UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q





|X | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
|- | ------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                     
|o | 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: 0-21606





InLand Capital Fund, L.P.

(Exact name of registrant as specified in its charter)



|Delaware                 | 36-3767977                          
|------------------------ | ------------------------------------
|(State of Incorporation) | (I.R.S. Employer Identification No.)







2901 Butterfield Road, Oak Brook, IL  60523

(Address of principal executive offices)(Zip Code)



630-218-8000

(Registrants telephone number, including area code)







Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days.

Yes X   No  o



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes q   No  X



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes q   No  X











-1-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 2005 and December 31, 2004
(unaudited)
Assets





|                                                                                                                                                                                                |   | 2005       | 2004      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | ----------
|Current assets:                                                                                                                                                                                 |   |            |           
|Cash and cash equivalents                                                                                                                                                                       | $ | 12,871,552 | 7,679,088 
|Accrued interest and other receivables                                                                                                                                                          |   | 20,887     | 10,242    
|Other current assets                                                                                                                                                                            |   | 5,950      | 7,942     
|                                                                                                                                                                                                |   |            |           
|Total current assets                                                                                                                                                                            |   | 12,898,389 | 7,697,272 
|                                                                                                                                                                                                |   |            |           
|Other assets                                                                                                                                                                                    |   | 238,075    | 221,266   
|Investment properties and improvements (including acquisition fees paid   to Affiliates of $28,475 and $191,267 at September 30, 2005 and   December 31, 2004, respectively) (Notes 1, 2 and 3) |   | 1,300,784  | 4,207,469 
|                                                                                                                                                                                                |   |            |           
|Total assets                                                                                                                                                                                    | $ | 14,437,248 | 12,126,007

See accompanying notes to financial statements.



-2-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 2005 and December 31, 2004
(unaudited)
Liabilities and Partners' Capital





|                                                                                                                                                                                                        |   | 2005         | 2004        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ------------
|Current liabilities:                                                                                                                                                                                    |   |              |             
|Accounts payable                                                                                                                                                                                        | $ | 306,122      | 419,683     
|Accrued real estate taxes                                                                                                                                                                               |   | 1,839        | 11,243      
|Due to Affiliates (Note 2)                                                                                                                                                                              |   | 27,681       | 16,377      
|Unearned income                                                                                                                                                                                         |   | 4,996        | 4,996       
|                                                                                                                                                                                                        |   |              |             
|Total liabilities                                                                                                                                                                                       |   | 340,638      | 452,299     
|                                                                                                                                                                                                        |   |              |             
|Partners' capital:                                                                                                                                                                                      |   |              |             
|General Partner:                                                                                                                                                                                        |   |              |             
|Capital contribution                                                                                                                                                                                    |   | 500          | 500         
|Cumulative cash distributions                                                                                                                                                                           |   | (6,449,678)  | (6,131,911) 
|Cumulative net income                                                                                                                                                                                   |   | 6,461,802    | 6,144,753   
|                                                                                                                                                                                                        |   |              |             
|                                                                                                                                                                                                        |   | 12,624       | 13,342      
|                                                                                                                                                                                                        |   |              |             
|Limited Partners:                                                                                                                                                                                       |   |              |             
|Units of $1,000. Authorized 60,000 Units, 32,337 outstanding at       September 30, 2005 and December 31, 2004, (net of offering costs of       $4,466,765, of which $3,488,574 was paid to Affiliates) |   | 27,876,265   | 27,876,265  
|Cumulative cash distributions                                                                                                                                                                           |   | (63,163,321) | (56,163,321)
|Cumulative net income                                                                                                                                                                                   |   | 49,371,042   | 39,947,422  
|                                                                                                                                                                                                        |   |              |             
|                                                                                                                                                                                                        |   | 14,083,986   | 11,660,366  
|                                                                                                                                                                                                        |   |              |             
|Total Partners' capital                                                                                                                                                                                 |   | 14,096,610   | 11,673,708  
|                                                                                                                                                                                                        |   |              |             
|Total liabilities and Partners' capital                                                                                                                                                                 | $ | 14,437,248   | 12,126,007  



See accompanying notes to financial statements.



-3-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 2005 and 2004
(unaudited)

|                                                                                     |   | Three months       | Three months       | Nine months        | Nine months       
|------------------------------------------------------------------------------------ | - | ------------------ | ------------------ | ------------------ | ------------------
|                                                                                     |   | ended              | ended              | ended              | ended             
|                                                                                     |   | September 30, 2005 | September 30, 2004 | September 30, 2005 | September 30, 2004
|Income:                                                                              |   |                    |                    |                    |                   
|Sale of investment property
    (Notes 1 and 3)                                      | $ | -                  | 4,001,303          | 12,798,146         | 28,353,826        
|Recognition of deferred gain on     sale of investments in land and     improvements |   | -                  | -                  | -                  | 477,783           
|Rental income (Note 4)                                                               |   | 369                | 22,251             | 17,573             | 65,389            
|Interest income                                                                      |   | 93,346             | 422,523            | 158,911            | 483,669           
|Other income                                                                         |   | 900                | 1,450              | 7,699              | 4,400             
|                                                                                     |   |                    |                    |                    |                   
|                                                                                     |   | 94,615             | 4,447,527          | 12,982,329         | 29,385,067        
|                                                                                     |   |                    |                    |                    |                   
|Expenses:                                                                            |   |                    |                    |                    |                   
|Cost of investment property sold                                                     |   | -                  | 1,577,259          | 2,985,704          | 8,515,704         
|Professional services to Affiliates                                                  |   | 6,913              | 3,641              | 16,024             | 20,926            
|Professional services to non-    affiliates                                          |   | 2,272              | 4,768              | 41,996             | 40,551            
|General and administrative     expenses to Affiliates                                |   | 3,001              | 4,073              | 16,426             | 15,935            
|General and administrative     expenses to non-affiliates                            |   | 10,930             | 10,436             | 122,348            | 179,967           
|Marketing expenses to Affiliates                                                     |   | 2,373              | 13,459             | 11,337             | 19,712            
|Marketing expenses to non-    affiliates                                             |   | 6,149              | 8,331              | 26,085             | 33,324            
|Land operating expenses to     Affiliates                                            |   | -                  | 3,872              | 1,032              | 13,844            
|Land operating expenses to non-    affiliates                                        |   | 9,886              | 25,252             | 20,708             | 20,968            
|Bad debt expense                                                                     |   | -                  | 12,761             | -                  | 12,761            
|                                                                                     |   |                    |                    |                    |                   
|                                                                                     |   | 41,524             | 1,663,852          | 3,241,660          | 8,873,692         
|                                                                                     |   |                    |                    |                    |                   
|Net income                                                                           | $ | 53,091             | 2,783,675          | 9,740,669          | 20,511,375        



See accompanying notes to financial statements.



-4-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and nine months ended September 30, 2005 and 2004
(unaudited)

|                                                                                                                                                                                     |   | Three months       | Three months       | Nine months        | Nine months       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ------------------ | ------------------ | ------------------ | ------------------
|                                                                                                                                                                                     |   | Ended              | ended              | ended              | ended             
|                                                                                                                                                                                     |   | September 30, 2005 | September 30, 2004 | September 30, 2005 | September 30, 2004
|                                                                                                                                                                                     |   |                    |                    |                    |                   
|Net income allocated to:                                                                                                                                                             |   |                    |                    |                    |                   
|General Partner                                                                                                                                                                      | $ | 531                | 3,597              | 317,049            | 3,171,624         
|Limited Partners                                                                                                                                                                     |   | 52,560             | 2,780,078          | 9,423,620          | 17,339,751        
|                                                                                                                                                                                     |   |                    |                    |                    |                   
|Net income                                                                                                                                                                           | $ | 53,091             | 2,783,675          | 9,740,669          | 20,511,375        
|                                                                                                                                                                                     |   |                    |                    |                    |                   
|Net income allocated to the one General Partner Unit                                                                                                                                 | $ | 531                | 3,597              | 317,049            | 3,171,624         
|                                                                                                                                                                                     |   |                    |                    |                    |                   
|Net income per Unit allocated to   Limited Partners per weighted   average Limited Partnership   Units of 32,337 for the three and   nine months ended September 30,   2005 and 2004 | $ | 1.63               | 85.97              | 291.42             | 536.22            

See accompanying notes to financial statements.



-5-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 2005 and 2004
(unaudited)

|                                                                                       |   | 2005        | 2004        
|-------------------------------------------------------------------------------------- | - | ----------- | ------------
|Cash flows from operating activities:                                                  |   |             |             
|Net income                                                                             | $ | 9,740,669   | 20,511,375  
|Adjustments to reconcile net income to net cash 
        used in operating activities: |   |             |             
|Gain on sale of investment properties                                                  |   | (9,812,442) | (19,838,122)
|Recognition of deferred gain                                                           |   | -           | (477,783)   
|Bad debt expense                                                                       |   | -           | 12,761      
|Changes in assets and liabilities:                                                     |   |             |             
|Accrued interest and other receivables                                                 |   | (10,645)    | (433,828)   
|Other current assets                                                                   |   | 1,992       | 2,081       
|Other assets                                                                           |   | -           | (293,202)   
|Accounts payable                                                                       |   | (113,561)   | 386,774     
|Accrued real estate taxes                                                              |   | (9,404)     | (39,344)    
|Due to Affiliates                                                                      |   | 11,304      | 14,548      
|Unearned income                                                                        |   | (16,809)    | (141,719)   
|                                                                                       |   |             |             
|Net cash used in operating activities                                                  |   | (208,896)   | (296,459)   
|                                                                                       |   |             |             
|Cash flows from investing activities:                                                  |   |             |             
|Additions to investment properties                                                     |   | (79,019)    | (154,868)   
|Principal payments received                                                            |   | -           | 846,737     
|Proceeds from sale of investment properties                                            |   | 12,798,146  | 28,353,826  
|                                                                                       |   |             |             
|Net cash provided by investing activities                                              |   | 12,719,127  | 29,045,695  
|                                                                                       |   |             |             
|Cash flows from financing activities:                                                  |   |             |             
|Distributions                                                                          |   | (7,317,767) | (20,000,000)
|                                                                                       |   |             |             
|Net cash used in financing activities                                                  |   | (7,317,767) | (20,000,000)
|                                                                                       |   |             |             
|Net increase in cash and cash equivalents                                              |   | 5,192,464   | 8,749,236   
|                                                                                       |   |             |             
|Cash and cash equivalents at beginning of period                                       |   | 7,679,088   | 1,402,121   
|                                                                                       |   |             |             
|Cash and cash equivalents at end of period                                             | $ | 12,871,552  | 10,151,357  





See accompanying notes to financial statements.



-6-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 2005



Readers of this Quarterly Report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2004, which are included in the Partnership's 2004 Annual Report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this Report.

(1)  Organization and Basis of Accounting

InLand Capital Fund, L.P. (the "Partnership") was organized on June 21, 1991 by the filing of a Certificate of Limited Partnership under the Revised Uniform Limited Partnership Act of the State of Delaware.  On December 13, 1991, the Partnership commenced an offering of 60,000 limited partnership units or Units pursuant to a Registration under the Securities Act of 1933. Inland Real Estate Investment Corporation is the General Partner.   The offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of  $500.  All of the holders of these Units have been admitted to the Partnership. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of September 30, 2005, the Partnership had repurchased and canceled a total of 62 Units for $56,253 from various Limited Partners through the unit repurchase program.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the period presented herein.  Results of interim periods are not necessarily indicative of results to be expected for the year.

The Partnership uses the area method of allocation, which approximates the relative sales method of allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.





-7-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2005
(unaudited)

(2)  Transactions with Affiliates

The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership.  Such costs are included in professional services and general and administrative expenses to affiliates, of which $10,356 and $6,792 was unpaid as of September 30, 2005 and December 31, 2004, respectively.

The General Partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost to the Partnership of undeveloped land annually, limited to a cumulative total over the life of the Partnership of 2% of the land's original cost to the Partnership. As of March 31, 2005, the Partnership had met the limit.  Such fees of $1,032 and $13,844 have been incurred for the nine months ended September 30, 2005 and 2004, respectively and are reported as land operating expenses to affiliates on the statement of operations, all of which was paid as of September 30, 2005.

An affiliate of the General Partner performed sales marketing and advertising services for the Partnership and was reimbursed (as set forth under terms of the partnership agreement) for direct costs. Such costs of $11,337 and $19,712 have been incurred and are included in marketing expenses to affiliates for the nine months ended September 30, 2005 and 2004, respectively.

An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the partnership agreement) for salaries and direct costs. For the nine months ended September 30, 2005, the Partnership incurred $64,861 of such costs. The affiliate did not take a profit on any project. Such costs are included in investment properties of which $17,325 and $9,585 was unpaid at September 30, 2005 and December 31, 2004, respectively.





INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2005 (unaudited)

(3)  Investment Properties

|       |          |                       |                | Initial Costs
|------ | -------- | --------------------- | -------------- | -------------
|Parcel | Illinois | Gross Acres Purchased | Purchase/Sales | Original     
|#      | County   | /(Sold)               | Date           | Costs        
|1      | Kendall  | 108.8960              | 07/22/92       | $   707,566  
|       |          | (108.8960)            | 01/11/02       |              
|       |          |                       |                |              
|2      | McHenry  | 201.0000              | 11/09/93       | 2,020,314    
|       |          | (17.7420)             | 08/02/95       |              
|       |          | (8.6806)              | Var 1997       |              
|       |          | (1.9290)              | Var 1998       |              
|       |          | (13.5030)             | Var 1999       |              
|       |          | (3.6400)              | 11/29/01       |              
|       |          | (10.1600)             | Var 2002       |              
|       |          | (2.0320)              | 06/07/04       |              
|       |          | (114.8134)            | 08/12/04       |              
|       |          | (5.7000)              | Var 2005       |              
|       |          |                       |                |              
|3      | Will     | 34.0474               | 03/04/94       | 1,235,830    
|       |          | (34.0474)             | 02/04/99       |              
|       |          |                       |                |              
|4      | Will     | 86.9195               | 03/30/94       | 1,778,820    
|       |          | (2.3050)              | Var 1997       |              
|       |          | (3.3600)              | Var 1998       |              
|       |          | (1.0331)              | 08/19/99       |              
|       |          | (60.1000)             | Var 2001       |              
|       |          | (20.1214)             | 11/01/04       |              
|       |          |                       |                |              
|5      | LaSalle  | 190.9600              | 04/01/94       | 532,000      
|       |          | (2.0600)              | 04/08/98       |              
|       |          | (188.9000)            | 10/07/99       |              
|       |          |                       |                |              
|6      | DeKalb   | 59.0800               | 05/11/94       | 670,207      
|       |          | (4.9233)              | Apr 1998       |              
|       |          | (54.1567)             | 07/23/98       |              
|       |          |                       |                |              
|7      | Kendall  | 200.8210              | 07/28/94       | 1,506,158    
|       |          | (168.1740)            | 09/18/03       |              
|       |          | (8.0000)              | 06/21/05       |              
|       |          |                       |                |              
|8      | Kendall  | 133.0000              | 08/17/94       | 1,300,000    
|       |          | (133.0000)            | 04/11/05       |              
|       |          |                       |                |              



-8-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2005 (unaudited)

(3)  Investment Properties (continued)



|       |          |                       |                |               | Initial Costs
|------ | -------- | --------------------- | -------------- | ------------- | -------------
|Parcel | Illinois | Gross Acres Purchased | Purchase/Sales | Original      | Acquisition  
|#      | County   | /(Sold)               | Date           | Costs         | Costs        
|       |          |                       |                |               |              
|9      | LaSalle  | 335.9600              | 08/30/94       | 993,441       | 79,329       
|       |          | (335.9600)            | 04/18/03       |               |              
|10     | Kendall  | 223.7470              | 09/16/94       | $   2,693,025 | 205,660      
|       |          | (2.9770)              | 11/03/99       |               |              
|       |          | (127.4000)            | 08/14/02       |               |              
|       |          | (84.39)               | 01/09/04       |               |              
|       |          |                       |                |               |              
|10A(a) | Kendall  | 7.0390                | 09/16/94       | 206,975       | 15,806       
|       |          | (7.0390)              | 04/21/95       |               |              
|       |          |                       |                |               |              
|11     | Kane     | 123.0000              | 09/26/94       | 1,353,000     | 75,551       
|       |          | (123.000)             | 11/30/00       |               |              
|       |          |                       |                |               |              
|12     | Kendall  | 110.2530              | 09/28/94       | 600,001       | 51,220       
|       |          | (59.9050)             | 04/16/01       |               |              
|       |          | (50.3480)             | 09/18/03       |               |              
|       |          |                       |                |               |              
|13     | LaSalle  | 352.7390              | 10/06/94       | 1,032,666     | 91,117       
|       |          | (10.0000)             | 07/27/98       |               |              
|       |          | (342.7390)            | 08/31/98       |               |              
|       |          |                       |                |               |              
|14     | Kendall  | 134.7760              | 10/26/94       | 1,000,000     | 81,674       
|       |          | (10.6430)             | 05/21/99       |               |              
|       |          | (124.1330)            | 12/17/04       |               |              
|       |          |                       |                |               |              
|15     | McHenry  | 169.5400              | 10/31/94       | 2,900,000     | 79,196       
|       |          | (169.5400)            | 02/26/04       |               |              
|       |          |                       |                |               |              
|16     | McHenry  | 207.0754              | 11/30/94       | 1,760,256     | 101,388      
|       |          | (207.0754)            | 02/26/04       |               |              
|       |          |                       |                |               |              
|17     | LaSalle  | 236.4400              | 12/07/94       | 1,060,286     | 74,735       
|       |          | (10.0000)             | 01/27/05       |               |              
|       |          | (226.4400)            | 06/06/05       |               |              



-9-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

September 30, 2005 (unaudited)

(3)  Investment Properties (continued)



|       |          |                       |                | Initial Costs
|------ | -------- | --------------------- | -------------- | -------------
|Parcel | Illinois | Gross Acres Purchased | Purchase/Sales | Original     
|#      | County   | /(Sold)               | Date           | Costs        
|       |          |                       |                |              
|18     | Kendall  | 386.9900              | 11/02/95       |              
|       |          | (386.9900)            | 08/31/98       | 934,993      
|       |          |                       |                |              
|       | Total    |                       |                | $24,285,538  



-10-



INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2005
(unaudited)

(3)  Investment Properties (continued)



(a)

Included in the purchase of Parcel 10 was a house and several outbuildings, located on approximately seven acres, which were sold on April 21, 1995.



(b)

Reconciliation of real estate owned:



|                         |   | September 30, | December 31,
|------------------------ | - | ------------- | ------------
|                         |   | 2005          | 2004        
|                         |   |               |             
|Balance at January 1,    | $ | 4,207,469     | 15,440,821  
|Additions during period  |   | 79,019        | 194,552     
|Sales during period      |   | 2,985,704     | 11,427,904  
|                         |   |               |             
|Balance at end of period | $ | 1,300,784     | 4,207,469   
|                         |   |               |             

(4)  Farm Rental Income

The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned.

As of September 30, 2005, the Partnership had farm leases of generally one year in duration, for approximately 30 acres of the approximately 56 acres owned.



(5) Subsequent Events



In October 2005, the Partnership paid a distribution of $10,000,000 to the Limited Partners and $1,496,000 to the General Partner.





-11-



Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995.  These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.



We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC).  The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330.  The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies."  A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgements in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable, cost allocation and revenue recognition.  These judgements often result from the need to make estimates about the effect of matters that are inherently uncertain.  The purpose of the FRR is to require companies to provide investors with an understanding of how management forms these policies.  Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP.  GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates.  The following disclosure discusses judgements known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value.  If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property.  The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole.  Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.







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The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property. For the nine months ended September 30, 2005, we had recorded no such impairment.



Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate".

Liquidity and Capital Resources
On December 13, 1991, we commenced an offering of 60,000 limited partnership units or units at $1,000 per unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 23, 1993, after we had sold 32,399.28 units, at $1,000 per unit, resulting in $32,399,282 in gross offering proceeds, not including our general partner's capital contribution of $500. All of the holders of these units have been admitted to our partnership.  Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held.

We used $25,945,989 of gross offering proceeds to purchase, on an all-cash basis, 18 parcels of land and one building. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties.  One of the parcels was purchased during 1992, one during 1993, fifteen during 1994 and one during 1995. As of September 30, 2005, we have had multiple sales transactions through which we have disposed of a building and approximately 3,246 acres, or 98%, of the 3,302 acres originally owned. As of September 30, 2005, cumulative distributions to the limited partners have totaled $63,163,321 (which exceeds the original capital) and $6,449,678 to the general partner. Through September 30, 2005, we have used $5,811,491 of working capital for rezoning and other activities and such amount is included in investment properties.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of September 30, 2005, we owned, in whole or in part, three of our original parcels, one of which is leased to a local farmer and is generating sufficient cash flow from the farm lease to cover property taxes and insurance.

At September 30, 2005, we had cash and cash equivalents of $12,871,552, which is available to be used for our costs and liabilities, cash distributions to partners, and other activities with respect to some or all of our land parcels.



During the nine months ended September 30, 2005 we have received net sales proceeds of approximately $12,798,146 from the sales of Parcels 2, 7, 8 and 17. On March 9, 2005, we paid distributions totaling $7,317,767, which includes $7,000,000 paid to the limited partners and $317,767 paid to the general partner.  In addition to these sales which occurred in 2005, we anticipate additional future sales of Parcels 2, 7 and 10, our only remaining s\parcels, in 2005 and 2006, thereby completing the business of the Partnership. However, there can be no assurance that these proposed sales will be completed or that a distribution will be made to the limited partners. Undistributed net sales proceeds will be used to cover our operations, including property upgrades. We will evaluate our cash needs throughout the year to determine future distributions.





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We plan to enhance the value of our remaining land through pre-development activities such as rezoning, annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on a majority of our land investments.  Parcel 2, annexed to the city of McHenry and zoned for a business park, has two phases of improvements complete and sites are being marketed to potential buyers, of which 147 of the 167 lots were sold as of September 30, 2005.  Parcels 7 and 10 have been zoned for commercial use and are being marketed. As of September 30, 2005, approximately 24 acres of Parcel 7 and 8 acres of Parcel 10 remain to be sold.

Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to our administration.  Such costs of $32,450 and $36,861 for the nine months ended September 30, 2005 and September 30, 2004, respectively, are included in professional services and general and administrative expenses to affiliates, of which $10,356 and $6,792 was unpaid as of September 30, 2005 and December 31, 2004, respectively.

Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost  of our undeveloped parcels annually, limited to a cumulative total over our life of 2% of the parcels' original cost to us. As of March 31, 2005, we had met this limit.  Such fees of $1,032 and $13,844 have been incurred for the nine months ended September 30, 2005 and 2004, respectively, all of which was paid as of September 30, 2005.

An affiliate of our general partner performed sales marketing and advertising services for us and was reimbursed  for direct costs. Such costs of $11,337 and $19,712 have been incurred and are included in marketing expenses to affiliates for the nine months ended September 30, 2005 and 2004, respectively.

An affiliate of the general partner performed property upgrades, rezoning, annexation and other activities to prepare our land investments for sale and was reimbursed for salaries and direct costs. For the nine months ended September 30, 2005, the Partnership incurred $64,861 of such costs. The affiliate did not take a profit on any project. Such costs are included in investment properties, of which $17,325 and $9,585 was unpaid at September 30, 2005 and December 31, 2004, respectively.

Results of Operations

As of September 30, 2005, we owned three parcels of land consisting of approximately 56 acres. Of the 56 acres owned, approximately 30 acres are tillable and leased to a local farmer and are generating sufficient cash flow to cover property taxes, insurance and other miscellaneous property expenses.

Sales of investment properties of $12,798,146 and cost of investment properties sold of $2,985,704 for the nine months ended September 30, 2005 are the result of the sales in of Parcels 2, 7, 8 and 17.  Sales of investment properties of $28,353,826 and cost of investment properties sold of $8,515,704 for the nine months ended September 30, 2004 are the result of the sales of Parcels 2, 10, 15 and 16.



In January 2002, we sold approximately 108 acres of Parcel 1 on an installment basis and recorded a deferred gain.  For the nine months ended September 30, 2004, we received the balance of the principal outstanding, totaling $838,947, and recognized $477,783 of deferred gain.





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Rental income was $17,573 and $65,389 for the nine months ended September 30, 2005 and 2004, respectively. The decrease is due to decreases in tillable acres as a result of land sales and pre-development activity on our land investments.  The decrease was partially offset by the annual increase in lease amounts from tenants.

General and administrative expenses to non-affiliates were $122,348 and $179,967 for the nine months ended September 30, 2005 and 2004, respectively. The decrease in 2005 is due to a decrease in state taxes payable as a result of land sales.

Land operating expenses to affiliates were $1,032 and $13,844 for the nine months ended September 30, 2005 and 2004, respectively and relate to asset management fees paid. Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost  of our undeveloped parcels annually, limited to a cumulative total over our life of 2% of the parcels' original cost to us. These amounts decrease as acres are sold. As of March 31, 2005, we had met the limit on this fee.

In April 2001, we sold approximately 60 acres of Parcel 12 on an installment basis and recorded a deferred gain. For the nine months ended September 30, 2004, we recorded bad debt expense of $12,761 relating to this receivable. As of December 31, 2004, this mortgage receivable and the related accrued interest receivable and deferred gain were written off.





Subsequent Events



In October 2005, the Partnership paid a distribution of $10,000,000 to the Limited Partners and $1,496,000 to the General Partner.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.





Item 4. Controls and Procedures

Our general partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There were no changes in our internal control over financial reporting that occurred during the nine months ended September 30, 2005 that materially affected, or are reasonably likely to materially affect, our internal control of financial reporting.





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PART II - Other Information



Items 1 through 5 are omitted because of the absence of conditions under which they are required.



Item 6: Exhibits and Reports on Form 8-K



(a)  Exhibits:

31.1 Rule 13a-14(a)/15d-14(a) Certification by principal executive officer

31.2 Rule 13a-14(a)/15d-14(a) Certification by principal financial officer



32.1 Section 1350 Certification by principal executive officer

32.2 Section 1350 Certification by principal financial officer



(b)  Reports on Form 8-K:



None



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SIGNATURES







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







|            | INLAND CAPITAL FUND, L.P.                                
|----------- | ---------------------------------------------------------
|            |                                                          
|By:    Its: | Inland Real Estate Investment Corporation General Partner
|            |                                                          
|            |                                                          
|            |                                                          
|            | /S/ BRENDA G. GUJRAL                                     
|            |                                                          
|By:         | Brenda G. Gujral                                         
|Its:        | President and principal executive officer                
|Date:       | November 10, 2005                                        
|            |                                                          
|            |                                                          
|            |                                                          
|            | /S/ GUADALUPE GRIFFIN                                    
|            |                                                          
|By:         | Guadalupe Griffin                                        
|Its:        | Vice President                                           
|Date:       | November 10, 2005                                        
|            |                                                          
|            |                                                          
|            |                                                          
|            | /S/ KELLY TUCEK                                          
|            |                                                          
|By:         | Kelly Tucek                                              
|Its:        | Vice President and                                       
|            | principal financial officer                              
|Date:       | November 10, 2005                                        
|            |                                                          





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