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, 2007oTRANSITION 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 of Incorporation)(I.R.S. Employer Identification No.)    2901 Butterfield Road, Oak Brook, IL  60523 (Address of principal executive offices)(Zip Code)  630-218-8000 (Registrants telephone number, including area code) ___________________________________________    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes X   No  o  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.  (Check one): Large accelerated filer  o          Accelerated filer  o          Non-accelerated filer  X  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yesq   No  X      -1-  INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
March 31, 2007 and December 31, 2006 (unaudited)   Assets   20072006Current assets:Cash and cash equivalents$14,085,7144,698,542Accounts and accrued interest receivable (Note 5)165,033315,965Other current assets50,287279,836Total current assets14,301,0345,294,343Mortgage loans receivable (Note 5)10,110,36010,160,728Investment properties (including acquisition fees paid to   Affiliates of $383,202 and $469,365 at March 31, 2007 and   December 31, 2006, respectively) (Note 3):Land and improvements16,234,70319,655,113Total assets$40,646,09735,110,184          See accompanying notes to financial statements.  -2-  INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 2007 and December 31, 2006
(unaudited)Liabilities and Partners' Capital   20072006Current liabilities:Accounts payable$930,9141,412,790Accrued real estate taxes60,95648,990Due to affiliates (Note 2)48,51284,130Unearned income8,295-Total current liabilities1,048,6771,545,910Deferred gain on sale of investment properties (Note 5)5,907,8555,937,343Total liabilities6,956,5327,483,253Partners' capital:General Partner:Capital contribution500500Cumulative net income11,223,43211,222,780Cumulative cash distributions(10,813,195)(10,813,195)410,737410,085Limited Partners:Units of $1,000. Authorized 60,000 Units, 50,068 Units outstanding     at March 31, 2007 and December 31, 2006, (net of offering costs of     $7,532,439, of which $2,535,445 was paid to Affiliates)42,559,90942,559,909Cumulative net income76,049,75369,987,771Cumulative cash distributions(85,330,834)(85,330,834)33,278,82827,216,846Total Partners' capital33,689,56527,626,931Total liabilities and Partners' capital$40,646,09735,110,184  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, 2007 and 2006
(unaudited) 20072006Income:Sale of investment properties (Note 3)$9,756,017911,575Recognition of deferred gain on sale of investment properties29,488501,906Rental income (Note 4)18,40319,128Interest income212,100214,223Other income9,25011,92810,025,2581,658,760Expenses:Cost of investment properties sold3,788,063838,633Professional services to affiliates9,6517,149Professional services to non-affiliates26,51133,442General and administrative expenses to affiliates2,8333,170General and administrative expenses to non-affiliates72,25245,844Marketing expenses to affiliates8,3387,621Marketing expenses to non-affiliates19,17129,297Land operating expenses to non-affiliates35,80528,2633,962,624993,419Net income$6,062,634665,341Net income allocated to:General Partner$652905Limited Partners6,061,982664,436Net income$6,062,634665,341Net income allocated to the one General Partner Unit$652905Net income per Unit allocated to Limited Partners per weighted
  average Limited Partnership Units (50,068 for the three months   ended March 31, 2007 and 2006)$121.0713.27  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, 2007 and 2006
(unaudited) 20072006Cash flows from operating activities:Net income$6,062,634665,341Adjustments to reconcile net income to net cash used in operating     activities:Gain on sale of investment properties(5,967,954)(72,942)Recognition of deferred gain on sale of investment properties(29,488)(501,906)Changes in operating assets and liabilities:Accounts and accrued interest receivable150,932127,046Other current assets229,549182Accounts payable(481,876)(1,329,964)Accrued real estate taxes11,9667,544Due to Affiliates(35,618)(12,840)Unearned income8,2956,624Net cash used in operating activities(51,560)(1,110,915)Cash flows from investing activities:Principal payments on mortgage loans receivable50,368857,278Additions to investment properties(367,653)(1,822,482)Proceeds from sale of investment properties9,756,017911,575Net cash provided by (used in) investing activities9,438,732(53,629)Net increase (decrease) in cash and cash equivalents9,387,172(1,164,544)Cash and cash equivalents at beginning of period4,698,5426,129,127Cash and cash equivalents at end of period$14,085,7144,964,583  See accompanying notes to financial statements.  -5-  INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 2007
(unaudited)   Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2006, which are included in the Partnership's 2006 annual report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report.  (1) Organization and Basis of Accounting  Inland 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 or Units pursuant to a registered offering under the Securities Act of 1933.  Inland Real Estate Investment Corporation is 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, 2007, the Partnership had 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 period 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 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.  New Accounting Pronouncements  In June 2006, the FASB issued Interpretation No. 48: Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109. This Interpretation defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Partnership determined that the adoption of Interpretation No. 48 did not have a material effect on our financial statements.   -6-  INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2007
(unaudited)   (2) Transactions with Affiliates The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership. Such costs are included in professional services to affiliates and general and administrative expenses to affiliates, of which $10,105 and $12,352 was unpaid as of March 31, 2007 and December 31, 2006, respectively. 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 $8,338 and $7,621 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2007 and March 31, 2006, respectively, of which $4,127 and $10,137 was unpaid as of March 31, 2007 and December 31, 2006, respectively. An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the partnership agreement) for salaries and direct costs.  For the three months ended March 31, 2007, the Partnership incurred $53,098 of such costs.  The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $34,280 and $61,641 was unpaid as of March 31, 2007 and December 31, 2006, respectively.    -7-


INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements (continued) March 31, 2007 (unaudited) (3) Investment Properties Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized1McHenry372.75904/25/90$2,114,295114,0702,228,365630,7032,859,068--(372.759)02/23/042Kendall41.11807/06/90549,63943,889593,52875,199668,727--(3.473)08/29/03(37.645)02/17/053Kendall120.81711/06/901,606,794101,8631,708,6574,256,3404,636,7941,328,2031,014,514(3.390)05/17/05(31.000)07/14/05(49.400)Var 2006(20.350)Var 20074Kendall299.02506/28/911,442,05977,8041,519,863491,823-2,011,686-5Kane189.046802/28/911,954,62994,5692,049,198349,8452,399,043--(189.0468)05/16/016Lake57.334504/16/91904,33771,199975,53655,6281,031,164-4,450,568(.258)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 20008Kane325.39406/14/913,496,700262,2753,758,97555,9431,909,0341,905,884-(.870)04/03/96(63.000)01/23/01(80.000)05/11/04


-8-


INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued) (3) Investment Properties (continued) Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized9 (c)Will9.86708/13/91$-------(9.867)09/16/0210Will150.6608/20/911,866,71689,3331,956,04923,8971,979,946--(150.66)01/10/0511Will138.44708/20/91289,91420,376310,2902,700312,990--(138.447)05/03/9312 (c)Will44.73208/20/91-------(44.732)09/16/0213Will6.34209/23/91139,524172139,696-139,696--(6.342)05/03/9314Kendall44.40309/03/91888,06068,210956,2701,259,5832,215,853--(15.392)04/16/01(14.2110)Var 2002(13.6000)04/11/03(1.2000)02/19/0415Kendall100.36409/04/911,050,00052,6941,102,694117,8291,220,523--(5.000)09/01/93(11.000)12/01/94(84.364)08/14/9816McHenry168.90509/13/911,402,05869,7311,471,78997,7661,569,555--(168.905)08/03/0117Kendall3.46210/30/91435,00022,326457,326113,135570,461--(2.113)03/06/01(1.349)08/23/02


-9-


INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued) (3) Investment Properties (continued)  Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized18McHenry139.169711/07/91$1,160,30158,1901,218,4918,713,2878,129,5541,802,224148,159(9.2500)Var 2004(33.3197)Var 2005(62.0200)Var 2006(7.8400)Var 200719Kane436.23612/13/914,362,360321,2504,683,610187,2114,870,821--(436.236)05/16/0120Kane &Kendall400.12901/31/921,692,623101,3181,793,9414,862,2481,250,4695,405,720-(21.138)06/30/9921Kendall15.01305/26/92250,00023,844273,84443,063316,907--(1.000)03/16/99(14.013)09/06/0622Kendall391.95910/30/923,870,000283,1864,153,1861,768,6405,556,530365,296-(10.000)01/06/94(5.538)01/05/96(2.400)07/27/99(73.395)Var 2001(136.000)08/14/02(34.1400)05/27/03(101.4900)01/09/0423Kendall133.207410/30/923,231,942251,3733,483,3154,665,9988,149,313--(11.525)07/16/93(44.070)Var 1995(8.250)Var 1996(2.610)Var 1997(10.6624)Var 1998(5.8752)Var 1999(49.0120)Var 2000(.2028)Var 2001(1.0000)Var 2002


-10-


INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued) (3) Investment Properties (continued) Gross AcresPurchase/Initial CostsCosts CapitalizedCosts ofTotal Remaining Costs ofCurrent Year GainParcelIllinoisPurchasedSalesOriginalAcquisitionTotalSubsequent toPropertyParcels aton Sale#County(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized23A(a)Kendall.267610/30/92$170,07212,641182,713-182,713--(.2676)03/16/9324Kendall3.90801/21/93645,00056,316701,31630,436731,752--(3.908)04/16/0124A(b)Kendall.40601/21/93155,00013,533168,533-168,533--(.406)04/16/0125Kendall656.68701/28/931,625,00082,5361,707,53622,6731,730,209--(656.687)10/31/9526 (d)Kane89.51103/10/931,181,55589,3121,270,8675,135,8956,406,762--(2.108)Var 1999(34.255)Var 2000(7.800)Var 2001(29.1200)Var 2002(11.3100)Var 2003(4.9180)01/28/0427Kendall83.52503/11/93984,47454,8461,039,3203,915,0732,427,7282,526,665354,713(25.300)Var 2006(7.700)Var 200728 (c)Kendall50.000009/16/02661,46022,976684,436204,589-889,025-$38,810,0252,504,27641,314,30140,289,95565,369,55316,234,7035,967,954


-11-


INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2007
(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) Reconciliation of investment properties owned:  March 31,December 31,20072006Balance at January 1,$19,655,11321,988,636Additions during period367,6536,112,652Sales during period(3,788,063)(8,446,175)Balance at end of period,$16,234,70319,655,113  (e) On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, the Partnership conducts an impairment analysis to ensure that the carrying value of each 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 carrying value over fair value.  In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property.  The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole.  Should the actual results differ from management's 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, 2007, the Partnership had recorded no such impairment.   -12-  INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2007
(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, 2007, the Partnership had leases of generally one year in duration, for approximately 707 acres of the approximately 1,032 acres owned.  (5) Mortgage Loans Receivable Mortgage loans receivable are the result of sales of parcels, in whole or in part.  The Partnership has recorded a deferred gain on these sales.  The deferred gain will be recognized over the life of the related mortgage loan receivable as principal payments are received.  AccruedPrincipalPrincipalInterestDeferredBalanceBalanceReceivableGainParcelMaturityInterest Rate03/31/0712/31/0603/31/0703/31/075 & 1907/01/116.00%$10,110,36010,160,728151,6815,907,855$10,110,36010,160,728151,6815,907,855 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%.  For the three months ended March 31, 2007, we received principal payments totaling $50,368 and recognized deferred gain of $29,488.  The remaining deferred gain will be recognized as payments are received.   (6) Subsequent Events  On April 9, 2007, we sold 2 additional lots of Parcel 27 for approximately $133,000 and recorded a gain of approximately $52,000.      -13-  Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward looking statements. These factors include, among other things, the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner. We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC).  The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330.  The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically. Critical Accounting Policies The Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies."  A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable, cost allocation and revenue recognition.  These 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 require companies to provide investors with an understanding of how management forms these policies.  Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP.  GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates.  The following disclosure discusses 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, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value.  If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value. In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property.  The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole.  Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.  -14-  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. As of March 31, 2007, we had recorded no such impairment. Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price. Valuation of Mortgage Loans 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 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 mortgage loans 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. Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate.  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, 2007, 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 registered offering 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.   -15-  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, 2007, we have had multiple sales and exchange transactions through which we have disposed of the buildings and approximately 3,498 acres, or 77%, of the approximately 4,530 acres originally owned. As of March 31, 2007, cumulative distributions have totaled $85,330,834 to the limited partners (which exceeds the original capital) and $10,813,195 to the general partner.  Of the $85,330,834 distributed to the limited partners, $84,609,834 was net sales proceeds and $721,000 was from operations. As of March 31, 2007, we have used $40,289,955 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 March 31, 2007, we owned, in whole or in part, eight parcels consisting of approximately 1,032 acres, of which 707 acres are tillable and leased to local farmers and are generating sufficient cash flow from leases to cover property taxes and insurance. At March 31, 2007, we had cash and cash equivalents of $14,085,714 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, 2007 we received net sales proceeds of $849,114 from the sales of Parcel 18, $2,509,314 from the sales of Parcel 3, $920,313 from the sales of Parcel 27 and $5,477,275 from the sale of Parcel 6. We anticipate future additional sales of over 240 acres of Parcels 3, 18 and 27 during 2007 through 2008.  However there can be no assurance that any sales will be completed or that a distribution will be made to the limited partners. 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. We plan to enhance the value of our 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 useable for development, and discussions continue with the Village of Montgomery about a Tax Increment Financing District to fund development of the property.  Zoning and planning of Parcels 3 and 27 is complete and two contracts for sale of improved single family lots are pending.  We have completed our final planning on Parcel 4.  Sales of improved lots are proceeding on Parcel 18. 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 $12,484 and $10,319 are included in professional services to affiliates and general and administrative expenses to affiliates for the three months ended March 31, 2007 and March 31, 2006, respectively, of which $10,105 and $12,352 was unpaid as of March 31, 2007 and December 31, 2006, respectively.  -16-  An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs.  Such costs of $8,338 and $7,621 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2007 and March 31, 2006, respectively, of which $4,127 and $10,137 was unpaid at March 31, 2007 and December 31, 2006, respectively. An affiliate of our general partner performed property upgrades, rezoning, annexation and other activities to prepare our land investments for sale and was reimbursed for salaries and direct costs. For the three months ended March 31, 2007, we incurred $53,098 of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $34,280 and $61,641 was unpaid as of March 31, 2007 and December 31, 2006, respectively.  Results of Operations Income from the sale of investment properties of $9,756,017 and cost of investment properties sold of $3,788,063 for the three months ended March 31, 2007 is the result of the sale of approximately 20 acres of Parcel 3, 57 acres of Parcel 6, 8 acres of Parcel 18 and 8 acres of Parcel 27.  Income from the sale of investment properties of $911,575 and cost of investment properties sold of $838,633 for the three months ended March 31, 2006 is the result of the sale of 9.25 acres of Parcel 18.  During 2001, we sold 189 acres of Parcel 5 and 436 acres of Parcel 19 for $17,500,000 and recorded deferred gain of $10,230,133.  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%. For the three months ended March 31, 2007, we received principal payments totaling $50,368 and recognized deferred gain of $29,488.  The remaining deferred gain will be recognized as payments are received. As of March 31, 2007, we owned eight parcels of land consisting of approximately 1,032 acres. Of the approximately 1,032 acres owned, 707 acres are tillable, leased to local farmers and generate sufficient cash flow to cover property taxes, insurance and other miscellaneous expenses. Rental income was $18,403 and $19,128 for the three months ended March 31, 2007 and 2006, respectively. Rental income decreased due to land sales.  Professional services to affiliates and non-affiliates were $36,162 and $40,591 for the three months ended March 31, 2007 and March 31, 2006, respectively.  The decrease in 2007 is due to a decrease in accounting fees.  General and administrative expenses to non-affiliates were $72,252 and $45,844 for the three months ended March 31, 2007 and March 31, 2006, respectively. The increase in 2007 is due to an increase in Illinois Replacement tax due to the increase in land sales.  Marketing expenses to affiliates and non-affiliates were $27,509 and $36,918 for the three months ended March 31, 2007 and March 31, 2006, respectively.  Marketing expenses are costs incurred for preparing and marketing parcels for sale.  The decrease in 2007 is due to the efficiencies of established marketing plans and nonrecurring marketing expenses in 2006.  Land operating expenses to non-affiliates were $35,805 and $28,263 for the three months ended March 31, 2007 and March 31, 2006, respectively.  The increase in 2007 is due to an increase in grounds maintenance expenses.   -17-   Subsequent Events  On April 9, 2007, we sold 2 additional lots of Parcel 27 for approximately $133,000 and recorded a gain of approximately $52,000.  Other items  In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund II, L.P. Partnership Agreement and IRS Regulation Section 1.7704-1(j), we have reached the maximum threshold of partnership units that can be transferred/assigned during 2007. Therefore, no other sales of partnership interests can take place during 2007.    Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable.    Item 4. Controls and Procedures Our general partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  Based upon that evaluation, the principal executive officer and principal financial officer concluded that, as of the end of such period, our disclosure controls and procedures were effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission. There were no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2007 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.    PART II - Other Information  Items 1 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      -18-  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 Partner/S/ BRENDA G. GUJRALBy:Brenda G. GujralIts:President and Principal Executive OfficerDate:May 11, 2007/S/ GUADALUPE GRIFFINBy:Guadalupe GriffinIts:Vice PresidentDate:May 11, 2007/S/ DONNA URBAINBy:Donna UrbainIts:Principal Financial OfficerDate:May 11, 2007     -19-