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

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

~~For The Quarterly Period Ended June 30~~WASHINGTON, ~~2004~~ D.C. 20549

~~[ ]~~FORM ~~Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~10-Q

Commission File #0-21606 InLand Capital Fund, L.P.


X	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Delaware	36-3767977
(State of organization)	(I.R.S. Employer Identification Number)
2901 Butterfield Road, Oak Brook, Illinois	60523
(Address of principal executive office)	(Zip Code)

COMMISSION FILE NUMBER: 0-21606

~~Registrant's~~InLand ~~telephone~~Capital ~~number~~Fund, ~~including area code: 630-218-8000~~L.P.

~~N/A~~ (Exact name of registrant as specified in its charter)

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


Delaware	36-3767977
(State of Incorporation)	(I.R.S. Employer Identification No.)

~~Indicate~~2901 byButterfield aRoad, ~~checkmark~~Oak ~~whether~~Brook, ~~the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2) __ Yes X No~~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).

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 q No X

-1-

INLAND CAPITAL FUND, L.P. (a limited partnership) Balance Sheets ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006 (unaudited) Assets

		2004	2003
		2007	2006
Current assets:
Cash and cash equivalents (Note 1)	$	6,327,047	1,402,121
Cash and cash equivalents	$	932,882	910,350
Accrued interest and other receivables (net of allowance for doubtful accounts of $62,289 at June 30, 2004 and December 31, 2003) (Note 5)		202,330	184,414
Accrued interest and other receivables		318	917
Current portion of mortgage loan receivable (net of allowance for doubtful accounts of $135,000 at June 30, 2004 and December 31, 2003) (Note 5)		33,925	872,872
Other current assets		3,726	3,726
Other current assets		7,863	6,419
Total current assets		936,926	914,993
Total current assets		6,571,165	2,465,826
Other assets		-	233,074
Other assets		173,074	3,074
Investment properties and improvements (including acquisition fees paid to Affiliates of $9,918 at March 31, 2007 and December 31, 2006) (Note 3)		778,925	777,625
Investment properties and improvements (including acquisition fees paid to Affiliates of $397,188 and $630,226 at June 30, 2004 and December 31, 2003, respectively) (Note 3)		8,598,598	15,440,821
Total assets	$	1,715,851	1,925,692
Total assets	$	15,342,837	17,909,721

See accompanying notes to financial statements.

-2-

INLAND CAPITAL FUND, L.P. (a limited partnership) Balance Sheets (continued) ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006 (unaudited) Liabilities and Partners' Capital

		2004	2003
		2007	2006
Current liabilities:
Accounts payable	$	~~358~~8,~~577~~419	3239,~~877~~444
Accrued real estate taxes		152,~~963~~055	491,~~986~~626
Due to Affiliates (Note 2)		23,718	23,813
Due to affiliates (Note 2)		3,238	6,358
Unearned income		14,052	151,435
Total current liabilities		13,712	247,428
Total current liabilities		412,310	229,111
Deferred gain on sale (Note 5)		13,374	491,157
Total liabilities		425,684	720,268
Partners' capital:
General Partner:
Capital contribution		500	500
Cumulative cash distributions		(49,~~413~~546,~~471~~406)	(19,~~243~~546,~~802~~406)
Cumulative net income		49,~~423~~558,~~194~~251	19,~~255~~558,~~167~~012
		10,223	11,865
		12,345	12,106
Limited Partners:
Units of $1,000. Authorized 60,000 Units, 32,337 outstanding at June 30, 2004 and December 31, 2003, (net of offering costs of $4,466,765, of which $3,488,574 was paid to Affiliates)		27,876,265	27,876,265
Units of $1,000. Authorized 60,000 Units, 32,337 outstanding at March 31, 2007 and December 31, 2006, (net of offering costs of $4,466,765, of which $3,488,574 was paid to Affiliates)		27,876,265	27,876,265
Cumulative cash distributions		(4578,~~663~~171,~~321~~193)	(2878,~~832~~171,~~990~~193)
Cumulative net income		3251,~~693~~984,~~986~~722	1851,~~134~~961,~~313~~086
		14,906,930	17,177,588
		1,689,794	1,666,158
Total Partners' capital		141,~~917~~702,~~153~~139	171,~~189~~678,~~453~~264
Total liabilities and Partners' capital	$	151,~~342~~715,~~837~~851	171,~~909~~925,~~721~~692

See accompanying notes to financial statements.

-3-

INLAND CAPITAL FUND, L.P. (a limited partnership) Statements of Operations For the three ~~and six~~ months ended ~~June~~March 3031, ~~2004~~2007 and ~~2003~~2006 (unaudited)

		Three months	Three months	Six months	Six months
		2007	2006
		ended	ended	ended	ended
Income:
		June 30, 2004	June 30, 2003	June 30, 2004	June 30, 2003
Interest income	$	11,061	5,403
Income:
Other income		43,626	5,455
Sale of investment property (Notes 1 and 3)	$	154,495	1,324,103	24,352,523	1,324,103
		54,687	10,858
Recognition of deferred gain on sale of investments in land and improvements		434,277	26,401	477,783	81,198
Expenses:
Rental income (Note 4)		21,519	43,478	43,138	86,477
Professional services to affiliates		3,594	2,994
Interest income		23,227	24,866	61,146	48,764
Professional services to non-affiliates		19,303	25,066
Other income		1,250	5,050	2,950	7,300
General and administrative expenses to affiliates		1,667	1,960
		634,768	1,423,898	24,937,540	1,547,842
General and administrative expenses to non-affiliates		4,282	47,706
Expenses:
Marketing expenses to affiliates		35	6,940
Cost of investment property sold		93,007	1,202,815	6,938,445	1,202,815
Marketing expenses to non-affiliates		-	1,797
Professional services to Affiliates		7,923	5,012	17,285	13,114
Land operating expenses to non-affiliates		1,931	1,882
Professional services to non- affiliates		3,813	-	35,783	28,675
		30,812	88,345
General and administrative expenses to Affiliates		5,622	5,173	11,862	13,205
Net income (loss)	$	23,875	(77,487)
General and administrative expenses to non-affiliates		11,073	5,366	169,531	50,523
Net income (loss) allocated to:
Marketing expenses to Affiliates		2,993	2,359	6,253	5,650
General Partner	$	239	(775)
Marketing expenses to non- affiliates		9,685	10,950	24,993	21,938
Limited Partners		23,636	(76,712)
Land operating expenses to Affiliates		3,872	9,236	9,972	18,472
Net income (loss)	$	23,875	(77,487)
Land operating expenses to non- affiliates		(12,500)	15,021	(4,284)	49,240
Net income (loss) per the one General Partner Unit	$	239	(775)
		125,488	1,255,932	7,209,840	1,403,632
Net income (loss) per Unit, basic and diluted, allocated to Limited Partners per weighted average Limited Partnership Units (32,337 for the three months ended March 31, 2007 and 2006)	$	.73	(2.37)
Net income	$	509,280	167,966	17,727,700	144,210

See accompanying notes to financial statements.

-4-

INLAND CAPITAL FUND, L.P. (a limited partnership) Statements of ~~Operations~~Cash Flows ~~(continued)~~ For the three ~~and six~~ months ended ~~June~~March 3031, ~~2004~~2007 and ~~2003~~2006 (unaudited)

		Three months	Three months	Six months	Six months
		2007	2006
		ended	ended	ended	ended
Cash flows from operating activities:
		June 30, 2004	June 30, 2003	June 30, 2004	June 30, 2003
Net income (loss)	$	23,875	(77,487)
Net income (loss) allocated to:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
General Partner	$	(1,065)	203	3,168,027	(583)
Changes in operating assets and liabilities:
Limited Partners		510,345	167,763	14,559,673	144,793
Accrued interest and other receivables		599	(25)
Net income	$	509,280	167,966	17,727,700	144,210
Other current assets		-	57
Net income (loss) allocated to the one General Partner Unit	$	(1,065)	203	3,168,027	(583)
Other assets		233,074	-
Net income per Unit allocated to Limited Partners per weighted average Limited Partnership Units of 32,337 for the three and six months ended June 30, 2004 and 2003	$	15.78	5.19	450.25	4.48
Accounts payable		(231,025)	76,376
Accrued real estate taxes		429	380
Due to Affiliates		(3,120)	(12,239)
Net cash provided by (used in) operating activities		23,832	(12,938)
Cash flows from investing activities:
Additions to investment properties		(1,300)	(21,540)
Net cash used in investing activities		(1,300)	(21,540)
Net increase (decrease) in cash and cash equivalents		22,532	(34,478)
Cash and cash equivalents at beginning of period		910,350	829,410
Cash and cash equivalents at end of period	$	932,882	794,932

See accompanying notes to financial statements.

-5-

INLAND CAPITAL FUND, L.P. (a limited partnership) ~~Statements~~Notes ofto ~~Cash~~Financial ~~Flows~~Statements ~~For~~March ~~the six months ended June 30~~31, ~~2004 and 2003 (unaudited)~~ 2007

		2004	2003
Cash flows from operating activities:
Net income	$	17,727,700	144,210
Adjustments to reconcile net income to net cash used in operating activities:
Gain on sale of investment properties		(17,414,078)	(121,288)
Recognition of deferred gain		(477,783)	(81,198)
Changes in assets and liabilities:
Accrued interest and other receivables		(17,916)	(39,261)
Other current assets		(1,444)	(5,280)
Accounts payable		354,700	(11,811)
Accrued real estate taxes		(34,023)	11,130
Due to Affiliates		(95)	(6,931)
Unearned income		(137,383)	(122)
Other assets		(170,000)	-
Net cash used in operating activities		(170,322)	(110,551)
Cash flows from investing activities:
Additions to investment properties		(96,222)	(952)
Principal payments received		838,947	145,226
Proceeds from sale of investment properties		24,352,523	1,324,103
Net cash provided by investing activities		25,095,248	1,468,377
Cash flows from financing activities:
Distributions		(20,000,000)	-
Net cash (used in) financing activities		(20,000,000)	-
Net increase in cash and cash equivalents		4,924,926	1,357,826
Cash and cash equivalents at beginning of period		1,402,121	1,284,069
Cash and cash equivalents at end of period	$	6,327,047	2,641,895

Readers of this Quarterly Report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2006, which are included in the Partnership's 2006 Annual Report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this Report.

See accompanying notes to financial statements.

-6-

INLAND CAPITAL FUND, L.P. (a limited partnership) Notes to Financial Statements June 30, 2004

(unaudited)

Readers of this Quarterly Report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2003, which are included in the Partnership's 2003 Annual Report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this Report.

(1) Organization and Basis of Accounting

InLand Capital Fund, L.P. (the "Partnership") was organized on June 21, 1991 by the filing of a Certificate of Limited Partnership under the Revised Uniform Limited Partnership Act of the State of Delaware. On December 13, 1991, the Partnership commenced an offering of 60,000 limited partnership units or Units pursuant to a ~~Registration~~registered offering under the Securities Act of 1933. ~~The Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provides for~~ Inland Real Estate Investment Corporation tois be the General Partner. The offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of $500. All of the holders of these Units have been admitted to the Partnership. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of ~~June~~March 3031, ~~2004~~2007, the Partnership has repurchased and canceled a total of 62 Units for $56,253 from various Limited Partners through the ~~Unit~~unit ~~Repurchase~~repurchase ~~Program~~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 periods. Actual results could differ from those estimates.

In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the period presented herein. Results of interim periods are not necessarily indicative of results to be expected for the year.

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

The Partnership uses the area method of allocation, which approximates the relative sales method of allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

InNew ~~January 2003, FASB issued Interpretation No. 46 ("FIN 46") "Consolidation of Variable Interest Entities and Interpretation of~~ Accounting Research Bulletin (ARB) No. 51", which was revised in December 2003. The primary objectives of FIN No. 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (Variable Interest Entities) and how to determine when and which business enterprise should consolidate the Variable Interest Entity (the Primary Beneficiary). The effective date for the Partnership is March 31, 2004. FIN 46 does not have a material impact on the Partnership's financial condition and results of operations.Pronouncements

~~-7-~~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.

~~INLAND CAPITAL FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) June 30, 2004 (unaudited)~~-6-

INLAND CAPITAL 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 $143,~~018~~238 and $53,~~183~~358 was unpaid as of ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006, respectively.

The General Partner is entitled to receive ~~Asset~~asset ~~Management~~management ~~Fees~~fees equal to one-quarter of 1% of the original cost to the Partnership of undeveloped land annually, limited to a cumulative total over the life of the Partnership of 2% of the land's original cost to the Partnership. ~~Such~~ ~~fees~~As of ~~$9,972~~March ~~and $18,472 have been incurred for the six months ended June~~ 31, ~~2004 and 2003~~2005, ~~respectively~~the ~~and~~Partnership ~~are~~had ~~reported~~met ~~as land operating expenses to Affiliates on~~ the ~~statement of operations, all of which was paid as of June 30, 2004~~limit.

An affiliate of the General Partner performed sales marketing and advertising services for the Partnership and was reimbursed (as set forth under terms of the ~~Partnership~~partnership ~~Agreement~~agreement) for direct costs. Such costs of $~~6,253~~35 and $56,~~650~~940 have been incurred and are included in marketing expenses to affiliates for the ~~six~~three months ended ~~June~~March 3031, ~~2004~~2007 and ~~2003~~2006, respectively.

An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the ~~Partnership~~partnership ~~Agreement~~agreement) for salaries and direct costs. ~~For the six months ended June 30, 2004, the Partnership incurred $56,285 of such costs.~~ The affiliate did not ~~take~~recognize a profit on any project. Such costs are included in investment properties of which $~~9,700~~0 and $183,~~630~~000 was unpaid at ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006, respectively.

-87-

INLAND CAPITAL FUND, L.P.
(a limited partnership)

Notes to Financial Statements (continued)

~~June~~March 3031, ~~2004~~ 2007(unaudited)

(3) Investment Properties

~~Initial Costs~~				Initial Costs
Parcel	Illinois	Gross Acres Purchased	Purchase/Sales	Original	Acquisition	Total	Costs Capitalized Subsequent to	Costs of Property	Total Remaining Costs of Parcels	Current Year Gain On Sale
#	County	/(Sold)	Date	Costs	Costs	Costs	Acquisition	Sold	at 0603/3031/0407	Recognized
1	Kendall	108.8960	07/22/92	$ 707,566	57,926	765,492	186,333	951,825	-	-
		(108.8960)	01/11/02
2	McHenry	201.0000	11/09/93	2,020,314	122,145	2,142,459	2,~~581~~689,~~256~~185	14,~~641~~052,~~445~~719	3778,~~082,270~~925	~~61,488~~-
		(17.7420)	08/02/95
		(8.6806)	Var 1997
		(1.9290)	Var 1998
		(13.5030)	Var 1999
		(3.6400)	11/29/01
		(10.1600)	Var 2002
		(2.0320)	06/07/04
		(114.8134)	08/12/04
		(5.7000)	Var 2005
		(3.4200)	06/11/2006
3	Will	34.0474	03/04/94	1,235,830	88,092	1,323,922	37,857	1,361,779	-	-
		(34.0474)	02/04/99
4	Will	86.9195	03/30/94	1,778,820	143,817	1,922,637	~~414~~416,~~522~~096	~~948~~2,~~389~~338,733	~~1,388,770~~-	-
		(2.3050)	Var 1997
		(3.3600)	Var 1998
		(1.0331)	08/19/99
		(60.1000)	Var 2001
		(20.1214)	11/01/04
5	LaSalle	190.9600	04/01/94	532,000	18,145	550,145	69,391	619,536	-	-
		(2.0600)	04/08/98
		(188.9000)	10/07/99
6	DeKalb	59.0800	05/11/94	670,207	58,373	728,580	486,869	1,215,449	-	-
		(4.9233)	Apr 1998
		(54.1567)	07/23/98
7	Kendall	200.8210	07/28/94	1,506,158	82,999	1,589,157	~~417~~460,~~130~~282	12,~~671~~049,~~539~~439	~~334,748~~-	-
		(168.1740)	09/18/03
8	Kendall	133.0000	08/17/94	1,300,000	106,949	1,406,949	24,656	-	1,431,605	-
		(32.6470)	Var 2005
9	LaSalle	335.9600	08/30/94	993,441	79,329	1,072,770	130,045	1,202,815	-	-
8	Kendall	133.0000	08/17/94	1,300,000	106,949	1,406,949	44,331	1,451,280	-	-
		(335.9600)	04/18/03
		(133.0000)	04/11/05

-98-

INLAND CAPITAL FUND, L.P.
(a limited partnership)

Notes to Financial Statements
(continued)

June 30, 2004 (unaudited)

(3) Investment Properties (continued)

~~Initial Costs~~				Initial Costs
Parcel	Illinois	Gross Acres Purchased	Purchase/Sales	Original	Acquisition	Total	Costs Capitalized Subsequent to	Costs of Property	Total Remaining Costs of Parcels	Current Year Gain On Sale
#	County	/(Sold)	Date	Costs	Costs	Costs	Acquisition	Sold	at 0603/3031/0407	Recognized
10	Kendall	223.7470	09/16/94	$ 2,693,025	205,660	2,898,685	352,326	3,106,497	144,514	3,010,412
9	LaSalle	335.9600	08/30/94	993,441	79,329	1,072,770	130,045	1,202,815	-	-
		(335.9600)	04/18/03
10	Kendall	223.7470	09/16/94	$ 2,693,025	205,660	2,898,685	362,769	3,261,454	-	-
		(2.9770)	11/03/99
		(127.4000)	08/14/02
		(84.39)	01/09/04
		(8.98)	12/15/05
10A(a)	Kendall	7.0390	09/16/94	206,975	15,806	222,781	1,327	224,108	-	-
		(7.0390)	04/21/95
11	Kane	123.0000	09/26/94	1,353,000	75,551	1,428,551	17,466	1,446,017	-	-
		(123.000)	11/30/00
12	Kendall	110.2530	09/28/94	600,001	51,220	651,221	157,198	808,419	-	-
		(59.9050)	04/16/01
		(50.3480)	09/18/03
13	LaSalle	352.7390	10/06/94	1,032,666	91,117	1,123,783	22,723	1,146,506	-	-
		(10.0000)	07/27/98
		(342.7390)	08/31/98
14	Kendall	134.7760	10/26/94	1,000,000	81,674	1,081,674	3036,~~789~~734	851,~~960~~118,408	~~1,026,503~~-	-
		(10.6430)	05/21/99
15	McHenry	169.5400	10/31/94	2,900,000	79,196	2,979,196	332,922	3,312,118	-	5,612,104
		(124.1330)	12/17/04
15	McHenry	169.5400	10/31/94	2,900,000	79,196	2,979,196	332,922	3,312,118	-	-
		(169.5400)	02/26/04
16	McHenry	207.0754	11/30/94	1,760,256	101,388	1,861,644	315,664	2,177,308	-	~~8,730,074~~-
		(207.0754)	02/26/04
17	LaSalle	236.4400	12/07/94	1,060,286	74,735	1,135,021	55100,~~167~~869	-1,235,890	~~1,190,188~~-	-
		(236.4400)	Var 2005
18	Kendall	386.9900	11/02/95
		(386.9900)	08/31/98	934,993	126,329	1,061,322	501	1,061,823	-	-
	Total			$24,285,538	1,660,451	25,945,989	5,~~634~~868,~~142~~562	2231,~~981~~035,~~533~~626	8778,~~598,598~~925	~~17,414,078~~-

-109-

INLAND CAPITAL FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) ~~June~~March 3031, ~~2004~~2007 (unaudited)

(3) Investment Properties (continued)

(a)

Included in the purchase of Parcel 10 was a house and several outbuildings, located on approximately seven acres, which were sold on April 21, 1995.

(b)

Reconciliation of real estate owned:

		June 30,	December 31,
		March 31,	December 31,
		2004	2003
		2007	2006
Balance at January 1,	$	15777,~~440,821~~625	18875,~~283,928~~290
Additions during period		961,~~222~~300	~~412~~37,~~195~~333
Sales during period		~~(6,938,445)~~-	(3134,~~255,302~~998)
Balance at end of period	$	8,598,598	15,440,821
Balance at end of period,	$	778,925	777,625

(4c) ~~Farm Rental Income~~

~~The~~On ~~Partnership~~a ~~has~~quarterly ~~determined~~basis, ~~that~~in ~~all~~accordance ~~leases~~with ~~relating~~Statement of Financial Accounting Standards No. 144, the Partnership conducts an impairment analysis to ensure that the ~~farm~~carrying ~~parcels~~value ~~are~~of ~~operating~~each ~~leases~~property does not exceed its estimated fair value. If ~~Accordingly~~this were to occur, ~~rental~~the ~~income~~Partnership iswould ~~reported~~be ~~when~~required ~~earned~~to record an impairment loss equal to the excess of carrying value over fair value.

AsIn determining the value of ~~June~~an ~~30,~~investment ~~2004~~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 ~~Partnership~~value ~~had~~of ~~farm~~any ~~leases~~particular property. The value of ~~generally~~any ~~one~~particular ~~year~~property inis ~~duration,~~sensitive ~~for~~to ~~approximately~~the ~~633~~actual ~~acres~~results of any of these uncertain factors, either individually or taken as a whole. Should the ~~approximately~~actual ~~698~~results ~~acres~~differ ~~owned~~from management's judgment, the valuation could be negatively or positively affected.

~~(5) Mortgage~~The ~~Loans~~valuation ~~Receivable~~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.

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.-10-

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things, the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.

We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies." A critical accounting policy is one that would materially affect our operations or financial condition, and requires management to make estimates or judgments in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable, cost allocation and revenue recognition. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to require companies to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value. If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole. Should the actual results differ from management's judgment, the valuation could be negatively or positively affected.

-11-

~~INLAND~~The ~~CAPITAL~~valuation ~~FUND,~~and ~~L.P. (~~possible subsequent impairment of investment properties is a ~~limited~~significant ~~partnership) Notes~~estimate tothat ~~Financial~~can ~~Statements (continued) June~~and 30does change based on management's continuous process of analyzing each property. For the three months ended March 31, ~~2004 (unaudited)~~2007, we had recorded no such impairment.

			Principal Balance	Principal Balance	Accrued Interest Receivable	Deferred Gain
Parcel	Maturity	Interest Rate	06/30/04	12/31/03	06/30/04	06/30/04
1	12/31/04	7.50%	$ 7,790	846,737	200,896	-
12	03/31/04*	9.00%	161,135	161,135	62,289	82,203
			168,925	1,007,872	263,185	82,203
Less allowances for doubtful accounts			135,000	135,000	62,289	68,829
			$ 33,925	872,872	200,896	13,374

Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

*This Revenue ~~loan~~Recognition ~~will~~- beWe ~~extended~~recognize income from the sale of land parcels in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate".

~~The~~Assets ~~velocity~~Held offor ~~the~~Sale ~~developer's~~- In ~~individual~~determining ~~home~~whether ~~sales~~to atclassify ~~Parcel~~an 12asset ~~was~~as ~~slower~~held ~~than~~for ~~was~~sale, ~~originally~~we ~~projected~~consider ~~and~~whether: ~~consequently,~~(i) ~~the~~management ~~developer's~~has ~~carrying~~committed ~~costs~~to ~~were higher. As~~ a ~~result~~plan ofto sell the ~~development's~~asset; ~~financial~~(ii) ~~difficulties,~~ the ~~net~~asset ~~sale~~is ~~proceeds~~ available tofor ~~the~~immediate ~~Partnership~~sale, ~~were~~in ~~lower~~its ~~than~~present ~~projected. As~~condition; of(iii) ~~June~~we ~~30,~~have ~~2004~~initiated ~~and~~a ~~December~~program ~~31,~~to ~~2003,~~locate ~~the~~a ~~Partnership~~buyer; ~~has~~(iv) ~~recorded~~we anbelieve ~~allowance~~that ~~for~~the ~~doubtful~~sale ~~accounts~~ of ~~$135,000~~the ~~relating~~asset tois ~~the~~probable; ~~mortgage~~(v) ~~receivable,~~we ~~and~~are ~~$62,289~~actively ~~relating~~marketing tothe ~~accrued~~asset ~~interest~~for ~~receivable,~~sale ~~relating~~at toa ~~the~~price ~~sale~~that ofis ~~Parcel~~reasonable ~~12. A~~in ~~portion~~relation ofto ~~the~~its ~~related~~current ~~deferred~~value; ~~gain~~and ~~for~~(vi) ~~Parcel~~actions 12required offor ~~$68,829~~us asto ofcomplete ~~June~~the ~~30,~~plan ~~2004~~indicate ~~and~~that ~~December~~it ~~31,~~is ~~2003,~~unlikely ~~has~~that ~~also~~any ~~been~~significant ~~written~~changes ~~off~~will ~~against~~be ~~bad~~made ~~debt~~to ~~expense~~the plan.

~~The~~If ~~General~~all ~~Partner~~of ~~guaranteed~~ the ~~third~~above ~~party~~criteria ~~development~~are ~~loans owed by these limited liability companies. In reviewing the developments' financial situation~~met, ~~our~~we ~~General~~classify ~~Partner determined that it would be in its best interest to have an affiliate acquire~~ the ~~interests~~asset inas ~~the~~held ~~LLCs~~for sale. The ~~General~~assets ~~Partner~~ and ~~its~~liabilities ~~affiliates~~associated ~~concluded~~with ~~that~~those ~~they~~assets ~~could~~that ~~better~~are ~~control~~held ~~the~~for ~~continuing~~sale ~~costs~~are toclassified ~~complete~~separately ~~these~~on ~~developments and would therefore have~~ the ~~best~~balance ~~opportunity~~sheets tofor ~~limit their exposure under~~ the ~~guarantee~~most ~~agreements~~recent ~~and~~reporting ~~possibly recover a portion of the amount owed~~period. ~~An affiliate of our General Partner contributed approximately $50~~ Additionally,~~000~~ ~~to acquire~~ the ~~interests~~operations infor the ~~LLCs.~~periods ~~The~~presented ~~affiliate~~are ofclassified ~~the~~on ~~General Partner will complete~~ the ~~development~~statements ~~and sale~~ of ~~these~~operations ~~projects.~~as ~~Our~~discontinued ~~Limited~~operations ~~Partners~~for ~~received~~all ~~distributions~~periods ~~that equated to the invested capital allocated to each parcel (parcel capital) plus approximately a 6% return per annum on the parcel capital through the date of the distribution~~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 December 13, 1991, we commenced an offering of 60,000 limited partnership units or units at $1,000 per unit, pursuant to a registered offering on Form S-11 under the Securities Act of 1933. The offering terminated on August 23, 1993, after we had sold 32,399.28 units, at $1,000 per unit, resulting in $32,399,282 in gross offering proceeds, not including our general partner's capital contribution of $500. All of the holders of these units have been 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 $25,945,989 of gross offering proceeds to purchase, on an all-cash basis, 18 parcels of land and one building. These investments included the payment of the purchase price, acquisition fees and acquisition costs of such properties. One of the parcels was purchased during 1992, one during 1993, fifteen during 1994 and one during 1995. As of March 31, 2007, we have had multiple sales transactions through which we have disposed of a building and approximately 3,283 acres, or 99%, of the 3,302 acres originally owned. As of March 31, 2007, cumulative distributions to the limited partners have totaled $78,171,193 (which exceeds the original capital) and $9,546,406 to the general partner. Through March 31, 2007, we have used $5,868,562 of working capital for rezoning and other activities and such amount is included in investment properties.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of March 31, 2007, we own, in part, one of our original parcels.

-12-

~~Item~~At ~~2. Management's~~March ~~Discussion~~31, ~~and~~2007, ~~Analysis~~we ofhad ~~Financial~~cash ~~Condition~~ and ~~Results~~cash ofequivalents ~~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$932,882, ~~uncertainties and other factors~~ which ~~may~~is ~~cause~~available ~~our actual results, performance, or achievements~~ to be ~~materially~~used ~~different~~for ~~from~~our ~~any~~costs ~~future~~and ~~results~~liabilities, ~~performance,~~cash ordistributions ~~achievements~~to ~~expressed or implied by these forward-looking statements. These factors include~~partners, ~~among~~and other ~~things~~activities ~~the~~with ~~ability~~respect to ~~obtain~~our ~~annexation~~remaining ~~and~~land ~~zoning~~parcel. Undistributed ~~approvals~~net ~~required~~sales toproceeds ~~develop~~will ~~our~~be ~~properties;~~used ~~the approval of local governing bodies~~ to ~~develop~~fund our ~~properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate~~operations, ~~financing~~including ~~and~~property ~~general~~upgrades. ~~economic~~We orwill ~~local~~evaluate ~~conditions;~~our ~~eminent~~cash ~~domain~~needs ~~proceedings;~~throughout ~~changes in~~ the ~~environmental~~year ~~conditions~~to ordetermine ~~changes~~future ~~in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner~~distributions.

We ~~electronically~~believe ~~file~~we ~~our~~enhanced ~~annual~~the ~~report~~value onof ~~Form~~our ~~10-K,~~land ~~quarterly~~through ~~reports on Form 10~~pre-Q,development ~~current~~activities ~~reports~~such onas ~~Form~~rezoning, ~~8-K~~annexation and ~~all~~land ~~amendments to those reports with the Securities and Exchange Commission (SEC)~~planning. ~~The~~ Our ~~public~~remaining ~~may~~parcel, ~~read~~Parcel ~~and~~2, ~~copy~~was ~~any~~annexed ofto the ~~reports~~village ~~that~~of ~~are~~McHenry ~~filed~~and ~~with~~zoned ~~the~~for ~~SEC~~a atbusiness ~~the SEC's Public Reference Room at 405 Fifth Street, NW, Washington, DC 20549~~park. ~~The~~ There ~~public~~are ~~may~~two ~~obtain~~phases ~~information on the operation~~ of ~~the~~improvements ~~Public~~complete ~~Reference~~and ~~room~~sites byare ~~calling~~being ~~the~~marketed ~~SEC~~to atpotential ~~(800)-SEC-0330~~buyers. ~~The~~ As ~~SEC~~of ~~maintains~~March an31, ~~Internet site at (www.sec.gov) that contains reports~~2007, ~~proxy~~17 ~~and~~lots ~~information~~in ~~statements~~this ~~and~~parcel ~~other~~remain ~~information~~to ~~regarding~~be ~~issuers that file electronically~~sold.

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 effect our operations or financial condition, and requires management to make estimates or judgements 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 judgements 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 judgements 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.

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 judgement, 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.

-13-

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 judgement, 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.

Liquidity and Capital Resources On December 13, 1991, we commenced an offering of 60,000 limited partnership units or units at $1,000 per unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 23, 1993, after we had sold 32,399.28 units, at $1,000 per unit, resulting in $32,399,282 in gross offering proceeds, not including our general partner's capital contribution of $500. All of the holders of these units have been 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 $25,945,989 of gross offering proceeds to purchase, on an all-cash basis, 18 parcels of land and one building. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. One of the parcels was purchased during 1992, one during 1993, fifteen during 1994 and one during 1995. As of June 30, 2004, we have had multiple sales transactions through which we have disposed of a building and approximately 2,604 acres, or 79%, of the 3,302 acres originally owned. As of June 30, 2004, cumulative distributions to the limited partners have totaled $45,663,321 (which represents a return of all the original capital) and $4,413,471 to the general partner. Through June 30, 2004, we have used $5,634,142 of working capital for rezoning and other activities and such amount is included in investment properties.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of June 30, 2004, we own, in whole or in part, seven of our 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 June 30, 2004, we had cash and cash equivalents of $6,327,047, 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.

-14-

During the six months ended June 30, 2004 we have received net sales proceeds of approximately $21,300,000 from the sales of Parcels 2, 10, 15 and 16.

We plan to enhance the value of our land through pre-development activities such as rezoning, annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on a majority of our land investments. Parcel 2, annexed to the village of McHenry and zoned for a business park, has two phases of improvements complete and sites are being marketed to potential buyers, of which 34 of the 167 lots were sold as of June 30, 2004. Parcel 4 was zoned for a variety of business uses and has improvements underway. Sites are being marketed to potential buyers, of which approximately 67 acres were sold in various transactions. Parcels 15 and 16 were annexed to the village of Huntley and zoned for residential and commercial development. Parcels 15 and 16 were sold in 2004. Parcels 7 and 10 have been zoned for commercial use and are being marketed.

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 $295,~~147~~261 and $264,~~319~~954 for the ~~six~~three months ended ~~June~~March 3031, ~~2004~~2007 and ~~June 30~~2006, ~~2003,~~ respectively, are included in professional services and general and administrative expenses to affiliates, of which $143,~~018~~238 and $53,~~183~~358 was unpaid as of ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006, respectively.

Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost of our undeveloped parcels annually, limited to a cumulative total over ~~our~~the life of the partnership of 2% of the parcels' original cost to us. ~~Such~~ ~~fees~~As of ~~$9,972~~March ~~and $18~~31,~~472~~ ~~have been incurred for the six months ended June 30~~2005, ~~2004~~we ~~and~~had ~~2003,~~met ~~respectively,~~this ~~all of which was paid as of June 30, 2004~~limit.

An affiliate of our general partner performed sales marketing and advertising services for us and was reimbursed for direct costs. Such costs of $~~6,253~~35 and $56,~~650~~940 have been incurred and are included in marketing expenses to affiliates for the ~~six~~three months ended ~~June~~March 3031, ~~2004~~2007 and ~~2003~~March 31, 2006, respectively.

An affiliate of the general partner performed property upgrades, rezoning, annexation and other activities to prepare our land investments for sale and was reimbursed for salaries and direct costs. ~~For the six months ended June 30, 2004, the Partnership incurred $56,285 of such costs.~~ The affiliate did not ~~take~~recognize a profit on any project. Such costs are included in investment properties, of which $~~9,700~~0 and $183,~~630~~000 was unpaid at ~~June~~March 3031, ~~2004~~2007 and December 31, ~~2003~~2006, respectively.

Results of Operations

As of ~~June~~March 3031, ~~2004~~2007, we owned ~~seven~~one ~~parcels~~parcel of land consisting of approximately ~~698~~19 acres. Of the 698 acres owned, approximately 633 acres are tillable and leased to local farmers and are generating sufficient cash flow to cover property taxes, insurance and other miscellaneous property expenses.

~~-15-~~Other income was $43,626 and $5,455 for the three months ended March 31, 2007 and March 31, 2006, respectively. This increase is due primarily to a $45,000 reimbursement of road improvement funds never used by a municipality.

OnProfessional ~~January~~services ~~11,~~to ~~2002,~~non-affiliates wewere ~~sold approximately 108 acres of Parcel 1 on an installment basis and recorded a deferred gain of~~ $119,~~202,106. As~~303 ~~of June 30, 2004, we have received principal payments totaling $838,947~~ and ~~recognized~~ $~~477~~25,~~783~~066 offor the ~~deferred~~three ~~gain. In~~months ~~addition,~~ended onMarch ~~April 16~~31, ~~2001,~~2007 ~~we sold approximately 60 acres of Parcel 12 on an installment basis~~ and ~~recorded~~March ~~a deferred gain of $447~~31,~~528.~~ ~~As of June 30~~2006, ~~2004, we have received principal payments totaling $713,865 and recognized $365,325 of the deferred gain~~respectively. This Asdecrease ofwas ~~June~~due ~~30,~~primarily ~~2004 and December 31, 2003, we have recorded an allowance for doubtful accounts of $135,000 relating~~ to ~~this~~a ~~mortgage~~decrease ~~receivable~~in ~~and~~accounting ~~have reserved the related deferred gain of $68,829 against bad debt expense~~fees. ~~The remaining deferred gain of $13,374 will be recognized as payments are received.~~

~~Rental~~General ~~income~~and ~~was~~administrative expenses to non-affiliates were $434,~~138~~282 and $8647,~~477~~706 for the ~~six~~three months ended ~~June~~March 3031, ~~2004~~2007 and ~~2003~~March 31, 2006, respectively. The decrease in 2007 is due to ~~decreases in tillable acres as~~ a ~~result of land sales and pre-development activity on our land investments. The~~ decrease ~~was partially offset by the annual increase~~ in ~~lease~~Illinois ~~amounts~~Replacement ~~from~~tax ~~tenants~~expense.

Interest income was $61,146 and $48,764 for the six months ended June 30, 2004 and 2003, respectively. Interest income is primarily a result of approximately $35,900 of interest income earned on short term investments and approximately $25,200 of interest income earned on our mortgage loan receivable for the six months ended June 30, 2004, as compared to approximately $9,000 of interest income earned on short term investments and approximately $40,000 of interest income earned on our mortgage loan receivable for the six months ended June 30, 2003. The increase in interest income earned on short term investments is due to interest earned on sales proceeds invested prior to distribution to the limited partners.

Professional services to affiliates were $17,285 and $13,114 for the six months ended June 30, 2004 and 2003. This increase was due to increases in legal fees as a result of increased sales activity. Professional services to non-affiliates were $35,783 and $28,675 for the six months ended June 30, 2004 and 2003. This increase was due to an increase in accounting fees.

General and administrative expenses to non-affiliates were $169,531 and $50,523 for the six months ended June 30, 2004 and 2003, respectively. The increase in 2004 is due to accrued state taxes payable as a result of land sales in 2004.

Marketing expenses to non-affiliates were $24,993 and $21,938 for the six months ended June 30, 2004 and 2003. In 2003 and continuing into 2004, we changed our marketing approach to target homebuilders, industrial users and land developers through direct mailings, newspaper and trade publication advertising and an enhanced website.

Land operating expenses to affiliates were $9,972 and $18,472 for the six months ended June 30, 2004 and 2003, respectively and relate to asset management fees paid. Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost of our undeveloped parcels annually, limited to a cumulative total over our life of 2% of the parcels' original cost to us. These amounts decrease as acres are sold.

Land operating expenses to non-affiliates were $(4,284) and $49,240 for the six months ended June 30, 2004 and 2003, respectively. These costs primarily include real estate tax expense and ground maintenance expense and insurance expense on the parcels owned. The decrease in 2004 is the result of the over accrual of 2003 real estate taxes payable in 2004. The General Partner was able to obtain a significant reduction of approximately $20,000 in the 2003 real estate taxes payable relating to Parcel 4.

We determined that the maximum value of Parcels 1 and 12 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. These transactions were deemed installment sales. After the sale, the developer, through limited liability companies 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. These sales were structured so that the deferred down payment received at the time of the sale was sufficient to provide a distribution to our limited partners that equated to the parcel capital allocated to the parcel plus approximately a 6% return per annum on the invested capital allocated to the parcel (parcel capital) through the date of the distribution.

The velocity of the developer's individual home sales at Parcel 12 was slower than was originally projected and consequently, the developer's carrying costs were higher. As a result of the slower lot sales, the net sale proceeds available to us were lower than anticipated. As of June 30, 2004 and December 31, 2003, we have recorded allowances for doubtful accounts of $135,000 relating to the mortgage receivable and $62,289 relating to accrued interest receivable, relating to the sale of Parcel 12. A portion of the related deferred gain for Parcel 12 of $68,829 as of June 30, 2004 and December 31, 2003 has also been written off against bad debt expense.

The General Partner guaranteed the third party development loans owed by these limited liability companies. In reviewing the developments' financial situation, our general partner determined that it would be in its best interest to have an affiliate acquire the interests in the LLCs. The general partner and its affiliates concluded that they could better control the continuing costs to complete these developments and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed. An affiliate of our general partner contributed approximately $50,000 to acquire the interests in the LLCs. The affiliate of the general partner will complete the development and sale of these projects. Our limited partners received distributions that equated to the invested capital allocated to each parcel (parcel capital) plus approximately a 6% return per annum on the parcel capital through the date of the distribution.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

-13-

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 ~~are~~were effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There were no changes in our internal controls over financial reporting that occurred during the ~~six~~three months ended ~~June~~March 3031, ~~2004~~2007 that materially affected, or are reasonably likely to materially affect, our internal control ofover 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 and Reports on Form 8-K

(a) Exhibits:

31.1 Rule 13a-14(a)/15d-14(a) Certification by ~~principal~~Principal ~~executive~~Executive ~~officer~~Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification by ~~principal~~Principal ~~financial~~Financial ~~officer~~Officer

32.1 Section 1350 Certification by ~~principal~~Principal ~~executive~~Executive ~~officer~~Officer

32.2 Section 1350 Certification by ~~principal~~Principal ~~financial~~Financial ~~officer~~Officer

(b) Reports on Form 8-K:

None

-1814-

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 CAPITAL FUND, L.P. By: Inland Real Estate Investment Corporation General Partner /S/ BRENDA G. GUJRAL By: Brenda G. Gujral President and Principal Executive Officer Date: ~~August~~May 411, ~~2004~~2007 /S/ ~~PATRICIA~~GUADALUPE A.GRIFFIN ~~DELROSSO~~ By: ~~Patricia~~Guadalupe A.Griffin ~~DelRosso Senior~~ Vice President Date: ~~August~~May 411, ~~2004~~2007 /S/ ~~KELLY~~DONNA ~~TUCEK~~URBAIN By: ~~Kelly~~Donna ~~Tucek~~Urbain ~~Vice~~Principal ~~President~~Financial ~~and~~Officer ~~principal financial officer~~ Date: ~~August~~May 411, ~~2004~~2007

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