SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-K/A-1


                   ANNUAL REPORT UNDER SECTION 13 or 15(d) of
                       THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997



Commission File Number 0-16720
Commission File Number 0-16721



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



            Delaware                                          86-0570015
-----------------------------------                   -------------------------
(Partnership State of Organization)                   (Partnership IRS Employer
                                                          Identification No.)
                                                                           
                                                                           
             Delaware                                         86-0557949
------------------------------------                 -------------------------
(Corporation State of Incorporation)                 (Corporation IRS Employer
                                                         Identification No.)

            The Perimeter Center                                85255
         17207 North Perimeter Drive                          ---------
            Scottsdale, Arizona                               (Zip Code)
----------------------------------------
(Address of Principal Executive Offices)

Co-Registrants' telephone number, including area code:       (602) 585-4500
<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,
<PAGE>
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 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 78 interstate travel plaza properties as
of January 31, 1998. 
                                       2
<PAGE>
The Company  owned eight of these  properties  at December 31,  1997.  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.

         For the fiscal year ended January 31, 1998, CFJ Properties reported net
income of $16 million on revenues of $1.3  billion.  Revenues  rose 7% from $1.2
billion in the prior year. The higher revenues  resulted from the opening of six
new units and increases in fuel prices.  Net income  increased from $1.8 million
in the prior year due to higher gross profit margins.

         During the fiscal year ended January 31, 1998, CFJ Properties  reported
$41.7 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, 1998, CFJ Properties  reported cash balances of
approximately  $3.8 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, 1998, CFJ Properties reported partners' capital of $155.5 million
and total assets of $463.7 million.

         CFJ Properties leases travel plazas and equipment under  non-cancelable
operating leases,  which generally expire at various dates over the next 9 to 15
years.  Payments  under these leases were $17.5 million in fiscal 1998 and $17.3
million in fiscal 1997,  including  percentage  lease  payments.  Future minimum
annual rent obligations under non-cancelable  leases, as projected through 2003,
remain comparable to 1998 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  $27.5 million during the fiscal year
ended January 31, 1998 as compared to $24.4  million in fiscal year 1997.  Total
travel plaza unit-level  income for these nine properties  (before  depreciation
and allocated  corporate  overhead) totaled  approximately  $2.8 million in 1998
with five of the nine  properties  reporting  positive  unit-level  income.  The
remaining four properties  reported net losses primarily due to higher expenses.
The combined result of the travel plaza  
                                       3
<PAGE>
unit-level income before  depreciation and allocated  corporate  overhead was up
from  $700,000 in the prior year due largely to an increase in fuel and non-fuel
sales  volumes and an increase in fuel prices.  Volumes and margins were reduced
in 1997 due to CFJ's  curtailment of its relationship with a third party billing
company in June 1996.  For CFJ  Properties'  fiscal year ended January 31, 1998,
the average  unit-level base and participating  rents  approximated 14.4% of the
original cost of these properties.

         Those  properties  that each  represent  over 10% of the  Partnership's
total assets at December 31, 1997 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.  The limited partners will
receive a proxy  statement  containing  a complete  description  of the proposed
transaction when the sale and financing agreements are finalized.

         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
(the Boise Plaza) to CFJ  Properties  for a cash sale price of  $3,385,784.  The
Boise Plaza was a  full-service  travel plaza,  built on a parcel  consisting of
approximately 21 acres.  The negotiated sale price of approximately  $52 million
referenced above originally included the Boise Plaza and since this travel plaza
was sold,  the $52  million  sale price will be  reduced by  approximately  $3.4
million.  Proceeds from the Boise Plaza sale were $65.50 per limited partnership
unit and were  distributed  to the  limited  partners in April 1998 as a partial
return  of their  adjusted  capital  contribution.  The  Partnership  accrued  a
subordinated  real estate  disposition fee equal to three percent of the selling
price of the Boise Plaza (amounting to $101,574)  payable to the General Partner
of the Partnership.
                                       4
<PAGE>
         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 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
                                       5
<PAGE>
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 to make their
scheduled lease payments to the Partnership.
                                       6
<PAGE>
         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  
                                       7
<PAGE>
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.


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
                  (including  the Boise  Plaza).  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   
                                       8
<PAGE>
                  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.

         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.
                                       9
<PAGE>
                                     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

                  CFJ Properties
                  (A General Partnership)

                  Independent  Auditors' Report 
                  Balance Sheets as of January 31, 1998 and 1997  
                  Statements of Income and Partners' Capital for the
                    years ended  January 31, 1998,  1997 and 1996
                  Statements of Cash Flows for the years ended January 31, 1998,
                    1997 and 1996
                  Notes to Financial Statements

                  Clive Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1998, 1997 and 1996
                                       10
<PAGE>
                  Statements of Cash Flows for the years ended January 31, 1998,
                    1997 and 1996
                  Note to Financial Statements

                  Amarillo Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1998, 1997 and 1996
                  Statements of Cash Flows for the years ended January 31, 1998,
                    1997 and 1996
                  Note to Financial Statements

                  Cheyenne Travel Plaza

                  Independent Auditors' Report
                  Statements of Revenues and Direct Operating Costs and Expenses
                    for the years ended January 31, 1998, 1997 and 1996
                  Statements of Cash Flows for the years ended January 31, 1998,
                    1997 and 1996
                  Note to Financial Statements

         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  
                                       11
<PAGE>
                  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.
                                                                  1986 Form 10-K
                                                                    Exhibit No.
                                                                    -----------

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

                     Bylaws of FFCA Investor Services                   3-E
                     Corporation 86-B.

                           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.
                                       12
<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:  June 24, 1998                 By /s/ Morton H. Fleischer
                                        -----------------------
                                            Morton H. Fleischer, General Partner

                                 By: PERIMETER CENTER MANAGEMENT COMPANY,
                                     Corporate General Partner


Date:  June 24, 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:  June 24, 1998             By /s/ Morton H. Fleischer
                                    -----------------------
                                        Morton H. Fleischer, President, Chief  
                                        Executive Officer and Director
<PAGE>

Date:  June 24, 1998             By /s/ John Barravecchia
                                    ---------------------
                                        John Barravecchia, Executive Vice 
                                        President, Chief Financial Officer, 
                                        Treasurer and Assistant Secretary



Date:  June 24, 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:  June 24, 1998             By /s/ Morton H. Fleischer
                                    -----------------------
                                        Morton H. Fleischer, Sole Director


Date:  June 24, 1998             By /s/ John Barravecchia
                                    ---------------------
                                        John Barravecchia, President, Secretary,
                                        Treasurer, Principal Financial Officer
                                        and Principal Accounting Officer
<PAGE>
Independent Auditors' Report

================================================================================










The Board of Directors
CFJ Properties:


We have audited the  accompanying  balance  sheets of CFJ  Properties (a general
partnership)  as of January 31, 1998 and 1997,  and the  related  statements  of
income  and  partners'  capital,  and cash  flows  for each of the  years in the
three-year  period ended January 31, 1998.  These  financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements 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 CFJ Properties as of January
31, 1998 and 1997, and the results of its operations and its cash flows for each
of the years in the three-year period ended January 31, 1998, in conformity with
generally accepted accounting principles.


                                             /s/ KPMG Peat Marwick LLP

Salt Lake City, Utah
March 31, 1998
<PAGE>
Balance Sheets

================================================================================


CFJ PROPERTIES
(A General Partnership)
January 31, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
                                 Assets                                      1998            1997
--------------------------------------------------------------------------------------------------
<S>                                                                     <C>           <C>        
Current assets:
  Cash and cash equivalents                                             $   3,778     $     2,138
  Trade receivables, net of allowance for doubtful accounts
    of $114 in 1998 and $129 in 1997 (note 8)                              15,392          11,400
  Inventories (note 2)                                                     18,647          20,308
  Prepaid expenses                                                          3,321           2,141

--------------------------------------------------------------------------------------------------
              Total current assets                                         41,138          35,987
--------------------------------------------------------------------------------------------------
Land, buildings, and equipment:
  Land and improvements                                                   151,572         129,270
  Buildings                                                               169,203         145,875
  Equipment                                                               124,325         105,561
  Leasehold improvements                                                   24,330          24,317
  Construction-in-progress                                                 30,983          29,454
--------------------------------------------------------------------------------------------------
                                                                          500,413         434,477
  Less accumulated depreciation and amortization                           79,177          58,932
--------------------------------------------------------------------------------------------------
              Net land, buildings, and equipment                          421,236         375,545
--------------------------------------------------------------------------------------------------
Long-term notes receivable                                                     35             395
Other assets (note 3)                                                       1,339             957
--------------------------------------------------------------------------------------------------
                                                                        $ 463,748       $ 412,884
==================================================================================================


                   Liabilities and Partners' Capital
--------------------------------------------------------------------------------------------------

Current liabilities:
  Current installments  of long-term debt (note 5)                      $  10,000       $       0
  Accounts payable (note 8)                                                56,901          58,395
  Accrued liabilities (notes 4 and 8)                                      27,863          20,995
--------------------------------------------------------------------------------------------------
              Total current liabilities                                    94,764          79,390
Long-term debt, excluding current installments (note 5)                   209,300         190,000
Other liabilities                                                           4,206           4,016
--------------------------------------------------------------------------------------------------
              Total liabilities                                           308,270         273,406
--------------------------------------------------------------------------------------------------
Partners' capital                                                         155,478         139,478
Commitments and contingencies (notes 6 and 10)
--------------------------------------------------------------------------------------------------
                                                                        $ 463,748       $ 412,884
==================================================================================================
</TABLE>
See accompanying notes to financial statements.
                                        2
<PAGE>
Statements of Income and Partners' Capital

================================================================================


CFJ PROPERTIES
(A General Partnership)
Years ended January 31, 1998, 1997, and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                      1998           1997           1996
-------------------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>        
Sales (note 1(f))                                 $ 1,864,637    $ 1,688,194    $ 1,413,270
Cost of sales                                       1,638,532      1,501,758      1,231,752
-------------------------------------------------------------------------------------------
              Gross profit                            226,105        186,436        181,518
-------------------------------------------------------------------------------------------
Operating, general, and administrative expense:
  Operating                                           183,569        162,236        145,959
  General and administrative                           14,215         11,732         11,753
-------------------------------------------------------------------------------------------
                                                      197,784        173,968        157,712
-------------------------------------------------------------------------------------------
              Income from operations                   28,321         12,468         23,806
-------------------------------------------------------------------------------------------
Other income (expense):
  Interest income                                         106            134             93
  Interest expense, net                               (12,311)       (10,659)        (6,642)
  Loss on sale of fixed assets, net                      (116)          (163)           (52)
-------------------------------------------------------------------------------------------
                                                      (12,321)       (10,688)        (6,601)
-------------------------------------------------------------------------------------------
              Net income                               16,000          1,780         17,205
Partners' capital, beginning of year                  139,478        137,698        120,493
-------------------------------------------------------------------------------------------
Partners' capital, end of year                    $   155,478    $   139,478    $   137,698
===========================================================================================
</TABLE>
See accompanying notes to financial statements.
                                       3
<PAGE>
Statements of Cash Flows

================================================================================

CFJ PROPERTIES
(A General Partnership)
Years ended January 31, 1998, 1997, and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                   1998         1997         1996
---------------------------------------------------------------------------------------------------
<S>                                                             <C>          <C>          <C>      
Cash flows from operating activities:
  Net income                                                    $  16,000    $   1,780    $  17,205
  Adjustments to reconcile net income to net cash provided by
    operating activites:
      Depreciation and amortization                                22,067       19,080       14,933
      Provision for losses on accounts receivable                     137           84           35
      Loss on sale of fixed assets                                    116          163           52
      Changes in assets and liabilities:
        Trade receivables                                          (4,129)         352       (3,838)
        Inventories                                                 1,661       (4,476)      (3,034)
        Prepaid expenses                                           (1,180)          88       (1,025)
        Other assets                                                 (575)        (106)        (128)
        Accounts payable and accrued liabilities                    7,382        4,723        8,817
        Other liabilities                                             190          607        2,739
---------------------------------------------------------------------------------------------------
              Net cash provided by operating activities            41,669       22,295       35,756
---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Capital expenditures (note 8)                                   (69,689)     (56,111)    (104,107)
  Note receivable                                                     360          140         (535)
---------------------------------------------------------------------------------------------------
              Net cash used in investing activities               (69,329)     (55,971)    (104,642)
---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Proceeds from issuance of notes payable                          25,000            0       25,000
  Net proceeds under line of credit agreements                      4,300       33,500       44,500
---------------------------------------------------------------------------------------------------
              Net cash provided by financing activities            29,300       33,500       69,500
---------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                    1,640         (176)         614
Cash and cash equivalents, beginning of year                        2,138        2,314        1,700
---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                          $   3,778    $   2,138    $   2,314
===================================================================================================

Supplemental Disclosure of Cash Flow Information
------------------------------------------------
  Cash paid for interest, net of capitalized amounts            $  11,530    $  10,854    $   6,387

Supplemental Disclosure of Noncash Investing Activities
-------------------------------------------------------
   The  capital  expenditures  noted  above are net of  accounts  payable
     increases  (decreases)  related to the  acquisition  of building and
     equipment of ($2,008), $2,888, and ($4,403) in 1998, 1997, and 1996,
     respectively.
</TABLE>
       See accompanying notes to financial statements.
                                        4
<PAGE>
Notes to Financial Statements

================================================================================

CFJ PROPERTIES
(A General Partnership)
January 31, 1998, 1997, and 1996


1) Summary of Significant Accounting Policies

The following  significant  accounting  policies are followed by CFJ  Properties
(the Partnership) in preparing and presenting its financial statements:

(a)  Organization  and Line of  Business  - The  Partnership  is a Utah  general
partnership with its principal business being the development and operation of a
national network of interstate travel plazas in North America.  A typical travel
plaza offers a 24-hour  service  operation  which  includes fuel  facilities,  a
restaurant or deli,  convenience store, and other amenities designed to meet the
needs of the trucking industry and traveling public.  Some travel plazas include
lodging and truck  service  centers.  The  Partnership  operated  78, 72, and 66
travel plazas, as of January 31, 1998, 1997, and 1996, respectively.

(b) Cash  Equivalents - The Partnership  considers all investments with original
maturities of three months or less to be cash equivalents.

(c) Inventories - Inventories include gasoline, diesel,  ready-to-use additives,
related petroleum products, food, and miscellaneous merchandise. Inventories are
stated at the  lower of cost or  market  value as  determined  by the  first-in,
first-out method.

(d) Land, Buildings,  and Equipment - Land, buildings,  and equipment are stated
at cost for constructed  and purchased  assets and fair market value at the date
contributed  for  contributions  from  the  general  partners.  Depreciation  is
provided using the  straight-line  method over the estimated useful lives of the
assets. Leasehold improvements are amortized using the straight-line method over
the lesser of the lease term or the estimated useful life of the related assets.

Interest is capitalized in connection  with the  construction  of travel plazas.
The  interest  capitalized  is recorded as part of the asset to which it relates
and  is  amortized  over  the  asset's  useful  life.  Interest  of  $2,284,000,
$1,634,000,   and  $2,925,000,   was  capitalized  for  1998,  1997,  and  1996,
respectively.


(e) Income Taxes - The Partnership is not directly subject to income taxes. Each
partner is  responsible  for income  taxes  related to their  portion of taxable
income.

(f) Retail  Fuel Sales - The  Partnership  includes  related  federal  and state
excise taxes in  petroleum  product  retail sales and cost of sales.  Such taxes
amounted to approximately $605,751,000, $516,381,000, and $475,900,000 for 1998,
1997, and 1996, respectively.

(g) New Plaza  Opening Costs - Opening  costs are expensed  when  incurred.  The
costs associated with new travel plaza openings were  approximately  $1,923,000,
$2,100,000, and $4,000,000 in 1998, 1997, and 1996, respectively.

(h)  Concentration  of Credit Risk -  Financial  instruments  which  potentially
subject the Partnership to concentrations of credit risk consist  principally of
cash and cash equivalents and trade receivables. The Partnership places its cash
and cash equivalent  investments with high quality credit financial institutions
and limits  the  amount of credit  exposure  to any one  financial  institution.
Concentrations  of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Partnership's customer base, and
their dispersion  across many different  geographical  regions.  The Partnership
routinely performs credit evaluations of its customers and maintains  allowances
for potential credit losses.

(i) Use of  Estimates  - The  Partnership  has made a number  of  estimates  and
assumptions  relating  to the  reporting  of  assets  and  liabilities  and  the
disclosure  of contingent  assets and  liabilities  to prepare  these  financial
statements in conformity with generally accepted accounting  principles.  Actual
results could differ from those estimates.

(j)  Reclassifications - Certain amounts in 1997 and 1996 have been reclassified
to conform with the 1998 presentation.

(2) Inventories

Inventories are summarized as follows (in thousands):

                                             1998       1997
                                        ---------   --------
Store merchandise and restaurant food   $  15,164     16,368
Petroleum products                          3,483      3,940
                                        ---------   --------
                                        $  18,647     20,308
                                        =========   ========
                                       5
<PAGE>

================================================================================

(3) Other Assets

Other assets consist of the following (in thousands):
                                        
                                             1998       1997
                                        ---------   --------
Land deposits                           $     908        630
Lease deposits                                232        232
Loan origination fees, net                    199         95
                                        ---------   --------
                                        $   1,339        957
                                        =========   ========
(4) Accrued Liabilities                 

Accrued liabilities are summarized as follows (in thousands):

                                        
                                             1998       1997
                                        ---------   --------
Fuel, property, and sales taxes         $  17,301     14,285
Expense incurred by                                         
    operator (note 8)                       5,914      4,222
Frequent fueler incentive program           2,668      1,473
Interest                                    1,664        883
Other                                         316        132
                                        ---------   --------
                                        $  27,863     20,995
                                        =========   ========
                                        
(5)      Long-term Debt

Under a revolving line of credit  agreement with the banks,  the Partnership may
borrow up to $150,000,000.  Interest is computed at the Partnership's option, at
the LIBOR rate plus plus .5 to 1 percent,  or the  higher of the  federal  funds
rate plus .5  percent  and the  administrative  agent  bank's  prime  rate.  The
agreement matures February 1, 2002 and requires letter of credit and committment
fees. The Partnership had $94,300,000 and $90,000,000 in outstanding  borrowings
under the  agreement  as of January  31, 1998 and 1997,  respectively.  Interest
rates on outstanding  borrowings range from 6.38 to 8.5 percent.  In addition to
the  borrowings  under the  agreement,  the  Partnership  had  letters of credit
totaling $3,315,000 outstanding as of January 31, 1998.

Under a fiscal 1995 Master Shelf Agreement,  the Partnership issued $125,000,000
in long-term notes payable to an insurance company. The notes bear interest from
7.37 to 9.45 percent and require quarterly interest  payments.  Annual principal
payments are required  beginning  March 1998 with the final  payment in November
2006.

Aggregate maturities of long-term debt are summarized as follows (in thousands):


1999                                                  $      10,000
2000                                                         15,000
2001                                                         17,000
2002                                                         16,000
2003                                                        108,300
Thereafter                                                   53,000
                                                      -------------
          Total                                       $     219,300
                                                      =============

(6)      Lease Commitments

The Partnership leases travel plazas and equipment under noncancelable operating
leases,  which expire at various  dates over the next 9 to 15 years.  The leases
are obligations of the Partnership without recourse to the general partners. The
operating  leases include  minimum and percentage  (contingent)  lease payments.
Contingent   lease  payments  are  based  upon  gallons  sold,   restaurant  and
merchandise sales, and other revenues.

Minimum lease payments under  noncancelable  operating leases were  $13,120,000,
$13,173,000,  and  $13,266,000  for the years ended January 31, 1998,  1997, and
1996,  respectively.  Contingent  lease payments under  noncancelable  operating
leases were $4,390,000,  $4,105,000,  and $4,348,000 for the years ended January
31, 1998, 1997, and 1996, respectively.

Future minimum payments under  noncancelable  operating leases as of January 31,
1998 are as follows (in thousands):


1999                                                  $      13,099
2000                                                         12,832
2001                                                         12,217
2002                                                         12,165
2003                                                         12,144
Thereafter                                                   74,458
                                                      -------------
          Total                                       $     136,915
                                                      =============
                                       6
<PAGE>

================================================================================

(7) Pension and Profit Sharing Plan

Currently, the Partnership has chosen to have all eligible employees participate
in the noncontributory,  defined contribution pension and profit sharing plan of
Flying J Inc.  (Flying J), the parent  company of one of the  general  partners.
Flying J's  contributions  to the plan,  which are made at the discretion of the
Board of Directors,  may be in cash or qualifying  common stock of Flying J. The
Partnership's  expenses related to the plan amounted to $1,972,000,  $1,591,000,
and  $1,212,000  for  the  years  ended  January  31,  1998,   1997,  and  1996,
respectively.

(8) Related Party Transactions

Flying J operates all travel plazas and related  facilities for the Partnership.
Under the terms of the operations agreement, the Partnership reimburses Flying J
for the cost of  operations  plus a  monthly  amount  for  overhead  costs.  The
overhead cost reimbursements amounted to $1,022,000,  $960,000, and $916,000 for
1998,  1997, and 1996,  respectively.  Flying J paid the  Partnership  $706,000,
$686,000, and $668,000 during 1998, 1997, and 1996,  respectively,  for services
performed by the Partnership for certain franchisees of Flying J.

During  its normal  course of  business,  the  Partnership  purchases  petroleum
products from the general  partners under supply  agreements.  It is the general
partners'  opinion that such  agreements  are under terms similar to those which
could be received  under  arms-length  contracts.  Purchases  from the partners'
amounted to approximately $1,517,297,000, $1,399,265,000, and $1,138,800,000 for
1998, 1997, and 1996, respectively.

Included in accounts receivable at January 31, 1998 and 1997, is $1,522,000, and
$1,827,000, respectively, due from affiliates.

Included  in  accounts  payable  and  accrued  liabilities  is  $38,325,000  and
$38,256,000  as of January 31, 1998 and 1997,  respectively,  due to the general
partners and their affiliates resulting from petroleum product purchases.

The  Partnership  periodically  contracts with Flying J for the  development and
construction of travel plazas.  Capitalized  expenditures under these agreements
totaled  $49,883,000 and $45,326,000 in 1998 and 1997,  respectively.  It is the
general  partners'  opinion that such purchases are under terms similar to those
which could be received under arms-length contracts.

Included in accounts payable is $5,868,000 and $7,761,000 as of January 31, 1998
and 1997, respectively, due to Flying J for construction costs.

(9) Disclosure About the Fair Value of Financial Instruments

The carrying value for certain short-term  financial  instruments that mature or
reprice  frequently at market rate,  approximates  their fair market value. Such
financial  instruments  include:  cash and cash equivalents,  trade receivables,
revolving  line of  credit,  accounts  payable,  and  accrued  liabilities.  The
carrying  value of the  long-term  notes payable also  approximates  fair market
value.

(10) Commitments and Contingencies

(a) Environmental Laws and Regulations - In connection with the operation of its
network of fuel  facilities,  the Partnership has become subject to increasingly
demanding   environmental   standards  imposed  by  federal,  state,  and  local
environmental  laws and  regulations.  It is the  policy of the  Partnership  to
comply with applicable environmental laws and regulations.

An estimated amount related to the remediation of environmental  issues has been
accrued  as  management's  best  estimate  of the  cost.  However,  governmental
regulations covering  environmental issues are highly complex and are subject to
change. Accordingly, changes in the regulations or interpretations thereof could
result in future costs to the Partnership in excess of the amounts accrued.

Management believes that preventative  measures, in addition to proper attention
to  these  regulations,  will  minimize  costs  related  to  compliance  to such
regulations.  Furthermore,  the Partnership  routinely  succeeds in recovering a
significant  portion of the cost of remediation from the states which administer
environmental clean-up funds for in-state fuel retailers.

(b) Litigation - The Partnership is involved in legal actions resulting from the
ordinary  course of  business.  Such  actions  relate to  routine  travel  plaza
operations and other general matters.  Management  believes that the Partnership
has adequate legal defenses or insurance coverage and, accordingly, the ultimate
outcome  of  such  actions  will  not  have a  material  adverse  effect  on the
Partnership's financial position or results of operations.
                                       7
<PAGE>
Independent Auditors' Report

================================================================================


To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1998,  of the Clive Travel Plaza  operated by CFJ  Properties  (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements 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  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended to be a complete  representation of the Clive Travel Plaza's statements
of operations and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Clive Travel Plaza for each of
the years in the  three-year  period ended January 31, 1998, in conformity  with
generally accepted accounting principles.

                                        /s/ KPMG Peat Marwick LLP


Salt Lake City, Utah
March 5, 1998
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses

================================================================================


CLIVE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                1998        1997        1996
----------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>         <C>     
Revenues                                                      $ 17,467    $ 18,076    $ 17,336
----------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                 14,516      15,234      14,167
  Labor costs                                                    1,271       1,288       1,217
  Controllable operating expenses                                  651         675         716
  Occupancy expenses                                             1,245       1,241       1,260
----------------------------------------------------------------------------------------------
  Travel Plaza direct operating cost and expenses in excess
     of revenues                                              $   (216)   $   (362)   $    (24)
==============================================================================================
</TABLE>
See accompanying note to financial statements.
                                       2
<PAGE>
Statements of Cash Flows

================================================================================


CLIVE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                          1998     1997     1996
-------------------------------------------------------------------------------------------------
<S>                                                                       <C>      <C>        <C> 
Cash flows from operating activities:
  Travel Plaza direct operating costs and expenses in excess
       of revenues                                                        $(216)   $(362)     (24)
  Add amortization of leasehold improvements                                144      145      139
-------------------------------------------------------------------------------------------------
              Cash provided by (used in) direct Travel Plaza operations   $ (72)   $(217)     115
=================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       3
<PAGE>
Note to Financial Statements

================================================================================


CLIVE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996


(1) Summary of Significant Accounting Policies

(a)  Organization  and  Business - The Clive Travel  Plaza  (Travel  Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store and other  amenities  designed to meet the needs of the trucking  industry
and  traveling  public in general.  The Travel  Plaza,  located in Clive,  Iowa,
commenced  operations in March 1989 and is operated by CFJ Properties (CFJ). The
land and related plaza  facilities are leased by CFJ from  Participating  Income
Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements  include  only  revenues  and direct  operating  costs and  expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone  and  utilities,  insurance,  credit  card  charges,  travel and other
operaing expenses incurred at the Travel Plaza level.

(c)  Occupancy  Expenses  -  Occupancy  expenses  consist  of taxes,  insurance,
amortization and rent paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                       4
<PAGE>
Independent Auditors' Report

================================================================================








To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1998, of the Amarillo  Travel Plaza operated by CFJ Properties (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements 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  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended  to  be a  complete  representation  of  the  Amarillo  Travel  Plaza's
statements of income and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Amarillo Travel Plaza for each
of the years in the three-year period ended January 31, 1998, in conformity with
generally accepted accounting principles.

                                        /s/ KMPG Peat Marwick LLP



Salt Lake City, Utah
March 5, 1998
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses

================================================================================


AMARILLO TRAVEL PLAZA
Years ended  January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                                           1998       1997        1996
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>        <C>         <C>     
Revenues                                                                                 $ 21,762   $ 21,706    $ 22,525
------------------------------------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                                            18,838     19,188      19,152
  Labor costs                                                                               1,098      1,069       1,095
  Controllable operating expenses                                                             533        638         583
  Occupancy expenses                                                                        1,004        962         974
------------------------------------------------------------------------------------------------------------------------
    Travel Plaza revenues in excess (deficient) of direct operating costs and expenses   $    289   $   (151)   $    721
========================================================================================================================
</TABLE>
See accompanying note to financial statements.
                                        2
<PAGE>
Statements of Cash Flows

================================================================================


AMARILLO TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                                        1998    1997     1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>     <C>      <C>  
Cash flows from operating activities:
  Travel Plaza revenues in excess (deficient) of direct operating costs and expenses   $ 289   $(151)   $ 721
  Add amortization of leasehold improvements                                             185     159      133
-------------------------------------------------------------------------------------------------------------
              Cash provided by direct Travel Plaza operations                          $ 474   $   8    $ 854
=============================================================================================================
</TABLE>
See accompanying note to financial statements.
                                        3
<PAGE>
Note to Financial Statements

================================================================================


AMARILLO TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996


(1) Summary of Significant Accounting Policies

(a)  Organization  and Business - The Amarillo  Travel Plaza (Travel Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store and other  amenities  designed to meet the needs of the trucking  industry
and traveling public in general. The Travel Plaza,  located in Amarillo,  Texas,
commenced  operations in May 1989 and is operated by CFJ Properties  (CFJ).  The
land and related plaza  facilities are leased by CFJ from  Participating  Income
Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements  include  only  revenues  and direct  operating  costs and  expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone  and  utilities,  insurance,  credit  card  charges,  travel and other
operating expenses incurred at the Travel Plaza level.

(c)  Occupancy  Expenses  -  Occupancy  expenses  consist  of taxes,  insurance,
amortizaion and rent paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                        4
<PAGE>
Independent Auditors' Report

================================================================================














To the General Partners
CFJ Properties:


We have audited the  accompanying  statements  of revenues and direct  operating
costs and expenses  and the  statements  of cash flows from direct  travel plaza
operations  for each of the years in the  three-year  period  ended  January 31,
1998, of the Cheyenne  Travel Plaza operated by CFJ Properties (see note 1). The
land and related plaza facilities are owned by Participating  Income  Properties
1986,  L.P.  These  statements  are  the   responsibility  of  management.   Our
responsibility is to express an opinion on these statements 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  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management,  as
well as  evaluating  the overall  statement  presentation.  We believe  that our
audits provide a reasonable basis for our opinion.

The statements referred to above were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange  Commission and are not
intended  to  be a  complete  representation  of  the  Cheyenne  Travel  Plaza's
statements of income and cash flows.

In our opinion, the statements referred to above present fairly, in all material
respects,  the  revenues  and direct  operating  costs and expenses and the cash
flows from direct travel plaza  operations of the Cheyenne Travel Plaza for each
of the years in the three-year period ended January 31, 1998, in conformity with
generally accepted accounting principles.


                                        /s/ KPMG Peat Marwick LLP


Salt Lake City, Utah
March 5, 1998
                                        1
<PAGE>
Statements of Revenues and Direct Operating Costs and Expenses

================================================================================


CHEYENNE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                                         1998     1997      1996
------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>       <C>       <C>    
Revenues                                                                               $28,909   $28,793   $24,733
------------------------------------------------------------------------------------------------------------------
Direct operating costs and expenses:
  Cost of sales                                                                         22,313    23,216    19,214
  Labor costs                                                                            1,664     1,478     1,326
  Controllable operating expenses                                                        1,024       950       872
  Occupancy expenses                                                                     1,257     1,206     1,176
------------------------------------------------------------------------------------------------------------------
              Travel Plaza revenues in excess of direct operating costs and expenses   $ 2,651   $ 1,943   $ 2,145
==================================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       2
<PAGE>
Statements of Cash Flows

================================================================================


CHEYENNE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
                                                                            1998     1997     1996
---------------------------------------------------------------------------------------------------
<S>                                                                        <C>      <C>      <C>   
Cash flows from operating activities:
  Travel Plaza revenues in excess of direct operating costs and expenses   $2,651   $1,943   $2,145
  Add amortization of leasehold improvements                                  365      321      290
---------------------------------------------------------------------------------------------------
              Cash provided by direct Travel Plaza operations              $3,016   $2,264   $2,435
===================================================================================================
</TABLE>
See accompanying note to financial statements.
                                       3
<PAGE>
Note to Financial Statements

================================================================================


CHEYENNE TRAVEL PLAZA
Years ended January 31, 1998, 1997 and 1996


(1) Summary of Significant Accounting Policies

(a)  Organization  and Business - The Cheyenne  Travel Plaza (Travel Plaza) is a
24-hour service operation and includes fuel facilities,  restaurant, convenience
store,  motel and other  amenities  designed  to meet the needs of the  trucking
industry and traveling public in general. The Travel Plaza, located in Cheyenne,
Wyoming,  commenced  operations  in July 1988 and is operated by CFJ  Properties
(CFJ).   The  land  and  related  plaza   facilities  are  leased  by  CFJ  from
Participating Income Properties 1986, L.P. (PIP 86).

The accompanying statements have been prepared to facilitate PIP 86's compliance
with the rules and  regulations of the Securities and Exchange  Commission.  The
statements  include  only  revenues  and direct  operating  costs and  expenses.
Certain  overhead  costs  such  as  corporate  administrative   allocations  are
excluded.

(b) Controllable Operating Expenses - Controllable operating expenses consist of
supplies,  repairs  and  maintenance,   cleaning,   advertising  and  promotion,
telephone  and  utilities,  insurance,  credit  card  charges,  travel and other
operating expenses incurred at the Travel Plaza level.

(c)  Occupancy  Expenses  -  Occupancy  expenses  consist  of taxes,  insurance,
amortization and rent paid to PIP 86.

(d) Leasehold  Improvements  Amortization - Leasehold improvements are amortized
using  the  straight-line  method  over  the  lesser  of the  lease  term or the
estimated useful lives of the related assets.

(e) Federal and State  Income  Taxes - Federal and state  income  taxes have not
been allocated to the Travel Plaza.
                                       4