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 SEPTEMBER 30, 2008oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM     TO  COMMISSION FILE NUMBER: 0-18431   Inland Land Appreciation Fund, L.P. (Exact name of registrant as specified in its charter)   Delaware36-3545798(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 such filing requirements for the past 90 days. Yes X     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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"  in Rule 12b-2 of the Exchange Act. Large accelerated filer  o         Accelerated filer  o          Non-accelerated filer o           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, L.P.
(a limited partnership)
Balance Sheets
September 30, 2008 and December 31, 2007 (unaudited)  Assets   20082007Current assets:Cash and cash equivalents (Note 1)$2,112,0332,063,654Accounts and accrued interest receivable (net of allowance for doubtful     accounts of $423,794 at September 30, 2008 and December 31, 2007)     (Note 5)25,39215,182Mortgage loans receivable (net of allowance for doubtful accounts of     $1,233,175 at September 30, 2008 and December 31, 2007) (Note 5)--Total current assets2,137,4252,078,836Investment properties, at cost (including acquisition fees paid to affiliates of   $459,426 and $459,874 at September 30, 2008 and December 31, 2007,   respectively) (Note 3):Land and improvements13,190,30512,938,185Total assets$15,327,73015,017,021       See accompanying notes to financial statements. -2-    INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 2008 and December 31, 2007 (unaudited)  Liabilities and Partners' Capital   20082007Current liabilities:Accounts payable$115,49494,814Accrued real estate taxes12,21917,055Due to affiliates (Note 2)57,36845,340Unearned income17,36527,062Total current liabilities202,446184,271Partners' capital:General Partner:Capital contribution500500Cumulative net income4,760,7734,761,194Cumulative cash distributions(4,745,451)(4,745,451)15,82216,243Limited Partners:Units of $1,000. Authorized 30,001 Units, 29,593 outstanding at       September 30, 2008 and December 31, 2007, (net of offering costs of       $3,768,113, of which $1,069,764 was paid to affiliates)25,873,40325,873,403Cumulative net income27,905,96527,613,010Cumulative cash distributions(38,669,906)(38,669,906)15,109,46214,816,507Total Partners' capital15,125,28414,832,750Total liabilities and Partners' capital$15,327,73015,017,021   See accompanying notes to financial statements. -3-    INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 2008 and 2007 (unaudited)  Three monthsThree monthsNine monthsNine monthsendedendedendedendedSeptember 30, 2008September 30, 2007September 30, 2008September 30, 2007Revenues:Sale of investment properties (Notes 1 and 3)$-2,735,825476,8912,735,825Rental income (Note 4)39,90630,048105,499104,270Total revenues39,9062,765,873582,3902,840,095Expenses:Cost of investment property sold-1,921,779142,2381,921,779Professional services to affiliates12,9286,42543,52230,793Professional services to non-affiliates7,3326,35144,36032,867General and administrative expenses to affiliates231,4587,0365,930General and administrative expenses to non-    affiliates6,45112,57223,57824,677Marketing expenses to affiliates6,4754,08825,14213,215Marketing expenses to non-affiliates652,10014,87526,248Land operating expenses to non-affiliates10,22312,54734,79132,343Total expenses43,4971,967,320335,5422,087,852Operating income (loss)(3,591)798,553246,848752,243Interest income11,86625,47037,46160,049Other income1,1001,7008,2258,540Net income$9,375825,723292,534820,832Net income (loss) allocated to:General Partner$94117(421)68Limited Partners9,281825,606292,955820,764Net income$9,375825,723292,534820,832Net income (loss) allocated to the one General   Partner Unit$94117(421)68Net income per Unit, allocated to Limited   Partners per weighted average Limited   Partnership Units (29,593 for the three and nine   months ended September 30, 2008 and 2007)$.3127.909.9027.74   See accompanying notes to financial statements. -4-    INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 2008 and 2007 (unaudited)  20082007Cash flows from operating activities:Net income$292,534820,832Adjustments to reconcile net income to net cash used in operating     activities:Gain on sale of investment properties(334,653)(814,046)Changes in assets and liabilities:Accounts and accrued interest receivable(10,210)(22,542)Other current assets-3,020Accounts payable20,680(14,081)Accrued real estate taxes(4,836)(10,506)Due to affiliates12,028(12,296)Unearned income(9,697)-Net cash used in operating activities(34,154)(49,619)Cash flows from investing activities:Additions to investment properties(394,358)(491,768)Proceeds from sale of investment properties476,8912,735,825Net cash provided by investing activities82,5332,244,057Net increase in cash and cash equivalents48,3792,194,438Cash and cash equivalents at beginning of period2,063,6541,813,040Cash and cash equivalents at end of period$2,112,0334,007,478         See accompanying notes to financial statements. -5-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements September 30, 2008 (unaudited)   Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2007 which are included in the Partnership's 2007 annual report, as certain footnote disclosures which would 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, L.P. (the "Partnership"), was formed in October 1987, 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 12, 1988, the Partnership commenced an Offering of 10,000 (subject to increase to 30,000) Limited Partnership Units ("Units") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. Inland Real Estate Investment Corporation is the General Partner. The Offering terminated on October 6, 1989, with total sales of 30,000 Units, at $1,000 per Unit, not including the General Partner or the Initial Limited Partner. All of the holders of these Units were admitted to this Partnership. The Limited Partners of the Partnership share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of September 30, 2008, the Partnership has repurchased a total of 407.75 Units for $359,484 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 which are carried at cost, which approximates market.  The Partnership recognizes income from the sale of land parcels in accordance with Statement of Financial Accounting Standards (SFAS) No. 66, "Accounting for Sales of Real Estate".  The Partnership's escrow agent holds earnest money deposits for the purchase of parcels.  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.  Except as described in footnote (b) to Note 3 of these notes, 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, L.P.
(a limited partnership)
Notes to Financial Statements (continued)  September 30, 2008 (unaudited)    New Accounting Pronouncements  In September 2006, FASB issued SFAS No. 157: Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  FAS No. 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.  FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The adoption of SFAS No. 157 in 2008 did not have an impact on our financial statements.  In February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159).  FAS 159 provides the option to report certain financial assets and liabilities at fair value, with the intent to mitigate volatility in financial reporting that can occur when related assets and liabilities are recorded on different basis.  This statement is effective for fiscal years beginning after November 15, 2007.  The adoption of SFAS No. 159 in 2008 did not have an impact on our financial statements.  In May 2008, FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles"(FAS 162).  FAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles. FAS 162 becomes effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." The Partnership does not expect SFAS No. 162 to have a material impact on the financial statements.  (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 $50,558 and $36,723 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the nine months ended September 30, 2008 and 2007, respectively, of which $35,350 and $15,240 was unpaid as of September 30, 2008 and December 31, 2007, 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 $25,142 and $13,215 have been incurred and are included in marketing expenses to affiliates for the nine months ended September 30, 2008 and 2007, respectively, of which $11,075 and $2,596 was unpaid as of September 30, 2008 and December 31, 2007, respectively.  An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's investment properties and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. For the nine months ended September 30, 2008 and 2007, the Partnership incurred $77,783 and $117,011, respectively, of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $10,943 and $27,504 were unpaid as of September 30, 2008 and December 31, 2007, respectively.     -7-


INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)   (3)  Investment properties  Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts  Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold09/30/08Recognized1Kendall84.736001/19/89$423,68061,625485,3055,462,5895,947,894--(3.5200)12/24/96(.3520)11/25/97(80.8640)12/29/972McHenry223.412101/19/89650,00095,014745,01426,816771,830--(183.3759)12/27/90(40.0362)05/11/003Kendall20.000002/09/89189,00013,305202,305-202,305--(20.0000)05/08/904Kendall69.276004/18/89508,19638,126546,3221,223,3761,769,698--(.4860)02/28/91(27.5850)08/25/95(4.4017)Var 2001(2.1400)Var 2002(23.0933)Var 2003(6.7800)Var 2004(4.7900)Var 20055Kendall (a)372.223005/03/892,532,227135,9432,668,170456,3983,124,568--(Option)04/06/90(372.2230)06/20/036Kendall (b)78.390006/21/89416,78331,691448,4741,461,2561,909,730--(3.9500)11/01/00(30.0000)07/12/05(33.4270)07/27/06(11.0130)08/22/077Kendall (b)77.049006/21/8984,7548,16392,9171,438,7271,531,644-334,653(71.2070)08/22/07(5.8420)03/20/08  -8-  INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)   (3)  Investment properties (continued)  Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold09/30/08Recognized8Kendall (b)5.000006/21/8960,0005,11365,113-65,113--(5.0000)10/06/899McHenry (b)51.030008/07/89$586,84522,482609,32794,859-704,186-10McHenry (b)123.940008/07/8991,9397,22499,16360099,763--(123.9400)12/06/8911McHenry (b)30.592008/07/89321,21622,641343,85794,659-438,516-12Kendall90.271010/31/89907,38941,908949,297246,9641,196,261--(.7090)04/26/91(89.5620)03/10/0413McHenry92.780011/07/89251,30619,188270,49418,745289,239--(2.0810)09/18/97(90.6990)02/15/0114McHenry76.202011/07/89419,11123,402442,513206,519-649,032-15Lake84.556401/03/901,056,95585,2831,142,2381,661,3442,803,582--(10.5300)Var 1996(5.4680)Var 1997(68.5584)Var 199816Kane/72.418701/29/901,273,53755,3331,328,870706,7182,035,588--Kendall(30.9000)07/10/98(10.3910)12/15/99(3.1000)12/12/00(28.0277)05/19/0317McHenry99.924001/29/90739,63561,038800,6731,243,339320,9611,723,051-(27.5100)01/29/99  -9-  INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)   (3)  Investment properties (continued)  Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold09/30/08Recognized18McHenry71.487001/29/90$496,11626,259522,375507,54711,1091,018,813-(1.0000)Var 1990(.5200)03/11/9319McHenry63.691502/23/90490,15829,158519,316637,361-1,156,677-20Kane224.148002/28/902,749,800183,0922,932,8921,938,9304,871,822--(.2790)10/17/91(223.8690)02/20/0421Kendall172.495003/08/901,327,45975,8221,403,281954,4152,357,696--(172.4950)Var 199822McHenry254.525004/11/902,608,881136,5592,745,440563,085-3,308,525-23Kendall140.021005/08/901,480,000116,2401,596,240909,3952,505,635--(4.4100)Var 1993(35.8800)Var 1994(3.4400)Var 1995(96.2910)08/26/9924Kendall298.483005/23/901,359,77498,9211,458,69599,630436,6381,121,687-(12.4570)05/25/90(4.6290)04/01/96(69.8200)11/26/0225Kane225.000006/01/902,600,000168,7782,768,778301,040-3,069,818-Totals$23,624,7611,562,30825,187,06920,254,31232,251,07613,190,305334,653   -10-


INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)    (3) Investment properties (continued)  (a) Included in the purchase agreement of Parcel 5 was a condition that required the Partnership to buy an option to purchase an additional 243 acres immediately to the west of this parcel.  The 1990 sale transaction relates to the sale of this option.  (b) The Partnership purchased from two third parties, two sets of three contiguous parcels of land (Parcels 6, 7 and 8; and Parcels 9, 10 and 11). The General Partner believes that the total value of this land will be maximized if it is treated and marketed to buyers as six separate parcels and closed the transactions as six separate purchases to facilitate this. Parcels 6, 7 and 8 will be treated as one parcel and Parcels 9, 10 and 11 will be treated as one parcel for purposes of computing Parcel Capital (as defined in the Partnership Agreement) and distributions to the partners.  (c) Reconciliation of investment properties owned:  September 30,December 31,20082007Balance at January 1,$12,938,18514,012,118Additions during period394,358847,846Sales during period(142,238)(1,921,779)Balance at end of period$13,190,30512,938,185  (d) On a quarterly basis, in accordance with SFAS 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 September 30, 2008, the Partnership had recorded no such impairment.  (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 September 30, 2008, the Partnership had farm leases of generally one year in duration, for approximately 855 acres of the approximately 1,055 acres owned.  -11-  INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)    (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.  As of September 30, 2008, the mortgage loans receivable and the related deferred gain are fully reserved.  Principal BalancePrincipal BalanceAccrued Interest ReceivableDeferred GainParcelMaturityInterest Rate09/30/0812/31/0709/30/0809/30/08103/31/069.00%$  1,233,1751,233,175423,79460,752Less allowance for doubtful accounts1,233,1751,233,175423,79460,752$        ----  The General Partner determined that the maximum value of Parcel 1 could be realized if the parcel was developed and sold as individual lots. However, if we had followed that plan, there is a possibility that the limited partners may have been subject to unrelated business taxable income. Therefore, the Partnership sold the parcel to a third party developer whereby 100% of the sales price was represented by notes receivable from the buyer. The transaction was deemed an installment sale. After the sale, the developer, through a limited liability company (LLC), secured third party financing to cover the deferred down payment owed to the Partnership as well as provide proceeds to begin the development of the project.  The sale was structured so that the down payment received at the time of the sale was sufficient to provide a distribution to the Limited Partners that equated to the parcel capital allocated to the parcel plus approximately a 6% return per annum on the parcel capital through the date of the distribution.  The velocity of the developer's individual lot sales was slower than originally projected and consequently the developer's carrying costs were higher. The developer obtained a loan from an affiliate of our General Partner. These funds were used for operating costs and to continue the development of the project.  As a result of the slower lot sales, the net sale proceeds available to us were lower than anticipated. We continued to review the project and determined that the collectability of the receivable was doubtful. As a result, we elected to reserve $1,233,175 of principal and $423,794 of accrued interest relating to the mortgage receivable. The deferred gain of $60,752 relating to the mortgage loans receivable was also reserved and recorded against bad debt expense.  The General Partner guaranteed the third party development loan owed by the LLC.  In reviewing the developments financial situation, the General Partner determined that it would be in its best interest to have an affiliate acquire the interest in the LLC.  The General Partner and its affiliates concluded that they could better control the continuing costs to complete the development and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed to the Partnership. An affiliate of the General Partner acquired the interests in the LLC and paid off the debt under its guarantee of the LLC loans.  The affiliate of the General Partner will complete the development and the sale of the projects.  -12-  INLAND LAND APPRECIATION FUND, L.P. (a limited partnership)  Notes to Financial Statements (continued)  September 30, 2008 (unaudited)   (6) Subsequent Event  In fulfillment of one of the requirements stipulated in the Settlement and Annexation Agreement with the Village of Bull Valley, approximately 51 acres of Parcel 22 was conveyed to the Village of Bull Valley during October 2008.   -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 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 mortgage loans 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, in accordance with SFAS 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.  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 September 30, 2008, we had recorded no such impairment.   -14-    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 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 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 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. As of September 30, 2008, we have an allowance for doubtful accounts of $1,233,175 and $423,794 on the remaining mortgage loan receivable and accrued interest receivable, respectively.  Revenue Recognition - We recognize income from the sale of land parcels in accordance with SFAS 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 September 30, 2008, we have not classified any properties as held for sale.  Liquidity and Capital Resources  On October 12, 1988, we commenced an offering of 10,000 (subject to increase to 30,000) limited partnership units or units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933.  On October 6, 1989, the offering terminated after we had sold 30,000 units to the public at $1,000 per unit resulting in $30,000,000 in gross offering proceeds, which does not include proceeds from the initial limited partner and the general partner.  All of the holders of our units were admitted to our partnership. Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held.  We used $25,187,069 of gross offering proceeds to purchase on an all-cash basis twenty-five parcels of undeveloped land and an option to purchase undeveloped land. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. Fourteen of the parcels were purchased during 1989 and eleven during 1990.  As of September 30, 2008, we have had multiple sales transactions, through which we have disposed of approximately 2,047 acres of the approximately 3,102 acres originally owned. As of September 30, 2008, cumulative distributions to the limited partners have totaled $38,669,906 (which exceeds the original capital) and  -15-    $4,745,451 to the general partner. Through September 30, 2008, we have used $20,254,312 of working capital for rezoning and other activities. Such amounts have been capitalized and are included in investments in land.  Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing.  As of September 30, 2008, we own, in whole or in part, nine of our twenty-five original parcels, the majority of which are leased to local farmers and are generating sufficient cash flow from farm leases to cover property taxes and insurance.  At September 30, 2008, we had cash and cash equivalents of $2,112,033, 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.  Undistributed net sales proceeds will be used to cover our operations, including property upgrades, and for distributions. We will evaluate our cash needs throughout the year to determine future distributions.  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.  Zoning discussions and land planning are in progress on Parcels 17, 18, 19 and 22.  We are closely monitoring the real estate market trends, especially within the areas where our remaining parcels are located.  Currently, the soft real estate market, coupled with the turbulent financial markets, continue to hinder sales activity, especially sales of vacant land.  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 $50,558 and $36,723 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the nine months ended September 30, 2008 and 2007, respectively, of which $35,350 and $15,240 was unpaid as of September 30, 2008 and December 31, 2007, respectively.  An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $25,142 and $13,215 have been incurred and are included in marketing expenses to affiliates for the nine months ended September 30, 2008 and 2007, respectively, of which $11,075 and $2,596 was unpaid as of September 30, 2008 and December 31, 2007, respectively.  An affiliate of the 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. For the nine months ended September 30, 2008 and 2007, we incurred $77,783 and $117,011, respectively, of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investment properties, of which $10,943 and $27,504 was unpaid as of September 30, 2008 and December 31, 2007, respectively.  Results of Operations  As of September 30, 2008, we owned nine parcels of land consisting of approximately 1,055 acres. Of the 1,055 acres owned, approximately 855 acres are leased to local farmers and generate sufficient cash flow to cover property taxes and insurance.  Rental income was $105,499 and $104,270 for the nine months ended September 30, 2008 and 2007, respectively.  Sale of investment properties of $476,891 and cost of investment property sold of $142,238 for the nine months ended September 30, 2008 is the result of the sale of the remaining 5.8 acres of Parcel 7.  Sale of investment properties of $2,735,825 and cost of investment property sold of $1,921,779 for the nine months ended September 30, 2007 is the  -16-    result of the sale of approximately 82 acres of Parcels 6 and 7 which includes approximately 22 acres of the final residential phase of the development with the remaining 60 acres consisting of land designated for the development of roads, required storm water management, ponds, open space and a park which have been conveyed to the appropriate governing entities.  We are in the process of land planning three contiguous parcels 17, 18, and 22.  Parcels 17 and 18 are within the planning jurisdiction of the City of Woodstock. Parcel 22 was forcibly annexed into the corporate limits of the Village of Bull Valley and subject to that Villages restrictions. For land planning purposes, it was the intent of the Partnership to have most if not all three parcels annexed to the City of Woodstock. The Partnership has entered into a Settlement and Annexation Agreement with the Village of Bull Valley which moves the boundary line favorably for the Partnership allowing us to proceed with the land planning for these parcels with the City of Woodstock. The settlement with Bull Valley has the prospect of permitting the Partnership to develop the property with sewer and water facilities from the City of Woodstock and with a land use that could not have been developed in Bull Valley. In consideration for the release of land, the Partnership is in the process of conveying approximately 51 acres of Parcel 22 to the Village of Bull Valley. Also as part of the settlement, the Partnership received favorable zoning for the remaining land that lies within the limits of the Village of Bull Valley.  Professional services to affiliates were $43,522 and $30,793 for the nine months ended September 30, 2008 and 2007, respectively.  The increase in professional services to affiliates is due primarily to an increase in fees for accounting services and investor services.  Professional services to non-affiliates were $44,360 and $32,867 for the nine months ended September 30, 2008 and 2007, respectively.  The increase in professional services to non-affiliates is due primarily to an increase in fees for accounting services.  General and administrative expenses to affiliates and non-affiliates were $30,614 and $30,607 for the nine months ended September 30, 2008 and 2007, respectively.  General and administrative expenses primarily include data processing costs, postage, and printing expenses.  Marketing expenses to affiliates and non-affiliates were $40,017 and $39,463 for the nine months ended September 30, 2008 and 2007, respectively.  Marketing expenses to affiliates and non-affiliates are costs incurred for preparing and marketing parcels for sale.  Land operating expenses to non-affiliates were $34,791 and $32,343 for the nine months ended September 30, 2008 and 2007, respectively. These costs primarily include real estate tax expense and insurance expense on the parcels we own.  The increase is due primarily to an increase in insurance and real estate tax expenses.  Interest income was $37,461 and $60,049 for the nine months ended September 30, 2008 and 2007, respectively.  Interest income is primarily a result of the cash available to invest on a short term basis during the year as a result of sales proceeds received.  The decrease for 2008 is due primarily to lower interest rates.  Other income was $8,225 and $8,540 for the nine months ended September 30, 2008 and 2007, respectively.  The decrease in 2008 is due to less transfer fee income as a result of a reduced number of completed transfers.  We determined that the maximum value of Parcel 1 could be realized if the parcel was developed and sold as individual lots. However, if we had followed that plan, there is a possibility that the limited partners may have been subject to unrelated business taxable income. Therefore, we sold the parcel to a third party developer whereby 100% of the sales price was represented by notes receivable from the buyer. The transaction was deemed an installment sale. After the sale, the developer, through a limited liability company or LLC, secured third party financing to cover the deferred down payment owed to us as well as provide proceeds to begin the development of the project.  The sale was structured so that the deferred down payment received was sufficient to provide a distribution to our limited partners that equated to the invested capital allocated to the parcel (parcel capital) plus approximately a 6% return per annum on the parcel capital through the date of the distribution.   -17-    The velocity of the developer's individual lot sales was slower than originally projected and consequently the developer's carrying costs were higher. The developer obtained a loan from an affiliate of our general partner. These funds were used for operating costs and to continue the development of the project.  As a result of the slower lot sales, the net sale proceeds available to us were lower than anticipated. We continued to review the project and determined that the collectability of the receivable was doubtful. As a result, we elected to reserve $1,233,175 of principal and $423,794 of accrued interest relating to the mortgage receivable. The deferred gain of $60,752 relating to the mortgage loans receivable was also reserved and recorded against bad debt expense.  Our general partner guaranteed the third party development loan owed by the LLC.  In reviewing the developments financial situation, our general partner determined that it would be in its best interest to have an affiliate acquire the interest in the LLC.  The general partner and its affiliates concluded that they could better control the continuing costs to complete the development and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed to us. An affiliate of our general partner acquired the interest in the LLC and paid off the debt under its guarantee of the LLC loans.  The affiliate of the general partner will complete the development and sale of the projects. Based on our continuing review of developments financial situation, we do not anticipate receiving any additional proceeds. However, any write-off will not take place until such time as we are certain that no further proceeds will become available to reduce the amount of the receivable. Our limited partners received distributions that equated to the parcel capital plus approximately a 6% return per annum on the parcel capital through the date of the distribution.  Subsequent Event  In fulfillment of the requirements stipulated in the Settlement and Annexation Agreement with the Village of Bull Valley, approximately 51 acres of Parcel 22 was conveyed to the Village of Bull Valley during October 2008.  Other items  In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund, L.P. Partnership Agreement and Treasury Regulation Section 1.7704-1(j), we have reached the maximum threshold of partnership units that may be transferred/assigned directly between parties during 2008.  Therefore, we may not authorize any additional sales of partnership units directly between parties during 2008.  We have established a relationship, however, 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.  The Illinois Department of Revenue is currently in the process of finalizing regulations in regards to new Illinois income tax withholding requirements for nonresident partners.  The new withholding requirements would be effective for the taxable years ending on or after December 31, 2008. Payment of the required withholding amounts will be made to the Illinois Department of Revenue during the first quarter of 2009.  Off-Balance Sheet Arrangements, Contractual Obligations, Liabilities and Contracts and Commitments  None     -18-    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 September 30, 2008, 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 was effective as of September 30, 2008.  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 September 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  PART II - Other Information  Item 1(A). Risk Factors  Partnership-Related Risks  Transfer Limit.  In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund, L.P. Partnership Agreement and Treasury Regulation Section 1.7704-1(j), we have reached the maximum threshold of partnership units that may be transferred/assigned directly between parties during 2008.  Therefore, we may not authorize any additional sales of partnership units directly between parties during 2008.  We have established 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 or 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 or assigned directly between parties under our partnership agreement and Treasury Regulation Section 1.7704-1(j)).  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 the partnership agreement or the provisions of Treasury Regulation Section 1.7704-1(g).  The private letter ruling was issued to the "qualified matching service," not to us or for our benefit.  In addition, there can be no assurance that the IRS will not revise its regulations in the future to reduce this maximum threshold.   Furthermore, there can be no assurance that you will be able to find a buyer for your partnership units  -19-    through the "qualified matching service," or that you will be able to obtain a price for your partnership units consistent with their fair market value or any other valuation you may desire.  We have no influence in the prices set in such a service. You are strongly encouraged to consult your personal legal, financial and tax advisors in connection with any participation in any matching program or service.  Items 1(B) through 5 are omitted because of the absence of conditions under which they are required.  Item 6.  Exhibits  Exhibits.  31.1Rule 13a-14(a)/15d-14(a) Certification by principal executive officer31.2Rule 13a-14(a)/15d-14(a) Certification by principal financial officer32.1Section 1350 Certification by principal executive officer32.2Section 1350 Certification by principal financial officer    -20-    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, L.P.By:Inland Real Estate Investment CorporationIts:General PartnerBy:/S/ BRENDA G. GUJRALBy:Brenda G. GujralIts:President and Principal Executive OfficerDate:November 6, 2008By:/S/ GUADALUPE GRIFFINBy:Guadalupe GriffinIts:Vice PresidentDate:November 6, 2008By:/S/ DONNA URBAINBy:Donna UrbainIts:Principal Financial OfficerDate:November 6, 2008     -21-