UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-Q   XQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM     TO  COMMISSION FILE NUMBER: 0-19220   Inland Land Appreciation Fund II, L.P. (Exact name of registrant as specified in its charter)   Delaware36-3664407(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)    2901 Butterfield Road, Oak Brook, IL  60523 (Address of principal executive offices)(Zip Code)  630-218-8000 (Registrants telephone number, including area code) ___________________________________________  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes X     No  o  Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.45 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o        No o  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,  a non-accelerated filer, or a smaller reporting company.  See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company"  in Rule 12b-2 of the Exchange Act.  Large accelerated filer  oAccelerated filer  oNon-accelerated filer o  (Do not check off if smaller reporting company)Smaller reporting company X  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o     No  X      -1-   INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Balance Sheets  March 31, 2010 and December 31, 2009 (unaudited)  Assets  20102009Current assets:Cash and cash equivalents (Note 1)$2,266,6562,336,902Total current assets2,266,6562,336,902Mortgage loan receivable (net of allowance for doubtful accounts of   $8,918,412 at March 31, 2010 and December 31, 2009) (Note 5)--Investment properties, at cost (including acquisition fees paid to
affiliates of $369,560 at March 31, 2010 and December 31, 2009)   (Note 3):Land and improvements18,349,92218,349,922Total assets$20,616,57820,686,824       See accompanying notes to financial statements.  -2-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Balance Sheets (continued)  March 31, 2010 and December 31, 2009 (unaudited)  Liabilities and Partners' Capital  20102009Current liabilities:Accounts payable$88,593232,423Accrued real estate taxes50,94140,464Due to affiliates (Note 2)30,12236,186Unearned income46,252-Total current liabilities215,908309,073Partners' capital:General Partner:Capital contribution500500Cumulative net income13,691,33013,691,101Cumulative cash distributions(13,313,195)(13,313,195)378,635378,406Limited Partners:Units of $1,000. Authorized 60,000 Units, 50,068 Units outstanding       at March 31, 2010 and December 31, 2009, (net of offering costs of       $7,532,439, of which $2,535,445 was paid to affiliates)42,559,90942,559,909Cumulative net income67,794,13867,771,448Cumulative cash distributions(90,332,012)(90,332,012)20,022,03519,999,345Total Partners' capital20,400,67020,377,751Total liabilities and Partners' capital$20,616,57820,686,824       See accompanying notes to financial statements.  -3-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Statements of Operations  For the three months ended March 31, 2010 and 2009 (unaudited)  20102009Revenues:Rental income (Note 4)39,27128,893Other operating income71,000208,463Total revenues110,271237,356Expenses:Professional services to affiliates22,58419,931Professional services to non-affiliates33,81038,290General and administrative expenses to affiliates4,8422,580General and administrative expenses to non-affiliates11,3586,721Marketing expenses to affiliates2,6164,664Land operating expenses to affiliates5,8045,585Land operating expenses to non-affiliates16,464127,583Total expenses97,478205,354Operating income12,79332,002Interest income6,9261,197Other income3,2004,400Net income$22,91937,599Net income allocated to:General Partner$229376Limited Partners22,69037,223Net income$22,91937,599Net income allocated to the one General Partner Unit$229376Net income per Unit allocated to Limited Partners per weighted average   Limited Partnership Units (50,068 for the three months ended March 31,   2010 and 2009)$.45.74   See accompanying notes to financial statements.  -4-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Statements of Cash Flows  For the three months ended March 31, 2010 and 2009 (unaudited)  20102009Cash flows from operating activities:Net income$22,91937,599Adjustments to reconcile net income to net cash used in operating     activities:Changes in assets and liabilities:Accounts and accrued interest receivable-(13,278)Accounts payable(143,830)(266,181)Accrued real estate taxes10,47713,073Due to affiliates(6,064)(3,807)Unearned income46,25215,890Net cash used in operating activities(70,246)(216,704)Cash flows from investing activities:Additions to investment properties-(75,374)Net cash used in investing activities-(75,374)Cash flows from financing activities:Distributions-(1,178)Net cash used in financing activities-(1,178)Net decrease in cash and cash equivalents(70,246)(293,256)Cash and cash equivalents at beginning of period2,336,9024,137,034Cash and cash equivalents at end of period$2,266,6563,843,778             See accompanying notes to financial statements.  -5-    INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements  March 31, 2010 (unaudited)  Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2009, which are included in the Partnership's 2009 annual report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report.  (1) Organization and Basis of Accounting  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) 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 March 31, 2010, the Partnership has repurchased a total of 408.65 Units for $383,822 from various Limited Partners through the Unit Repurchase Program.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the periods presented herein.  Results of interim periods are not necessarily indicative of results to be expected for the year.  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. The Partnership maintains our cash and cash equivalents at financial institutions. The combined account balances at one or more institutions periodically exceed the Federal Depository Insurance Corporation (FDIC) insurance coverage of $250,000 and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Partnership believes that the risk is not significant, and the Partnership does not anticipate the financial institutions non-performance.  The Partnership recognizes income from the sale of land parcels in accordance with the full accrual method of accounting.  The Partnerships escrow agent holds earnest money deposits from a prospective purchaser when an agreement for sale is executed. Generally, these funds are not the Partnerships until the closing has occurred or the buyer under the sale agreement has committed a default which would entitle the Partnership to the earnest money.  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.    -6-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)    (2) Transactions with Affiliates  The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership. Such costs of $27,426 and $22,511 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the three months ended March 31, 2010 and 2009, respectively, of which $26,472 and $23,086 was unpaid as of March 31, 2010 and December 31, 2009, respectively.  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. Such costs of $2,616 and $4,664 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2010 and 2009, respectively, of which $650 and $2,100 was unpaid as of March 31, 2010 and December 31, 2009, respectively.  An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's investment properties for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. Such costs of $2,223 and $3,489 have been incurred for the three months ended March 31, 2010 and 2009, respectively. Such costs are included in investment properties, of which $600 and $3,000 was unpaid as of March 31, 2010 and December 31, 2009, respectively. In addition, the costs related to Parcel 3/27 and Parcel 18 totaled $5,804 and $5,585 for the three months ended March 31, 2010 and 2009, respectively, and are included in land operating expenses to affiliates, of which $2,400 and $8,000 was unpaid as of March 31, 2010 and December 31, 2009, respectively. The affiliate did not recognize a profit on any project.    -7-


INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   (3) Investment properties  Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/10Recognized1McHenry372.759004/25/90$2,114,295114,0702,228,365630,7032,859,068--(372.7590)02/23/042Kendall41.118007/06/90549,63943,889593,52875,199668,727--(3.4730)08/29/03(37.6450)02/17/053/27Kendall120.817011/06/902,591,268156,7092,747,9779,880,85010,384,8272,244,000-83.525003/11/93(3.3900)05/17/05(31.0000)07/14/05(74.7000)Var 2006(36.8500)Var 2007(6.6000)
(36.1262)Var 2008
Var 20094Kendall299.025006/28/911,442,05977,8041,519,863531,167-2,051,030-5Kane189.046802/28/911,954,62994,5692,049,198349,8452,399,043--(189.0468)05/16/016Lake57.334504/16/91904,33771,199975,53655,6281,031,164--(.2580)10/01/94(57.0765)03/22/077McHenry56.709404/22/91680,51344,444724,9573,210,4513,935,408--(12.6506)Var 1997(15.7041)Var 1998(19.6296)Var 1999(8.7251)Var 20008Kane325.394006/14/913,496,700262,2753,758,97574,7501,909,0341,924,691-(.8700)04/03/96(63.0000)01/23/01(80.0000)05/11/04   -8-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   (3) Investment properties (continued)  Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/10Recognized9 (c)Will9.867008/13/91$-------(9.8670)09/16/0210Will150.660008/20/911,866,71689,3331,956,04923,8971,979,946--(150.6600)01/10/0511Will138.447008/20/91289,91420,376310,2902,700312,990--(138.4470)05/03/9312 (c)Will44.732008/20/91-------(44.7320)09/16/0213Will6.342009/23/91139,524172139,696-139,696--(6.3420)05/03/9314Kendall44.403009/03/91888,06068,210956,2701,259,5832,215,853--(15.3920)04/16/01(14.2110)Var 2002(13.6000)04/11/03(1.2000)02/19/0415Kendall100.364009/04/911,050,00052,6941,102,694117,8291,220,523--(5.0000)09/01/93(11.0000)12/01/94(84.3640)08/14/9816McHenry168.905009/13/911,402,05869,7311,471,78997,7661,569,555--(168.9050)08/03/0117Kendall3.462010/30/91435,00022,326457,326113,135570,461--(2.1130)03/06/01(1.3490)08/23/02   -9-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   (3) Investment properties (continued)  Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/10Recognized18McHenry139.169711/07/91$1,160,30158,1901,218,4919,456,9929,621,4831,054,000-(9.2500)Var 2004(33.3197)Var 2005(62.0200)Var 2006(12.8800)Var 2007(2.2400)Var 200819Kane436.236012/13/914,362,360321,2504,683,610187,2114,870,821--(436.2360)05/16/0120Kane &Kendall400.129001/31/921,692,623101,3181,793,9419,244,6361,250,4699,788,108-(21.1380)06/30/99(7.0000)07/21/0821Kendall15.013005/26/92250,00023,844273,84443,063316,907--(1.0000)03/16/99(14.0130)09/06/0622Kendall391.959010/30/923,870,000283,1864,153,1861,768,8315,556,530365,487-(10.0000)01/06/94(5.5380)01/05/96(2.4000)07/27/99(73.3950)Var 2001(136.0000)08/14/02(34.1400)05/27/03(101.4900)01/09/04   -10-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)    (3) Investment properties (continued)  Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/10Recognized23Kendall133.207410/30/92$3,231,942251,3733,483,3154,665,9988,149,313--(11.5250)07/16/93(44.0700)Var 1995(8.2500)Var 1996(2.6100)Var 1997(10.6624)Var 1998(5.8752)Var 1999(49.0120)Var 2000(.2028)Var 2001(1.0000)Var 200223A(a)Kendall.267610/30/92170,07212,641182,713-182,713--(.2676)03/16/9324Kendall3.908001/21/93645,00056,316701,31630,436731,752--(3.9080)04/16/0124A(b)Kendall.406001/21/93155,00013,533168,533-168,533--(.4060)04/16/0125Kendall656.687001/28/931,625,00082,5361,707,53622,6731,730,209--(656.6870)10/31/9526 (d)Kane89.511003/10/931,181,55589,3121,270,8675,135,8956,406,762--(2.1080)Var 1999(34.2550)Var 2000(7.8000)Var 2001(29.1200)Var 2002(11.3100)Var 2003(4.9180)01/28/0428 (c)Kendall50.000009/16/02661,46022,976684,436238,170-922,606-$38,810,0252,504,27641,314,30147,217,40870,181,78718,349,922-    -11-


INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   (3) 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. The building was sold in 2001.  (c) On September 16, 2002, the Partnership completed a tax-deferred exchange of Parcels 9 and 12 for 50 acres in Kendall County (Parcel 28).  (d) On a quarterly basis, the Partnership reviews impairment indicators and if necessary, conducts an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value.  If this were to occur, the Partnership would be required to record an impairment loss equal to the excess of the carrying value over the estimated fair value.  In determining the value of an investment property and whether the property is impaired, management considers several indicators which require difficult, complex and/or subjective judgments, such as projected sales prices, capital expenditures and assessment of current economic conditions. The aforementioned indicators are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain indicators, either individually or taken as a whole.  Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.  The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property. For the quarter ended March 31, 2010, the partnership had recorded no such impairment. For the year ended December 31, 2009, the Partnership recorded a $1,397,000 impairment loss on land relating to Parcel 3/27 and Parcel 18. Due to the continuing troubled real estate market, the declining economy, the reduction in new construction home starts, and the decrease in new home and lot prices, the remaining cost of Parcel 3/27 and Parcel 18 exceeded the estimated sales proceeds on the remaining lots and accordingly, the Partnership recorded the impairment loss to reduce the remaining cost of Parcel 3/27 and Parcel 18 to the estimated sales proceeds. As of March 31, 2010, the total accumulated gain on sale recorded, net of the impairment losses, for Parcel 18 was approximately $2,200,000 and for Parcel 3/27, the total accumulated gain recorded, net of the impairment losses, was approximately $10,700,000.  (e) Reconciliation of investment properties owned:  March 31,December 31,20102009Balance at January 1,$18,349,92218,794,007Additions during period-952,915Impairment loss on land-(1,397,000)Balance at end of period$18,349,92218,349,922       -12-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   (4) 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 March 31, 2010, the Partnership had farm leases of generally one year in duration, for approximately 720 acres of the approximately 967 acres owned.  (5) Mortgage Loan Receivable  The mortgage loan receivable is the result of sales of parcels, in whole or in part. The Partnership recorded a deferred gain on these sales. The deferred gain was recognized over the life of the related mortgage loan receivable as principal payments were received.  AccruedPrincipalPrincipalInterestDeferredBalanceBalanceReceivableGainParcelMaturityInterest Rate03/31/1012/31/0903/31/1003/31/105 & 1907/01/116.00%$8,918,4128,918,412--Less allowance for doubtful accounts8,918,4128,918,412--$----  On May 16, 2001, the Partnership sold 189 acres of Parcel 5 and 436 acres of Parcel 19 for $17,500,000 and recorded deferred gain of $10,203,634. The Partnership received a deferred down payment note in the amount of $1,500,000, due December 31, 2001. The note had an interest rate of 6%, however the note provided for the interest to be waived if the principal was paid in full by December 1, 2001. The Partnership received payment of the deferred down payment note on December 1, 2001 and recognized $875,923 of deferred gain. The Partnership also received an installment note in the amount of $16,000,000 at the time of closing. The installment note matures July 1, 2011 and has an interest rate of 6%. During 2009, the Partnership received $2,400 in principal payments, bringing the total amount of principal paid since loan inception to $8,581,589 and interest paid since loan inception to $5,449,637. During the first quarter of 2008, the homebuilder who is the borrower under the mortgage loan notified the Partnership that they were experiencing a slowdown in sales contracts for new homes. The Partnership agreed to temporarily suspend the 6% interest due on the mortgage receivable and applied payments received during 2008 toward principal. During the second quarter of 2008, based on the available information, the Partnership determined that the full collectibility of the mortgage receivable was doubtful. As a result, management elected to reserve $3,923,062 of principal and $2,296,818 of the deferred gain relating to the mortgage receivable was recorded against bad debt expense resulting in bad debt expense of $1,626,244 for the year ended December 31, 2008.  During the third quarter of 2009, based on the available information, the Partnership determined that the collectibility of the remaining mortgage receivable was doubtful. The mortgage receivable is subordinate to a construction loan held by an unaffiliated lender. The holder of the first mortgage filed a complaint of foreclosure during September 2009. We filed our answer and counterclaim to the complaint to preserve our interest in the foreclosure on March 18, 2010. Since it is unlikely that the remaining value of the property secured by the mortgage receivable is in excess of the remaining balance due under the construction loan, management elected to reserve the remaining $4,995,350 of principal as of September 30, 2009. In addition, the deferred gain of $2,913,192 relating to the mortgage receivable was also reserved and recorded against bad debt expense resulting in bad debt expense of $2,082,158 for the nine months ended September 30, 2009.  -13-  INLAND LAND APPRECIATION FUND II, L.P. (a limited partnership)  Notes to Financial Statements (continued)  March 31, 2010 (unaudited)   Effective January 1, 2009, accrual of the 6% interest due on the mortgage receivable resumed, however, the Partnership determined that the collectibility of the interest is also doubtful. Since the Partnership has only received minimal payments from the borrower since January 2008, the Partnership is not accruing interest on the financial statements. The Partnership will continue to monitor the activity associated with the mortgage receivable and the related interest.  (6) Subsequent Events  On or about April 8, 2010, we received notification from the attorneys for the Village of Elburn that in effect demanded completion of certain improvements. The Partnership is a co-indemnitor of the subdivision bonds that secure completion of such improvements on Parcels 5 and 19 of the Blackberry Subdivision in Elburn, Il. Subsequently, on April 22, 2010, the Partnership received notice from the bonding companies demanding completion and satisfaction of such obligations. Based on information provided by the bonding companies, the Partnership is estimating that the maximum balances of the outstanding bonds and related fees are approximately $4.3 million. At this time, it is not possible to determine what if any liability will be asserted against the Partnership or the materiality of any outcome.  The Partnership has evaluated all activity through the date these financial statements were issued and determined that all subsequent events which have occurred that would require recognition in the financial statements or notes to the financial statements have been disclosed.     -14-    Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations  Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward looking statements. These factors include, among other things, adverse changes in real estate, financing and general economic or local conditions;  the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.  We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.  Critical Accounting Policies  The Securities and Exchange Commission previously issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies. A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and the mortgage loan receivable and revenue recognition. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.  Valuation of Investment Properties - On a quarterly basis, we review impairment indicators and if necessary, conduct an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value. If an investment property is considered impaired, we would be required to record an impairment loss equal to the excess of carrying value over the estimated fair value.  In determining the value of an investment property and whether the property is impaired, management considers several indicators which require difficult, complex and/or subjective judgments, such as projected sales prices, capital expenditures and assessment of current economic conditions. The aforementioned indicators are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain indicators, either individually or taken as a whole. Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.  The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property.  For the quarter ended March 31, 2010, we have not recorded any such impairment. For the year ended December 31, 2009, we recorded an impairment loss of $1,397,000 in regards to Parcel 3/27 and Parcel 18. Subsequent costs incurred above the estimated fair value for Parcel 3/27 and Parcel 18 and for any other parcels that may be deemed to be impaired will be expensed and included in land operating expenses.   -15-    Cost Allocation  Generally, we use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.  Valuation of Mortgage Loan Receivable - On a quarterly basis, we conduct an analysis to ensure that the carrying value of each mortgage loan receivable is recoverable from the borrower. If we determine that all or a portion of the receivable is not collectible, we would be required to record an allowance for doubtful accounts equal to the amount estimated to be uncollectible.  In determining the value of the mortgage loan receivable, management considers projected sales proceeds available and expenses related to the property associated with the mortgage. Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.  The valuation and possible subsequent allowance for doubtful accounts is a significant estimate that can and does change based on management's continuous process of analyzing each mortgage loan receivable.  As of March 31, 2010, we have evaluated the mortgage loan receivable and determined that an allowance for doubtful accounts of $8,918,412 is needed.  Assets Held for Sale-  In determining whether to classify an asset as held for sale, we consider whether: (i) management has committed to a plan to sell the asset; (ii) the asset is available for immediate sale, in its present condition; (iii) we have initiated a program to locate a buyer; (iv) we believe that the sale of the asset is probable; (v) we are actively marketing the asset for sale at a price that is reasonable in relation to its current value; and (vi) actions required for us to complete the plan indicate that it is unlikely that any significant changes will be made to the plan.  If all of the above criteria are met, we classify the asset as held for sale. The assets and liabilities associated with those assets that are held for sale are classified separately on the balance sheets for the most recent reporting period. Additionally, the operations for the periods presented are classified on the statements of operations as discontinued operations for all periods presented.  From time to time, we may determine that a held for sale property no longer meets the criteria to continue to be classified as held for sale. If this occurs, we record the property at the lower of the carrying amount before the property was classified as held for sale or the fair value at the decision date not to sell. As of March 31, 2010, we have not classified any properties as held for sale.  Liquidity and Capital Resources  On October 25, 1989, we commenced an offering of 30,000 (subject to increase to 60,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. On October 24, 1991, we terminated our 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 were admitted to the partnership. Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held.  We used $41,314,301 of gross offering proceeds to purchase, on an all-cash basis, 27 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. On September 16, 2002, we completed a tax-deferred exchange of Parcels 9 and 12 for 50 acres in Kendall County (Parcel 28). As of March 31, 2010, we have had multiple sales and exchange transactions through which we have disposed of the buildings and approximately 3,563 acres of the approximately 4,530 acres originally owned. As of March 31, 2010, cumulative distributions have totaled $90,332,012 to the limited partners (which exceeds the original capital) and $13,313,195 to the general partner. Of the $90,332,012 distributed to the limited partners, $89,611,012 was net sales proceeds and $721,000 was from operations. As of March 31, 2010, we have used $47,217,408 of working capital for rezoning and other activities. Such amounts have been capitalized and are included in investment properties.  Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of  -16-    March 31, 2010, we own, in whole or in part, seven parcels, consisting of approximately 967 acres, of which 720 are leased to local farmers and are generating sufficient cash flow from leases to cover real estate taxes and insurance.  At March 31, 2010, we had cash and cash equivalents of $2,266,656 which is available to be used for our costs and liabilities, cash distributions to partners and other activities with respect to some or all of our land parcels.  During the three months ended March 31, 2010 and 2009, respectively, there were no land sales. During 2009, required land conveyances were finalized for Parcel 3/27 to the Kendall County Forest Preserve.  Other conveyances include the subdivision roadways to the Village of Montgomery. After the conveyances, Parcel 3/27 remaining acreage totals 15.6758 acres which represents the sixty-six remaining improved residential lots and approximately three acres of park land which will be conveyed to the park district as required upon acceptance of the improvements. We are progressing in our negotiations with a homebuilder for the sale of the remaining sixty-six improved residential lots. Parcel 3/27 consists of two contiguous parcels which are being jointly developed as two residential subdivisions. Each subdivision lies within the boundaries of both parcels. Parcel 3/27 has been zoned and planned for commercial and residential use. The commercial portions have been sold and two third-party builders had entered into contracts for the residential portions of this parcel. Undistributed net sales proceeds will be used to fund our operations, including property upgrades. We will evaluate our cash needs throughout the year to determine any future distributions.  Parcel 18 has been zoned and planned for residential use. The townhome portion was sold in a single transaction to a third party purchaser. The residential lots and duplex lots were under separate contract on a take-out basis with a single third-party builder. The builder has fulfilled its obligations for the duplex lots pursuant to the terms of the contract.  Due to the severe slow down in new home starts and the abundance of competing inventory within these communities, the builders who had contracts for the remaining residential lots of Parcel 3/27 and Parcel 18 did not fulfill their take-out obligation for the balance of the residential lots. Pursuant to the terms of the contracts, the builders were given the required notice of default and an opportunity to cure such default within a specified period of time. The cure period expired January 11, 2009, the builders' right to purchase lots under the contracts was terminated, and the earnest money deposits held in escrow of $208,463 were remitted to us in 2009 and are included in other operating income.  We plan to enhance the value of our remaining land through pre-development activities such as rezoning, annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on several of our land investments. Parcel 20 has been granted rezoning which will permit additional land to be used for development.  We continue to closely monitor the real estate market trends, especially within the areas where our remaining parcels are located. Currently, the depressed real estate market, coupled with the troubled financial markets, continue to adversely impact sales activity, especially sales of vacant land and residential lots. We realize it could take some time for these current trends to improve which could result in an even longer holding period. However, we believe we have taken the steps necessary to reduce costs and maintain sufficient reserves of cash and cash equivalents to cover all our costs for an extended period of time. We have farm leases in place which generate sufficient income to cover the costs of insurance and real estate taxes. Our remaining land is not encumbered by debt and is located in areas that we believe are in the paths of future development.  Transactions with Related Parties  Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to our administration. Such costs of $27,426 and $22,511 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the three months ended March 31, 2010 and 2009, respectively, of which $26,472 and $23,086 was unpaid as of March 31, 2010 and December 31, 2009, respectively.  An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $2,616 and $4,664 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2010 and 2009, respectively, of which $650 and $2,100 was unpaid at March 31, 2010 and December 31, 2009, respectively.   -17-    An affiliate of our general partner performed property upgrades, rezoning, annexation and other activities to prepare our investment properties for sale and was reimbursed for salaries and direct costs. Such costs of $2,223 and $3,489 have been incurred for the three months ended March 31, 2010 and 2009, respectively. Such costs are included in investment properties, of which $600 and $3,000 was unpaid as of March 31, 2010 and December 31, 2009, respectively. In addition, the costs related to Parcel 3/27 and Parcel 18 totaled $5,804 and $5,585 for the three months ended March 31, 2010 and 2009, respectively, and is included in land operating expenses to affiliates, of which $2,400 and $8,000 was unpaid as of March 31, 2010 and December 31, 2009, respectively. The affiliate did not recognize a profit on any project.  Results of Operations  There were no land sales for the three months ended March 31, 2010 and 2009. The lack of sales activity for the three months ended March 31, 2010 and 2009 is the result of the depressed real estate market, the slow down in the sales of vacant land and residential lots and the troubled financial markets.  During 2001, we sold 189 acres of Parcel 5 and 436 acres of Parcel 19 for $17,500,000 and recorded deferred gain of $10,203,634. We received a deferred down payment note in the amount of $1,500,000, due December 31, 2001. The note had an interest rate of 6%, however the note provided for the interest to be waived if the principal was paid in full by December 1, 2001. We received payment of the deferred down payment note on December 1, 2001 and recognized $875,923 of deferred gain. We also received an installment note in the amount of $16,000,000 at the time of closing. The installment note matures July 1, 2011 and has an interest rate of 6%. During the first quarter of 2008, the homebuilder who is the borrower under the mortgage loan notified us that they were experiencing a slowdown in sales contracts for new homes. As a result, we agreed to temporarily suspend the 6% interest due on the mortgage receivable and applied payments received during 2008 toward principal. During the second quarter of 2008, based on the available information, we determined that the full collectibility of the mortgage receivable was doubtful. As a result, we elected to reserve $3,923,062 of principal. In addition, $2,296,818 of the deferred gain relating to the mortgage receivable was also reserved and recorded against bad debt expense during 2008. During the nine months ended September 30, 2009, we received principal payments totaling $2,400 and recognized deferred gain of $1,405. During the third quarter of 2009, based on the available information, we determined that the collectibility of the remaining mortgage receivable was doubtful. The mortgage receivable is subordinate to a construction loan held by an unaffiliated lender. The holder of the first mortgage filed a complaint of foreclosure during September 2009. We filed our answer and counterclaim to the complaint to preserve our interest in the foreclosure on March 18, 2010. Since it is unlikely that the remaining value of the property secured by the mortgage receivable is in excess of the remaining balance due under the construction loan, we elected to reserve the remaining $4,995,350 of principal as of September 30, 2009. In addition, the deferred gain of $2,913,192 relating to the mortgage receivable was also reserved and recorded against bad debt expense resulting in bad debt expense of $2,082,158 for the nine months ended September 30, 2009. Effective January 1, 2009, accrual of the 6% interest due on the mortgage receivable resumed, however, we determined that the collectibility of the interest is doubtful. Since we have only received minimal payments from the borrower since January 2008, we are not accruing interest on the financial statements. We will continue to monitor the activity associated with the mortgage receivable and the related interest.  As of March 31, 2010, we owned seven parcels of land consisting of approximately 967 acres. Of the approximately 967 acres owned, 720 acres are leased to local farmers and generate sufficient cash flow to cover real estate taxes and insurance expense. Rental income was $39,271 and $28,893 for the three months ended March 31, 2010 and 2009, respectively. Rental income increased due to an increase in the farm rental rates.  Other operating income was $71,000 and $208,463 for the three months ended March 31, 2010 and 2009, respectively. During the first quarter of 2010, we received a $71,000 reimbursement from an unused development cost escrow in regards to a previously sold parcel. During the first quarter of 2009, we received $208,463 in earnest money deposits held in escrow, as a result of the default on the three separate contracts with the builders for Parcels 3/27 and 18.  Professional services to affiliates were $22,584 and $19,931 for the three months ended March 31, 2010 and 2009, respectively. Professional services to affiliates increased due to an increase in legal and accounting fees.  Professional services to non-affiliates were $33,810 and $38,290 for the three months ended March 31, 2010 and 2009, respectively. Professional services to non-affiliates decreased in 2010 due to a decrease in accounting fees.  General and administrative expenses to affiliates and non-affiliates were $16,200 and $9,301 for the three months ended March 31, 2010 and 2009, respectively. General and administrative expenses primarily include data processing costs,  -18-    postage, and printing expenses. General and administrative expenses to affiliates and non-affiliates increased due primarily to the first time fee incurred for a farm management company. The company is experienced in modern farm management and in negotiating cash farm leases to achieve the maximum farm income possible.  Marketing expenses to affiliates were $2,616 and $4,664 for the three months ended March 31, 2010 and 2009, respectively. Marketing expenses to affiliates are costs incurred for preparing and marketing parcels for sale. Marketing expenses decreased in response to the slowdown in real estate sales.  Land operating expenses to affiliates and non-affiliates were $22,268 and $133,168 for the three months ended March 31, 2010 and 2009, respectively. These costs primarily include real estate tax expense, ground maintenance expense, the Partnerships proportionate share of the homeowners association fees, and insurance expense on the parcels owned. The decrease in 2010 is due primarily to a decrease in grounds maintenance expenses for Parcels 3/27 and 18. During 2009 there were additional expenses necessary in order to remain in compliance with municipal codes regarding erosion control and landscaping requirements on the remaining unsold residential lots of parcels 3/27 and 18. In addition, the Village of Montgomery has accepted the public improvements for the residential subdivision associated with Parcel 3/27 and consequently the homeowners association assessments have decreased significantly for 2010.  Interest income was $6,926 and $1,197 for the three months ended March 31, 2010 and 2009, respectively. Interest income is primarily a result of cash available to invest on a short term basis during the year as a result of sales proceeds received. During the first quarter of 2009, cash was invested in commercial paper while during the first quarter of 2010, cash was invested in a money market account earning higher interest rates.  Other income was $3,200 and $4,400 for the three months ended March 31, 2010 and 2009, respectively. The decrease in 2010 is due to less transfer fee income as a result of a reduced number of completed transfers.  Subsequent Events  On or about April 8, 2010, we received notification from the attorneys for the Village of Elburn that in effect demanded completion of certain improvements. The Partnership is a co-indemnitor of the subdivision bonds that secure completion of such improvements on Parcels 5 and 19 of the Blackberry Subdivision in Elburn, Il.  Subsequently, on April 22, 2010, we received notice from the bonding companies demanding completion and satisfaction of such obligations. Based on information provided by the bonding companies, we are estimating that the maximum balances of the outstanding bonds and related fees are approximately $4.3 million.At this time, it is not possible to determine what if any liability will be asserted against the Partnership or the materiality of any outcome.  The Partnership has evaluated all activity through the date these financial statements were issued and determined that all subsequent events which have occurred that would require recognition in the financial statements or notes to the financial statements have been disclosed.  Other Items  In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund II, L.P. Partnership Agreement and Treasury Regulation Section 1.7704-1(j), we have not yet reached the maximum threshold of partnership units that may be transferred/assigned directly between parties during 2010. Therefore, we may authorize additional sales of partnership units directly between parties during 2010 until the maximum threshold is reached. For the benefit of interested limited partners, we have a relationship with a qualified matching service as defined under Treasury Regulation Section 1.7704-1(g). In accordance with this Treasury Regulation and the IRS private letter ruling obtained by the qualified matching service, we understand that additional partnership units may be transferred/assigned through the qualified matching service up to a separate maximum threshold each taxable year (in addition to the maximum threshold that may be transferred/assigned directly between parties discussed above). However, there can be no assurance that the IRS private letter ruling will apply in this particular instance, or that any particular transfer will not violate the transfer restrictions contained in our partnership agreement or the provisions of Treasury Regulation Section 1.7704-1(g). If you have any interest in participating in a transfer/assignment of partnership units through this qualified matching service, please contact American Partnership Board directly at 800-736-9797. You are strongly encouraged to consult your personal legal, financial and tax advisors in connection with any such transfer/assignment.   -19-    The Illinois Department of Revenue has finalized regulations in regards to new Illinois income tax withholding requirements for nonresident partners. The withholding requirements were effective for the taxable years ending on or after December 31, 2008. For the taxable year ending December 31, 2009, there were no withholdings required. Payment of the required withholding amount for the taxable year ending December 31, 2008 of $1,167 was made to the Illinois Department of Revenue during March 2009. We are also required to pay a withholding tax to the Internal Revenue Service with respect to a partner's allocable share of our taxable net income, if the partner is a foreign person. We will first pay the withholding tax from the distributions to any nonresident and/or foreign partners, 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 such nonresident and/or foreign partners. During March 2010 and 2009, respectively, we paid $0 and $11 to the Internal Revenue Service on the behalf of foreign partners.  Off-Balance Sheet Arrangements, Contractual Obligations, Liabilities and Contracts and Commitments  None  Litigation  During the first quarter of 2009, the General Partner received notice that William Ryan Homes, Inc. (Ryan), the homebuilder for Parcel 18, filed suit against the City of Woodstock (Woodstock) and ILAFII#XVIII, LLC, our wholly-owned subsidiary that owns that property. The complaint seeks damages for alleged breach of a warranty which Ryan claims caused water seepage. The complaint claims that a total of seven lots have been the subject of water seepage complaints. Ryan also claims that the seepage issues have caused Woodstock to issue a stop work order causing Ryan additional damage. The Partnerships subsidiary has appeared and filed a Motion to Dismiss on November 10, 2009. On December 10, 2009, Ryan filed its Response to the Motion to Dismiss. The Motion was set for hearing January 22, 2010. On January 22, 2010 the Court heard the arguments of counsel and denied the Motion to Dismiss.  The Partnerships subsidiary filed its Answer and Affirmative Defenses on February 17, 2010 denying liability for the alleged damages. The case has been continued to August 12, 2010 for status. Also, Woodstock filed a Motion to Dismiss the complaint as it relates to Woodstock only and on October 13, 2009, Woodstocks motion was granted on the grounds that Ryan had failed to properly exhaust its administrative remedies. The General Partner believes that the claims against the Partnerships subsidiary are without merit and intends to vigorously defend the suit, beginning with its pursuit of a Motion to Dismiss.  Item 3.  Quantitative and Qualitative Disclosures About Market Risk  Not Applicable  Item 4.  Controls and Procedures  Evaluation of Disclosure Controls and Procedures  We have established disclosure controls and procedures to ensure that material information relating to us is made known to the members of senior management and the Audit Committee.  Based on management's evaluation as of March 31, 2010, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.  Management's Report on Internal Control Over Financial Reporting  Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework,our management concluded that our internal control over financial reporting  -20-    was effective as of March 31, 2010. This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this quarterly report.  There were no changes to our internal controls over financial reporting during the quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   PART II  Other Information  Item 1.  Legal Proceedings  During the first quarter of 2009, the General Partner received notice that William Ryan Homes, Inc. (Ryan), the homebuilder for Parcel 18, filed suit against the City of Woodstock (Woodstock) and ILAFII#XVIII, LLC, our wholly-owned subsidiary that owns that property. The complaint seeks damages for alleged breach of a warranty which Ryan claims caused water seepage. The complaint claims that a total of seven lots have been the subject of water seepage complaints. Ryan also claims that the seepage issues have caused Woodstock to issue a stop work order causing Ryan additional damage. The Partnerships subsidiary has appeared and filed a Motion to Dismiss on November 10, 2009. On December 10, 2009, Ryan filed its Response to the Motion to Dismiss. The Motion was set for hearing January 22, 2010. On January 22, 2010 the Court heard the arguments of counsel and denied the Motion to Dismiss.  The Partnerships subsidiary filed its Answer and Affirmative Defenses on February 17, 2010 denying liability for the alleged damages. The case has been continued to August 12, 2010 for status. Also, Woodstock filed a Motion to Dismiss the complaint as it relates to Woodstock only and on October 13, 2009, Woodstocks motion was granted on the grounds that Ryan had failed to properly exhaust its administrative remedies. The General Partner believes that the claims against the Partnerships subsidiary are without merit and intends to vigorously defend the suit, beginning with its pursuit of a Motion to Dismiss.  Items 2 through 5 are omitted because of the absence of conditions under which they are required.  Item 6. Exhibits  Exhibits: 31.1 Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer  31.2 Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer  32.1 Section 1350 Certification by Principal Executive Officer  32.2 Section 1350 Certification by Principal Financial Officer  -21-    SIGNATURES  Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.    INLAND LAND APPRECIATION FUND II, L.P.By:Inland Real Estate Investment CorporationIts:General PartnerBy:/S/ BRENDA G. GUJRALBy:Brenda G. GujralIts:President and Principal Executive OfficerDate:April 30, 2010By:/S/ GUADALUPE GRIFFINBy:Guadalupe GriffinIts:Vice PresidentDate:April 30, 2010By:/S/ DONNA URBAINBy:Donna UrbainIts:Principal Financial OfficerDate:April 30, 2010   -22-