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, 1996

                                       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

                   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>
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.  The  general  partner  of the
Partnership is FFCA Management Company Limited  Partnership,  a Delaware limited
partnership  (the  "General  Partner").  Under the  terms of the First  Restated
Agreement of Partnership of the Company,  the General Partner is entitled to the
remaining 0.1% of the profits, losses and disbursable cash of the Company.

         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."

         The  statements  contained  in  this  report,  if not  historical,  are
forward-looking  statements and involve risks and uncertainties 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" or "expected". Therefore,
forward-looking  statements  should not be relied upon as a prediction of actual
future results or occurrences.

         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
                                       1
<PAGE>
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 March 14, 1997,  eight of the travel plazas
owned by the Partnership  were leased to CFJ Properties  ("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 (i)  preserve,  protect and enhance  Partnership  capital,  (ii)
provide partially  tax-sheltered cash distributions to investors,  (iii) provide
the potential for increased  income and  protection  against  inflation  through
participation in the gross revenues of Flying J Travel Plaza facilities and (iv)
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, 1996, one will expire and the related
equipment is  anticipated to be sold to the lessee in January 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 (i) 4% of annual gross  receipts  derived from
the travel plaza facility, excluding fuel sales, (ii) 3/10 of $.01 per gallon of
fuel sold and (iii) 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 the  financial  condition  of CFJ  Properties  could
materially  affect  their  ability  to make lease  payments.  During  1996,  CFJ
Properties  and  Flying J Inc.  together  contributed  approximately  88% of the
Company's  total rental and  participating  rental  revenue for the year and are
expected to contribute a similar percentage of revenue in 1997.

         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. CFJ Properties is the franchisor and operator of the Flying J
Inc.  network of interstate  travel  plazas,  which included 66 properties as of
January 31, 1996. 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
                                       2
<PAGE>
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 Flying J Inc., CFJ
Properties or franchisees of FJFI.

         For the fiscal year ended  January 31, 1996,  CFJ  Properties  reported
earnings of $17.2  million on revenues of $937.4  million.  Revenues  rose 33.3%
from $703.4  million  the prior  year.  The higher  revenues  resulted  from the
opening of twelve new units and increases in average unit  volumes.  As a result
of higher revenues,  net income increased to $17.2 million from $16.1 million in
the fiscal year ended January 31, 1995.

         During the fiscal year ended January 31, 1996, CFJ Properties  reported
$35.8 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, 1996, CFJ Properties  reported cash balances of
approximately  $2.3 million,  with  liquidity  supported by net cash provided by
operating  activities and a $70 million revolving line of credit with a bank. As
of January 31, 1996, CFJ Properties reported partners' capital of $137.7 million
and total assets of $369.4 million.

         CFJ Properties leases travel plazas and equipment under  non-cancelable
operating  leases,  which expire at various  dates over the next 15 to 20 years.
Payments  under these  leases were $13.3  million in both 1996 and 1995.  Future
minimum  annual rent  obligations  under  non-cancelable  leases,  as  projected
through 2001, remain comparable to 1996 expense amounts.

         The  nine  properties  operated  by CFJ  Properties  and  Flying J Inc.
generated a combined fuel and non-fuel gross profit  (including other income) of
approximately  $26.8  million  during the fiscal year ended  January 31, 1996 as
compared to $28 million in 1995. Total travel plaza unit-level  income for these
nine properties (before  depreciation and allocated  corporate overhead) totaled
approximately  $2.8 million in 1996 with five of the nine  properties  reporting
positive  unit-level income.  The remaining four properties  reported net losses
due to intense fuel price  competition  in their  geographic  area. The combined
result of the travel plaza unit-level  income before  depreciation and allocated
corporate  overhead  was down from  $4.1  million  in the  prior  year due to an
overall decrease in fuel gross profit margins while the total volume of fuel and
non-fuel sales remained  relatively  constant between years. For CFJ Properties'
fiscal  year  ended  January  31,  1996,   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 are located in Amarillo, Texas; Clive, Iowa and Cheyenne, Wyoming.

         The travel  plaza/truckstop  industry,  although highly fragmented,  is
highly  competitive. 
                                       3
<PAGE>
The   Company'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 Company's lessees also compete
with other entities which 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 Franchise 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
grosses  more than  $340  billion  annually,  representing  78% of the  nation's
freight bill. The 20 million  commercial  trucks registered in the United States
consume  approximately  39 billion  gallons of fuel  annually.  The  Partnership
believes  that the  trucking  industry is  sensitive  to certain  aspects of the
general economic  environment,  such as retail sales;  the level,  direction and
rate of change in inventories; international trade; vendor performance; the cost
and availability of fuel; labor issues; and technology. The trucking industry is
also affected by various government  policies,  including economic  regulations;
vehicle  size and weight  regulations;  and  health,  safety  and  environmental
protection regulations. These factors also may influence the competitive posture
of one mode of transportation compared to others; however, the trucking industry
has presented itself as an affordable and timely alternative to other methods of
transportation such as air freight and rail, particularly for short hauls.

         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  ("UST's") 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 UST's. Regulations
enacted  by the EPA in 1988  established  requirements  for (i)  installing  UST
systems; (ii) upgrading UST systems;  (iii) taking corrective action in response
to releases; (iv) closing UST systems; (v) keeping appropriate records; and (vi)
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  1998,  all  UST's  must be
corrosion  protected,  overfill/spill  protected and have leak detection.  These
environmental laws impose strict liability for owners
                                       4
<PAGE>
and  operators of faulty and leaking  storage  tanks  resulting in damage to the
environment or third parties.

         The  Partnership  has taken steps to (i) ensure that the lessees comply
with applicable rules and regulations;  (ii) mitigate any potential liabilities,
including the  establishment  of storage tank monitoring  procedures;  and (iii)
require that lessees  indemnify the  Partnership  for all such  liabilities  and
obtain liability insurance,  if reasonably  available.  The Partnership 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  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  Partnership  believes that its lessees are in compliance  with all
applicable  regulatory  requirements  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 Partnership 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.

         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 
                                       5
<PAGE>
any business operations.

Item 2.  Properties.

         As of December 31, 1996, 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.  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.

         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, as
follows:

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

        Clive, Iowa                                    15.0%
        Cheyenne, Wyoming                              10.2%
        Amarillo, Texas                                11.4%

         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.  A total of five  federal  primary
highways serve the county with a central hub in the Boise metropolitan area.

         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.
                                       6
<PAGE>
         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  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, 1996.

         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, 1996.
                                       7
<PAGE>
                                     PART II

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

         Market  Information.  During  1996,  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 14, 1997,  there were 4,242 record holders of the
Units.

         Distributions.  For the two most recent fiscal years,  the  Partnership
made the following cash distributions to the Holders:


                                      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          26.49           -          1,369,189             -         11.0%
</TABLE>
                                      1995
<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         $26.86       $39.66       $1,388,313      $2,049,906       10.7%
September 30                51,687          27.91           -         1,442,584               -       11.2%
June 30                     51,687          27.03           -         1,397,100               -       10.8%
March 31                    51,687          26.40           -         1,364,537               -       10.6%
</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. 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  
                                       8
<PAGE>
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,  1996.  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
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,
                                                 -----------------------

                               1996          1995          1994          1993          1992
                               ----          ----          ----          ----          ----
<S>                          <C>           <C>           <C>           <C>           <C>        
Revenues                     $ 6,289,831   $ 6,563,996   $ 7,179,846   $ 6,397,242   $ 6,223,933

Net Income                     4,013,518     3,944,780     4,375,249     3,606,158     3,204,238

Net Income Per Unit                76.87         75.56         83.80         69.07         61.37

Total Assets                  28,759,012    32,378,912    34,094,240    36,048,390    37,945,883

Distributions of Cash from
 Operations to Holders         5,440,957     5,592,710     5,674,532     5,546,729     5,228,026

Distributions of Cash from
 Operations Per Unit              105.27        108.20        109.79        107.31        101.15

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.
                                       9
<PAGE>
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 eleven  travel  plazas.  The rental
payments from lessees of the properties are the Partnership's  primary source of
income.

         As of  December  31,  1996,  the  Partnership  had cash and  marketable
securities with a maturity of three months or less generally  collateralized  by
United States government obligations  aggregating $2,346,371 of which $1,321,120
was paid out to the Holders in January 1997 as their fourth quarter distribution
for  1996,  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 October 6, 1994, CFJ Properties (the lessee) exercised its option to
purchase the lodging premises and equipment  located at the Boise,  Idaho travel
plaza.  Proceeds  from the  sale of the  lodging  premises  of  $2,050,000  were
distributed by the  Partnership in January 1996 as a return of capital.  The net
decrease  in cash  and cash  equivalents  of  $1,303,606  during  1996  resulted
primarily from the return of the 1994 sale proceeds. This decrease was partially
offset by the proceeds from a partial land sale and the sale of equipment to the
lessees of seven travel plazas upon exercise of their purchase option at the end
of the equipment lease term.

         The General  Partner  knows of no other trends,  demands,  commitments,
events or  uncertainties  that will result in or that are  reasonably  likely to
result in the Partnership's  liquidity  increasing or decreasing in any material
way.

         FFCA Investor  Services  Corporation 86-B serves as the initial limited
partner  of the  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 1996,
1995 and 1994.
                                       10
<PAGE>
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.  In June  1996,  a credit  card  issuer to  Flying J Travel  Plaza
customers  terminated  its  relationship  with the travel  plazas.  As a result,
volumes and margins at many Flying J Travel Plaza locations decreased during the
latter part of 1996.  CFJ  Properties  expects the  situation to  stabilize  and
volumes to be restored by early 1997.  Also  contributing  to the decrease was a
decrease in rental  revenue of $19,151  relating  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 1996 were  $2,271,611,  representing a
decrease of  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%.

Fiscal Year Ended December 31, 1995 Compared to
  Fiscal Year Ended December 31, 1994

         The Partnership's total revenues decreased from $7,179,846 for the year
ended  December  31, 1994 to  $6,563,996  for the year ended  December 31, 1995,
primarily  due to gains during 1994  totaling  $653,477 on the sale of the Boise
travel plaza lodging  facility and on the sale of a one-half acre parcel of land
on this  travel  plaza.  In  addition,  as a result  of the sale of the  lodging
facility  in 1994,  there was a decrease in 1995 base  rentals of  approximately
$160,000  and a decrease  in  participating  rentals of  approximately  $65,000.
Offsetting  these  decreases  were gains on the sale of equipment in 1995 and an
increase in interest  income over 1994 of $114,805 due to a higher  average cash
balance.

         Total  Partnership  expenses for 1995 were  $2,614,608,  representing a
decrease of approximately 6.6% from $2,799,476 in 1994, primarily resulting from
a decrease in depreciation  expense of $148,025 related to the sale of the Boise
travel plaza  lodging  facility in 1994.  Also  contributing  to the decrease in
total expenses is the decrease in operating  expenses due to lower legal fees in
1995 than in 1994.  Net income for 1995 was $3,944,780 as compared to $4,375,249
for 1994, representing a decrease of approximately 9.8%.

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  
                                       11
<PAGE>
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:


PCMC

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

Morton H. Fleischer                                                 1993

                                    Officers
<TABLE>
<CAPTION>
                                                                                        Associated With
Name                                       Positions Held                                 PCMC Since
----                                       --------------                                 ----------
<S>                                 <C>                                                      <C> 
Morton H. Fleischer                 President and Chief Executive Officer                    1993
John R. Barravecchia                Executive Vice President, Chief Financial Officer,
                                           Treasurer and Assistant Secretary                 1993
Christopher H. Volk                 Executive Vice President, Chief Operating
                                           Officer, Secretary and Assistant Treasurer        1993
                                       12
<PAGE>
Dennis L. Ruben                     Executive Vice President, General Counsel
                                           and Assistant Secretary                           1994
Stephen G. Schmitz                  Executive Vice President, Chief Investment
                                           Officer and Assistant Secretary                   1995
Catherine F. Long                   Senior Vice PresidentAFinance, Principal
                                           Accounting Officer, Assistant Secretary
                                           and Assistant Treasurer                           1993
</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
</TABLE>
                               Assistant Treasurer

         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.

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 60, 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.
                                       13
<PAGE>
         John R.  Barravecchia,  age 41, 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 40, 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 44,  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 admitted to the
Iowa, Nebraska and Colorado bars.

         Stephen   G.   Schmitz,   age   42,   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 40, 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  
                                       14
<PAGE>
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  1996  and  Forms  5 and
amendments thereto furnished to the  Co-Registrants  with respect to fiscal year
ended December 31, 1996 (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 1996.

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
1996.

         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.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

         As of March 14, 1997,  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 14, 1997. None of the directors and officers of the General
Partner's corporate general partner, PCMC, owned any Units as of March 14, 1997.
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  
                                       15
<PAGE>
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, 1996
                    and 1995
                  Consolidated Statements of Income for the years
                    ended December 31, 1996, 1995 and 1994
                  Consolidated  Statements  of Changes In Partners'  Capital for
                    the years ended December 31, 1996, 1995 and 1994
                  Consolidated Statements of Cash Flows for the years
                    ended December 31, 1996, 1995 and 1994
                  Notes to Consolidated Financial Statements

                  FFCA Investor Services Corporation 86-B

                  Report of independent public  accountants  
                  Balance Sheet as of December 31, 1996 
                  Notes to Balance Sheet

         2.       Financial Statement Schedules.

                  Schedule III-Schedule of Real Estate and Accumulated
                    Depreciation as of December 31, 1996

                  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.
                                       16
<PAGE>
         3.       Exhibits.

                  99.  Annual  Portfolio  Valuation of Cushman & Wakefield as of
                        December 31, 1996.

                           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 FFCA             3-D
                           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>
                           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 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.
                                       17
<PAGE>
         (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, 1996.
                                       18
<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 19, 1997                            By /s/ Morton H. Fleischer
                                                    -----------------------
                                                    Morton H. Fleischer, 
                                                    General Partner

                                        By       PERIMETER  CENTER  MANAGEMENT
                                                 COMPANY, 
                                                 Corporate General Partner


Date:  March 19, 1997                            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 19, 1997                   By /s/ Morton H. Fleischer
                                           -----------------------
                                           Morton H. Fleischer, President, Chief
                                           Executive Officer and Director



Date:  March 19, 1997                   By /s/ John R. Barravecchia
                                           ------------------------
                                           John R. Barravecchia, Executive Vice 
                                           President, Chief Financial Officer, 
                                           Treasurer and Assistant Secretary
<PAGE>
Date:  March 19, 1997                   By /s/ Catherine F. Long
                                           ---------------------
                                           Catherine F. Long, Senior Vice 
                                           PresidentA 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 19, 1997                   By /s/ Morton H. Fleischer
                                           -----------------------
                                           Morton H. Fleischer, Sole Director




Date:  March 19, 1997                   By /s/ John R. Barravecchia
                                           ------------------------
                                           John R. Barravecchia, President, 
                                           Secretary, Treasurer, Principal 
                                           Financial Officer and Principal 
                                           Accounting Officer
<PAGE>
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,  1996 and  1995,  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,  1996.  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, 1996 and 1995,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1996 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  of  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 the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.


/s/ Arthur Andersen LLP

Phoenix, Arizona,

     January 3, 1997.
<PAGE>
            PARTICIPATING INCOME PROPERTIES 1986, L.P. AND AFFILIATE
            --------------------------------------------------------

            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1996 AND 1995
            --------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                       1996                  1995
                                                                                   ------------          ------------

                                                        ASSETS
                                                        ------
<S>                                                                                <C>                   <C>         
CASH AND CASH EQUIVALENTS                                                          $  2,346,371          $  3,649,977

RECEIVABLES FROM LESSEES                                                                149,803               144,183

SECURED NOTES RECEIVABLE                                                                131,323               157,911

PROPERTY SUBJECT TO OPERATING LEASES (Note 3)                                        26,131,515            28,426,841
                                                                                   ------------          ------------

                  Total assets                                                      $28,759,012           $32,378,912
                                                                                   ============          ============


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

DISTRIBUTION PAYABLE TO LIMITED PARTNERS (Note 1)                                  $  1,321,426          $  3,438,656

PAYABLE TO GENERAL PARTNER                                                               10,304                17,705

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES                                                 49,704                61,088

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

                  Total liabilities                                                   1,495,834             3,631,849
                                                                                   ------------          ------------

MINORITY INTEREST (Note 1)                                                              (14,923)              (13,436)
                                                                                   ------------          ------------

PARTNERS' CAPITAL (DEFICIT):
      General partner                                                                  (158,058)             (143,234)
      Limited partners                                                               27,436,159            28,903,733
                                                                                   ------------          ------------

                  Total partners' capital                                            27,278,101            28,760,499
                                                                                   ------------          ------------

                  Total liabilities and partners' capital                           $28,759,012           $32,378,912
                                                                                   ============          ============
</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, 1996, 1995 AND 1994
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                                1996                    1995                  1994
                                                             ----------              ----------            ----------
<S>                                                          <C>                     <C>                   <C>       
REVENUES:
      Rental                                                 $4,295,373              $4,314,524            $4,475,319
      Participating rentals                                   1,818,632               1,894,911             1,968,580
      Interest and other                                         99,868                 197,275                82,470
      Gain on sale of property                                   75,958                 157,286               653,477
                                                             ----------              ----------            ----------

                                                              6,289,831               6,563,996             7,179,846
                                                             ----------              ----------            ----------

EXPENSES:
      General partner fees  (Note 5)                            543,553                 558,712               566,887
      Depreciation                                            1,559,843               1,863,412             2,011,437
      Operating                                                 168,215                 192,484               221,152
                                                             ----------              ----------            ----------

                                                              2,271,611               2,614,608             2,799,476
                                                             ----------              ----------            ----------

MINORITY INTEREST IN INCOME  (Note 1)                             4,702                   4,608                 5,121
                                                             ----------              ----------            ----------

NET INCOME                                                   $4,013,518              $3,944,780            $4,375,249
                                                             ==========              ==========            ==========


NET INCOME ALLOCATED TO  (Note 1):
      General partner                                        $   40,135              $   39,448            $   43,752
      Limited partners                                        3,973,383               3,905,332             4,331,497
                                                             ----------              ----------            ----------

                                                             $4,013,518              $3,944,780            $4,375,249
                                                             ==========              ==========            ==========

NET INCOME PER LIMITED PARTNERSHIP
      UNIT  (based on 51,687 units held by
      limited partners)                                          $76.87                  $75.56                $83.80
                                                                 ======                  ======                ======
</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, 1996, 1995 AND 1994
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                                General              Limited
                                                                Partner              Partners                Total
                                                              ----------           -----------            -----------
<S>                                                           <C>                  <C>                    <C>        
BALANCE,  December 31, 1993                                   $(112,623)           $33,984,146            $33,871,523

      Net income                                                 43,752              4,331,497              4,375,249

      Distributions to partners,
           cash from operations                                 (57,319)            (5,674,532)            (5,731,851)
                                                              ---------            -----------            -----------

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
                                                              =========            ===========            ===========
</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, 1996, 1995 AND 1994
              ----------------------------------------------------
<TABLE>
<CAPTION>
                                                                             1996             1995             1994
                                                                         -----------      -----------      -----------
<S>                                                                      <C>              <C>              <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                           $ 4,013,518      $ 3,944,780      $ 4,375,249
    Adjustments to net income:
        Depreciation                                                       1,559,843        1,863,412        2,011,437
        Gain on sale of property                                             (75,958)        (157,286)        (653,477)
        Minority interest in income                                            4,702            4,608            5,121
        Change in assets and liabilities:
          Decrease (increase) in receivables from lessees                     (5,620)          10,817          (10,000)
          Increase (decrease) in payable to general partner                   (7,401)          17,705             -
          Increase (decrease) in accounts payable
             and accrued liabilities                                         (11,384)         (49,309)          61,034
          Decrease in rental deposits                                           -                -            (634,300)
                                                                         -----------      -----------      -----------

             Net cash provided by operating activities                     5,477,700        5,634,727        5,155,064
                                                                         -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property                                           811,441          207,818        2,108,409
    Principal collections on secured note receivable                          26,588            7,412            6,709
                                                                         -----------      -----------      -----------

             Net cash provided by investing activities                       838,029          215,230        2,115,118
                                                                         -----------      -----------      -----------

CASH FLOWS FOR FINANCING ACTIVITIES:
    Partner distributions declared (Note 1)                               (5,495,916)      (5,649,202)      (5,731,851)
    Return of capital to limited partners declared (Note 1)                     -          (2,050,000)            -
    Increase (decrease) in distribution payable                           (2,117,230)       2,072,402          (22,924)
    Distributions to minority interest                                        (6,189)          (6,312)          (6,479)
                                                                         -----------      -----------      -----------

             Net cash used in financing activities                        (7,619,335)      (5,633,112)      (5,761,254)
                                                                         -----------      -----------      -----------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                      (1,303,606)         216,845        1,508,928

CASH AND CASH EQUIVALENTS, beginning of year                               3,649,977        3,433,132        1,924,204
                                                                         -----------      -----------      -----------

CASH AND CASH EQUIVALENTS, end of year                                   $ 2,346,371      $ 3,649,977      $ 3,433,132
                                                                         ===========      ===========      ===========
</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, 1996 and 1995
                           --------------------------

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

         Participating Income Properties 1986, L.P. (the Partnership) was formed
on June 23, 1986 under the Delaware  Revised Uniform Limited  Partnership Act to
invest as a co-general  partner with Franchise Finance  Corporation of America I
(FFCA I) in FFCA/PIP 1986 Property Company, a Delaware general  partnership (the
Company).  FFCA I sold its  interest in the Company on May 31, 1994 to Perimeter
Center Management Company (PCMC). The general partner of the Partnership is FFCA
Management Company Limited  Partnership (the General Partner) of which PCMC is a
general partner.  The 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, 1996 and 1995,  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
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,
         therefore,  the  limited  partner  Adjusted  Capital  Contribution,  as
         defined in the Partnership  agreement,  at December 31, 1996 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>
                                                                  1996                  1995                  1994
                                                               ----------            ----------            ----------
<S>                                                            <C>                   <C>                   <C>       
         Net income                                            $4,013,518            $3,944,780            $4,375,249
         Adjustments to reconcile net income to
             cash distributions declared:
                Depreciation                                    1,559,843             1,863,412             2,011,437
                Gain on sale of property                          (75,958)             (157,286)             (653,477)
                Change in minority interest                        (1,487)               (1,704)               (1,358)
                                                               ----------            ----------            ----------

                   Cash distributions declared
                      from operations                          $5,495,916            $5,649,202            $5,731,851
                                                               ==========            ==========            ==========
</TABLE>
<PAGE>
         The 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 Company in
which the Partnership holds a substantial  interest,  as discussed in Note 1. In
addition,  the  Partnership has the right to remove the other general partner of
the  Company  with  the  consent  of  more  than  50% of the  limited  partners'
interests.  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  $2,210,317  and  $3,335,997  at  December  31,  1996  and  1995,
respectively, and bank repurchase agreements (which are collateralized by United
States  Treasury and Government  obligations)  of $125,074 at December 31, 1995.
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, 1996 and
1995:
                                              1996                  1995
                                          -----------           -----------
     Land                                 $ 6,773,272           $ 7,021,917
     Buildings                             29,669,322            29,669,322
     Equipment                                626,781             3,969,303
                                          -----------           -----------
                                           37,069,375            40,660,542
     Less - Accumulated depreciation       10,937,860            12,233,701
                                          -----------           -----------

                                          $26,131,515           $28,426,841
                                          ===========           ===========

         Lease agreements provide for monthly base rentals equal to a percentage
of the property's  cost. As additional  rent, the Company  receives a portion of
the  operating  revenues of the lessee equal to a percentage  of gross  receipts
(participating  rentals)  from travel  plaza  facilities,  fuel sales and travel
plaza lodging  facilities (one of the travel plazas operated a lodging  facility
which was sold in October  1994).  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 
<PAGE>
value or cost) at any time  after the first ten years of the  lease.  Of the two
equipment leases remaining at December 31, 1996, one will expire and the related
equipment  will be sold to the lessee in January 1998 and the other lease is not
subject to a purchase  option.  During the year ended December 31, 1996, 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,  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, 1996, are as follows:

         Year Ending December 31,
         ------------------------
         1997                                                 $ 4,289,000
         1998                                                   4,289,000
         1999                                                   4,289,000
         2000                                                   4,289,000
         2001                                                   4,289,000
         Thereafter                                            26,793,000
                                                              -----------

         Total minimum future rentals                         $48,238,000
                                                              ===========

         The General Partner, the 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, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
                                                                  1996                  1995                  1994
                                                               ----------            ----------            ----------
         <S>                                                   <C>                   <C>                   <C>       
         Net income for financial reporting purposes           $4,013,518            $3,944,780            $4,375,249
         Differences for tax purposes in:
             Depreciation                                         765,189               965,142               973,733
             Gain on sale and other                                17,534              (375,409)             (200,666)
                                                               ----------            ----------            ----------

         Taxable income to partners                            $4,796,241            $4,534,513            $5,148,316
                                                               ==========            ==========            ==========
</TABLE>
For  Federal  income tax  reporting  purposes,  taxable  income to  partners  is
reported on the accrual basis of accounting and is classified as follows:
<TABLE>
<CAPTION>
                                                                  1996                  1995                  1994
                                                               ----------            ----------            ----------
         <S>                                                   <C>                   <C>                   <C>       
         Ordinary income                                       $4,796,241            $4,534,513            $4,931,566
         Long-term capital gain                                    -                       -                  216,750
                                                               ----------            ----------            ----------
                                                               $4,796,241            $4,534,513            $5,148,316
                                                               ==========            ==========            ==========
</TABLE>
<PAGE>
         At December 31,  1996,  the tax bases of the  Partnership's  assets and
liabilities  exceed the amounts  recorded for  financial  reporting  purposes by
$4,133,476.  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 1996, 1995 and 1994, fees paid
to the General Partner were as follows:
<TABLE>
<CAPTION>
                                                                   1996                  1995                  1994
                                                                 --------              --------              --------
         <S>                                                     <C>                   <C>                   <C>     
         Disbursable cash fee                                    $543,553              $558,712              $566,887
                                                                 ========              ========              ========
</TABLE>
         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 $30,001 in 1996,
$29,301 in 1995 and $32,316 in 1994 for such expenses.
<PAGE>
                                                                    SCHEDULE III
                                                                     Page 1 of 2

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

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

                            AS OF DECEMBER 31, 1996
                            -----------------------
<TABLE>
<CAPTION>
                                      Initial Cost to Partnership and
                                     Gross Amount at December 31, 1996                 Accumulated Depreciation
                            ---------------------------------------------------  --------------------------------------
                                                                                                                            Date
Restaurant Location            Land        Buildings    Equipment      Total       Buildings    Equipment      Total      Acquired
-------------------         -----------  ------------  ----------  ------------  ------------  ----------  ------------  ----------
<S>                         <C>          <C>           <C>         <C>           <C>           <C>         <C>           <C> 
ELOY,           ARIZONA     $   458,740  $  3,558,260  $     -     $  4,017,000  $  1,247,862  $     -     $  1,247,862  Aug.  1988
THOUSAND PALMS, CALIFORNIA      809,050     2,757,950        -        3,567,000       976,774        -          976,774  July  1988
BOISE,          IDAHO         1,007,082     1,213,244        -        2,220,326       505,518        -          505,518  Jan.  1987
POST FALLS,     IDAHO           351,320     1,818,680        -        2,170,000       757,783        -          757,783  Jan.  1987
CLIVE,          IOWA            307,250     6,191,750        -        6,499,000     2,192,911        -        2,192,911  July  1988
TRUXTON,        MISSOURI        403,600     3,803,400        -        4,207,000     1,347,038        -        1,347,038  July  1988
BUTTE,          MONTANNA        242,710     1,631,290     259,000     2,133,000       607,753     203,962       811,715  July  1987
AMARILLO,       TEXAS         1,326,000     2,814,000        -        4,140,000       874,321        -          874,321  June  1988
ELLENSBURG,     WASHINGTON      533,040     1,266,113        -        1,799,153       456,469        -          456,469  Sept. 1987
EVANSTON,       WYOMING         622,640     1,188,475     367,781     2,178,896       247,599     318,335       565,934  Dec.  1987*
CHEYENNE,       WYOMING         711,840     3,426,160        -        4,138,000     1,201,535        -        1,201,535  Aug.  1988
                            -----------  ------------  ----------  ------------  ------------  ----------  ------------

                     Total  $ 6,773,272  $ 29,669,322  $  626,781  $ 37,069,375  $ 10,415,563  $  522,297  $ 10,937,860
                            ===========  ============  ==========  ============  ============  ==========  ============
</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, 1996
                             -----------------------

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 1996, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                                                       Cost              Depreciation
                                                                                   -----------           ------------

         <S>                                                                       <C>                    <C>        
         Balance, December 31, 1993                                                $45,143,831            $11,272,587
                Cost of real estate sold                                            (1,998,029)              (581,535)
                Cost of equipment sold                                                (300,000)              (261,562)
                Depreciation expense                                                     -                  2,011,437
                                                                                   -----------            -----------

         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
                                                                                   ===========            ===========
</TABLE>
<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, 1996. 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, 1996, in conformity with generally
accepted accounting principles.




/s/ Arthur Andersen LLP

Phoenix, Arizona,
     January 3, 1997.
<PAGE>
                     FFCA INVESTOR SERVICES CORPORATION 86-B
                     ---------------------------------------


                        BALANCE SHEET - DECEMBER 31, 1996
                        ---------------------------------

<TABLE>
<CAPTION>
                                                      ASSETS
<S>                                                                                                          <C> 
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
                                                                                                             ====
</TABLE>
       The accompanying notes are an integral part of this balance sheet.
<PAGE>
                     FFCA INVESTOR SERVICES CORPORATION 86-B
                     ---------------------------------------


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

                                DECEMBER 3l, l996
                                -----------------


(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
                             -----------------------



<TABLE>
<CAPTION>
                                                                                                              Sequentially
                                            Exhibit                                                           Numbered Page
                                            -------                                                           -------------
                  <S>      <C>                                                           
                  99.      Annual Portfolio Valuation of Cushman & Wakefield as 
                           of December 31, 1996.
</TABLE>
                  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
                           FFCA Investor Services Corporation 86-B, as filed                 3-D
                           with the  Secretary  of State of Delaware on June 23,
                           1986.

                           Bylaws of FFCA Investor Services Corporation 86-B.                3-E
</TABLE>

                  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 10(e) to the Co-Registrants'
<PAGE>
         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.