UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                  For The Fiscal Year Ended December 31, 1998

                                      or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                           Commission File #0-19220

                    Inland Land Appreciation Fund II, L.P.
            (Exact name of registrant as specified in its charter)

       Delaware                                  36-3664407
(State of organization)     (I.R.S. Employer Identification Number)

2901 Butterfield Road, Oak Brook, Illinois      60523
 (Address of principal executive office)       (Zip Code)

Registrant's telephone number, including area code:  630-218-8000

          Securities registered pursuant to Section 12(b) of the Act:

Title of each class:          Name of each exchange on which registered:
       None                                      None

       Securities registered pursuant to Section 12(g) of the Act:
                           LIMITED PARTNERSHIP UNITS
                               (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months  (or  for  such  shorter  period that the registrant was
required to  file  such  reports),  and  (2)  has  been  subject  to such filing
requirements for the past 90 days.  Yes X  No   

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 registrant's 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 nonaffiliates of
the registrant. Not applicable.

The Prospectus of the  Registrant  dated  October  25, 1989, as supplemented and
filed pursuant to Rule 424(b)  and  424(c)  under  the Securities Act of 1933 is
incorporated by reference in Parts I, II  and  III of this Annual Report on Form
10-K.


                                      -1-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)



                               TABLE OF CONTENTS



                                    Part I                                Page
                                    ------                                ----
  Item  1. Business......................................................   3

  Item  2. Properties....................................................   5

  Item  3. Legal Proceedings.............................................   5

  Item  4. Submission of Matters to a Vote of Security Holders...........   5


                                    Part II
                                    -------
  Item  5. Market for Partnership's Limited Partnership
            Units and Related Security Holder Matters....................   6

  Item  6. Selected Financial Data.......................................   7

  Item  7. Management's Discussion and Analysis of Financial
            Condition and Results of Operations..........................   8

  Item  8. Financial Statements and Supplementary Data...................  13

  Item  9. Changes in and Disagreements with Independent Auditors on
            Accounting and Financial Disclosure..........................  30


                                   Part III
                                   --------
  Item 10. Directors and Executive Officers of the Registrant............  30

  Item 11. Executive Compensation........................................  36

  Item 12. Security Ownership of Certain Beneficial Owners and
            Management...................................................  37

  Item 13. Certain Relationships and Related Transactions................  37


                                    Part IV
                                    -------
  Item 14. Exhibits, Financial Statement Schedules, and Reports
            on Form 8-K..................................................  38

  SIGNATURES.............................................................  39




                                      -2-


                                    PART I

Item 1. Business

The Registrant, Inland Land Appreciation  Fund II, L.P. (the "Partnership"), is
a limited partnership formed on June 28, 1989, pursuant to the Delaware Revised
Uniform Limited Partnership Act, to  invest  in undeveloped land on an all-cash
basis and realize appreciation of such  land  upon resale. On October 25, 1989,
the Partnership commenced an Offering of 30,000 (subject to increase to 60,000)
Limited  Partnership  Units  ("Units")  at  $1,000  per  Unit,  pursuant  to  a
Registration Statement on  Form  S-11  under  the  Securities  Act  of 1933. On
October 24, 1991, the Partnership terminated  its Offering of Units, with total
sales of 50,476.17 Units, at $1,000 per Unit, resulting in $50,476,170 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.
Inland Real Estate Investment Corporation  is  the General Partner. 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 December 31, 1998, the Partnership has repurchased
a total of 356.65 Units for  $346,239 from various Limited Partners through the
Unit Repurchase  Program.  Under  this  program,  Limited  Partners  may, under
certain circumstances, have  their  Units  repurchased  for  an amount equal to
their Invested Capital.

The Partnership is engaged  in  the  business  of  real estate investment which
management considers to  be  a  single  operating  segment.   A presentation of
information about operating segments would  not be material to an understanding
of the Partnership's business taken as a whole.

The  Partnership  acquired  fee  ownership   of  the  following  real  property
investments:

                                          Gross Acres        Purchase/Sales
      Parcel & Location                  Purchased/Sold           Date      
-----------------------------------  --------------------   ----------------
Parcel 1, McHenry County, Illinois         372.7590             04/25/90

Parcel 2, Kendall County, Illinois          41.1180             07/06/90

Parcel 3, Kendall County, Illinois         120.8170             11/06/90

Parcel 4, Kendall County, Illinois         299.0250             06/28/91

Parcel 5, Kane County, Illinois            189.0468             02/28/91

Parcel 6, Lake County, Illinois             57.3345             04/16/91
                                             (.2580        sold 10/01/94)

Parcel 7, McHenry County, Illinois          56.7094             04/22/91
                                           (12.6506        sold Var 1997)
                                           (15.7041        sold Var 1998)

Parcel 8, Kane County, Illinois            325.3940             06/14/91
                                             (.8700        sold 04/03/96)

Parcel 9, Will County, Illinois              9.8670             08/13/91

Parcel 10, Will County, Illinois           150.6600             08/20/91


                                      -3-


                                          Gross Acres        Purchase/Sales
      Parcel & Location                  Purchased/Sold           Date      
-----------------------------------  --------------------   ----------------
Parcel 11, Will County, Illinois           138.4470             08/20/91
                                          (138.4470        sold 05/03/93)

Parcel 12, Will County, Illinois            44.7320             08/20/91

Parcel 13, Will County, Illinois             6.3420             09/23/91
                                            (6.3420        sold 05/03/93)

Parcel 14, Kendall County, Illinois         44.4030             09/03/91

Parcel 15, Kendall County, Illinois        100.3640             09/04/91
                                            (5.0000        sold 09/01/93)
                                           (11.0000        sold 12/01/94)
                                           (84.3640        sold 08/14/98)

Parcel 16, McHenry County, Illinois        168.9050             09/13/91

Parcel 17, Kendall County, Illinois          3.4620             10/30/91

Parcel 18, McHenry County, Illinois        139.1697             11/07/91

Parcel 19, Kane County, Illinois           436.2360             12/13/91

Parcel 20, Kane & Kendall Counties,
           Illinois                        400.1290             01/31/92

Parcel 21, Kendall County, Illinois         15.0130             05/26/92

Parcel 22, Kendall County, Illinois        391.9590             10/30/92
                                           (10.0000        sold 01/06/94)
                                            (5.5380        sold 01/05/96)

Parcel 23, Kendall County, Illinois        133.4750             10/30/92
                                             (.2676        sold 03/16/93)
                                           (11.5250     donated 07/16/93)
                                           (44.0700        sold Var 1995)
                                            (8.2500        sold Var 1996)
                                            (2.6100        sold Var 1997)
                                           (10.6624        sold Var 1998)

Parcel 24, Kendall County, Illinois          4.3140             01/21/93

Parcel 25, Kendall County, Illinois        656.6870             01/28/93
                                          (656.6870        sold 10/31/95)

Parcel 26, Kane County, Illinois            89.5110             03/10/93

Parcel 27, Kendall County, Illinois         83.5250             03/11/93


Reference is made to Note 4  of  the  Notes  to Financial Statements (Item 8 of
this Annual  Report)  for  additional  descriptions  of  the Partnership's real
property investments.


                                      -4-


The Partnership had purchased  on  an  all-cash  basis, twenty-seven parcels of
undeveloped land and two buildings and is engaged in the rezoning and resale of
the parcels. All of the investments were made in the Chicago metropolitan area.
The anticipated holding period of the land was approximately two to seven years
from the completion of  the  land  portfolio  acquisitions.  As of December 31,
1998, the Partnership has had multiple  sales transactions through which it has
disposed  of  approximately  1,024  acres  of  the  approximately  4,480  acres
originally owned.

The General Partner anticipates  that  land  purchased  by the Partnership will
produce  sufficient  income  to   pay   property  taxes,  insurance  and  other
miscellaneous expenses. Income will  be  derived  through  leases to farmers or
from other activities  compatible  with  undeveloped  land.  A  majority of the
parcels purchased by the  Partnership  consist  of land which generates revenue
from  farming  or  other  leasing  activities.  It  is  not  expected  that the
Partnership will generate cash distributions  to  investors from farm leases or
other activities.

The Partnership had no employees during 1998.

The terms of transactions between the Partnership and Affiliates of the General
Partner of the Partnership are set  forth  in  Item  11 below and Note 3 of the
Notes to Financial Statements (Item 8 of this Annual Report) to which reference
is hereby made for a description of such terms and transactions.


Item 2. Properties

The Partnership owns directly the parcels of  land referred to in Item 1 and in
Note 4 of the Notes to Financial  Statements  (Item 8 of this Annual Report) to
which reference is hereby made for a description of said parcels.


Item 3. Legal Proceedings

The Partnership is not subject to any material pending legal proceedings.


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

There were no matters submitted to a vote of security holders during 1998.

















                                      -5-


                                    PART II


Item 5. Market for  the  Partnership's  Limited  Partnership  Units and Related
        Security Holder Matters

As of December 31, 1998, there were  4,944 holders of Units of the Partnership.
There is no public  market  for  Units  nor  is  it anticipated that any public
market for Units will develop.

Although the Partnership has established  a  Unit Repurchase Program, funds for
the repurchase of Units  are  limited.  Reference  is  made to "Unit Repurchase
Program" on pages 19-20 of the  Prospectus of the Partnership dated October 25,
1989, which is incorporated herein by  reference.  As of December 31, 1998, the
Partnership had approximately $268,200 available for the repurchase of Units.











































                                      -6-


Item 6. Selected Financial Data


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)


       For the years ended December 31, 1998, 1997, 1996, 1995 and 1994

                 (not covered by Independent Auditors' Report)


                           1998       1997       1996       1995       1994
                           ----       ----       ----       ----       ----

Total assets.......... $40,923,656 43,263,842 46,763,097 46,003,464 44,168,179
                       =========== ========== ========== ========== ==========

Total income.......... $ 6,260,631  2,174,319  2,359,290  7,995,470    943,990
                       =========== ========== ========== ========== ==========

Net income............ $ 2,115,321    518,404    684,711  2,885,478    254,760
                       =========== ========== ========== ========== ==========
Net income allocated
  to the one General
  Partner Unit........ $   167,690         60      1,671    329,498        360
                       =========== ========== ========== ========== ==========
Net income allocated
  per Limited
  Partnership Unit(b). $ 1,947,631      10.33      13.61      50.89       5.06
                       =========== ========== ========== ========== ==========
Distributions per
  Limited Partnership
  Unit from sales
  (b)(c).............. $     99.71      79.72       -         19.91       -
                       =========== ========== ========== ========== ==========
Weighted average
  Limited Partnership
  Units...............   50,144.40  50,172.77  50,193.51  50,223.70  50,246.34
                       =========== ========== ========== ========== ==========


(a)  The above selected financial data  should  be read in conjunction with the
     financial statements and related notes  appearing elsewhere in this Annual
     Report.

(b)  The net income per Unit and distributions  per Unit data is based upon the
     weighted average number of Units outstanding.

(c)  Distributions from  sales  represents  a  return  of  Invested Capital, as
     defined in the Partnership Agreement.

(d)  Reference is made to Note 4  of  the Notes to Financial Statements (Item 8
     of this  Annual  Report)  for  a  description  of  the  Partnership's land
     acquisitions and dispositions.



                                      -7-


Item 7.  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 annual report on
Form 10-K 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  the  Partnership's  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,  federal,  state  or local regulations;
adverse changes in general economic  or local conditions; uninsured losses; and
potential conflicts of  interest  between  the  Partnership and its Affiliates,
including the General Partner.

Liquidity and Capital Resources

On October 25, 1989, the  Partnership  commenced an Offering of 30,000 (subject
to increase to 60,000)  Limited  Partnership  Units  pursuant to a Registration
Statement on Form S-11 under the  Securities  Act of 1933. On October 24, 1991,
the Partnership terminated its Offering of Units, with total sales of 50,476.17
Units, at $1,000 per Unit, resulting in $50,476,170 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.

The Partnership used $41,314,301 of gross  offering proceeds to purchase, on an
all-cash basis, twenty-seven  parcels  of  undeveloped  land and two buildings.
These investments include the payment  of  the purchase price, acquisition fees
and acquisition costs of such  properties.  Three of the parcels were purchased
during 1990, sixteen during 1991, four during 1992, and four during 1993. As of
December 31, 1998, the Partnership  has had multiple sales transactions through
which it has disposed of  approximately  1,024 acres of the approximately 4,480
acres originally owned. As of  December 31, 1998, cumulative distributions have
totaled $11,836,753  to  the  Limited  Partners  and  $259,531  to  the General
Partner.  Of the $11,836,753  distributed  to the Limited Partners, $11,115,753
was net sales  proceeds  (which  represents  a  return  of Invested Capital, as
defined in the Partnership Agreement)  and  $721,000 was from operations. As of
December 31, 1998,  the  Partnership  has  used  $9,314,010  of working capital
reserve for rezoning and other  activities.  Such amounts have been capitalized
and are included in investment properties.

The Partnership's capital needs and resources will vary depending upon a number
of factors, including the extent to which the Partnership conducts 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 the Partnership's land, and the amount of revenue received from
leasing. As of December 31, 1998,  the  Partnership  owns, in whole or in part,
twenty-three of its twenty-seven original  parcels and one office building, the
majority of which are  leased  to  local  tenants and are generating sufficient
cash flow from leases to cover property taxes and insurance.




                                      -8-


At December  31,  1998,  the  Partnership  had  cash  and  cash  equivalents of
$340,191, of which approximately  $268,200  is  reserved  for the repurchase of
Units through the Unit Repurchase  Program.  The remaining $71,991 is available
to be used for the Partnership  expenses and liabilities, cash distributions to
partners and other activities with respect to  some or all of its land parcels.
The Partnership has increased its parcel sales effort in anticipation of rising
land values.

The Partnership plans to enhance the  value of its land through pre-development
activities such as rezoning, annexation  and land planning. The Partnership has
already been successful in, or  is  in the process of, pre-development activity
on a majority of the Partnership's  land  investments. Parcel 1, annexed to the
Village of Huntley and  zoned  for  residential and commercial development, has
improvements in  planning  stage  and  sites  are  being  marketed to potential
buyers. Parcel 7, the Olde Mill  Ponds  on  Boone Creek subdivision, has all of
the total 130 single-family lots  under  contract  with a homebuilder, of which
sixty-five have already closed (see Note 4 of the Notes to Financial Statements
for further discussion of Parcel 7).    Parcel 18, zoned for multi- and single-
family use, is being marketed  to  potential  homebuilders.  As of December 31,
1998, the Partnership has sold 173  of  the 243 single-family lots at the Ponds
of Mill Race Creek (Parcel  23)  in  addition  to the multi-family portion, the
Winding Waters of Mill  Race  Creek.    The  Partnership has sixty-seven of the
remaining seventy single-family lots under contract with homebuilders (see Note
4 of the Notes to Financial Statements for further discussion on Parcel 23).

Results of Operations

Income from the sale of investment properties and cost of investment properties
sold recorded for the year ended December 31, 1998 is the result of the sale of
approximately 111 acres, including additional  lots  at  the Olde Mill Ponds on
Boone Creek subdivision (Parcel 7), the sale of additional lots at the Ponds of
Mill  Race  Creek  subdivision  (Parcel  23)  and  the  sale  of  the remaining
approximately 84  acres  of  Parcel  15.  Income  from  the  sale of investment
properties and cost of investment  properties  sold for the year ended December
31, 1997 is the result of the sale of approximately 15 acres, including twenty-
nine lots at the Olde Mill Ponds  on Boone Creek subdivision (Parcel 7) and the
sale of additional lots at  the  Ponds  at  Mill Race Creek subdivision (Parcel
23).  Income from  the  sale  of  investment  properties and cost of investment
properties sold for the year ended December  31, 1996 is the result of the sale
of approximately 15 acres,  including  the  lot  sales  at  the Mill Race Creek
Subdivision (Parcel 23), 5.538 acres of Parcel 22 and .87 acres of Parcel 8.

As of December 31,  1998,  the  Partnership  owned twenty-three parcels of land
consisting of  approximately  3,456  acres  and  one  office  building.  Of the
approximately 3,456 acres  owned,  3,045  acres  are  tillable, leased to local
farmers and generate sufficient  cash  flow  to cover property taxes, insurance
and other miscellaneous expenses.   Rental  income increased for the year ended
December 31, 1998, as compared to  the  years ended December 31, 1997 and 1996,
due to the annual increase in lease amounts from tenants.









                                      -9-


Interest income increased for the year  ended December 31, 1998, as compared to
the year ended December 31,  1997,  due  primarily  as a result of the interest
income earned on the mortgage loan receivable the Partnership received from the
sale of the remaining  acreage  of  Parcel  15.    See  Note  6 of the Notes to
Financial Statements for further discussion  of  the terms of the mortgage loan
receivable received from this  sale.    Interest  income decreased for the year
ended December 31, 1997, as compared  to  the year ended December 31, 1996, due
to the Partnership distributing net  sales proceeds of approximately $4,000,000
and using its working capital  reserve  to fund pre-development activity on the
Partnership's investment properties.

The other income recorded for the  year  ended December 31, 1998 relates to one
of the homebuilders on Parcel 23  buying  out  of  its lot sales contract.  The
General Partner plans to replace this homebuilder with another one.

Professional services to non-affiliates  decreased  for the year ended December
31 1998, as compared to the  year  ended  December 31, 1997, due primarily to a
decrease in legal  services.    Professional  services  to  Affiliates and non-
affiliates increased for the year ended  December  31, 1997, as compared to the
year ended December  31,  1996,  due  to  an  increase  in legal and accounting
services related to the increase in sales activity within the Partnership. 

General and administrative expenses to  Affiliates decreased for the year ended
December 31, 1998, as compared  to  the  year  ended  December 31, 1997, due to
decreases in postage, data processing  and  investor service expenses.  General
and administrative expenses to Affiliates decreased for the year ended December
31, 1997, as compared to the year  ended  December 31, 1996, due primarily to a
decrease  in  investor  services  and  data  processing  expenses.  General and
administrative expenses to non-affiliates decreased for the year ended December
31, 1997, as compared to the year  ended  December 31, 1996, due primarily to a
decrease in the Illinois Replacement Tax paid by the Partnership.

Marketing expenses to  Affiliates  and  non-affiliates  increased  for the year
ended December 31, 1998, as compared  to  the year ended December 31, 1997, due
to  increases  in   expenses   relating   to   marketing  and  advertising  the
Partnership's land investments for  sale  paid  to  Affiliates and increases in
advertising and travel expenses  relating  to  marketing  the land portfolio to
prospective  purchasers  paid  to   non-affiliates.     Marketing  expenses  to
Affiliates decreased for the year ended  December  31, 1997, as compared to the
year  ended  December  31,  1996,  and  marketing  expenses  to  non-affiliates
increased for the year ended December  31,  1997, as compared to the year ended
December 31, 1996,  due  to  decreases  in  expenses  relating to marketing and
advertising the Partnership's land investments  for sale paid to Affiliates and
increases in advertising and  travel  expenses  relating  to marketing the land
portfolio to prospective purchasers paid to non-affiliates.

Land operating expenses to non-affiliates increased for the year ended December
31, 1998, as compared to the year ended December 31 1997, due to an increase in
real  estate  taxes  and   maintenance   expenses  of  the  Partnership's  land
investments.








                                     -10-


Year 2000 Issues

GENERAL
-------
Many computer operating systems  and  software  applications were designed such
that the year 1999 is the  maximum  date  that can be processed accurately.  In
conducting business, the Partnership relies  on computers and operating systems
provided by equipment manufacturers, and also on application software developed
internally and,  to  a  limited  extent,  by  outside  software  vendors.   The
Partnership has assessed its  vulnerability  to the so-called "Year-2000 Issue"
with respect to its equipment and computer systems.

STATE OF READINESS
------------------
The  Partnership  has  identified  the  following  two  areas  for  "Year-2000"
compliance efforts:

Business  Computer  Systems:  The  majority  of  the  Partnership's information
technology systems  were  developed  internally  and  include accounting, lease
management, investment portfolio  tracking,  and  tax  return preparation.  The
Partnership has rights to the  source  code  for these applications and employs
programmers who are  knowledgeable  regarding  these  systems.   The process of
testing these internal  systems  to  determine  year  2000 compliance is nearly
complete.  The Partnership does  not  anticipate any material costs relating to
its  business  computer  systems  regarding  year  2000  compliance  since  the
Partnership's  critical  hardware  and  software  systems  use  four  digits to
represent the applicable year.  The Partnership does use various computers, so-
called "PC's", that may run software that  may not use four digits to represent
the applicable year.  The  Partnership  is  in  the  process  of testing the PC
hardware and software to determine year  2000  compliance, but it must be noted
that such PC's  are  incidental  to  the  Partnership's  critical systems.  The
Partnership is considering independent testing of its critical systems.

Suppliers and other Parties:  The  Partnership  is  in the process of surveying
suppliers and other parties with whom the Partnership does a significant amount
of business to identify the Partnership's  potential exposure in the event such
parties are not year 2000  compliant  in  a  timely  manner.  At this time, the
Partnership is not aware of any party that is anticipating a material Year 2000
compliance issue.  However, since  this  area  involves some parties over which
the Partnership  has  no  control,  such  as  public  utility  companies, it is
difficult, at best, to judge  the  status  of  the outside companies' year 2000
compliance. The Partnership is working closely  with all suppliers of goods and
services in an effort to minimize the  impact of the failure of any supplier to
become  year  2000   compliant   by   December   31,  1999.  The  Partnership's
investigations  and  assessments  of  possible   year  2000  issues  are  in  a
preliminary stage, and currently the  Partnership  is not aware of any material
impact on its business, operations or  financial  condition even if one or more
parties is not Year 2000 compliant  in  a  timely manner, due to the number and
nature of the Partnership's diverse supplier base.









                                     -11-


YEAR 2000 RISKS
---------------
The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of  its  business computer systems would be the
inability to access information  which  could  result  in  the failure to issue
financial reports.

YEAR 2000 COSTS
---------------
The Partnership's General Partner  and  its  Affiliates  estimate that costs to
achieve  year  2000  compliance   will   not  exceed  $100,000.  However,  only
approximately 1% of these costs will  be  directly allocated to and paid by the
Partnership. The balance of the  year 2000 compliance costs, approximately 99%,
will be paid by  the  General  Partner  and  its  Affiliates.   Total year 2000
compliance  costs  incurred  through   December   31,  1998  are  estimated  at
approximately $5,000.

CONTINGENCY PLAN
----------------
The Partnership is expects to  be  Year  2000  compliant in advance of the year
2000.  The Partnership  will  continue  to  monitor  its  progress and state of
readiness, and is in the  process  of  formulating a contingency plan which the
Partnership will be prepared to adopt  with  respect to areas in which evidence
arises that it may not  become  Year  2000  compliant in sufficient time.  With
respect to its suppliers and  other  parties with whom the Partnership conducts
business, the Partnership does not  yet have sufficient information to identify
the types of problems it may encounter in the event these third parties are not
Year 2000 compliant.  As information is obtained that may indicate such parties
may not become  Year  2000  compliant  in  sufficient  time, the Partnership is
prepared to develop contingency plans, accordingly.



Inflation

Inflation in future periods may cause capital appreciation of the Partnership's
investments in land.  Rental  income  levels  (from  leases  to  new tenants or
renewals of existing tenants)  will  rise  and  fall  in accordance with normal
agricultural market conditions and may or may not be affected by inflation.


Item 7(a). Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.














                                     -12-


Item 8.  Financial Statements and Supplementary Data



                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)


                                     Index
                                     -----

                                                                         Page
                                                                         ----
Independent Auditors' Report............................................  14

Financial Statements:

  Balance Sheets, December 31, 1998 and 1997............................  15

  Statements of Operations, for the years ended
    December 31, 1998, 1997 and 1996....................................  17

  Statements of Partners' Capital, for the years ended
    December 31, 1998, 1997 and 1996....................................  19

  Statements of Cash Flows, for the years ended
    December 31, 1998, 1997 and 1996....................................  20

  Notes to Financial Statements.........................................  22



Schedules not filed:

All schedules have been omitted as  the required information is inapplicable or
the information is presented in the financial statements or related notes.






















                                     -13-








INDEPENDENT AUDITORS' REPORT


To the Partners of 
Inland Land Appreciation Fund II, L.P. 

We have audited the  accompanying  balance  sheets  of Inland Land Appreciation
Fund II, L.P. (a limited partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period  ended  December  31, 1998.  These statements are
the responsibility of the Partnership's  management.   Our responsibility is to
express an opinion on these financial statements based on our audits. 

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards  require  that  we  plan  and  perform the audit to
obtain reasonable assurance about whether  the financial statements are free of
material misstatement.  An audit includes  examining, on a test basis, evidence
supporting the amounts and disclosures  in  the financial statements.  An audit
also  includes  assessing  the   accounting  principles  used  and  significant
estimates made by  management,  as  well  as  evaluating  the overall financial
statement presentation.  We believe that  our audits provide a reasonable basis
for our opinion.

In our opinion,  such  financial  statements  present  fairly,  in all material
respects, the financial position of  Inland  Land Appreciation Fund II, L.P. as
of December 31, 1998 and 1997, and  the  results of its operations and its cash
flows for each of the three  years  in  the  period ended December 31, 1998, in
conformity with generally accepted accounting principles.



DELOITTE & TOUCHE LLP


Chicago, Illinois
January 29, 1999
(March 19, 1999 as to Note 7)















                                     -14-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets

                          December 31, 1998 and 1997



                                    Assets
                                    ------

                                                       1998          1997
Current assets:                                        ----          ----
  Cash and cash equivalents (Note 1).............. $   340,191       961,428
  Short-term investments (Note 1).................        -          431,682
  Accounts and accrued interest
    receivable (Note 6)...........................       3,208        25,065
  Other current assets............................       2,229         2,380 
                                                   ------------  ------------
Total current assets..............................     345,628     1,420,555 
                                                   ------------  ------------
Mortgage loan receivable (Note 6).................   1,287,151          -
Investment properties (including acquisition
  fees paid to Affiliates of $1,915,424 and
  $2,003,096 at December 31, 1998 and 1997,
  respectively) (Notes 1, 3 and 4):
  Land and improvements...........................  39,216,282    41,765,589
  Buildings.......................................      93,082        93,082 
                                                   ------------  ------------
                                                    39,309,364    41,858,671
  Less accumulated depreciation...................      18,487        15,384 
Total investment properties, net of accumulated    ------------  ------------
  depreciation....................................  39,290,877    41,843,287 
                                                   ------------  ------------
Total assets...................................... $40,923,656    43,263,842
                                                   ============  ============



















                See accompanying notes to financial statements.


                                     -15-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                                Balance Sheets
                                  (continued)

                          December 31, 1998 and 1997




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

                                                       1998          1997
                                                       ----          ----
Current liabilities:
  Accounts payable................................ $    29,019        21,221
  Accrued real estate taxes.......................     104,137       100,993
  Due to Affiliates (Note 3)......................      26,249        12,450
  Unearned income.................................      39,233       109,669 
                                                   ------------  ------------
Total current liabilities.........................     198,638       244,333 
                                                   ------------  ------------
Deferred gain on sale of investment properties
  (Note 6)........................................     796,203          -

Partners' capital (Notes 1, 2 and 3):
  General Partner:
   Capital contribution...........................        500            500
   Cumulative net income..........................    617,144        449,454
   Cumulative cash distributions..................   (259,531)       (93,034)
                                                   ------------  ------------
                                                      358,113        356,920 
  Limited Partners:                                ------------  ------------
   Units of $1,000. Authorized 60,000 Units,
    50,119.52 and 50,164.52 Units outstanding
    at December 31, 1998 and 1997, respectively
    (net of offering costs of $7,532,439, of which
    $2,535,445 was paid to Affiliates)............  42,597,492    42,637,010
   Cumulative net income..........................   8,809,963     6,862,332
   Cumulative cash distributions.................. (11,836,753)   (6,836,753)
                                                   ------------  ------------
                                                    39,570,702    42,662,589 
                                                   ------------  ------------
Total Partners' capital...........................  39,928,815    43,019,509 
                                                   ------------  ------------
Total liabilities and Partners' capital........... $40,923,656    43,263,842
                                                   ============  ============







                See accompanying notes to financial statements.


                                     -16-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations

             For the years ended December 31, 1998, 1997 and 1996


                                         1998          1997          1996
Income:                                  ----          ----          ----
  Sale of investment properties
    (Notes 1 and 3)................. $ 4,586,494     1,609,943     1,691,540
  Recognition of deferred gain on
    sale of investment properties
    (Note 6)........................     904,887          -             -
  Rental income (Note 5)............     371,460       369,362       351,065
  Interest income...................     232,214       194,994       316,685
  Other income......................     165,576            20          -    
                                     ------------  ------------  ------------
                                       6,260,631     2,174,319     2,359,290 
                                     ------------  ------------  ------------
Expenses:
  Cost of investment properties
    sold............................   3,495,314     1,097,586     1,173,955
  Professional services to
    Affiliates......................      43,599        42,021        30,055
  Professional services to
    non-affiliates..................      32,845        52,705        34,418
  General and administrative
    expenses to Affiliates..........      24,716        28,843        38,187
  General and administrative
    expenses to non-affiliates......      26,725        26,482        34,413
  Marketing expenses to
    Affiliates......................      79,512        26,204        45,606
  Marketing expenses to
    non-affiliates..................     156,679       134,981        58,232
  Land operating expenses to
    Affiliates......................      88,412        91,270        92,022
  Land operating expenses to 
    non-affiliates..................     194,405       152,721       164,588
  Depreciation......................       3,103         3,102         3,103 
                                     ------------  ------------  ------------
                                       4,145,310     1,655,915     1,674,579 
                                     ------------  ------------  ------------
Net income.......................... $ 2,115,321       518,404       684,711
                                     ============  ============  ============










                See accompanying notes to financial statements.


                                     -17-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Operations
                                  (continued)

             For the years ended December 31, 1998, 1997 and 1996



                                         1998          1997          1996
                                         ----          ----          ----
Net income allocated to (Note 2):
  General Partner................... $   167,690            60         1,671
  Limited Partners..................   1,947,631       518,344       683,040 
                                     ------------  ------------  ------------
Net income.......................... $ 2,115,321       518,404       684,711
                                     ============  ============  ============ 

Net income allocated to the one
  General Partner Unit.............. $   167,690            60         1,671
                                     ============  ============  ============

Net income per Unit allocated to
  Limited Partners per weighted
  average Limited Partnership Units
  (50,144.40, 50,172.77 and
  50,193.51 for the years ended
  December 31, 1998, 1997 and 1996,
  respectively)..................... $     38.84         10.33         13.61
                                     ============  ============  ============

























                See accompanying notes to financial statements.


                                     -18-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                        Statements of Partners' Capital

             For the years ended December 31, 1998, 1997 and 1996



                                        General       Limited
                                        Partner       Partners       Total   
                                     ------------  ------------  ------------
Balance January 1, 1996............. $   355,189    45,488,032    45,843,221


Repurchase of Limited Partnership
  Units.............................        -           (8,621)       (8,621)
Distributions to Partners (Note 1)..        -              (55)          (55)
Net income (Note 2).................       1,671       683,040       684,711 
                                     ------------  ------------  ------------
Balance December 31, 1996...........     356,860    46,162,396    46,519,256


Repurchase of Limited Partnership
  Units.............................        -          (18,361)      (18,361)
Distributions to Partners ($79.72 per
  weighted average Limited Partnership
  Units of 50,172.77) (Note 2)......        -       (3,999,790)   (3,999,790)
Net income (Note 2).................          60       518,344       518,404 
                                     ------------  ------------  ------------
Balance December 31, 1997...........     356,920    42,662,589    43,019,509


Repurchase of Limited Partnership
  Units.............................        -          (39,518)      (39,518)
Distributions to Partners ($99.71 per
  weighted average Limited Partnership
  Units of 50,144.40) (Note 2)......    (166,497)   (5,000,000)   (5,166,497)
Net income (Note 2).................     167,690     1,947,631     2,115,321 
                                     ------------  ------------  ------------
Balance December 31, 1998........... $   358,113    39,570,702    39,928,815
                                     ============  ============  ============













                See accompanying notes to financial statements.


                                     -19-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Cash Flows

             For the years ended December 31, 1998, 1997 and 1996


                                         1998          1997          1996
Cash flows from operating activities:    ----          ----          ----
  Net income........................ $ 2,115,321       518,404       684,711
  Adjustments to reconcile net income
     to net cash provided by operating
     activities:
    Depreciation....................       3,103         3,102         3,103 
    Gain on sale of investment
      properties....................  (1,091,180)     (512,357)     (517,585)
    Recognition of deferred gain on
      sale of investment properties.    (904,887)         -             -
    Changes in assets and liabilities:
     Accounts and accrued interest
       receivable...................      21,857         3,713        (8,878)
     Other current assets...........         151            97            67
     Accounts payable...............       7,798       (44,166)       43,480
     Accrued real estate taxes......       3,144        (3,066)        6,788
     Due to Affiliates..............      13,799         8,143        (6,860)
     Unearned income................     (70,436)       39,581        40,190 
Net cash provided by operating       ------------  ------------  ------------
  activities........................      98,670        13,451       245,016 
                                     ------------  ------------  ------------
Cash flows from investing activities:
  Principal payments on mortgage 
    loan receivable.................   1,462,849          -             -
  Additions to investment properties    (946,007)   (2,348,964)     (888,754)
  Sale (purchase) of short-term
    investments, net................     431,682     1,801,103    (2,232,785)
  Proceeds from sale of investment
    properties......................   3,537,584     1,609,943     1,691,540 
Net cash provided by (used in)       ------------  ------------  ------------
  investing activities..............   4,486,108     1,062,082    (1,429,999)
                                     ------------  ------------  ------------
Cash flows from financing activities:
  Repurchase of Limited Partnership
    Units...........................     (39,518)      (18,361)       (8,621)
  Cash distributions................  (5,166,497)   (3,999,790)          (55)
                                     ------------  ------------  ------------
Net cash used in financing activities (5,206,015)   (4,018,151)       (8,676)
Net decrease in cash                 ------------  ------------  ------------
  and cash equivalents..............    (621,237)   (2,942,618)   (1,193,659)
Cash and cash equivalents at
  beginning of year.................     961,428     3,904,046     5,097,705 
Cash and cash equivalents at end of  ------------  ------------  ------------
  year.............................. $   340,191       961,428     3,904,046
                                     ============  ============  ============


                See accompanying notes to financial statements.


                                     -20-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                           Statements of Cash Flows

             For the years ended December 31, 1998, 1997 and 1996


                                         1998          1997          1996
                                         ----          ----          ----
Supplemental schedule of non-cash investing activities:

  Mortgage loan receivable.......... $(2,750,000)         -             -
  Reduction of investment properties   3,495,314          -             -
  Deferred gain on sale of investment
    properties......................   1,701,090          -             -
  Gain on sale of investment
    properties......................   1,091,180          -             -    
  Proceeds from sale of investment   ------------  ------------  ------------
    properties...................... $ 3,537,584          -             -
                                     ============  ============  ============



































                See accompanying notes to financial statements.


                                     -21-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements

             For the years ended December 31, 1998, 1997 and 1996


(1) Organization and Basis of Accounting

The Registrant, Inland Land Appreciation  Fund II, L.P. (the "Partnership"), is
a limited partnership formed on June 28, 1989, pursuant to the Delaware Revised
Uniform Limited Partnership Act, to  invest  in undeveloped land on an all-cash
basis and realize appreciation of such  land  upon resale. On October 25, 1989,
the Partnership commenced an Offering of 30,000 (subject to increase to 60,000)
Limited Partnership Units pursuant to  a  Registration under the Securities Act
of 1933.  The  Amended  and  Restated  Agreement  of  Limited  Partnership (the
"Partnership Agreement") provides for Inland Real Estate Investment Corporation
to be the General Partner. On  October 24, 1991, the Partnership terminated its
Offering of Units, with total  sales  of  50,476.17  Units, at $1,000 per Unit,
resulting in $50,476,170 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. As  of December 31, 1998, the Partnership has
repurchased a total of 356.65 Units  for $346,239 from various Limited Partners
through the Unit Repurchase Program.  Under this program, Limited Partners may,
under certain circumstances, have their  Units  repurchased for an amount equal
to their Invested Capital.

The preparation of 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 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 period.
Actual results could differ from those estimates.

Offering costs have been offset against the Limited Partners' capital accounts.

The Partnership  considers  all  highly  liquid  investments  purchased  with a
maturity of three months or  less  to  be  cash  equivalents and are carried at
cost, which approximates market.

Investments purchased with a maturity of three months or more are considered to
be short-term investments and are carried at cost, which approximates market.

For  vacant  land  parcels   and   parcels  with  insignificant  buildings  and
improvements,  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. For parcels with significant buildings and improvements (Parcel
24,  described  in  Note  4),   the   Partnership  records  the  buildings  and
improvements  at  a  cost  based  upon  the  appraised  value  at  the  date of
acquisition. Buildings and improvements are depreciated using the straight-line
method  of  depreciation  over  a  useful  life  of  thirty  years.  Repair and
maintenance  expenses  are  charged  to  operations  as  incurred.  Significant
improvements are capitalized and depreciated over their estimated useful lives.


                                     -22-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)

Statement  of  Financial  Accounting  Standards  No.  121  "Accounting  for the
Impairment of Long-Lived Assets and  for  Long-Lived  Assets to be Disposed of"
("SFAS 121") requires  the  Partnership  to  record  an  impairment loss on its
property to be held for investment  whenever its carrying value cannot be fully
recovered  through  estimated  undiscounted   future   cash  flows  from  their
operations and sale.  The amount of  the impairment loss to be recognized would
be the difference  between  the  property's  carrying  value and the property's
estimated fair value.  As of  December  31,  1998 and 1997, the Partnership has
not recognized any such impairment.

The Partnership is required to  pay  a  withholding tax to the Internal Revenue
Service with  respect  to  a  Partner's  allocable  share  of the Partnership's
taxable net income, if the  Partner  is  a foreign person. The Partnership will
first pay the withholding tax  from  the  distributions to any foreign partner,
and to the extent that the tax exceeds the amount of distributions withheld, or
if there have been no distributions  to  withhold, the excess will be accounted
for as a distribution to the foreign partner. Withholding tax payments are made
every April, June, September and December.

The Partnership records are maintained  on  the  accrual basis of accounting in
accordance with generally accepted  accounting principles ("GAAP"). The Federal
income tax return has been prepared  from such records after making appropriate
adjustments, if any,  to  reflect  the  Partnership's  accounts as adjusted for
Federal income tax reporting purposes. Such adjustments are not recorded in the
records of the Partnership.  The  net  effect  of  these items is summarized as
follows:
                                       1998                     1997          
                             ------------------------ ------------------------
                                             Tax                      Tax
                                GAAP         Basis       GAAP         Basis
                                Basis     (unaudited)    Basis     (unaudited)
                             ----------- ------------ ----------- ------------
Total assets................ $40,923,656  48,456,097   43,263,842   50,796,281

Partners' capital:
  General Partner...........     358,113     188,350      356,920      358,874
  Limited Partners..........  39,570,702  47,272,905   42,662,589   50,193,075

Net income (loss):
  General Partner...........     167,690      (4,027)          60           64
  Limited Partners..........   1,947,631   2,119,348      518,344      518,340

Net income per Limited
  Partnership Unit..........       38.84       42.26        10.33        10.33

The net income per Unit is based  upon  the weighted average number of Units of
50,144.40 and 50,172.77 during 1998 and 1997, respectively.





                                     -23-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


Statement of Financial Accounting  Standards  No.  128 "Earnings per Share" was
adopted by the Partnership for the  year  ended  December 31, 1997 and has been
applied to all prior  earnings  periods  presented in the financial statements.
The Partnership has no dilutive securities.

A presentation of information about operating segments as required in Statement
of Financial Accounting Standards  No.  131  "Disclosures  About Segments of an
Enterprise and Related Information" would  not  be material to an understanding
of the Partnership's business taken as a whole as the Partnership is engaged in
the business of  real  estate  investment  which  management  considers to be a
single operating segment.

No provision for Federal income taxes  has  been made as the liability for such
taxes is that of the Partners rather than the Partnership.


(2) Partnership Agreement

The Partnership Agreement defines  the  allocation  of  profits and losses, and
available cash. If and  to  the  extent  that  real  estate taxes and insurance
payable with respect  to  the  Partnership's  land  during  a given year exceed
revenues of the  Partnership,  the  General  Partner  will  make a Supplemental
Capital Contribution of such amount  to  the  Partnership to ensure that it has
sufficient funds to make such payments.

Profits and losses from  operations  (other  than capital transactions) will be
allocated 99% to the Limited Partners  and  1%  to the General Partner. The net
gain from sales of Partnership properties is first allocated among the Partners
in proportion to the  negative  balances,  if  any, in their respective capital
accounts. Thereafter, except as provided  below,  net  gain is allocated to the
General Partner in an amount equal  to  the proceeds distributed to the General
Partner from such sale and  the  balance  of  any  net gain is allocated to the
Limited Partners. If the amount of net  gain  realized from a sale is less than
the amount of cash  distributed  to  the  General  Partner  from such sale, the
Partnership will allocate income or  gain  to  the General Partner in an amount
equal to the excess of the cash distributed to the General Partner with respect
to such sale as quickly as permitted by  law.  Any net loss from a sale will be
allocated to the Limited Partners.

Distributions of  Net  Sale  Proceeds  will  be  allocated  between the General
Partner and the Limited Partners based upon both an aggregate overall return to
the Limited Partners and a separate return  with respect to each parcel of land
purchased by the Partnership.

As a general rule, Net  Sale  Proceeds  will  be distributed 90% to the Limited
Partners and  10%  to  the  General  Partner  until  the  Limited Partners have
received from Net Sale Proceeds  (i)  a  return  of their Original Capital plus
(ii) a noncompounded  Cumulative  Preferred  Return  of  15%  of their Invested
Capital. However, with respect to  each  parcel  of land, the General Partner's
10% share will be subordinated until  the  Limited Partners receive a return of
the Original Capital attributed to such parcel ("Parcel Capital") plus a 6% per
annum noncompounded Cumulative Preferred Return thereon.


                                     -24-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


After the amounts described  in  items  (i)  and  (ii) above and any previously
subordinated distributions to  the  General  Partner  have  been  paid, and the
amount of  any  Supplemental  Capital  Contributions  have  been  repaid to the
General Partner, subsequent  distributions  shall  be  paid  75% to the Limited
Partners and 25% to the General Partner without considering Parcel Capital. If,
after all Net Sale  Proceeds  have  been  distributed,  the General Partner has
received more than 25%  of  all  Net  Sale Proceeds (exclusive of distributions
made to the Limited  Partners  to  return  their Original Capital), the General
Partner shall contribute to  the  Partnership  for  distribution to the Limited
Partners an amount equal to such excess.

Any distributions from Net Sales  Proceeds  at  a time when Invested Capital is
greater than zero shall be deemed  applied  first to reduction of such Invested
Capital before application to payment  of  any deficiency in the 15% Cumulative
Preferred Return.


(3) 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 to Affiliates and  general and administrative expenses to
Affiliates, of which $5,473 and $3,977  was  unpaid as of December 31, 1998 and
1997, 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. Such fees of $88,412, $91,270
and $92,022 have been incurred for the  years ended December 31, 1998, 1997 and
1996, respectively, and are included  in land operating expenses to Affiliates,
of which $20,776 was unpaid as of December 31, 1998.

An  Affiliate  of  the  General  Partner  performed  marketing  and advertising
services for the Partnership and was reimbursed (as set forth under term of the
Partnership Agreement) for direct costs.    Such  costs of $79,512, $26,204 and
$45,606 have been incurred and paid  and  are included in marketing expenses to
Affiliates for the years ended December 31, 1998, 1997 and 1996, 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.  The  Affiliate did not recognize a
profit on any project. Such  costs  of  $90,456, $139,696 and $50,828 have been
incurred and paid  for  the  years  ended  December  31,  1998,  1997 and 1996,
respectively, and are included in investment properties.




                                     -25-


<TABLE>                                 INLAND LAND APPRECIATION FUND II, L.P.
                                                (a limited partnership)

                                             Notes to Financial Statements
                                                      (continued)

(4) Investment Properties
<CAPTION>
                                                                                                              Total
                   Gross                            Initial Costs                 Costs                     Remaining    Current
                   Acres    Purchase/  --------------------------------------  Capitalized     Costs of      Costs of   Year Gain
       Location: Purchased    Sales       Original  Acquisition     Total     Subsequent to    Property     Parcels at   on Sale
Parcel  County    (Sold)      Date         Costs       Costs        Costs      Acquisition       Sold        12/31/98   Recognized 
------ --------- ---------  ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S>     <C>       <C>        <C>         <C>           <C>         <C>          <C>           <C>           <C>            <C>
   1     McHenry  372.759   04/25/90 $ 2,114,295      114,070    2,228,365        528,703         -       2,757,068         -

   2     Kendall   41.118   07/06/90     549,639       43,889      593,528          8,888         -         602,416         -

   3     Kendall  120.817   11/06/90   1,606,794      101,863    1,708,657         19,970         -       1,728,627         -

   4     Kendall  299.025   06/28/91   1,442,059       77,804    1,519,863          3,003         -       1,522,866         -

   5     Kane     189.0468  02/28/91   1,954,629       94,569    2,049,198        195,394         -       2,244,592         -

   6     Lake      57.3345  04/16/91     904,337       71,199      975,536         19,365        4,457      990,444         -
                    (.258)  10/01/94

   7     McHenry   56.7094  04/22/91     680,513       44,444      724,957      2,980,758    1,743,026    1,962,689      405,261
                  (12.6506) Var 1997
                  (15.7041) Var 1998

   8     Kane     325.394   06/14/91   3,496,700      262,275    3,758,975         26,710       10,000    3,775,685         -
                    (.870)  04/03/96

   9     Will       9.867   08/13/91     217,074          988      218,062          7,286         -         225,348         -

  10     Will     150.66    08/20/91   1,866,716       89,333    1,956,049          6,113         -       1,962,162         -

  11     Will     138.447   08/20/91     289,914       20,376      310,290          2,700      312,990         -            -
                 (138.447)  05/03/93

  12     Will      44.732   08/20/91     444,386       21,988      466,374          5,693         -         472,067         -

  13     Will       6.342   09/23/91     139,524          172      139,696           -         139,696         -            -
                   (6.342)  05/03/93

  14     Kendall   44.403   09/03/91     888,060       68,210      956,270         20,058         -         976,328         -

  15     Kendall  100.364   09/04/91   1,050,000       52,694    1,102,694        117,829    1,220,523         -         904,887
                   (5.000)  09/01/93
                  (11.000)  12/01/94
                  (84.364)  08/14/98

  16     McHenry  168.905   09/13/91   1,402,058       69,731    1,471,789         82,844         -       1,554,633         -

  17     Kendall    3.462   10/30/91     435,000       22,326      457,326          4,522         -         461,848         -

  18     McHenry  139.1697  11/07/91   1,160,301       58,190    1,218,491        273,631         -       1,492,122         -    
                                     ------------ ------------ ------------ -------------- ------------ ------------ ------------
        Subtotal                     $20,641,999    1,214,121   21,856,120      4,303,467    3,430,692   22,728,895    1,310,148



                                                                -25-


                                     -26-


                                               INLAND LAND APPRECIATION FUND II, L.P.
                                                       (a limited partnership)

                                                    Notes to Financial Statements
                                                             (continued)

(4) Investment Properties (continued)
                                                                                                              Total
                   Gross                            Initial Costs                 Costs                     Remaining    Current
                   Acres    Purchase/  --------------------------------------  Capitalized     Costs of      Costs of   Year Gain
       Location: Purchased    Sales       Original  Acquisition     Total     Subsequent to    Property     Parcels at   on Sale
Parcel  County    (Sold)      Date         Costs       Costs        Costs      Acquisition       Sold        12/31/98   Recognized 
------ --------- ---------  ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
      Subtotal                       $20,641,999    1,214,121   21,856,120      4,303,467    3,430,692   22,728,895    1,310,148

  19     Kane     436.236   12/13/91   4,362,360      321,250    4,683,610        163,456         -       4,847,066        -

  20   Kane &
       Kendall    400.129   01/31/92   1,692,623      101,318    1,793,941        192,161         -       1,986,102        -

  21   Kendall     15.013   05/26/92     250,000       23,844      273,844          8,195         -         282,039        -

  22   Kendall    391.959   10/30/92   3,870,000      283,186    4,153,186        107,660      164,804    4,096,042        -
                  (10.000)  01/06/94
                   (5.538)  01/05/96

  23 (c) Kendall  133.2074  10/30/92   3,231,942      251,373    3,483,315      4,426,840    5,810,529    2,099,626     685,918
                  (11.525)  07/16/93
                  (44.070)  Var 1995
                   (8.250)  Var 1996
                   (2.610)  Var 1997
                  (10.6624) Var 1998

  23A(a) Kendall     .2676  10/30/92     170,072       12,641      182,713           -         182,713         -           -
                    (.2676) 03/16/93

  24   Kendall      3.908   01/21/93     645,000       56,316      701,316          3,144         -         704,460        -

  24A(b) Kendall     .406   01/21/93     155,000       13,533      168,533           -            -         168,533        -

  25   Kendall    656.687   01/28/93   1,625,000       82,536    1,707,536         22,673    1,730,209         -           -
                 (656.687)  10/31/95

  26   Kane        89.511   03/10/93   1,181,555       89,312    1,270,867         83,854         -       1,354,721        -

  27   Kendall     83.525   03/11/93     984,474       54,846    1,039,320          2,560         -       1,041,880        -    
                                     ------------ ------------ ------------ -------------- ------------ ------------ -----------
                                     $38,810,025    2,504,276   41,314,301      9,314,010   11,318,947   39,309,364   1,996,066
                                     ============ ============ ============ ============== ============ ============ ===========



</TABLE>








                                                               -26-


                                     -27-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


(4) Investment Properties (continued)

(a) Included in the purchase of Parcel  23 was a newly constructed 2,500 square
    foot house. The house was sold in March 1993.

(b) Included in the  purchase  of  Parcel  24  was  a  2,400 square foot office
    building.

(c) Parcel 23, annexed and zoned to  Oswego,  Illinois as part of the Mill Race
    Creek subdivision, consists of  two  parts:  a 28-acre multi-family portion
    and a 105-acre  single-family  portion.  The  Partnership  sold the 28-acre
    multi-family portion on June 7, 1995  and  as  of December 31, 1998, 173 of
    the 243 single-family lots.

(d) Reconciliation of investment properties owned:
                                                       1998          1997
                                                       ----          ----
  Balance at January 1,........................... $41,858,671    40,607,293
  Additions during year:
  Improvements....................................     946,007     2,348,964 
                                                   ------------  ------------
                                                    42,804,678    42,956,257
  Sales during year...............................   3,495,314     1,097,586 
                                                   ------------  ------------
  Balance at December 31,......................... $39,309,364    41,858,671 
                                                   ============  ============

(e) Reconciliation of accumulated depreciation:
                                                       1998          1997
                                                       ----          ----
  Balance at January 1,........................... $    15,384        12,282
  Depreciation expense............................       3,103         3,102 
                                                   ------------  ------------
  Balance at December 31,......................... $    18,487        15,384
                                                   ============  ============

(f) The aggregate cost of investment properties  owned at December 31, 1998 for
    Federal income tax purposes was approximately $39,220,000 (unaudited).













                                     -28-


                    INLAND LAND APPRECIATION FUND II, L.P.
                            (a limited partnership)

                         Notes to Financial Statements
                                  (continued)


(5) 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 December 31, 1998, the  Partnership  had  leases of generally one year in
duration, for approximately 3,045 acres of the approximately 3,456 acres owned.


(6) Mortgage Loan Receivable

As a result of the sale  of  the  remaining approximately 84 acres of Parcel 15
for a sales price of $2,750,000 on  August 14, 1998, the Partnership received a
mortgage loan receivable of $2,750,000 and  recorded a deferred gain on sale of
$1,701,090, of which $904,887 has been recognized as of December 31, 1998.  The
deferred gain will be recognized  over  the  life  of the related mortgage loan
receivable as principal payments  are  received.   The mortgage loan receivable
accrues interest at 9% per annum and  has  a maturity date of July 31, 2001, at
which time all accrued interest, as well as principal, is due.  On December 21,
1998, the purchaser paid  down  the  mortgage  loan receivable in the principal
amount of  $1,462,849  plus  accrued  interest,  resulting  in  a mortgage loan
receivable balance of $1,287,151  at  December  31,  1998.   As of December 31,
1998, accrued interest totaled $3,174.


(7) Subsequent Events

On March 9, 1999, the Partnership sold  an  additional 11 lots of Parcel 7, the
Olde Mill Ponds on Boone Creek  subdivision, to an unaffiliated third party for
$438,780.  The Partnership received net sales proceeds of $437,746 and recorded
a gain on sale of $104,671.




















                                     -29-


Item 9.  Changes in and Disagreements  with  Independent Auditors on Accounting
         and Financial Disclosure

There were  no  disagreements  on  accounting  or  financial disclosure matters
during 1998.



                                   PART III


Item 10.  Directors and Executive Officers of the Registrant

The  General  Partner  of  the   Partnership,  Inland  Real  Estate  Investment
Corporation, was organized in 1984 for the purpose of acting as general partner
of limited partnerships formed  to  acquire,  own  and operate real properties.
The General Partner is a wholly-owned subsidiary  of The Inland Group, Inc.  In
1990, Inland Real Estate Investment  Corporation became the replacement General
Partner for an additional 301  privately-owned real estate limited partnerships
syndicated by Affiliates.    The  General  Partner  has  responsibility for all
aspects of the  Partnership's  operations.    The  relationship  of the General
Partner  to  its  Affiliates  is  described  under  the  caption  "Conflicts of
Interest" at pages 11 to 13 of  the  Prospectus, a copy of which description is
hereby incorporated herein by reference.


Officers and Directors

The officers, directors, and key  employees  of  The Inland Group, Inc. and its
Affiliates ("Inland") that are  likely  to  provide services to the Partnership
are as follows:


                               Functional Title

  Daniel L. Goodwin....... Chairman and Chief Executive Officer
  Robert H. Baum.......... Executive Vice President-General Counsel
  G. Joseph Cosenza....... Senior Vice President-Acquisitions
  Robert D. Parks......... Senior Vice President-Investments
  Norbert J. Treonis...... Senior Vice President-Property Management
  Brenda G. Gujral........ President and Chief Operating Officer-IREIC
  Catherine L. Lynch...... Treasurer
  Paul J. Wheeler......... Vice President-Personal Financial Services Group
  Roberta S. Matlin....... Assistant Vice President-Investments
  Mark Zalatoris.......... Assistant Vice President-Due Diligence
  Patricia A. Challenger.. Vice President-Asset Management
  Kelly Tucek............. Assistant Vice President-Partnership Accounting
  Venton J. Carlston...... Assistant Controller










                                     -30-


    DANIEL L. GOODWIN (age 55)   is  Chairman  of the Board of Directors of The
Inland Group, Inc.,  a  billion-dollar  real  estate and financial organization
located in Oak Brook,  Illinois.    Among  Inland's subsidiaries is the largest
property management firm in  Illinois  and  one  of the largest commercial real
estate and mortgage banking firms in the Midwest.

Mr. Goodwin has served as Director  of  the  Avenue  Bank  of Oak Park and as a
director of the Continental Bank of  Oakbrook  Terrace.  He was Chairman of the
Bank Holding Company of American National Bank  of DuPage.  Currently he is the
Chairman of the Board of Inland Mortgage Investment Corporation.

Mr. Goodwin has been in the  housing  industry  for more than 28 years, and has
demonstrated a lifelong interest in  housing-related  issues.  He is a licensed
real estate broker and a member  of  the National Association of Realtors.  Mr.
Goodwin has developed thousands of  housing  units in the Midwest, New England,
Florida, and the Southwest.  He  is  also the author of a nationally recognized
real estate reference book for the management of residential properties.

Mr. Goodwin has served on  the  Board  of the Illinois State Affordable Housing
Trust Fund for the past six years.   He is an advisor for the Office of Housing
Coordination Services of the State  of  Illinois,  and  a member of the Seniors
Housing Committee of the  National  Multi-Housing  Council.  Recently, Governor
Edgar appointed Mr. Goodwin as Chairman of the Housing Production Committee for
the Illinois State Affordable Housing Conference.    He also served as a member
of the Cook County  Commissioner's  Economic Housing Development Committee, and
he was the Chairman of the  DuPage  County  Affordable Housing Task Force.  The
1992 Catholic Charities Award  was  presented  to  Mr.  Goodwin for his work in
addressing affordable housing needs.   The  City  of Hope designated him as the
Man of the Year for the Illinois  construction industry.  In 1989,  the Chicago
Metropolitan  Coalition  on  Aging  presented  Mr.  Goodwin  with  an  award in
recognition of his  efforts  in  making  housing  more  affordable to Chicago's
Senior Citizens.  On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin  with  an  award,  recognizing  The  Inland  Group as the
leading corporate provider of transitional  housing  for the homeless people of
DuPage County.  Mr. Goodwin also  serves  as Chairman of New Directions Housing
Corporation, a leading provider of affordable housing in northern Illinois.

Mr. Goodwin is a product  of  Chicago-area schools, and obtained his Bachelor's
and Master's Degrees  from  Illinois  Universities.    Following graduation, he
taught for five  years  in  the  Chicago  Public  Schools.    His commitment to
education has continued through his  work  with  the BBF Family Services' Pilot
Elementary School in  Chicago,  and  the  development  of the Inland Vocational
Training Center  for  the  Handicapped  located  at  Little  City  in Palatine,
Illinois.  He  personally  established  an  endowment  which  funds a perpetual
scholarship program for inner-city  disadvantaged  youth.   In 1990 he received
the Northeastern  Illinois  University  President's  Meritorious Service Award.
Mr. Goodwin  holds  a  Master's  Degree  in  Education  from  Northern Illinois
University, and in 1986, he was awarded an Honorary Doctorate from Northeastern
Illinois University College of Education.    More  than 12 years ago, under Mr.
Goodwin's direction, Inland instituted  a  program to educate disabled students
about the workplace.  Most  of  these  original  students are still employed at
Inland today, and Inland  continues  as  one  of  the  largest employers of the
disabled in DuPage County.  Mr. Goodwin has  served as a member of the Board of
Governors of Illinois State Colleges  and  Universities,  and he is currently a
trustee of Benedictine University.  He was elected Chairman of the Northeastern
Illinois University Board of Trustees in January 1996.


                                     -31-


In 1988 he received the  Outstanding  Business  Leader Award from the Oak Brook
Jaycees and in March 1994,  he  won  the  Excellence in Business Award from the
DuPage Area Association of Business and Industry.  Additionally, he was honored
with a dinner sponsored by Little  Friends  on  May 17, 1995 for rescuing their
Parent-Handicapped Infant Program  when  they  lost  their  lease.   He was the
recipient of the 1995 March  of  Dimes  Life Achievement Award and was recently
recognized as the 1998  Corporate  Leader  of  the  Year  by the Oak Brook Area
Association of Commerce and Industry.    The  Ray Graham Association for People
with Disabilities honored Mr. Goodwin as  the  1999  Employer of the Year.  For
many years, he  has  been  Chairman  of  the  National  Football League Players
Association Mackey Awards for the benefit  of inner-city youth and he served as
the  recent  Chairman  of  the   Speakers   Club   of  the  Illinois  House  of
Representatives.

    ROBERT H. BAUM (age  55)  has  been  with  The  Inland  Group, Inc. and its
affiliates since 1968 and is one of  the four original principals.  Mr. Baum is
Vice Chairman and Executive Vice President-General Counsel of The Inland Group,
Inc.  In his  capacity  as  General  Counsel,  Mr.  Baum is responsible for the
supervision  of  the  legal  activities  of  The  Inland  Group,  Inc.  and its
affiliates.  This responsibility  includes  the  supervision  of The Inland Law
Department and serving as liaison with outside counsel.  Mr. Baum has served as
a member  of  the  North  American  Securities  Administrators Association Real
Estate Advisory Committee and as a  member of the Securities Advisory Committee
to the Secretary  of  State  of  Illinois.    He  is  a  member of the American
Corporation Counsel Association and  has  also  been  a  guest lecturer for the
Illinois State Bar Association.   Mr. Baum has been admitted to practice before
the Supreme Court of the United States,  as well as the bars of several federal
courts of appeals and federal district  courts  and  the State of Illinois.  He
received his B.S. Degree from the  University  of Wisconsin and his J.D. Degree
from Northwestern University School of Law.   Mr. Baum has served as a director
of American National Bank  of  DuPage  and  currently  serves  as a director of
Westbank.  Mr. Baum  also  is  a  member  of  the Governing Council of Wellness
House, a charitable  organization  that  provides  emotional support for cancer
patients and their families. 

    G. JOSEPH COSENZA (age 55)  has  been  with  The Inland Group, Inc. and its
affiliates since 1968 and is one of  the four original principals.  Mr. Cosenza
is a Director  and  Vice  Chairman  of  The  Inland  Group,  Inc. and oversees,
coordinates and directs Inland's  many  enterprises.   In addition, Mr. Cosenza
immediately  supervises  a  staff  of  nine  persons  who  engage  in  property
acquisition.  Mr. Cosenza has been  a  consultant to other real estate entities
and lending institutions on property appraisal methods.

Mr. Cosenza received his B.A.  Degree from Northeastern Illinois University and
his M.S. Degree from  Northern  Illinois  University.    From  1967 to 1968, he
taught at the LaGrange School District  in  Hodgkins, Illinois and from 1968 to
1972, he served as  Assistant  Principal  and  taught in the Wheeling, Illinois
School District.  Mr. Cosenza has been a licensed real estate broker since 1968
and an active member of  various  national  and local real estate associations,
including the National Association of Realtors and the Urban Land Institute.

Mr. Cosenza has also been Chairman  of  the  Board of American National Bank of
DuPage, and has  served  on  the  Board  of  Directors  of  Continental Bank of
Oakbrook Terrace.  He  is  presently  a  Director  on  the Board of Westbank in
Westchester and Hillside, Illinois.



                                     -32-


    ROBERT D. PARKS  (age  55)    is  a  Director  of  The  Inland Group, Inc.,
President,  Chairman  and  Chief  Executive   Officer  of  Inland  Real  Estate
Investment Corporation and President,  Chief Executive Officer, Chief Operating
Officer and Affiliated Director of Inland Real Estate Corporation.

Mr. Parks is responsible for  the ongoing administration of existing investment
programs,  corporate  budgeting  and  administration  for  Inland  Real  Estate
Investment Corporation.   He  oversees  and  coordinates  the  marketing of all
investments and investor relations. 

Prior to joining Inland, Mr.  Parks  was  a  school teacher in Chicago's public
schools.  He received his B.A. degree from Northeastern Illinois University and
his M.A. degree from the University  of  Chicago.    He is a member of the Real
Estate Investment Association and a member of NAREIT.

    NORBERT J.  TREONIS  (age  48)    joined  The  Inland  Group,  Inc. and its
affiliates in 1975 and he is  currently Chairman and Chief Executive Officer of
The Inland Property Management Group, Inc.  and a Director of The Inland Group,
Inc.  He serves on the  Board  of Directors of all Inland subsidiaries involved
in the  property  management,  acquisitions  and  maintenance  of  real estate,
including   Mid-America    Property    Management   Corporation,   Metropolitan
Construction Services, Inc.  and  Inland  Commercial  Property Management, Inc.
Mr. Treonis is charged with  the  responsibility  of the overall management and
leasing of all apartment  units,  retail,  industrial and commercial properties
nationwide.

Mr. Treonis is a licensed real estate broker.  He is a past member of the Board
of Directors of American National Bank of DuPage, the Apartment Building Owners
and  Managers  Association,   the   National   Apartment  Association  and  the
Chicagoland Apartment Association.

    BRENDA G. GUJRAL  (age  56)  is  President  and  Chief Operating Officer of
Inland Real Estate Investment  Corporation  (IREIC),  the parent company of the
Advisor.  She is  also  President  and  Chief  Operating Officer of the Dealer-
Manager, Inland Securities Corporation  (ISC),  a  member  firm of the National
Association of Securities Dealers (NASD).

Mrs. Gujral has overall responsibility  for  the operations of IREIC, including
the distribution  of  checks  to  over  50,000  investors,  review  of periodic
communications to those investors, the  filing  of quarterly and annual reports
for Inland's publicly registered  investment  programs  with the Securities and
Exchange Commission, compliance with other  SEC and NASD securities regulations
both for IREIC and ISC,  review  of  asset management activities, and marketing
and communications with  the  independent  broker/dealer firms selling Inland's
current and prior programs.  Mrs.  Gujral works with internal and outside legal
counsel in structuring and registering  the prospectuses for IREIC's investment
programs.

Mrs. Gujral has been with  Inland  for  18  years, becoming an officer in 1982.
Prior to joining  Inland,  she  worked  for  the  Land  Use Planning Commission
establishing an office in Portland,  Oregon,  to implement land use legislation
for that state.

She is a graduate of California State  University.   She holds Series 7, 22, 39
and 63 licenses from the NASD  and  is  a member of the National Association of
Real Estate Investment Trusts (NAREIT)  and  the National Association of Female
Executives.


                                     -33-


    CATHERINE L. LYNCH (age 40) joined  Inland  in 1989 and is the Treasurer of
Inland Real  Estate  Investment  Corporation.    Ms.  Lynch  is responsible for
managing the Corporate Accounting  Department.    Prior  to joining Inland, Ms.
Lynch worked in the  field  of  public  accounting  for KPMG Peat Marwick since
1980.    She  received  her  B.S.  degree  in  Accounting  from  Illinois State
University.  Ms. Lynch is  a  Certified  Public  Accountant and a member of the
American  Institute  of  Certified  Public  Accountants  and  the  Illinois CPA
Society.  She is registered with the National Association of Securities Dealers
as a Financial Operations Principal.

    PAUL J. WHEELER (age  46)    joined  Inland  in  1982  and is currently the
President of Inland Real Estate Equities,  Inc., the entity responsible for all
corporately owned  real  estate.    Mr.  Wheeler  received  his  B.A. degree in
Economics from  DePauw  University  and  an  M.B.A.  in Finance/Accounting from
Northwestern University.   Mr.  Wheeler  is  a  Certified Public Accountant and
licensed real estate broker.    For  three  years  prior to joining Inland, Mr.
Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan
& Tyson, Inc.

    ROBERTA S. MATLIN (age 54)   joined  Inland in 1984 as Director of Investor
Administration  and  currently  serves  as  Senior  Vice President-Investments.
Prior to that, Ms. Matlin spent 11  years with the Chicago Region of the Social
Security Administration of the  United  States  Department  of Health and Human
Services.  She is  a  Director  of  Inland  Real Estate Investment Corporation,
Inland Securities Corporation, and  Inland  Real Estate Advisory Services, Inc.
As Senior  Vice  President-Investments,  she  directs  the  day-to-day internal
operations of the General Partner.    Ms.  Matlin received her B.A. degree from
the University of Illinois.  She is registered with the National Association of
Securities Dealers, Inc. as a General Securities Principal.

    MARK ZALATORIS (age 41) joined Inland  in 1985 and currently serves as Vice
President of Inland Real  Estate  Investment Corporation.  His responsibilities
include the coordination of due  diligence activities by selling broker/dealers
and is also involved  with  limited  partnership asset management including the
mortgage funds.  Mr.  Zalatoris  is  a  graduate  of the University of Illinois
where he received  a  Bachelors  degree  in  Finance  and  a  Masters degree in
Accounting and Taxation.   He  is  a  Certified  Public  Accountant and holds a
General Securities License with Inland Securities Corporation.

    PATRICIA A. CHALLENGER (age  46)  joined  Inland  in  1985.  Ms. Challenger
serves as Senior Vice President of Inland Real Estate Investment Corporation in
the area of Asset Management.  As  head of the Asset Management Department, she
develops  operating  and   disposition   strategies  for  all  investment-owned
properties.    Ms.  Challenger  received  her  Bachelor's  degree  from  George
Washington University and  her  Master's  from  Virginia  Tech University.  Ms.
Challenger was selected and  served  from  1980-1984 as Presidential Management
Intern, where she was part of a special government-wide task force to eliminate
waste, fraud and abuse  in  government  contracting  and  also served as Senior
Contract Specialist  responsible  for  capital  improvements  in 109 government
properties.  Ms. Challenger is  a  licensed real estate broker, NASD registered
securities sales representative and is a member of the Urban Land Institute. 







                                     -34-


    KELLY TUCEK (age  36)  joined  Inland  in  1989  and  is  an Assistant Vice
President of Inland Real Estate Investment Corporation.  As of August 1996, Ms.
Tucek is responsible for  the  Investment  Accounting Department which includes
all public partnership accounting functions along with quarterly and annual SEC
filings.  Prior to joining Inland, Ms.  Tucek was on the audit staff of Coopers
and Lybrand since  1984.    She  received  her  B.A.  Degree  in Accounting and
Computer Science from North Central College.

    VENTON J. CARLSTON (age 41)    joined  Inland  in 1985 and is the Assistant
Controller of Inland Real Estate Investment Corporation where he supervises the
corporate  bookkeeping  staff  and   is  responsible  for  financial  statement
preparation and budgeting for Inland Real Estate Investment Corporation and its
subsidiaries.    Prior  to  joining  Inland,  Mr.  Carlston  was  a partnership
accountant with JMB Realty.   He  received  his  B.S. degree in Accounting from
Southern Illinois University.   Mr.  Carlston  is a Certified Public Accountant
and a member of the Illinois CPA  Society.   He is registered with the National
Association of Securities Dealers, Inc. as a Financial Operations Principal.









































                                     -35-


Item 11. Executive Compensation

The General Partner is entitled to receive a share of cash distributions of Net
Sale Proceeds based  upon  both  an  aggregate  overall  return  to the Limited
Partners and a separate return with respect to each parcel of land purchased by
the Partnership as described under the caption "Cash Distributions" and a share
of profits or losses as described  under  the caption "Allocation of Profits or
Losses" at  page  39  of  the  Prospectus,  and  at  pages  A-8  to  A-9 of the
Partnership Agreement, included as  an  exhibit  to  the  Prospectus, a copy of
which descriptions is incorporated herein by reference.

The Partnership  is  permitted  to  engage  in  various  transactions involving
affiliates of the General Partner  of  the  Partnership, as described under the
captions "Compensation and Fees" at  pages  9-11 and "Conflicts of Interest" at
pages  11-13  of  the  Prospectus,  and  at  pages  A-11  through  A-18  of the
Partnership Agreement, included as  an  exhibit  to  the  Prospectus, a copy of
which is incorporated  herein  by  reference.  The  relationship of the General
Partner (and its directors and officers)  to  its Affiliates is set forth above
in Item 10.

The General Partner and its  Affiliates  may  be reimbursed for its expenses or
out-of-pocket costs relating to the  administration of the Partnership. For the
year ended December 31,  1998,  such  costs  were  $68,315, of which $5,473 was
unpaid as of December 31, 1998.

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. For the year ended December 31,
1998, the Partnership  incurred  $88,412  in  Asset  Management  Fees, of which
$20,776 was unpaid as of December 31, 1998.

An  Affiliate  of  the  General  Partner  performed  marketing  and advertising
services for the Partnership and  was  reimbursed  (as set forth under terms of
the Partnership Agreement) for direct  costs.  For  the year ended December 31,
1998, the Partnership incurred and paid $79,512 of such costs.

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.    The Affiliate did not recognize a
profit on any project. For  the  year  ended December 31, 1998, the Partnership
incurred and paid  $90,456  of  such  costs,  which  are included in investment
properties.














                                     -36-


Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) No person or group is  known  by  the  Partnership to own beneficially more
    than 5% of the outstanding Units of the Partnership.

(b) The officers and directors of the General Partner of the Partnership own as
    a group the following Units of the Partnership:

                                  Amount and Nature
                                    of Beneficial             Percent
    Title of Class                    Ownership               of Class   
    --------------               --------------------      --------------
    Limited Partnership          140 Units directly        Less than 1/2%
     Units

    No officer or director of the  General Partner of the Partnership possesses
    a right to acquire beneficial ownership of Units of the Partnership.

    All of the outstanding shares of the General Partner of the Partnership are
    owned by an Affiliate or its  officers  and directors as set forth above in
    Item 10.

(c) There exists no arrangement,  known  to  the  Partnership, the operation of
    which may, at a  subsequent  date,  result  in  a  change in control of the
    Partnership.


Item 13. Certain Relationships and Related Transactions

There were  no  significant  transactions  or  business  relationships with the
General Partner, Affiliates or their  management  other than those described in
Items 10 and 11 above. Reference is  made  to  Note 3 of the Notes to Financial
Statements (Item 8 of  this  Annual  Report)  for information regarding related
party transactions.
























                                     -37-


                                    PART IV



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

(a) The financial statements listed  in  the  index  at  page 13 of this Annual
    Report are filed as part of this Annual Report.

(b) Exhibits. The following documents are filed as part of this report:

    3 Certificate of Limited Partnership  and Amended and Restated Agreement of
    Limited Partnership, included as Exhibits  A  and B of the Prospectus dated
    October 25, 1989, as amended, are incorporated herein by reference thereto.

    28 Prospectus, to Form S-11  Registration  Statement, File No. 33-30110, as
    filed with Securities  and  Exchange  Commission  on  October  25, 1989, as
    amended, is incorporated herein by reference thereto.

(c) Financial Statement Schedules:

    All schedules have been omitted as the required information is inapplicable
    or the information  is  presented  in  the  financial statements or related
    notes.

(d) Reports on Form 8-K:

    None


No Annual Report or proxy  material  for  the  year  1998  has been sent to the
Partners of the Partnership.  An  Annual  Report  will  be sent to the Partners
subsequent to this  filing  and  the  Partnership  will  furnish copies of such
report to the Commission when it is sent to the Partners.
























                                     -38-


                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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 LAND APPRECIATION FUND II, L.P.
                            Inland Real Estate Investment Corporation
                            General Partner

                                  /s/ Robert D. Parks

                            By:   Robert D. Parks
                                  Chairman of the Board
                                  and Chief Executive Officer
                            Date: March 29, 1999

Pursuant to the  requirements  of  the  Securities  Exchange  Act of 1934, this
report has  been  signed  below  by  the  following  persons  on  behalf of the
registrant and in the capacities and on the dates indicated:

                            By:   Inland Real Estate Investment Corporation
                                  General Partner

                                  /s/ Robert D. Parks

                            By:   Robert D. Parks
                                  Chairman of the Board
                                  and Chief Executive Officer
                            Date: March 29, 1999

                                  /s/ Patricia A. Challenger

                            By:   Patricia A. Challenger
                                  Senior Vice President
                            Date: March 29, 1999

                                  /s/ Kelly Tucek

                            By:   Kelly Tucek
                                  Principal Financial Officer
                                  and Principal Accounting Officer
                            Date: March 29, 1999

                                  /s/ Daniel L. Goodwin

                            By:   Daniel L. Goodwin
                                  Director
                            Date: March 29, 1999

                                  /s/ Robert H. Baum

                            By:   Robert H. Baum
                                  Director
                            Date: March 29, 1999



                                     -39-