  Partnership  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  Partnership  and
                  liquidation   of   remaining   Partnership   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.

         o        Adverse  changes  in  general  or  local  economic  or  market
                  conditions may decrease  demand for products and services sold
                  at the Partnership's travel plazas.

         o        Competition  in the travel plaza  industry (see  discussion in
                  "Business"  above),  as well as competition  with  established
                  entities  and  private   investors  in  connection   with  the
                  acquisition,  sale  and  leasing  of  similar  properties  may
                  decrease sales at the Partnership's travel plazas and decrease
                  profit margins.

         o        Material  or   substantial   restrictions   on  travel   plaza
                  facilities  imposed  by  federal,  state  and  local  laws and
                  regulations  may result in  increased  operating  expenses and
                  capital  expenditures  for the operators of the  Partnership's
                  travel plazas.

         o        The  Partnership is dependent upon the financial  condition of
                  CFJ Properties and its ability to properly  operate the travel
                  plaza  facilities.  If CFJ  Properties  fails to  operate  the
                  travel plaza facilities  properly,  the Partnership's  revenue
                  stream may be adversely affected.
                                       7
<PAGE>
         o        The  Partnership  is  dependent  upon  petroleum  products and
                  factors  affecting  the  petroleum  industry,   including  the
                  following:  governmental  policies and programs  regarding oil
                  exploration,  production  and  marketing;  federal,  state and
                  local environmental laws, rules and regulations  regarding the
                  ownership,   operation  and   maintenance  of  oil  production
                  facilities,  refineries  and  petroleum  product  storage  and
                  marketing facilities; unrest in the Middle East; worldwide and
                  domestic  economic   conditions;   oil  import  quotas;  trade
                  embargoes;  the  imposition of gasoline or other energy taxes;
                  the  supply  and  price  of  oil;  and  effects  of all of the
                  foregoing on the transportation  and travel industries,  which
                  could result in smaller profit margins and volumes of sales of
                  petroleum  products  as well as  smaller  base  rental  income
                  revenues from lessees of the  properties.  This dependency may
                  decrease the availability, and increase the price of, products
                  and services sold at the Partnership's travel plazas which may
                  adversely affect its revenue stream.

         o        Condemnation  or  uninsured  losses may  adversely  affect the
                  ability of the travel plazas to profitably operate.

         o        Changing  demographics  and  changing  transport,  traffic and
                  travel  patterns  may  result  in a  decrease  in sales at the
                  Partnership's travel plazas.

         o        Relocation  and  construction  of highways  may  substantially
                  decrease  consumer demand and adversely  affect the operations
                  of the Partnership's travel plaza.

         o        Increased costs of food products would decrease profit margins
                  on food products.

         o        Failure  of  lessees  to  remediate   environmental   problems
                  identified  in recent  environmental  audits  may  affect  the
                  marketability of the travel plazas to third parties.

Item 2.  Properties.

         As of December 31, 1997, the Partnership, through its investment in the
Company, had acquired 11 travel plaza properties located in nine states, without
borrowings  by the  Company or the  Partnership.  As  discussed  under  "Item 1.
Business,"  the  Boise,  Idaho  travel  plaza  was sold in  February  1998.  The
properties  were  acquired  by the  Company  during  1987 and 1988  with the net
proceeds received by the Partnership from the public offering of the Units.
                                       8
<PAGE>
         The Partnership's travel plazas, divided into sections which serve both
the  commercial  and  non-commercial  traveler,  generally  offer  a  multi-use,
full-service  operation  including  fuel  facilities for the storage and sale of
automotive and diesel fuels, a 24-hour restaurant, a convenience store, restroom
facilities with private showers,  and other amenities designed to meet the needs
of the  trucking  industry  and the  traveling  public in general.  Three of the
Company's  properties  represent over 10% of the  Partnership's  total assets at
December 31, 1997, as follows:

                                          Approximate % of
                              Location      Total Assets
                              --------      ------------

                           Clive, Iowa           15%
                           Amarillo, Texas       11%
                           Cheyenne, Wyoming     10%

         The  following  is a  description  of the  properties  acquired  by the
Company.

         Boise,  Idaho.  The  Boise  travel  plaza  is  a  completely  renovated
full-service  travel plaza,  built on a parcel  consisting of  approximately  21
acres  approximately  1/5 of a mile south of  Interstate  84.  During 1994,  the
lessee of this travel plaza  exercised  its option to purchase the motel portion
of the  travel  plaza  comprising  two and  one-half  acres of land,  the  motel
building and motel equipment.  In addition,  approximately one-half acre of land
was sold to the  State of Idaho  Transportation  Department,  leaving  the Boise
travel plaza with  approximately  18 acres,  which was sold to CFJ Properties in
February 1998.

         Post Falls, Idaho. The Post Falls travel plaza is a full-service travel
plaza, built on a parcel consisting of approximately 8 acres of land, located at
the northeast off-ramp of Interstate Highway 90.

         Butte,  Montana.  The Butte travel plaza was a pre-existing Husky truck
stop,  renovated in 1988, and is located on a parcel consisting of approximately
9.01 acres of land along the north side of I-15 and I-90.

         Ellensburg,  Washington. The Ellensburg travel plaza was a pre-existing
Husky truck stop,  renovated in 1987,  and is located on a parcel  consisting of
approximately 8.06 acres of land just south of I-90 and one mile west of I-82.

         Amarillo,  Texas.  The Amarillo  travel plaza was a pre-existing  Husky
truck stop,  renovated in 1989,  and is located on a parcel  consisting of 16.32
acres of land five  miles west of the I-27 and I-40  interchange  and four miles
east of downtown Amarillo.

         Clive,  Iowa.  The Clive travel plaza is a  full-service  travel plaza,
built on a parcel  consisting  of 26.6 acres of land,  located at the  southwest
corner of I-35/80. Clive, Iowa is located northwest of Des Moines.

         Eloy,  Arizona.  The Eloy travel plaza is a full-service  travel plaza,
built on a 15-acre parcel of land, located three miles south of the I-8 and I-10
junction.  Eloy, Arizona is located 60 miles south of Phoenix and 53 miles north
of Tucson.

         Thousand  Palms,  California.  The  Thousand  Palms  travel
                                       9
<PAGE>
plaza is a full-service  travel plaza, built on a 5.01-acre parcel of land north
of I-10. Thousand Palms is situated midway between the Arizona/California border
and Los Angeles.

         Truxton,  Missouri.  The Truxton travel plaza is a full-service  travel
plaza,  built on a parcel of land of approximately 15 acres located south of the
I-70 and Highway B junction.  Truxton, Missouri is located 55 miles northwest of
St. Louis.

         Cheyenne,  Wyoming.  The Cheyenne travel plaza is a full-service travel
plaza,  built on a 15.2-acre parcel of land west of I-25.  Downtown  Cheyenne is
located three miles north of the site.

         Evanston,  Wyoming. The Evanston travel plaza is located on a 5.42-acre
parcel of land along the north side of Highway 30 and north of I-80. Evanston is
approximately two miles from the Utah border.

         Reference is made to the Annual Portfolio Valuation prepared by Cushman
& Wakefield  which is filed with this  Report as an exhibit for the  properties'
appraised value as of December 31, 1997.

         FFCA Investor Services  Corporation 86-B has no interest in any real or
personal property independent of the Partnership.

Item 3.  Legal Proceedings.

         Neither  the  Co-Registrants  nor their  properties  are parties to, or
subject to, any material pending legal proceedings.

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

         No  matter  was  submitted  to  a  vote  of  the  Holders  through  the
solicitation  of proxies or  otherwise  during the fourth  quarter of the fiscal
year ended December 31, 1997.

                                     PART II

Item 5.  Market for Registrant's Units and Related Security Holder Matters.

         Market  Information.  During  1997,  there  was no  established  public
trading  market for the Units,  and it is not  anticipated  that an  established
public trading market for the Units will develop.

         Holders.  As of March 2, 1998,  there were 4,099 record  holders of the
Units.
                                       10
<PAGE>
         Distributions.  For the two most recent fiscal years,  the  Partnership
made the following cash distributions to the Holders:

                                      1997
<TABLE>
<CAPTION>
                                          Per Unit
                                        Distribution                Total               Annualized
                                    --------------------     ----------------------        Cash
       Date of          Number      Cash from                Cash from                  Yield from
    Distribution       of Units     Operations   Capital     Operations     Capital     Operations
    ------------       --------     ----------   -------     ----------     -------     ----------
<S>                      <C>        <C>             <C>      <C>               <C>        <C>
December 31              51,687     $   26.43       --       $1,366,087        --         11.0%
September 30             51,687         27.68       --        1,430,696        --         11.5%
June 30                  51,687         26.81       --        1,385,728        --         11.2%
March 31                 51,687         25.47       --        1,316,468        --         10.6%
</TABLE>

                                      1996
<TABLE>
<CAPTION>
                                          Per Unit
                                        Distribution                Total               Annualized
                                    --------------------     ----------------------        Cash
       Date of          Number      Cash from                Cash from                  Yield from
    Distribution       of Units     Operations   Capital     Operations     Capital     Operations
    ------------       --------     ----------   -------     ----------     -------     ----------
<S>                      <C>        <C>             <C>      <C>               <C>        <C>
December 31              51,687     $25.56          --       $1,321,120        --         10.6%
September 30             51,687      26.92          --        1,391,414        --         11.2%
June 30                  51,687      26.30          --        1,359,368        --         11.0%
March 31                 51,687      25.49          --        1,369,189        --         11.0%
</TABLE>

         Cash from  operations,  defined as disbursable cash in the agreement of
limited  partnership  which  governs  the  Partnership,  is  distributed  to the
Holders.  Any variations in the amount of distributions  from quarter to quarter
are due to fluctuations in net cash provided by operating activities.  Reference
is made to Item 7 below for a discussion and analysis of such fluctuations.  The
annualized   cash  yield  from   operations   represents  the  annualized   cash
distribution   from   operations  as  a  percentage  of  the  Adjusted   Capital
Contribution,  as  defined.  Cash  proceeds  from  the  sale of  property,  when
distributed,  represent a partial return of the limited partners' initial $1,000
per unit capital contribution.  The Adjusted Capital Contribution of a Holder is
generally  the  Holder's  initial  capital  contribution  reduced  by  the  cash
distributions to the Holders of proceeds from the sale of Partnership properties
and  reduced by any other cash  distributions  other than from  operations.  The
Adjusted  Capital  Contribution  per  Unit of the  Holders,  as  defined  in the
agreement of limited  partnership which governs the Partnership,  was $960.34 as
of December 31, 1997. At December 31, 1995, the Partnership declared a return of
capital of  $2,050,000  ($39.66 per Unit) related to the 1994 sale of the Boise,
Idaho lodging premises and equipment, which was distributed in January 1996.

         Any differences in the amounts of distributions  set forth in the above
tables from the  information  contained  in Item 6 below are due to rounding the
amount of  distributions  payable  per Unit down to the  nearest  whole cent and
carrying  any  fractional  cents  forward  from  one  period  to the  next.  The
Partnership  expects  to  continue  making  cash  distributions  to the  Holders
                                       11
<PAGE>
pursuant to the provisions of the agreement of limited partnership which governs
the  Partnership.  The General  Partner knows of no material  restrictions  that
would limit the Partnership's ability to pay distributions to the Holders in the
future.

Item 6.  Selected Financial Data.

         The following  selected  financial  data should be read in  conjunction
with the Consolidated  Financial Statements and the related notes attached as an
exhibit to this Report.
<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      -----------------------
                                 1997          1996          1995          1994          1993
                                 ----          ----          ----          ----          ----

<S>                          <C>           <C>           <C>           <C>           <C>
Revenues                     $ 6,297,173   $ 6,289,831   $ 6,563,996   $ 7,179,846   $ 6,397,242
Net Income                     4,239,903     4,013,518     3,944,780     4,375,249     3,606,158
Net Income Per Unit                81.21         76.87         75.56         83.80         69.07
Total Assets                  27,480,329    28,759,012    32,378,912    34,094,240    36,048,390
Distributions of Cash from
 Operations to Holders         5,499,084     5,440,957     5,592,710     5,674,532     5,546,729

Distributions of Cash from
 Operations Per Unit              106.39        105.27        108.20        109.79        107.31

Return of Capital to
 Holders                            --            --       2,050,000          --            --
Return of Capital Per Unit          --            --           39.66          --            --
</TABLE>

         The 1994 results of operations  include gains totaling  $653,477 on the
sale of the motel  portion  of the  Boise,  Idaho  travel  plaza and the sale of
approximately  one-half  acre of land at this travel plaza to the State of Idaho
Transportation   Department,   which  is  not  necessarily   indicative  of  the
Partnership's  future results of operations.  Due to the sale, in February 1998,
of the remaining  assets of the Boise,  Idaho travel plaza,  rental  revenues in
1998 are expected to be lower than in 1997.

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

Liquidity and Capital Resources

         The Partnership  received $51,687,000 in gross proceeds from its public
offering of the Units.  After deducting  organizational  and offering  expenses,
including sales commissions, the Partnership,  through the Company, invested the
net offering  proceeds of $45,613,778 in 11 travel plazas.  The rental  payments
from lessees of the properties are the Partnership's primary source of income.

         As of  December  31,  1997,  the  Partnership  had cash and  marketable
securities with a maturity of three months or less generally  collateralized  by
United States government obligations  aggregating $2,402,680 of which $1,366,087
was paid out to the Holders in January 1998 as
                                       12
<PAGE>
their fourth quarter  distribution  for 1997, and the remainder of which will be
held by the Partnership for reserves.  The Partnership  uses the rental revenues
from the  Company's  properties to meet its cash needs and those of the Company,
and it is  anticipated  that such revenues will be sufficient to meet all of the
Partnership's expenses and provide cash for distribution to the Holders.

         On February 2, 1998,  the  Partnership  entered into a letter of intent
with Flying J Inc. to sell  substantially  all of the  Partnership'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
Partnership  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  Partnership and liquidation
of remaining  Partnership 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  negotiated  sale price of  approximately  $52  million  would have
resulted in an estimated  book gain of $27 million had the  proposed  sale taken
place at December 31, 1997. Subsequent to the proposed asset sale and conversion
of other  Partnership  assets into cash upon  liquidation,  a  liquidating  cash
distribution  will be made to  investors  in  accordance  with  the  Partnership
Agreement.  Had the sale (as  proposed)  occurred at December  31,  1997,  it is
estimated that the liquidating cash distribution would have been in the range of
$965 to $990 per limited  partnership unit. The actual liquidating  distribution
to be  received by  investors  will depend upon the actual date and terms of the
sale and the actual costs of liquidating the Partnership.

         In February 1998, the Partnership sold the Boise, Idaho travel plaza to
CFJ Properties for  approximately  $3,386,000 in cash. The above negotiated sale
price of approximately $52 million did include the Boise,  Idaho travel plaza as
if the proposed sale of the Partnership's assets had taken place at December 31,
1997. Proceeds from the sale on October 6, 1994 of the Boise, Idaho travel plaza
lodging  premises of $2,050,000  were  distributed by the Partnership in January
1996 as a return of capital.

         The  Partnership  pays an  affiliate  of the  General  Partner  for the
maintenance  of the books  and  records  of the  Partnership  and for  computer,
investor and legal services  performed for the  Partnership.  During 1997,  this
affiliate  of the  General  Partner  completed  the  design of a new  accounting
information  system  that was begun in 1996 and was  implemented  on  January 1,
1998. The new system is "Year 2000"  compliant  which means that the system will
be able to handle any dates that refer to the 21st century.  By the end of 1998,
all of the  affiliate's  significant  information  systems that would impact the
Partnership will be "Year 2000" compliant.

         As  discussed  previously,  the  Partnership  entered  into a letter of
intent with Flying J Inc. to sell substantially all of the Partnership's assets.
In accordance with the partnership  agreement,  sale of substantially all of the
assets  will  result  in  dissolution  of the  partnership  and  liquidation  of
remaining Partnership assets, net of liabilities. Under these circumstances, the
"Year 2000" issue is not anticipated to have any effect on the Partnership.

         FFCA Investor  Services  Corporation 86-B serves as the initial limited
partner  of the
                                       13
<PAGE>
Partnership  and the owner of record of the  limited  partner  interests  in the
Partnership,  the rights and  benefits of which are  assigned  by FFCA  Investor
Services  Corporation  86-B  to  investors  in the  Partnership.  FFCA  Investor
Services  Corporation  86-B has no other  business  activity  and has no capital
resources.

Results of Operations

         The  Partnership,  through the Company,  began  acquiring  travel plaza
properties  using the net  proceeds  of the  offering in 1987 and  continued  to
purchase properties until becoming fully invested in September 1988. The Company
received or accrued 100% of the lease  payments due it from its lessees in 1997,
1996 and 1995.

Fiscal Year Ended December 31, 1997
Compared to Fiscal Year Ended December 31, 1996

         The Partnership's  total revenues  increased to $6,297,173 for the year
ended  December 31, 1997 from  $6,289,831  for the year ended December 31, 1996.
The overall increase in revenues is due to an increase in participating rentals.
Participating rental revenues increased to $1,897,489 in 1997 from $1,818,632 in
1996 due to higher travel plaza sales  volumes.  On June 1, 1996, CFJ Properties
(lessee of eight 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 lower participating rental revenues in
1996 as compared to 1997.  Partially  offsetting  the increase in  participating
rentals,  was a decrease in rental  revenues  due to a partial  land sale in the
first quarter of 1996, which resulted in a monthly reduction of $2,128 in rental
revenue.

         Total  Partnership  expenses for 1997 were  $2,052,340,  representing a
decrease of approximately 10% from $2,271,611 in 1996,  primarily resulting from
a decrease in  depreciation  expense of  $243,800  related to the sale of travel
plaza  equipment  in 1996.  Net income for 1997 was  $4,239,903  as  compared to
$4,013,518 for 1996, representing an increase of approximately 6%.

Fiscal Year Ended December 31, 1996
Compared to Fiscal Year Ended December 31, 1995

         The Partnership's  total revenues  decreased to $6,289,831 for the year
ended December 31, 1996 from $6,563,996 for the year ended December 31, 1995. Of
this decrease,  $81,328 was  attributable to lower gains on the sale of property
in 1996 and $97,407 in lower interest  income resulted from a lower average cash
balance  invested  since the  proceeds  from the sale of the Boise  travel plaza
lodging  facility  (which were  invested in temporary  investment  securities in
1995) were  returned  to the  limited  partners in January  1996.  In  addition,
participating  rental revenue  decreased $76,279 due to decreased overall travel
plaza sales  related to the  curtailment  in June 1996 by CFJ  Properties of its
relationship  with a third  party  billing  company.  Also  contributing  to the
decrease  was a decrease  in rental  revenue of $19,151  relating to the partial
land sale in the first quarter of 1996.

         Total  Partnership  expenses for 1996 were  $2,271,611,  representing a
decrease of
                                       14
<PAGE>
approximately 13.1% from $2,614,608 in 1995, primarily resulting from a decrease
in  depreciation  expense  of  $303,569  related  to the  sale of  travel  plaza
equipment in 1996 and 1995. Also  contributing to the decrease in total expenses
is a general decrease in operating expenses of approximately $24,000. Net income
for 1996 was  $4,013,518  as compared to  $3,944,780  for 1995,  representing  a
difference of less than 2%.

Inflation

         Inflation may cause an increase in each travel  plaza's gross  revenues
due to price  increases.  This may cause an increase in rental income  because a
portion of the lessees'  lease  payments  are  computed as a  percentage  of the
lessees' gross  revenues.  Thus, as gross sales increase the lease payments will
also  increase.  Inflation  may  also  tend to  increase  the  rate  of  capital
appreciation  of the Company's  properties over a period of time as gross rental
income from the properties continues to increase.  Inflation may, however,  have
an adverse impact on the  profitability  of the lessees  because of increases in
operating   expenses.   Inflation  has  no  impact  on  FFCA  Investor  Services
Corporation 86-B's activities.

Item 8.  Financial Statements and Supplementary Data.

         The financial statements and supporting schedules of the Co-Registrants
required by  Regulation  S-X are attached to this  Report.  Reference is made to
Item 14 below for an index to the financial  statements and financial  statement
schedules.

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

         None.

                                    PART III

Item 10. Directors and Executive Officers.

         The Partnership,  the General Partner and the Company have no directors
or  executive  officers.  PCMC is the  managing  general  partner  and Morton H.
Fleischer  is the  individual  general  partner of the  General  Partner.  PCMC,
through the General Partner,  has  responsibility  for all of the  Partnership's
operations.  The  directors  and  executive  officers of PCMC and FFCA  Investor
Services Corporation 86-B are as follows:
                                       15
<PAGE>
PCMC

                                    Director

             Name                     Position Held Since
             ----                     -------------------

Morton H. Fleischer                          1993

                                    Officers
<TABLE>
<CAPTION>
                                                                                                 Associated With
                                                                                                      PCMC
               Name                                 Positions Held                                    Since
               ----                                 --------------                                    -----
<S>                                  <C>                                                              <C>
Morton H. Fleischer                  President and Chief Executive Officer                            1993
John R. Barravecchia                 Executive Vice President, Chief Financial Officer,               1993
                                     Treasurer and Assistant Secretary
Christopher H. Volk                  Executive Vice President, Chief Operating Officer,               1993
                                     Secretary and Assistant Treasurer
Dennis L. Ruben                      Executive Vice President, General Counsel and Assistant          1994
                                     Secretary
Stephen G. Schmitz                   Executive Vice President, Chief Investment Officer and           1995
                                     Assistant Secretary
Catherine F. Long                    Senior Vice President-Finance, Principal Accounting              1993
                                     Officer, Assistant Secretary and Assistant Treasurer
</TABLE>

FFCA INVESTOR SERVICES CORPORATION 86-B

                                    Director

                    Name                            Position Held Since
                    ----                            -------------------

Morton H. Fleischer, Chairman                              1986

                                    Officers
<TABLE>
<CAPTION>
                                                                                     Position Held
              Name                             Positions Held                            Since
              ----                             --------------                            -----

<S>                               <C>                                                     <C>
Morton H. Fleischer               Chairman of the Board of Directors                      1986
John R. Barravecchia              President, Secretary and Treasurer                      1990
Christopher H. Volk               Vice President, Assistant Secretary and                 1994
                                  Assistant Treasurer
</TABLE>

         All of the foregoing directors and executive officers have been elected
to serve a one-year term and until their  successors  are elected and qualified.
There are no arrangements or understandings between or among any of the officers
or directors and any other person  pursuant to which any officer or director was
selected as such.  There are no family  relationships  among any  directors  and
officers.
                                       16
<PAGE>
Business Experience

         The business experience during the past five years of each of the above
directors and executive officers is as follows:

         Morton H.  Fleischer,  age 61, has served as a director,  President and
Chief Executive Officer of PCMC since 1993, and as Chairman of the Board of FFCA
Investor  Services  Corporation  86-B since 1986.  Mr.  Fleischer also serves as
President,  Chief  Executive  Officer  and  Chairman  of the Board of  Franchise
Finance  Corporation  of  America,  a  Delaware   corporation   ("FFCA")  having
previously  served as a  director,  President  and Chief  Executive  Officer  of
Franchise  Finance  Corporation  of America I ("FFCA I"), a predecessor of FFCA,
from 1980 to 1994. Mr. Fleischer is an individual general partner of the General
Partner,  and is a general partner (or general partner of a general  partner) of
the following public limited  partnerships:  Participating Income Properties II,
L.P.;  Participating Income Properties III Limited  Partnership;  and Scottsdale
Land Trust Limited Partnership.

         John R.  Barravecchia,  age 42, has served as President,  Secretary and
Treasurer of FFCA Investor  Services  Corporation 86-B since 1990. He has served
as Chief  Financial  Officer of PCMC since 1993 and as Senior Vice President and
Treasurer  since  1994.  In 1995,  Mr.  Barravecchia  was named  Executive  Vice
President  of  PCMC.  Mr.  Barravecchia   currently  serves  as  Executive  Vice
President,  Chief Financial Officer,  Treasurer and Assistant  Secretary of FFCA
and served in various  capacities for FFCA I from 1984 to 1994. He was appointed
Vice  President  and Chief  Financial  Officer of FFCA I in December  1986,  and
Senior  Vice  President  in October  1989.  Mr.  Barravecchia  was  elected as a
director  of FFCA I in March  1993 and  Treasurer  in  December  1993.  Prior to
joining FFCA I, Mr.  Barravecchia was associated with the  international  public
accounting firm of Arthur Andersen LLP.

         Christopher  H. Volk, age 41, has served as Vice  President,  Assistant
Secretary and Assistant  Treasurer of FFCA Investor  Services  Corporation  86-B
since  1994,  and has served as  Secretary  of PCMC  since 1993 and Senior  Vice
President-Underwriting  and  Research  since 1994.  In 1995,  Mr. Volk was named
Executive Vice President and Chief Operating Officer of PCMC. Mr. Volk currently
serves as Executive  Vice  President,  Chief  Operating  Officer,  Secretary and
Assistant  Treasurer  of FFCA.  He joined  FFCA I in 1986 and  served in various
capacities  in FFCA I's capital  preservation  and  underwriting  areas prior to
being named Vice  President-Research  in October 1989. In December  1993, he was
appointed Secretary and Senior Vice  President-Underwriting and Research of FFCA
I, and he was elected as a director  of FFCA I in March  1993.  Prior to joining
FFCA I, Mr. Volk was employed  for six years with the National  Bank of Georgia,
where his last position was Assistant  Vice  President and Senior  Correspondent
Banking Credit  Officer.  Mr. Volk is a member of the Association for Investment
Management and Research and the Phoenix Society of Financial Analysts.

         Dennis L.  Ruben,  age 45,  has  served as Senior  Vice  President  and
General  Counsel  for PCMC  since  1994.  Mr.  Ruben  was named  Executive  Vice
President,  General Counsel and Assistant Secretary of PCMC in February 1997. He
currently  serves  in the same  capacity  for FFCA and  served as  attorney  and
counsel for FFCA I from 1991 to 1994. In December 1993, he was appointed  Senior
Vice President and General Counsel of FFCA I. Prior to joining FFCA I, Mr. Ruben
was  associated  with the law firm of Kutak Rock from 1980 until March 1991. Mr.
Ruben became a partner of Kutak Rock in 1984. Mr. Ruben has been
                                       17
<PAGE>
admitted to the Iowa, Nebraska and Colorado bars.

         Stephen   G.   Schmitz,   age   43,   has   served   as   Senior   Vice
President-Corporate  Finance of PCMC since January 1996. He was named  Executive
Vice  President,  Chief  Investment  Officer and Assistant  Secretary of PCMC in
February  1997. He currently  serves in the same capacity for FFCA.  Mr. Schmitz
served in various  positions  as an officer of FFCA I from 1986 to June 1, 1994.
Prior to joining FFCA I, Mr. Schmitz was a commercial lender with Mellon Bank in
Pittsburgh, where his last position was Vice-President and Section Manager.

         Catherine  F. Long,  age 41, has served as Vice  President-Finance  and
Principal Accounting Officer of PCMC since 1994, and Vice President from 1993 to
1994. In February 1997 she was named Senior Vice  President-Finance of PCMC. She
currently serves as Senior Vice President-Finance, Principal Accounting Officer,
Assistant  Secretary  and  Assistant  Treasurer  of  FFCA  and  served  as  Vice
President-Finance  of FFCA I from  1990  to  1993.  In  December  1993,  she was
appointed  Principal  Accounting  Officer of FFCA I. From  December  1978 to May
1990, Ms. Long was associated with the  international  public accounting firm of
Arthur Andersen LLP. Ms. Long is a certified  public  accountant and is a member
of the Arizona Society of Certified Public Accountants.

Compliance with Section 16(a)
of the Securities Exchange Act of 1934

         Based  solely  upon a review  of Forms 3 and 4 and  amendments  thereto
furnished  to the  Co-Registrants  during  fiscal  year  1997  and  Forms  5 and
amendments thereto furnished to the  Co-Registrants  with respect to fiscal year
ended December 31, 1997 (the "Forms"),  and any written  representations  by the
directors and executive officers of FFCA Investor Services  Corporation 86-B and
PCMC, the Co-Registrants  have not identified herein any such person that failed
to file on a timely basis the Forms  required by Section 16(a) of the Securities
Exchange Act of 1934 for fiscal year 1997.

Item 11. Executive Compensation.

         The   Partnership  is  required  to  pay  an  acquisition   fee  and  a
subordinated real estate disposition fee to the General Partner, and the General
Partner is entitled to receive a share of cash  distributions,  when and as made
to the Holders,  a share of profits and losses and a  subordinated  share of any
sale  proceeds.  Reference  is made to Note  (1) and  Note  (5) of the  Notes to
Consolidated  Financial  Statements of the Partnership and the Company which are
filed with this Report for a description of the fees and  distributions  paid in
1997.

         FFCA Investor Services  Corporation 86-B serves as assignor and initial
limited partner without compensation from the Partnership. It is not entitled to
any share of the profits,  losses or cash distributions of the Partnership.  The
director and officers of FFCA Investor  Services  Corporation 86-B serve without
compensation from FFCA Investor Services Corporation 86-B or the Partnership.

         PCMC is entitled to a one-tenth of one percent share of the profits and
losses of the Company.
                                       18
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.

         As of March 2, 1998, no person or group was known by the Partnership to
own  directly  or  beneficially  more  than 5% of the  outstanding  Units of the
Partnership.

         The General Partner of the  Partnership and its general  partners owned
no Units as of March 2, 1998.  None of the directors and officers of the General
Partner's corporate general partner,  PCMC, owned any Units as of March 2, 1998.
PCMC is owned by Morton H. Fleischer.

         FFCA  Investor  Services  Corporation  86-B  has  an  interest  in  the
Partnership as a limited  partner and it serves as the owner of record of all of
the limited partnership  interests assigned by it to the Holders.  However, FFCA
Investor  Services  Corporation  86-B has no right to vote its  interest  on any
matter and it must vote the assigned interests as directed by the Holders.  FFCA
Investor Services Corporation 86-B is a wholly-owned subsidiary of PCMC.

Item 13. Certain Relationships and Related Transactions.

         Since the beginning of the Co-Registrants' last fiscal year, there have
been  no  significant   transactions   or  business   relationships   among  the
Co-Registrants,  the Company,  and PCMC or their affiliates or their management,
other than as described in Items 1, 10 and 11 above.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         (a)      The following documents are filed as part of this Report:

         1.       Financial Statements.

                  The Partnership and the Company

                  Report of independent public accountants
                  Consolidated Balance Sheets as of December 31, 1997
                    and 1996
                  Consolidated Statements of Income for the years
                    ended December 31, 1997, 1996 and 1995
                  Consolidated Statements of Changes In Partners' Capital for
                    the years ended December 31, 1997, 1996 and 1995
                  Consolidated Statements of Cash Flows for the years
                    ended December 31, 1997, 1996 and 1995
                  Notes to Consolidated Financial Statements

                  FFCA Investor Services Corporation 86-B

                  Report of independent public accountants
                  Balance Sheet as of December 31, 1997
                  Notes to Balance Sheet
                                       19
<PAGE>
         2.       Financial Statement Schedules.

                  Schedule III-Schedule of Real Estate and Accumulated
                    Depreciation as of December 31, 1997

                  All other  schedules  are omitted since they are not required,
                    are inapplicable, or the required information is included in
                    the financial statements or notes thereto.

         3.       Exhibits.

                  The following is a complete list of exhibits  filed as part of
                  this Form 10-K. For  electronic  filing  purposes  only,  this
                  report  contains  Exhibit  27, the  Financial  Data  Schedule.
                  Exhibit numbers correspond to the numbers in the Exhibit Table
                  of Item 601 of Regulation S-K.

                  99.      Annual Portfolio  Valuation of Cushman & Wakefield as
                           of December 31, 1997.

                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended,  the following  document,  filed with
                  the  Securities  and Exchange  Commission  as Exhibit 4 to the
                  Co-Registrants'  Form 10-K for the fiscal year ended  December
                  31, 1989,  Commission File No. 0-16720, is incorporated herein
                  by this reference.

                           Second Amended and Restated Certificate and Agreement
                           of Limited Partnership which governs the Partnership,
                           as filed with the  Secretary  of State of Delaware on
                           April 16, 1987.

                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended, the following  documents,  filed with
                  the  Securities  and  Exchange  Commission  as exhibits to the
                  Co-Registrants'  Form 10-K for the fiscal year ended  December
                  31, 1986, Commission File No. 0-16720, are incorporated herein
                  by this reference.
<TABLE>
<CAPTION>
                                                                                       1986 Form 10-K
                                                                                         Exhibit No.
                                                                                         -----------

                           <S>                                                               <C>
                           Depositary Agreement of the Partnership.                          3-C

                           The  Certificate of  Incorporation  which governs                 3-D
                           FFCA  Investor  Services  Corporation  86-B, as filed
                           with the  Secretary  of State of Delaware on June 23,
                           1986.

                           Bylaws of FFCA Investor Services
                           Corporation 86-B.                                                 3-E
</TABLE>
                                       20
<PAGE>
                           Pursuant to Rule 12b-32 under the Securities Exchange
                  Act of 1934, as amended,  the following  document,  filed with
                  the Securities  and Exchange  Commission on October 8, 1986 as
                  Exhibit 10(e) to the Co-Registrants' Registration Statement on
                  Form S-11, Registration No.
                  33-7502, is incorporated herein by this reference.

                           Operating  Agreement,  dated  October 7, 1986, by and
                           among FFCA Management  Company,  L.P.,  FFCA/PIP 1986
                           Property   Company,   Flying  J  Inc.  and  Flying  J
                           Franchise Inc.

         (b)      Reports on Form 8-K.

                  No reports on Form 8-K were filed by the Co-Registrants during
                  the last quarter of the fiscal year ended December 31, 1997.
                                       21
<PAGE>
                                   SIGNATURES


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

                                      PARTICIPATING INCOME PROPERTIES 1986, L.P.

                                      By:   FFCA MANAGEMENT COMPANY
                                            LIMITED PARTNERSHIP, General Partner


Date:  March 27, 1998                       By /s/ Morton H. Fleischer
                                               ---------------------------------
                                               Morton H. Fleischer,
                                               General Partner

                                      By:   PERIMETER CENTER MANAGEMENT
                                            COMPANY, Corporate General Partner


Date:  March 27, 1998                       By /s/ Morton H. Fleischer
                                               ---------------------------------
                                               Morton H. Fleischer,
                                               President and Chief Executive
                                               Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Partnership and in the capacities and on the dates indicated.

         SIGNATURES  OF REQUIRED  OFFICERS AND  DIRECTORS  OF  PERIMETER  CENTER
         MANAGEMENT  COMPANY,  CORPORATE  GENERAL  PARTNER  OF  FFCA  MANAGEMENT
         COMPANY LIMITED  PARTNERSHIP,  GENERAL PARTNER OF PARTICIPATING  INCOME
         PROPERTIES 1986, L.P.



Date:  March 27, 1998                 By /s/ Morton H. Fleischer
                                         ---------------------------------------
                                         Morton H. Fleischer, President, Chief
                                         Executive Officer and Director


Date:  March 27, 1998                 By /s/ John Barravecchia
                                         ---------------------------------------
                                         John Barravecchia, Executive Vice
                                         President, Chief Financial Officer,
                                         Treasurer and Assistant Secretary
<PAGE>
Date:  March 27, 1998                 By /s/ Catherine F. Long
                                         ---------------------------------------
                                         Catherine F. Long, Senior Vice
                                         President-Finance, Principal Accounting
                                         Officer, Assistant Secretary and
                                         Assistant Treasurer


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Co-Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                      FFCA INVESTOR SERVICES CORPORATION 86-B


Date:  March 27, 1998                 By /s/ Morton H. Fleischer
                                         ---------------------------------------
                                         Morton H. Fleischer, Sole Director


Date:  March 27, 1998                 By /s/ John Barravecchia
                                         ---------------------------------------
                                         John Barravecchia, President,
                                         Secretary, Treasurer, Principal
                                         Financial Officer and Principal
                                         Accounting Officer
<PAGE>
                              ARTHUR ANDERSEN LLP



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Participating Income Properties 1986, L.P.:

We have audited the  accompanying  consolidated  balance sheets of PARTICIPATING
INCOME  PROPERTIES 1986, L.P. (a Delaware limited  partnership) and affiliate as
of  December  31,  1997 and 1996,  and the related  consolidated  statements  of
income,  changes in partners' capital and cash flows for each of the three years
in the period ended  December  31,  1997.  These  financial  statements  and the
schedule referred to below are the  responsibility of the partnership's  general
partner.  Our  responsibility  is to  express  an  opinion  on  these  financial
statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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 financial  statements  referred to above present fairly, in
all material respects, the financial position of Participating Income Properties
1986,  L.P. and  affiliate as of December 31, 1997 and 1996,  and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1997,  in  conformity  with  generally  accepted  accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a  whole.  The  schedule  for  Real  Estate  and
Accumulated  Depreciation  is  presented  for  purposes  of  complying  with the
Securities  and Exchange  Commission's  rules and is not a required  part of the
basic  financial  statements.  This schedule has been  subjected to the auditing
procedures  applied in our audits of the basic financial  statements and, in our
opinion,  fairly  states  in all  material  respects  in  relation  to the basic
financial statements taken as a whole.

                                            ARTHUR ANDERSEN LLP


Phoenix, Arizona,
  January 6, 1998, (except with respect to the matter discussed
  in Note 6, as to which the date is February 3, 1998).
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1997 AND 1996
            --------------------------------------------------------
<TABLE>
<CAPTION>
                                                                1997                  1996
                                                          ----------------      ----------------
<S>                                                           <C>                   <C>
                                     ASSETS
                                     ------
CASH AND CASH EQUIVALENTS                                     $  2,402,680          $  2,346,371

RECEIVABLES FROM LESSEES                                           161,608               149,803

SECURED NOTES RECEIVABLE                                           100,569               131,323

PROPERTY SUBJECT TO OPERATING LEASES (Note 3)                   24,815,472            26,131,515
                                                              ------------          ------------

                  Total assets                                $ 27,480,329          $ 28,759,012
                                                              ============          ============


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

DISTRIBUTION PAYABLE TO LIMITED PARTNERS                      $  1,366,497          $  1,321,426

PAYABLE TO GENERAL PARTNER                                            -                   10,304

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                            52,297                49,704

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

                  Total liabilities                              1,533,194             1,495,834
                                                              ------------          ------------

MINORITY INTEREST (Note 1)                                         (16,239)              (14,923)
                                                              ------------          ------------

PARTNERS' CAPITAL (DEFICIT):
      General partner                                             (171,205)             (158,058)
      Limited partners                                          26,134,579            27,436,159
                                                              ------------          ------------

                  Total partners' capital                       25,963,374            27,278,101
                                                              ------------          ------------

                  Total liabilities and partners' capital     $ 27,480,329          $ 28,759,012
                                                              ============          ============
</TABLE>
              The accompanying notes are an integral part of these
                          consolidated balance sheets.
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                     1997                    1996                  1995
                                                  ----------              ----------            ----------
<S>                                               <C>                     <C>                   <C>
REVENUES:
      Rental                                      $4,288,989              $4,295,373            $4,314,524
      Participating rentals                        1,897,489               1,818,632             1,894,911
      Interest and other                             110,695                  99,868               197,275
      Gain on sale of property                           -                    75,958               157,286
                                                  ----------              ----------            ----------

                                                   6,297,173               6,289,831             6,563,996
                                                 -----------             -----------           -----------

EXPENSES:
      General partner fees  (Note 5)                 549,359                 543,553               558,712
      Depreciation                                 1,316,043               1,559,843             1,863,412
      Operating                                      186,938                 168,215               192,484
                                                  ----------              ----------            ----------

                                                   2,052,340               2,271,611             2,614,608
                                                  ----------              ----------            ----------

MINORITY INTEREST IN INCOME  (Note 1)                  4,930                   4,702                 4,608
                                                  ----------              ----------            ----------

NET INCOME                                        $4,239,903              $4,013,518            $3,944,780
                                                  ==========              ==========            ==========


NET INCOME ALLOCATED TO  (Note 1):
      General partner                             $   42,399              $   40,135            $   39,448
      Limited partners                             4,197,504               3,973,383             3,905,332
                                                  ----------              ----------            ----------

                                                  $4,239,903              $4,013,518            $3,944,780
                                                  ==========              ==========            ==========

NET INCOME PER LIMITED PARTNERSHIP
      UNIT  (based on 51,687 units held by
      limited partners)                               $81.21                  $76.87                $75.56
                                                  ==========              ==========            ==========
</TABLE>
              The accompanying notes are an integral part of these
                            consolidated statements.
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

             CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
             -------------------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                               General              Limited
                                                               Partner              Partners                Total
                                                              ---------            -----------            -----------
<S>                                                           <C>                  <C>                    <C>
BALANCE,  December 31, 1994                                   $(126,190)           $32,641,111            $32,514,921

      Net income                                                 39,448              3,905,332              3,944,780

      Distributions to partners,
           cash from operations                                 (56,492)            (5,592,710)            (5,649,202)


      Return of capital to limited partners (Note 1)              -                 (2,050,000)            (2,050,000)
                                                              ---------            -----------            -----------

BALANCE,  December 31, 1995                                    (143,234)            28,903,733             28,760,499

      Net income                                                 40,135              3,973,383              4,013,518

      Distributions to partners,
           cash from operations                                 (54,959)            (5,440,957)            (5,495,916)
                                                              ---------            -----------            -----------

BALANCE,  December 31, 1996                                    (158,058)            27,436,159             27,278,101

      Net income                                                 42,399              4,197,504              4,239,903

      Distributions to partners,
           cash from operations                                 (55,546)            (5,499,084)            (5,554,630)
                                                              ---------            -----------            -----------

BALANCE,  December 31, 1997                                   $(171,205)           $26,134,579            $25,963,374
                                                              =========            ===========            ===========
</TABLE>
              The accompanying notes are an integral part of these
                            consolidated statements.
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                                             1997            1996             1995
                                                                         -----------      -----------      -----------
<S>                                                                      <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                           $ 4,239,903      $ 4,013,518      $ 3,944,780
    Adjustments to net income:
        Depreciation                                                       1,316,043        1,559,843        1,863,412
        Gain on sale of property                                                -             (75,958)        (157,286)
        Minority interest in income                                            4,930            4,702            4,608
        Change in assets and liabilities:
          Decrease (increase) in receivables from lessees                    (11,805)          (5,620)          10,817
          Increase (decrease) in payable to general partner                  (10,304)          (7,401)          17,705
          Increase (decrease) in accounts payable
             and accrued liabilities                                           2,593          (11,384)         (49,309)
                                                                         -----------      -----------      -----------

             Net cash provided by operating activities                     5,541,360        5,477,700        5,634,727
                                                                         -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property                                              -             811,441          207,818
    Principal collections on secured notes receivable                         30,754           26,588            7,412
                                                                         -----------      -----------      -----------

             Net cash provided by investing activities                        30,754          838,029          215,230
                                                                         -----------      -----------      -----------

CASH FLOWS FOR FINANCING ACTIVITIES:
    Partner distributions declared (Note 1)                               (5,554,630)      (5,495,916)      (5,649,202)
    Return of capital to limited partners declared (Note 1)                     -                -          (2,050,000)
    Increase (decrease) in distribution payable                               45,071       (2,117,230)       2,072,402
    Distributions to minority interest                                        (6,246)          (6,189)          (6,312)
                                                                         -----------      -----------      -----------

             Net cash used in financing activities                        (5,515,805)      (7,619,335)      (5,633,112)
                                                                         -----------      -----------      -----------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                          56,309       (1,303,606)         216,845

CASH AND CASH EQUIVALENTS, beginning of year                               2,346,371        3,649,977        3,433,132
                                                                         -----------      -----------      -----------

CASH AND CASH EQUIVALENTS, end of year                                   $ 2,402,680      $ 2,346,371      $ 3,649,977
                                                                         ===========      ===========      ===========
</TABLE>
Supplemental Disclosure of Noncash Investing Activity:  In 1995, the Partnership
    sold  equipment,  received  a secured  note in the  amount of  $65,341,  and
    deferred a gain of $1,251 on the sale.


              The accompanying notes are an integral part of these
                            consolidated statements.
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

                   Notes to Consolidated Financial Statements
                   ------------------------------------------

                           December 31, 1997 and 1996
                           --------------------------

1)  ORGANIZATION:
    -------------

         Participating Income Properties 1986, L.P. (the Partnership) was formed
on June 23, 1986 under the Delaware Revised Uniform Limited Partnership Act. The
Partnership  invests as a co-general  partner with Perimeter  Center  Management
Company (PCMC) in FFCA/PIP 1986 Property Company, a Delaware general partnership
(the  Property  Company).  The  general  partner  of  the  Partnership  is  FFCA
Management Company Limited  Partnership (the General Partner) of which PCMC is a
general partner. The Property Company was organized to purchase new and existing
"Flying J Travel Plaza" facilities,  including land,  buildings and equipment to
be leased on a net basis to Flying J Inc.  and certain  franchisees  of Flying J
Franchise Inc. At December 31, 1997 and 1996,  eight of the eleven travel plazas
owned by the  Partnership  were leased to CFJ Properties  (CFJ), an affiliate of
Flying J Inc.,  one of the travel  plazas  was  leased to Flying J Inc.  and the
remaining two were leased to  franchisees  that operate  Flying J Travel Plazas.
"Flying J Travel Plaza"  facilities  offer a full-service  operation,  generally
including fuel facilities,  a restaurant,  convenience store and other amenities
for  use  by  the  trucking  industry  and  traveling  public  in  general.  The
Partnership  and the Property  Company  will expire  December 31, 2029 and 2028,
respectively,  or  sooner,  in  accordance  with the  terms of their  respective
agreements.

         Investors acquired units of assigned limited partnership  interest (the
limited  partnership  units)  in the  Partnership  from FFCA  Investor  Services
Corporation  86-B  (the  Initial  Limited  Partner),   a  Delaware   corporation
wholly-owned by PCMC. Holders of the units have all of the economic benefits and
substantially  the same rights and powers of limited partners;  therefore,  they
are referred to herein as "limited partners."

         The Partnership agreement provides for allocation of profits and losses
and cash distributions among its partners as follows:

         Profits and Losses: Allocated 99% to the limited partners and 1% to the
         General Partner.

         Cash Distributions: All cash from operations, as defined, after payment
         of fees to the General Partner is allocated 99% to the limited partners
         and 1% to the General Partner.  Cash proceeds from the sale of property
         are  not  considered  cash  from  operations  but,  when   distributed,
         represent a partial return of the limited  partners' initial $1,000 per
         unit  capital  contribution.  There has been one such  distribution  to
         date, therefore, the limited partner Adjusted Capital Contribution,  as
         defined in the Partnership  agreement,  at December 31, 1997 is $960.34
         per unit.

         The following is a reconciliation  of net income to cash  distributions
from operations as defined in the Partnership agreement:
<TABLE>
<CAPTION>
                                                       1997                   1996                  1995
                                                     ----------            ----------            ----------
<S>                                                  <C>                   <C>                   <C>
         Net income                                  $4,239,903            $4,013,518            $3,944,780
         Adjustments to reconcile net income to
             cash distributions declared:
                Depreciation                          1,316,043             1,559,843             1,863,412
                Gain on sale of property                   -                  (75,958)             (157,286)
                Change in minority interest              (1,316)               (1,487)               (1,704)
                                                     ----------            ----------            ----------

                   Cash distributions declared
                      from operations                $5,554,630            $5,495,916            $5,649,202
                                                     ==========            ==========            ==========
</TABLE>
         The Property Company  agreement  provides for allocation of profits and
losses and cash distributions among its partners as follows:

         Profits and Losses: Allocated 99.9% to the Partnership and .1% to PCMC.
         Cash Distributions:  All cash from operations, as defined, is allocated
         99.9% to the Partnership and .1% to PCMC.

2)  SIGNIFICANT ACCOUNTING POLICIES:
    --------------------------------

         Consolidation and Financial Statements - The accompanying  consolidated
financial  statements  include the accounts of the  Partnership and the Property
Company in which the Partnership holds a substantial  interest,  as discussed in
Note 1.  All  significant  intercompany  accounts  and  transactions  have  been
eliminated in consolidation.  The consolidated financial statements are prepared
on the accrual basis of accounting.  The preparation of the financial statements
in conformity with generally accepted accounting  principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting period.  Although management believes
its estimates are reasonable, actual results could differ from those estimates.

         Cash and Cash  Equivalents  -  Investment  securities  that are  highly
liquid and have  maturities  of three months or less at the date of purchase are
classified as cash equivalents.  Cash equivalents include United States Treasury
securities  of  $2,091,603  and  $2,210,317  at  December  31,  1997  and  1996,
respectively. Short-term investments are recorded at cost plus accrued interest,
which approximates market value.

         Leases - The Partnership leases its property under long-term net leases
which are classified as operating  leases.  Rental revenue from operating leases
is recognized as it is earned.

         Depreciation  -  Depreciation   on  buildings  is  provided  using  the
straight-line method based upon an estimated useful life of 24 years.  Equipment
is  depreciated  over an estimated  useful life of eight  years,  assuming a 10%
salvage  value at the end of its useful life.  The cost of  properties  includes
miscellaneous acquisition and closing costs.

3)  PROPERTY SUBJECT TO OPERATING LEASES:
    -------------------------------------

         The following is an analysis of the Partnership's  investment, at cost,
in property  subject to operating leases by major class at December 31, 1997 and
1996:
                                                1997              1996
                                            ------------      ------------
         Land                               $  6,773,272      $  6,773,272
         Buildings                            29,669,322        29,669,322
         Equipment                               626,781           626,781
                                            ------------      ------------
                                              37,069,375        37,069,375
         Less - Accumulated depreciation      12,253,903        10,937,860
                                            ------------      ------------

                                             $24,815,472       $26,131,515
                                            ============      ============

         Lease agreements provide for monthly base rentals equal to a percentage
of the  property's  cost. As additional  rent, the Property  Company  receives a
portion of the  operating  revenues of the lessee equal to a percentage of gross
receipts  (participating  rentals) from travel plaza  facilities and fuel sales.
The terms of the leases are eight years for  equipment and 20 years for land and
buildings.  Generally,  the lessee has the option to purchase equipment (at fair
market  value)  at the end of the  lease  term and land  and  buildings  (at the
greater of fair  market  value or cost) at any time after the first ten years of
the lease. Of the two equipment  leases remaining at December 31, 1997, one will
expire in 1998 and the other lease is not subject to a purchase  option.  During
the year ended December 31, 1997,  CFJ and Flying J Inc.,  accounting for 88% of
total  rental  and  participating  rental  revenue,  operated  a  total  of nine
Partnership properties in Idaho, Montana,  California,  Arizona, Iowa, Missouri,
<PAGE>
Texas and Wyoming. The Partnership is the beneficiary of a letter of credit from
CFJ in the amount of $634,300 to be used as security for CFJ's lease payments.

         Minimum  future  rentals   (excluding   participating   rentals)  under
noncancellable operating leases as of December 31, 1997, are as follows:

         Year Ending December 31,
         ------------------------
         1998                                                $  4,289,000
         1999                                                   4,289,000
         2000                                                   4,289,000
         2001                                                   4,289,000
         2002                                                   4,289,000
         Thereafter                                            22,504,000
                                                             ------------

         Total minimum future rentals                         $43,949,000
         ====                                                ============

         The General Partner,  the Property Company,  Flying J Inc. and Flying J
Franchise  Inc.  have  entered into an  operating  agreement.  In the event of a
default in the payment of any amount due and payable under the lease agreements,
and upon the General  Partner's  written  request and delivery of the defaulting
lessee's  property to Flying J Inc.,  Flying J Inc.  has agreed to operate  such
defaulted lessee's property for the maximum potential lease term.

4)  INCOME TAXES:
    -------------

         The Partnership is not directly subject to income taxes;  rather,  each
partner is subject to income taxes on his distributable share of taxable income.
The Partnership tax returns and the amount of distributable  partnership profits
or losses are subject to examination by Federal and state taxing authorities. If
examinations  by  taxing   authorities   result  in  changes  to   distributable
partnership  profits or losses,  the tax  liabilities  of the partners  could be
changed accordingly.

         The following is a reconciliation of net income for financial reporting
purposes to income  reported for Federal income tax purposes for the years ended
December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
                                                                  1997                  1996                  1995
                                                               ----------            ----------            ----------
<S>                                                            <C>                   <C>                   <C>
         Net income for financial reporting purposes           $4,239,903            $4,013,518            $3,944,780
         Differences for tax purposes in:
             Depreciation                                         554,950               765,189               965,142
             Gain on sale and other                                -                     17,534              (375,409)
                                                               ----------            ----------            ----------

         Taxable income to partners                            $4,794,853            $4,796,241            $4,534,513
                                                               ==========            ==========            ==========
</TABLE>

For  Federal  income tax  reporting  purposes,  taxable  income to  partners  is
reported  on the  accrual  basis of  accounting  and is  classified  as ordinary
income.

         At December 31,  1997,  the tax bases of the  Partnership's  assets and
liabilities  exceed the amounts  recorded for  financial  reporting  purposes by
$4,688,426.  This  difference  results  primarily  from  the  use  of  different
depreciation methods for financial reporting and tax reporting purposes.

5)  TRANSACTIONS WITH RELATED PARTIES:
    ----------------------------------

         Under the terms of the  Partnership  agreement,  the General Partner is
entitled to  compensation  for certain  services  performed in  connection  with
managing the affairs of the  Partnership.  During 1997, 1996 and 1995, fees paid
to the General Partner were as follows:
<PAGE>
                                      1997            1996           1995
                                    --------        --------       --------

         Disbursable cash fee       $549,359        $543,553       $558,712
                                    ========        ========       ========

         The  disbursable  cash  fee  equals  9% of  all  cash  received  by the
Partnership (excluding sale proceeds) less Partnership operating expenses,  only
to the  extent  the  limited  partners  have  received  an  annual  return of 9%
(calculated  quarterly) on their Adjusted Capital  Contribution,  as defined.  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  only after the limited  partners  have  received an amount  equal to
their Adjusted Capital Contribution and a cumulative,  non-compounded  return of
10% per annum on their Adjusted Capital Contribution.

         An affiliate of the General  Partner  incurs  expenses on behalf of the
Partnership for maintenance of the books and records and for computer,  investor
and  legal  services   performed  for  the   Partnership.   These  expenses  are
reimbursable in accordance with the Partnership  agreement and are less than the
amount  which  the  Partnership  would  have  paid to  independent  parties  for
comparable services.  The Partnership  reimbursed the affiliate $35,018 in 1997,
$30,001 in 1996 and $29,301 in 1995 for such expenses.

6) SUBSEQUENT EVENT - POSSIBLE SALE OF SUBSTANTIALLY ALL ASSETS:
   -------------------------------------------------------------

         On February 2, 1998,  the  Partnership  entered into a letter of intent
with Flying J. Inc. to sell  substantially all of the  Partnership'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
Partnership  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  partnership and liquidation
of remaining  Partnership 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 negotiated  sale price of  approximately  $52 million,  net of book
value of the assets to be sold,  would have resulted in an estimated gain of $27
million had the proposed  sale taken place at December 31, 1997.  Subsequent  to
the proposed  asset sale and  conversion of other  Partnership  assets into cash
upon  liquidation,  a liquidating cash distribution will be made to investors in
accordance with the Partnership  agreement.  Had the sale (as proposed) occurred
at December 31, 1997, it is estimated  that the  liquidating  cash  distribution
would have been in the range of $965 to $990 per limited  partnership  unit. The
actual liquidating distribution to be received by investors will depend upon the
actual  date  and  terms of the sale and the  actual  costs of  liquidating  the
Partnership.
<PAGE>
                                                                    SCHEDULE III

                                                                     Page 1 of 2

            PARTICIPATION INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
              ----------------------------------------------------

                             AS OF DECEMBER 31, 1997
                             -----------------------
<TABLE>
<CAPTION>
                                              Initial Cost to Partnership and
                                             Gross Amount at December 31, 1997
                                   ------------------------------------------------------

    Travel Plaza Location             Land        Buildings      Equipment       Total
    ---------------------          ----------    -----------     ---------    -----------

<S>                 <C>            <C>           <C>             <C>          <C>
ELOY,               ARIZONA        $  458,740    $ 3,558,260     $    --      $ 4,017,000
THOUSAND PALMS,     CALIFORNIA        809,050      2,757,950          --        3,567,000
BOISE,              IDAHO           1,007,082      1,213,244          --        2,220,326
POST FALLS,         IDAHO             351,320      1,818,680          --        2,170,000
CLIVE,              IOWA              307,250      6,191,750          --        6,499,000
TRUXTON,            MISSOURI          403,600      3,803,400          --        4,207,000
BUTTE,              MONTANA           242,710      1,631,290       259,000      2,133,000
AMARILLO,           TEXAS           1,326,000      2,814,000          --        4,140,000
ELLENSBURG,         WASHINGTON        533,040      1,266,113          --        1,799,153
EVANSTON,           WYOMING           622,640      1,188,475       367,781      2,178,896
CHEYENNE,           WYOMING           711,840      3,426,160          --        4,138,000
                                   ----------    -----------     ---------    -----------

                       TOTAL       $6,773,272    $29,669,322     $ 626,781    $37,069,375
                                   ==========    ===========     =========    ===========

<CAPTION>
                                           Accumulated Depreciation
                                   -----------------------------------------
                                                                                    Date
    Travel Plaza Location           Buildings       Equipment       Total         Acquired
    ---------------------          -----------      ---------    -----------     ----------

<S>                 <C>            <C>              <C>          <C>             <C>
ELOY,               ARIZONA        $ 1,396,123      $    --      $ 1,396,123     Aug.  1988
THOUSAND PALMS,     CALIFORNIA       1,091,689           --        1,091,689     July  1988
BOISE,              IDAHO              556,070           --          556,070     Jan.  1987
POST FALLS,         IDAHO              833,562           --          833,562     Jan.  1987
CLIVE,              IOWA             2,450,901           --        2,450,901     July  1988
TRUXTON,            MISSOURI         1,505,513           --        1,505,513     July  1988
BUTTE,              MONTANA            676,609        233,099        909,708     July  1987
AMARILLO,           TEXAS              991,571           --          991,571     June  1988
ELLENSBURG,         WASHINGTON         509,575           --          509,575     Sept. 1987
EVANSTON,           WYOMING            297,119        367,781        664,900     Dec.  1987*
CHEYENNE,           WYOMING          1,344,291           --        1,344,291     Aug.  1988
                                   -----------      ---------    -----------

                       TOTAL       $11,653,023      $ 600,880    $12,253,903
                                   ===========      =========    ===========
</TABLE>

* Restaurant reconstructed during 1991
<PAGE>
         SCHEDULE III
                                                                     Page 2 of 2

            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
              ----------------------------------------------------

                             AS OF DECEMBER 31, 1997
                             -----------------------

NOTES:

(1)      There are no encumbrances on properties.

(2)      Cost for Federal  income tax purposes is the same as cost for financial
         reporting purposes.

(3)      All buildings and equipment are depreciated over estimated useful lives
         of 24 and eight years, respectively. Substantially all of the buildings
         and equipment were purchased as new properties.

(4)      Transactions  in real estate,  equipment and  accumulated  depreciation
         during 1997, 1996 and 1995 are summarized as follows:

                                                              Accumulated
                                                Cost          Depreciation
                                             -----------      ------------

         Balance, December 31, 1994          $42,845,802       $12,440,927
                Cost of equipment sold        (2,185,260)       (2,070,638)
                Depreciation expense                -            1,863,412
                                             -----------       -----------

         Balance, December 31, 1995           40,660,542        12,233,701
                Cost of land sold               (248,645)             -
                Cost of equipment sold        (3,342,522)       (2,855,684)
                Depreciation expense                -            1,559,843
                                             -----------       -----------

         Balance, December 31, 1996           37,069,375        10,937,860
                Depreciation expense                -            1,316,043
                                             -----------       -----------

         Balance, December 31, 1997          $37,069,375       $12,253,903
                                             ===========       ===========
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To FFCA Investor Services Corporation 86-B:

We have  audited  the  accompanying  balance  sheet  of FFCA  INVESTOR  SERVICES
CORPORATION  86-B  (a  Delaware  corporation)  as of  December  31,  1997.  This
financial  statement is the  responsibility  of the  Company's  management.  Our
responsibility is to express an opinion on this financial statement based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material  misstatement.  An
audit includes examining,  on a test basis,  evidence supporting the amounts and
disclosures  in  the  balance  sheet.  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
audit provides a reasonable basis for our opinion.

In our opinion,  the balance sheet  referred to above  presents  fairly,  in all
material respects,  the financial position of FFCA Investor Services Corporation
86-B as of December 31, 1997, in conformity with generally  accepted  accounting
principles.


                                    ARTHUR ANDERSEN LLP



Phoenix, Arizona,
     January 6, 1998.
<PAGE>
                     FFCA INVESTOR SERVICES CORPORATION 86-B
                     ---------------------------------------


                        BALANCE SHEET - DECEMBER 31, 1997
                        ---------------------------------


                                     ASSETS


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

                    Total Assets                                    $200
                                                                    ====


                                    LIABILITY

Payable to Parent (Note 2)                                          $100
                                                                    ----


                              STOCKHOLDER'S EQUITY


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

                    Liability and Stockholder's Equity              $200
                                                                    ====
               The accompanying notes are an integral part of this
                                 balance sheet.
<PAGE>
                     FFCA INVESTOR SERVICES CORPORATION 86-B
                     ---------------------------------------


                             NOTES TO BALANCE SHEET
                             ----------------------

                                DECEMBER 3l, l997
                                -----------------


(l) Operations:

           FFCA  Investor  Services  Corporation  86-B (a Delaware  corporation)
(86-B) was organized on June 23, l986 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.

(2) Related Parties:

           Perimeter Center Management Company (a Delaware  corporation)  (PCMC)
is the sole  stockholder of 86-B. The general  partner of PIP-86 is an affiliate
of PCMC.
<PAGE>
                   PARTICIPATING INCOME PROPERTIES 1986, L.P.
                                       and
                     FFCA INVESTOR SERVICES CORPORATION 86-B

                        --------------------------------

                                  Exhibit Index

         The following is a complete list of exhibits filed as part of this Form
         10-K. For electronic filing purposes only, this report contains Exhibit
         27, the Financial  Data  Schedule.  Exhibit  numbers  correspond to the
         numbers in the Exhibit Table of Item 601 of Regulation S-K.

                        --------------------------------

                                                                    Sequentially
                                     Exhibit                       Numbered Page
                                     -------                       -------------

                  99.      Annual Portfolio Valuation of Cushman
                           & Wakefield as of December 31, 1997.

                  Pursuant to Rule 12b-32 under the  Securities  Exchange Act of
         1934, as amended, the following document, filed with the Securities and
         Exchange Commission as Exhibit 4 to the  Co-Registrants'  Form 10-K for
         the fiscal year ended December 31, 1989,  Commission  File No. 0-16720,
         is incorporated herein by this reference.

                           Second Amended and Restated Certificate and Agreement
                           of Limited Partnership which governs the Partnership,
                           as filed with the  Secretary  of State of Delaware on
                           April 16, 1987.

                  Pursuant to Rule 12b-32 under the  Securities  Exchange Act of
         1934, as amended,  the following  documents,  filed with the Securities
         and Exchange  Commission as exhibits to the  Co-Registrants'  Form 10-K
         for the fiscal  year  ended  December  31,  1986,  Commission  File No.
         0-16720, are incorporated herein by this reference.
<TABLE>
<CAPTION>
                                                                                       1986 Form 10-K
                                                                                         Exhibit No.
                                                                                         -----------
                           <S>                                                               <C>
                           Depositary Agreement of the Partnership.                          3-C

                           The Certificate of Incorporation which governs                    3-D
                           FFCA Investor Services Corporation 86-B, as filed
                           with the  Secretary  of State of Delaware on June 23,
                           1986.

                           Bylaws of FFCA Investor Services Corporation 86-B.                3-E
</TABLE>
<PAGE>
                  Pursuant to Rule 12b-32 under the  Securities  Exchange Act of
         1934, as amended, the following document, filed with the Securities and
         Exchange  Commission  on  October  8,  1986  as  Exhibit  10(e)  to the
         Co-Registrants'  Registration Statement on Form S-11,  Registration No.
         33-7502, is incorporated herein by this reference.

                           Operating  Agreement,  dated  October 7, 1986, by and
                           among FFCA Management  Company,  L.P.,  FFCA/PIP 1986
                           Property   Company,   Flying  J  Inc.  and  Flying  J
                           Franchise Inc.