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: 0-18431   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 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). Yes o     No  X      -1-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
March 31, 2007 and December 31, 2006
(unaudited)  Assets   20072006Current assets:Cash and cash equivalents$1,586,3811,813,040Accounts and accrued interest receivable (net of allowance for doubtful     accounts of $423,794 at March 31, 2007 and December 31, 2006) (Note 5)31,68618,234Mortgage loans receivable (net of allowance for doubtful accounts of     $1,233,175 at March 31, 2007 and December 31, 2006) (Note 5)--Other current assets-6,638Total current assets1,618,0671,837,912Investments in land and improvements, at cost (including acquisition fees paid   to Affiliates of $479,219 at March 31, 2007 and December 31, 2006) (Note 3)14,226,86114,012,118Total assets$15,844,92815,850,030  See accompanying notes to financial statements.  -2-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 2007 and December 31, 2006
(unaudited)Liabilities and Partners' Capital  20072006Current liabilities:Accounts payable$87,19179,256Accrued real estate taxes36,80329,234Due to affiliates (Note 2)33,15548,964Unearned income16,08323,170Total current liabilities173,232180,624Partners' capital:General Partner:Capital contribution500500Cumulative net income4,560,7244,560,701Cumulative cash distributions(4,545,451)(4,545,451)15,77315,750Limited Partners:Units of $1,000. Authorized 30,001 Units, 29,593 outstanding at       March 31, 2007 and December 31, 2006, (net of offering costs of       $3,768,113, of which $1,069,764 was paid to Affiliates)25,873,40325,873,403Cumulative net income26,952,42626,950,159Cumulative cash distributions(37,169,906)(37,169,906)15,655,92315,653,656Total Partners' capital15,671,69615,669,406Total liabilities and Partners' capital$15,844,92815,850,030 See accompanying notes to financial statements.  -3-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 2007 and 2006
(unaudited) 20072006Income:Rental income (Note 4)$41,09140,711Interest income19,08211,862Other income7,5508,38067,72360,953Expenses:Professional services to affiliates4,1925,269Professional services to non-affiliates23,32929,246General and administrative expenses to affiliates1,8301,692General and administrative expenses to non-affiliates3,54813,655Marketing expenses to affiliates4,6945,380Marketing expenses to non-affiliates19,71326,700Land operating expenses to non-affiliates8,1278,77465,43390,716Net income (loss)$2,290(29,763)Net income (loss) allocated:General partner$23(298)Limited partners2,267(29,465)Net income (loss)$2,290(29,763)Net income (loss) allocated to the one general partner unit$23(298)Net income (loss) per unit allocated to limited partners per weighted   average limited partnership units (29,593 for the three months
   ended March 31, 2007 and 2006)$.08(1.00)  See accompanying notes to financial statements.  -4-  INLAND LAND APPRECIATION FUND, 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 (loss)$2,290(29,763)Adjustments to reconcile net income (loss) to net cash provided by 
    (used in) operating activities:Changes in operating assets and liabilities:Accounts and accrued interest receivable(13,452)(2,984)Other assets6,638966Accounts payable7,93564,060Accrued real estate taxes7,5697,518Due to affiliates(15,809)(7,959)Unearned income(7,087)5,559Net cash provided by (used in) operating activities(11,916)37,397Cash flows from investing activities:Additions to investments in land and improvements(214,743)(154,450)Net cash used in investing activities(214,743)(154,450)Net decrease in cash and cash equivalents(226,659)(117,053)Cash and cash equivalents at beginning of period1,813,0401,426,760Cash and cash equivalents at end of period$1,586,3811,309,707   See accompanying notes to financial statements.  -5-  INLAND LAND APPRECIATION FUND, 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 duplicate those contained in such audited financial statements have been omitted from this report. (1) Organization and Basis of Accounting 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 or 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 units purchased by 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 March 31, 2007, the Partnership had 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. Certain reclassifications were made to the 2006 financial statements to conform with the 2007 presentation.  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. 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.  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, 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 and general and administrative expenses to affiliates, of which $4,796 and $5,006 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 terms of the partnership agreement) for direct costs. Such costs of $4,694 and $5,380 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2007 and 2006, respectively, of which $3,101 and $4,443 was unpaid as of March 31, 2007 and December 31, 2006. 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 and March 31, 2006, the Partnership incurred $39,948 and $46,981, respectively, of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investments in land and improvements, of which $25,258 and $39,515 was unpaid as of March 31, 2007 and December 31, 2006, respectively.    -7-


INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)  (3) Investments in Land and Improvements Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts  Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized1Kendall84.736001/19/89$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(4.79)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)78.390006/21/89416,78331,691448,4741,436,3531,377,357507,470-(3.9500)11/01/00(30.0000)07/12/05(33.4270)07/27/067Kendall (b)77.049006/21/8984,7548,16392,9171,392,737-1,485,654-8Kendall (b)5.000006/21/8960,0005,11365,113-65,113--(5.0000)10/06/89   -8-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)  (3) Investments in Land and Improvements (continued) Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized9McHenry (b)51.030008/07/89$586,84522,482609,32768,985-678,312-10McHenry (b)123.940008/07/8991,9397,22499,16360099,763--(123.9400)12/06/8911McHenry (b)30.592008/07/89321,21622,641343,85772,459-416,316-12Kendall90.271010/31/89907,38941,908949,297246,9641,196,261--(.7090)04/26/91(89.562)03/10/0413McHenry92.780011/07/89251,30619,188270,49418,745289,239--(2.0810)09/18/97(90.6990)02/15/0114McHenry76.202011/07/89419,11123,402442,513187,803-630,316-15Lake84.556401/03/901,056,95585,2831,142,2381,661,3442,803,582--(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)05/19/0317McHenry99.924001/29/90739,63561,038800,6731,053,731320,9611,533,443-(27.5100)01/29/99   -9-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)  (3) Investments in Land and Improvements (continued)  Initial CostsIllinoisGross Acres PurchasedPurchase/SalesOriginalAcquisitionTotalCosts Capitalized Subsequent toCosts of PropertyTotal Remaining Costs of Parcels atCurrent Year Gain on SaleParcelCounty(Sold)DateCostsCostsCostsAcquisitionSold03/31/07Recognized18McHenry71.487001/29/90$496,11626,259522,375326,12711,109837,393-(1.0000)Var 1990(.5200)03/11/9319McHenry63.691502/23/90490,15829,158519,316418,380-937,696-20Kane224.148002/28/902,749,800183,0922,932,8921,938,9304,871,822--(.2790)10/17/91(223.869)02/20/0421Kendall172.495003/08/901,327,45975,8221,403,281954,4152,357,696--(172.4950)Var 199822McHenry254.525004/11/902,608,881136,5592,745,440362,735-3,108,175-23Kendall140.021005/08/901,480,000116,2401,596,240909,3952,505,635--(4.4100)Var 1993(35.8800)Var 1994(3.4400)Var 1995(96.2910)08/26/9924Kendall298.483005/23/901,359,77498,9211,458,69593,642436,6381,115,699-(12.4570)05/25/90(4.6290)04/01/96(69.82)11/26/0225Kane225.000006/01/902,600,000168,7782,768,778207,609-2,976,387-Totals$23,624,7611,562,30825,187,06919,226,85130,187,05914,226,861-   -10-


INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2007
 (unaudited) (3) Investments in Land and Improvements (continued)  (a) Included in the purchase agreement for 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 investments in land and improvements owned:  March 31,December 31,20072006Balance at January 1,$14,012,11814,151,504Additions during period214,743563,453Sales during period-(702,839)Balance at end of period$14,226,86114,012,118  (d) 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.  -11-  INLAND LAND APPRECIATION FUND, 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 farm leases of generally one year in duration, for approximately 880 acres of the approximately 1,143 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.  As of March 31, 2007, the mortgage loans receivable and the related deferred gain are fully reserved.  Principal BalancePrincipal BalanceAccrued Interest ReceivableDeferred GainParcelMaturityInterest Rate03/31/0712/31/0603/31/0703/31/07103/31/069.00%$  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.  -12-  INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2007
(unaudited)  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 the 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 the Partnership were lower than anticipated. Management continued to review the project and determined that the collectability of the receivable was doubtful. As a result, management 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 loans 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 project.   -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 On December 12, 2001, 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. 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 have recorded no such impairment.   -14-   Cost Allocation - Except as described in footnote (b) to Note 3 of the footnotes to the financial statements included elsewhere in this quarterly report, 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 March 31, 2007, we have recorded an allowance for doubtful account of $1,233,175 and $423,794 on the mortgage loan receivable and accrued interest receivable, respectively. Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial 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 12, 1988, we commenced an offering of 10,000 (subject to increase to 30,000) limited partnership units or units pursuant to a registered offering 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.   -15-  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 included 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 March 31, 2007, we have had multiple sales transactions, through which we have disposed of approximately 1,959 acres of the approximately 3,102 acres originally owned. As of March 31, 2007, cumulative distributions to the limited partners have totaled $37,169,906 (which exceeds the original capital) and $4,545,451 to the general partner. Through March 31, 2007, we have used $19,226,851 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 March 31, 2007, we owned, in whole or in part, eleven 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 March 31, 2007, we had cash and cash equivalents of $1,586,381, 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.  We anticipate additional sales of the residential portion of Parcels 6 and 7 in July 2007. 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, and for distributions. We will evaluate our cash needs throughout the year to determine any 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. Parcels 6 and 7 have completed and sold two phases of improvements for an industrial park and sites are being marketed. We have also completed the planning process and received favorable zoning on the residential portion of these parcels. Marketing efforts have been successful to date and a contract is in place for the sale of the residential portion of these parcels.  Zoning discussions and land planning are in progress on Parcels 14, 17, 18, 19 and 22. 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 $6,022 and $6,961 are included in professional services to affiliates and general and administrative expenses to affiliates for the three months ended March 31, 2007 and 2006, respectively, of which $4,796 and $5,006 was unpaid as of March 31, 2007 and December 31, 2006, respectively. An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $4,694 and $5,380 have been incurred and are included in marketing expenses to affiliates for the three months ended March 31, 2007 and 2006, respectively, of which $3,101 and $4,443 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 our parcels for sale and was reimbursed for salaries and direct costs. For the three months ended March 31, 2007 and 2006, we incurred $39,948 and $46,981, respectively, of such costs. The affiliate did not recognize a profit on any project. Such costs are included in investments in land, of which $25,258 and $39,515 was unpaid as of March 31, 2007 and December 31, 2006, respectively.   -16-  Results of Operations As of March 31, 2007, we owned eleven parcels of land consisting of approximately 1,143 acres. Of the 1,143 acres owned, approximately 880 acres are tillable, leased to local farmers and generate sufficient cash flow to cover property taxes, insurance and other miscellaneous expenses.  Rental income was $41,091 and $40,711 for the three months ended March 31, 2007 and March 31, 2006, respectively. The increase in rental income is due to the increase in negotiated lease rates.  Interest income was $19,082 and $11,862 for the three months ended March 31, 2007 and March 31, 2006, respectively. The increase in interest income is primarily a result of an increase in cash available to invest on a short term basis during the period.  Professional services to affiliates were $4,192 and $5,269 for the three months ended March 31, 2007 and 2006, respectively.  The decrease in professional services to affiliates is due primarily to a decrease in accounting fees.  Professional services to non-affiliates were $23,329 and $29,246 for the three months ended March 31, 2007 and 2006, respectively.  The decrease in professional services to non-affiliates is due to a decrease in accounting fees.  General and administrative expenses to non-affiliates were $3,548 and $13,655 for the three months ended March 31, 2007 and March 31, 2006, respectively.  The decrease in 2007 is due to a decrease in postage and printing costs related to nonrecurring costs associated with the 2006 tender offer responses.  Marketing expenses to affiliates were $4,694 and $5,380 for the three months ended March 31, 2007 and 2006, respectively.  Marketing expenses to affiliates are costs incurred for preparing and marketing parcels for sale.  Marketing expenses to non-affiliates were $19,713 and $26,700 for the three months ended March 31, 2007 and March 31, 2006, respectively.  The decrease is due to nonrecurring signage expenditures in 2006.  Land operating expenses to non-affiliates were $8,127 and $8,774 for the three months ended March 31, 2007 and March 31, 2006, respectively.  Land operating expenses include primarily real estate taxes and filing fees.  We determined that the maximum value of Parcels 1, 15, 21 and 23 could be realized if the parcels were 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 parcels to a third party developer whereby 100% of the sales price was represented by notes receivable from the buyer. The transactions were deemed installment sales. After the sales, the developer, through a limited liability company or LLCs, 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 sales were 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.  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 loans owed by the limited liability company. 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  -17-  general partner will complete the development and sale of the project. 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.  Other items  In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund, 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 significant changes in our internal controls over financial reporting during the three months ended March 31, 2007 that have 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, L.P.By:Inland Real Estate Investment CorporationIts:General PartnerBy:/S/ BRENDA G. GUJRALBy:Brenda G. GujralIts:President and Principal Executive OfficerDate:May 11, 2007By:/S/ GUADALUPE GRIFFINBy:Guadalupe GriffinIts:Vice PresidentDate:May 11, 2007By:/S/ DONNA URBAINBy:Donna UrbainIts:Principal Financial OfficerDate:May 11, 2007     -19-