UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

X		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012
¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013

TRANSITION 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)


Delaware		36-3544798
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2901 Butterfield Road, Oak Brook, IL 60523

(Address of principal executive offices)(Zip Code)

630-218-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ ~~Accelerated filer ¨~~ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Accelerated filer ¨ Smaller reporting company X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No X

INLAND LAND APPRECIATION FUND, L.P.

(a limited partnership)

Balance Sheets

~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012

(unaudited)

Assets


Assets		2013			2012

Current assets:
Cash and cash equivalents (Note 1)	$		2,134,482			2,070,810
Other assets			1,784			2,442


Total current assets			2,136,266			2,073,252


Investment properties, at cost (including acquisition fees paid to affiliates of $216,239 at March 31, 2013 and December 31, 2012) (Note 4):
Land and improvements			8,409,715			8,403,480


Total assets	$		10,545,981			10,476,732

Liabilities and Partners’ Capital
Current liabilities:
Accounts payable	$		12,719			18,580
Accrued real estate taxes			9,258			7,283
Due to affiliates (Note 3)			19,090			17,079
Unearned income			109,570			0


Total current liabilities			150,637			42,942


Partners’ capital:
General Partner:
Capital contribution			500			500
Cumulative net income			5,351,288			5,351,661
Cumulative cash distributions			(5,335,451	)		(5,335,451)

			16,337			16,710

Limited Partners:
Units of $1,000. Authorized 30,001 Units, 29,593 Units outstanding at March 31, 2013 and December 31, 2012, (net of offering costs of $3,768,113, of which $1,069,764 was paid to affiliates)			25,873,403			25,873,403
Cumulative net income			27,985,821			28,022,788
Cumulative cash distributions			(43,480,217	)		(43,479,111)


			10,379,007			10,417,080


Total Partners’ capital			10,395,344			10,433,790


Total liabilities and Partners’ capital	$		10,545,981			10,476,732

	2012			2011
Assets
Current assets:
Cash and cash equivalents (Note 1)	$	5,301,571			1,983,495
Accounts receivable		375			0
Total current assets		5,301,946			1,983,495
Investment properties, at cost (including acquisition fees paid to affiliates of $216,239 and $459,426 at September 30, 2012 and December 31, 2011, respectively) (Note 4):
Land and improvements		8,398,151			13,238,394
Total assets	$	13,700,097			15,221,889
Liabilities and Partners’ Capital
Current liabilities:
Accounts payable	$	9,890			16,865
Accrued real estate taxes		5,326			15,966
Due to affiliates (Note 3)		20,779			5,566
Unearned income		29,650			0
Total current liabilities		65,645			38,397
Partners’ capital:
General Partner:
Capital contribution		500			500
Cumulative net income		5,151,667			4,761,402
Cumulative cash distributions		(5,135,451	)		(4,745,451)
		16,716			16,451
Limited Partners:
Units of $1,000. Authorized 30,001 Units, 29,593 Units outstanding at September 30, 2012 and December 31, 2011, (net of offering costs of $3,768,113, of which $1,069,764 was paid to affiliates)		25,873,403			25,873,403
Cumulative net income		28,223,444			27,968,131
Cumulative cash distributions		(40,479,111	)		(38,674,493)
		13,617,736			15,167,041
Total Partners’ capital		13,634,452			15,183,492
Total liabilities and Partners’ capital	$	13,700,097			15,221,889

See accompanying notes to financial statements.

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INLAND LAND APPRECIATION FUND, L.P.

(a limited partnership)

Statements of Operations

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012

(unaudited)

	Three monthsendedSeptember 30,2012				Three monthsendedSeptember 30,2011				Nine months endedSeptember 30,2012			Nine months ended September 30, 2011
			2013				2012
Revenues
Revenues:
Rental income (Note 5)	$	~~31,191~~		36,234		~~25,164~~		50,399		~~91,429~~			~~74,672~~
Total revenues		~~31,191~~		36,234		~~25,164~~		50,399		~~91,429~~			~~74,672~~
Expenses:
Professional services to affiliates		~~16,281~~		14,346		~~3,686~~		10,577		~~40,920~~			~~25,982~~
Professional services to non-affiliates		~~24,145~~		37,331		~~11,801~~		32,314		~~64,210~~			~~61,871~~
General and administrative expenses to affiliates		~~4,724~~		4,266		~~1,168~~		2,899		~~9,636~~			~~7,187~~
General and administrative expenses to non- affiliates		1,100				2,497				24,825			18,320
General and administrative expenses to non-affiliates				17,354				16,909
Marketing expenses to affiliates		~~674~~		130		0		0		~~674~~			~~335~~
Marketing expenses to non-affiliates		798				0				798			0
Land operating expenses to non-affiliates				2,883				4,577
Land operating expenses to non-affiliates		2,997				1,583				9,378			5,359
Total expenses				76,310				67,276
Total expenses		50,719				20,735				150,441			119,054
Operating loss				(40,076	)			(16,877)
Operating income (loss)		(19,528	)			4,429				(59,012	)		(44,382)
Interest income				1,236				2,442
Interest income		2,928				5,226				8,606			15,211
Other income				1,500				2,850
Other income		1,950				2,225				6,800			5,625
Loss from continuing operations				(37,340	)			(11,585)
Income (loss) from continuing operations		(14,650	)			11,880				(43,606	)		(23,546)
Discontinued operations (Note 2):
Discontinued operations (Note 2)
Operating income, net				0				13,990
Operating income, net		14,287				26,393				70,145			78,224
Income from discontinued operations				0				13,990
Gain(loss) on sale of investment properties, net		(469,497	)			0				619,039			0
Net income (loss)	$			(37,340	)			2,405
Income (loss) from discontinued operations		(455,210	)			26,393				689,184			78,224
Net income (loss) allocated to:
Net income (loss)	$	(469,860	)			38,273				645,578			54,678
General Partner	$			(373	)			24
Net income (loss) allocated to:
Limited Partners				(36,967	)			2,381
General Partner	$	(4	)			383				390,265			547
Net income (loss)	$			(37,340	)			2,405
Limited Partners		(469,856	)			37,890				255,313			54,131
Net income (loss) allocated to the one General Partner Unit	$			(373	)			24
Net income (loss)	$	(469,860	)			38,273				645,578			54,678
Net income (loss) per Unit, allocated to Limited Partners per weighted average Limited Partnership Units (29,593 for the three months ended March 31, 2013 and 2012):
Net income (loss) allocated to the one General Partner Unit	$	(4	)			383				390,265			547
Continuing operations	$			(1.25	)			(.39)
Net income (loss) per Unit, allocated to Limited Partners per weighted average Limited Partnership Units (29,593 for the three and nine months ended September 30, 2012 and 2011):
Discontinued operations				0				.47
Continuing operations	$	(.49	)			.40				(1.46	)		(.79)
	$			(1.25	)			.08
Discontinued operations		(15.38	)			.88				10.09			2.62
	$	(15.87	)			1.28				8.63			1.83

See accompanying notes to financial statements.

-3-

INLAND LAND APPRECIATION FUND, L.P.

(a limited partnership)

Statements of Cash Flows

For the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012

(unaudited)

	2012			2011
				2013			2012
Cash flows from operating activities:
Net income	$	645,578			54,678
Net income (loss)	$				(37,340	)		2,405
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
Adjustments to reconcile net income (loss) to net cash provided by operating activities (including discontinued operations):
Gain on sale of investment properties		(619,039	)		0
Changes in assets and liabilities:
Changes in assets and liabilities:
Accounts receivable					0			(125)
Accounts receivable		(375	)		(53,295)
Other assets					658			0
Accounts payable		~~(6,975~~	)		2(5,~~043~~861	)		(6,545)
Accrued real estate taxes		~~(10,640~~	)		(1,~~103)~~975			(2,132)
Due to affiliates		~~15,213~~			~~(776)~~2,011			6,322
Unearned income		~~29,650~~			~~116~~109,570			149,491
Net cash provided by operating activities		53,412			1,663
Liabilities associated with discontinued operations					0			53,884
Cash flows from investing activities:
Net cash provided by operating activities					71,013			203,300
Additions to investment properties		(2,946	)		(9,527)
Cash flows from investing activities:
Proceeds from sale of investment properties		5,462,228			0
Additions to investment properties					(6,235	)		(211)
Net cash provided by (used in) investing activities		5,459,282			(9,527)
Net cash used in investing activities					(6,235	)		(211)
Cash flows from financing activities:
Distributions		~~(2,194,618~~	)		0(1,106	)		(1,538)
Net cash used in financing activities		~~(2,194,618~~	)		0(1,106	)		(1,538)
Net increase (decrease) in cash and cash equivalents		3,318,076			(7,864)
Net increase in cash and cash equivalents					63,672			201,551
Cash and cash equivalents at beginning of period		~~1,983,495~~			12,~~912~~070,~~181~~810			1,983,495
Cash and cash equivalents at end of period	$	~~5,301,571~~			12,~~904~~134,~~317~~482			2,185,046

See accompanying notes to financial statements.

-4-

INLAND LAND APPRECIATION FUND, L.P.

(a limited partnership)

Notes to Financial Statements

~~September~~March 3031, ~~2012~~2013

(unaudited)

Readers of this quarterly report should refer to the Partnership’s audited financial statements for the fiscal year ended December 31, ~~2011~~ 2012 which are included in the Partnership’s ~~2011~~2012 annual report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report.

(1) Organization and Basis of Accounting

The Registrant, Inland Land Appreciation Fund, 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. Between October 12, 1988 and October 6, 1989, the Partnership sold 30,000 Limited Partnership Units (“Units”) at $1,000 per Unit, which does not include the General Partner or the Initial Limited Partner, resulting in gross offering proceeds of $30,000,000. Inland Real Estate Investment Corporation is the ~~General~~ General Partner. 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. Through ~~September~~March 3031, ~~2012~~2013, the Partnership had repurchased a total of 407.75 Units for $359,484 from various Limited Partners through a ~~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 period. Actual results could differ from those estimates.

Certain reclassifications, as a result of discontinued operations, have been made to the 2011 financial statements to conform to the 2012 presentation. Unless otherwise noted, all disclosures in the financial statements relate to the continuing operations of the Partnership.

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 value. The Partnership maintains its cash and cash equivalents at a financial institution. The account ~~balance~~balances at the financial institution ~~periodically~~exceed ~~exceeds~~ the Federal Depository Insurance Corporation (“FDIC”) insurance coverage of $250,000 ~~on interest bearing accounts~~ and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Partnership believes that the risk is not significant, and the Partnership does not anticipate the financial institution’s non-performance.

The Partnership recognizes income from the sale of land parcels in accordance with the full accrual method of accounting.

The Partnership’s escrow agent holds earnest money deposits from a prospective purchaser when an agreement for sale is executed. Generally, these funds are not the Partnership’s until the closing has occurred or the buyer under the sale agreement has committed a default which would entitle the Partnership to the earnest money.

Except as described in footnote (b) to the Investment Properties table ~~beginning~~ on page 1215, the Partnership uses the area 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. Repairs and maintenance expenses are charged to operations as incurred.

-5-

INLAND LAND APPRECIATION FUND, L.P.

(a limited partnership)

Notes to Financial Statements

(continued)

March 31, 2013

(unaudited)

(2) Discontinued Operations and Investment Property Held for Sale

~~During~~On ~~the three and nine months ended September~~May 304, 2012, the Partnership ~~had~~sold ~~multiple~~approximately ~~land~~212 ~~sales,~~acres ~~all~~ of ~~which~~Parcel ~~are~~24 ~~included~~located in ~~discontinued~~ ~~operations.~~Kendall ~~Sales~~County, ofIllinois ~~investment~~for approximately ~~properties of~~ $52,~~462~~220,~~228~~000, ~~and~~which ~~cost~~resulted ofin ~~land~~net ~~sold~~sales proceeds of approximately $42,~~843~~160,~~189,~~000 ~~resulting~~and in a ~~net~~ gain on sale of approximately $~~619~~1,~~039~~085,000. isThis ~~the~~property ~~result~~qualified offor ~~the~~held for sale ofaccounting ~~Parcel~~treatment ~~24,~~under ~~consisting~~GAAP ofduring ~~approximately 212 acres,~~ the ~~sale~~first ofquarter ~~Parcel 25, consisting~~ of ~~225~~2012. ~~acres~~As such, ~~and~~ the ~~sale~~assets ofand ~~Parcel~~liabilities ~~14,~~are ~~consisting~~separately ofclassified ~~approximately~~as 76held ~~acres.~~for ~~The~~sale ~~gain~~ on ~~sale~~the ~~for~~accompanying ~~all~~balance ~~investment~~sheet ~~property~~as ~~sold~~of March 31, 2012 and the operations for ~~all~~the ~~investment~~three ~~property~~months ~~sold~~ended ~~for~~March 31, ~~all~~2012 ~~periods presented~~ are included in discontinued operations on the accompanying statements of operations. ~~for~~There ~~the~~is ~~three~~no ~~and~~investment ~~nine~~property ~~months~~classified ~~ended~~as ~~September 30,~~held ~~2012~~for ~~and~~sale ~~2011~~as of March 31, 2013.

(3) Transactions with Affiliates

The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership. Such costs of $5018,~~556~~612 and $3313,~~169~~476 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively, of which $2019,~~472~~090 and $517,~~566~~079 was unpaid as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, 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 $~~674~~130 and $~~335~~0 have been incurred and are included in marketing expenses to affiliates for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively, all of which ~~$307 and $0~~ was paid ~~unpaid~~ as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~ 2012, respectively.

As of ~~September~~March 3031, ~~2012~~2013, the Partnership held all cash and cash equivalents with Inland Bank and Trust, an affiliate of the General Partner.

(4) Investment Properties

As of ~~September~~March 3031, ~~2012~~2013, the Partnership owned six parcels of land consisting of approximately 491 acres. There were ~~multiple~~ no land sales during the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013. ~~The~~During 2012, the Partnership sold the remaining ~~balances~~balance of Parcel 24, consisting of approximately 212 acres, Parcel 25, consisting of 225 acres, and Parcel 14, consisting of approximately 76 acres.

(a)	Reconciliation of investment properties owned:

	September 30, 2012				December 31, 2011
			March 31,2013				December 31,2012
Balance at January 1,	$	~~13,238,394~~		8,403,480		~~13,228,867~~		13,238,394
Additions during period		~~2,946~~		6,235		~~9,527~~		8,275
Sales during period		~~(4,843,189~~	)	0		0		(4,843,189	)
Balance at end of period,	$	~~8,398,151~~		8,409,715		~~13,238,394~~		8,403,480

(b) On a quarterly basis, the Partnership reviews impairment indicators and if necessary, conducts an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value. If this were to occur, the Partnership would be required to record an impairment loss equal to the excess of the carrying value over the estimated fair value.

-6-

~~particular~~INLAND ~~property~~LAND isAPPRECIATION ~~sensitive to the actual results of any of these uncertain indicators~~FUND, ~~either individually or taken as a whole~~L. ~~Should the actual results differ from management’s judgment, the valuation could be negatively or positively affected~~P.

~~The valuation and possible subsequent impairment of investment properties is~~ (a ~~significant~~limited ~~estimate~~partnership) that can and does change based on management’s continuous process of analyzing each property. For the nine months ended September 30, 2012 and 2011, respectively, the Partnership had recorded no such impairment.

Notes to Financial Statements

(continued)

March 31, 2013

(unaudited)

(b)

The Partnership has taken the steps necessary to reduce costs and maintain sufficient reserves of cash and cash equivalents to cover all our costs for an extended period of time. We have farm leases in place which generate sufficient income to cover the costs of insurance expense and real estate taxes. Our remaining land is not encumbered by debt and is located in areas that we believe are in the paths of future development. As such, the Partnership has the ability and management has the intent to hold the remaining parcels until such time as reasonable and acceptable offers are received. On a quarterly basis, the Partnership reviews impairment indicators and if necessary, conducts an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value. If this were to occur, the Partnership would be required to record an impairment loss equal to the excess of the carrying value over the estimated fair value.

In determining the value of an investment property and whether the property is impaired, management considers several indicators which require difficult, complex and/or subjective judgments, such as projected sales prices, capital expenditures, assessment of current economic conditions and management’s intent to hold the remaining parcels until such time as reasonable and acceptable offers are received. These indicators are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain indicators, either individually or taken as a whole. Should the actual results differ from management’s judgment, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management’s continuous process of analyzing each property. For the three months ended March 31, 2013 and 2012, respectively, no impairment provisions were recorded by the Partnership.

(5) Rental Income

The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned. Farm rent is fully collected during the first quarter. As such, a portion of the farm rent is classified as unearned income. As of March 31, 2013, unearned income was $109,570.

As of ~~September~~March 3031, ~~2012~~2013, the Partnership had farm leases of generally one year in duration, for approximately 431 acres of the approximately 491 acres owned.

(6) Subsequent Events

The Partnership evaluates subsequent events occurring between the most recent balance sheet date and the date that the financial statements are available to be issued in order to determine whether the subsequent events are to be recorded in and/or disclosed in the Partnership’s financial statements and footnotes. The financial statements are considered to be available to be issued at the time that they are filed with the Securities and Exchange Commission. There are no subsequent events to report that would have a material impact on the Partnership’s financial statements.

-7-

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

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

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

Critical Accounting Policies

The SEC previously issued Financial Reporting Release (FRR) 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, classify, and allocate costs of investment properties and revenue recognition. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. The purpose of the FRR is to provide investors with an understanding of how management forms these policies. Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America or GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. The following disclosure discusses judgments known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, we review impairment indicators and if necessary, conduct an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value. If an investment property is considered impaired, we would be required to record an impairment loss equal to the excess of carrying value over the estimated fair value.

In determining the value of an investment property and whether the property is impaired, management considers several indicators which require difficult, complex and/or subjective judgments, such as projected sales prices, capital expenditures, ~~and~~ assessment of current economic conditions, and management’s intent to hold the remaining parcels until such time as reasonable and acceptable offers are received. These indicators are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain indicators, either individually or taken as a whole. Should the actual results differ from management’s judgment, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management’s continuous process of analyzing each property. For the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively, we have not recorded any such impairment.

Cost Allocation – We use the area 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.

-8-

Revenue Recognition - We recognize income from the sale of land parcels in accordance with the full accrual method of accounting.

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) the due diligence period as defined in the sales agreement has expired and a closing date has been set; (vi) we are actively marketing the asset for sale at a price that is reasonable in relation to its current value; and (vivii) 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 included in the statements of operations as discontinued operations for all periods presented. As of ~~September~~March ~~30, 2012 and December~~ 31, ~~2011~~2013, we have not classified any investment properties as investment property held for sale.

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.

Liquidity and Capital Resources

Between October 12, 1988 and October 6, 1989, we sold 30,000 limited partnership units to the public at $1,000 per unit resulting in $30,000,000 in gross offering proceeds.

We used $25,187,069 of gross offering proceeds to purchase on an all-cash basis twenty-five parcels of undeveloped land and an option to purchase undeveloped land. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. Fourteen of the parcels were purchased during 1989 and eleven during 1990. Through ~~September~~March 3031, ~~2012~~2013, we have had multiple sales transactions disposing of approximately 2,611 acres of the approximately 3,102 acres originally owned. A ~~distribution of net sales proceeds of $1,804,618 to the limited partners and $390,000 to the general partner was paid on June 15, 2012.~~ As of ~~September~~March 3031, ~~2012~~2013, cumulative distributions to the limited partners have totaled $4043,~~479~~480,~~111~~217, which is equivalent to ~~135~~ 145% of the original capital raised which was $30,000,000, and $5,~~135~~335,451 to the general partner. Through ~~September~~March 3031, ~~2012~~2013, we have used $20,~~305~~316,~~347~~911 of working capital for rezoning and other activities. Such amounts have been capitalized and are included in investment properties.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of ~~September~~March 3031, ~~2012~~2013, we own, in whole or in part, six 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 real estate taxes and insurance expense.

At ~~September~~March 3031, ~~2012~~2013, we had cash and cash equivalents of $52,~~301~~134,~~571~~482 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.

~~Income~~There ~~from~~were ~~the~~no ~~sale~~land ~~of investment properties of $5,462,228 and the cost of investment properties sold of $4,843,189~~ sales for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 isand ~~the~~2012, ~~result~~respectively. ofWe ~~the~~believe ~~sale~~we ofhave ~~Parcel 24,~~taken ~~consisting~~the ofsteps ~~approximately~~necessary ~~212~~to ~~acres,~~reduce ~~the~~costs ~~sale~~and ofmaintain ~~Parcel~~sufficient ~~25,~~reserves ~~consisting~~ of ~~225~~cash ~~acres,~~ and ~~the~~cash ~~sale~~equivalents ofto ~~Parcel~~cover ~~14,~~all ~~consisting~~our ofcosts ~~approximately~~for 76an ~~acres.~~extended ~~Sales~~period ~~activity~~of ~~for~~time. We ~~the~~have ~~nine~~farm ~~months~~leases ~~ended~~in ~~September 30,~~place ~~2012~~which isgenerate ~~the~~sufficient ~~result~~income ofto ancover ~~increase in~~the ~~sales~~costs of ~~vacant~~insurance ~~land~~expense toand ~~both~~real ~~speculators~~estate ~~looking~~taxes. toOur ~~hold~~remaining land ~~until~~is ~~the~~not ~~market~~encumbered ~~rebounds~~by debt and ~~farmers~~is ~~looking~~located toin ~~increase~~areas ~~their~~that ~~farming~~we ~~businesses.~~believe ~~During~~are in the ~~nine~~paths ~~months~~of ~~ended~~future ~~September 30, 2011, there were no land sales~~development. As land sales occur, net sales proceeds will be used to cover our current and future operations, including land improvements and land use activities. We will evaluate our cash needs throughout the year to determine future distributions.

We have been successful in pre-development activities such as rezoning, annexation and /or land planning of approximately 410 acres of Parcels 17, 18, 19 and 22 in McHenry, Illinois. Further pre-development activities are on hold pending significant improvements in the real estate market as well as demand for improved land zoned for residential and commercial use.

-9-

We continue to closely monitor the real estate market trends, especially within the areas where our remaining parcels are located. We have seen modest improvements in the residential resale real estate market, however, new home starts in these middle class communities remain weak. That, coupled with strict lender requirements, adversely impact sales activity, especially sales of residential lots and sales of vacant land for retail purposes. ~~There~~We ~~have~~are ~~been~~aware ~~recent reports~~ of ~~vacant~~farm ~~land~~parcel sales in surrounding communities from both speculators looking to hold land until the market rebounds, as well as farmers looking to increase their farming businesses. Inquiries on the Partnership’s land holdings have also increased~~, resulting in three separate land sales for the nine months ended September 30, 2012~~. We believe we have taken the steps necessary to reduce costs and maintain sufficient reserves of cash and cash equivalents to cover all our costs for an extended period of time as we continue to market the remaining parcels for sale. We have farm leases in place which generate sufficient income to cover the costs of insurance expense and real estate taxes. Our remaining land is not encumbered by debt and is located in areas that we believe are in the paths of future development.

Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of their employees relating to our administration. Such costs of $5018,~~556~~612 and $3313,~~169~~476 have been incurred and are included in professional services to affiliates and general and administrative expenses to affiliates for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively, of which $2019,~~472~~090 and $517,~~566~~079 was unpaid as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, respectively.

An affiliate of our general partner performed marketing and advertising services for us and was reimbursed for direct costs. Such costs of $~~674~~130 and $~~335~~ 0 have been incurred and are included in marketing expenses to affiliates for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~ 2013 and ~~2011~~2012, respectively, all of which ~~$307 and $0~~ was ~~unpaid~~paid as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012, respectively.

As of ~~September~~March 3031, ~~2012~~2013, the Partnership held all cash and cash equivalents with Inland Bank and Trust, an affiliate of the General Partner.

Results of Operations

As of ~~September~~March 3031, ~~2012~~2013, we owned six parcels of land consisting of approximately 491 acres. Of the 491 acres owned, approximately 431 acres are leased to local farmers and generate sufficient cash flow to cover real estate taxes and insurance expense. Rental income was $9136,~~429~~234 and $7450,~~672~~399 for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. Rental income decreased ~~increased~~approximately $20,030 due to fewer farm leases, as three farms were sold in 2012. The decrease was offset by an increase in rent of approximately $5,865 from the remaining farms. Farm rent payments are fully collected during the first quarter. A portion of the farm ~~rental~~rent ~~rates~~collected is classified as unearned income of $109,570 as of March 31, 2013.

We have been successful in pre-development activities such as rezoning, annexation and/or land planning of approximately 410 acres of Parcels 17, 18, 19 and 22 in McHenry, Illinois. Parcels 17 and 18 are within the planning jurisdiction of the City of Woodstock. Parcel 22 was forcibly annexed into the corporate limits of the Village of Bull Valley and subject to that village’s restrictions. For land planning purposes, it was our intent to have most if not all three parcels annexed to the City of Woodstock. In a prior year, we entered into a Settlement and Annexation Agreement with the Village of Bull Valley which moved the boundary line favorably for us allowing us to proceed with the land planning for these parcels with the City of Woodstock. The settlement with Bull Valley provided the prospect of allowing us to develop the property with sewer and water facilities from the City of Woodstock and with a land use that could not have been developed in Bull Valley. In consideration for the release of land, we simultaneously conveyed approximately 51 acres of Parcel 22 to the Village of Bull Valley. Also as part of the settlement, we received favorable zoning for the remaining land that lies within the limits of the Village of Bull Valley. Due to the downturn in the real estate and financial markets the decision was made to discontinue the land planning process of these parcels until such time as the market rebounds and homebuilders and developers enter back into these markets.

Parcel 19 previously received approval required from certain Village of McHenry municipal departments for a preliminary plan approving a 41 unit well and septic residential subdivision to be called Hunters Woods. Following the downturn in the real estate market, we sought an extension in the time limit for recording the final plat for the Hunters Woods Subdivision. The extension expired on May 5, 2011. During the first quarter of 2011, we submitted a formal request for an additional one year extension as allowed by the Village of McHenry. We received a response which required addressing minor storm water comments raised by the McHenry County Department of Planning and Development. These matters have been addressed in a formal response. We are awaiting further comments and/or a date when our request for a plat extension will be submitted for approval. It is our intent to preserve the validity of our preliminary plan until such time as the market rebounds and homebuilders resume new home construction in this area.

-10-

~~Professional~~ While ~~services~~new tohome ~~affiliates~~construction ~~and~~has ~~non-affiliates~~not ~~were~~significantly ~~$105,130~~improved ~~and~~in ~~$87,853~~these ~~for the nine months ended September 30~~markets, ~~2012~~we ~~and~~have ~~2011,~~seen ~~respectively.~~signs ~~Professional~~of ~~services~~investors ~~primarily include accounting~~ and ~~legal~~farmers ~~fees. Professional services to affiliates and non~~re-~~affiliates~~entering ~~increased~~these ~~due~~markets to ~~additional~~acquire ~~accounting~~land ~~fees~~either for ~~state~~future ~~tax~~development ~~filings and XBRL~~or ~~filing~~to ~~requirements,~~expand asfarming ~~well as an increase in legal fees associated with the land sales activities~~operations.

~~General~~Professional ~~and~~services ~~administrative expenses~~ to affiliates and non-affiliates were $3451,~~461~~677 and $2542,~~507~~891 for the ~~nine~~three months ended ~~September~~ March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~General~~Professional ~~and~~services ~~administrative expenses~~ primarily include ~~data~~accounting ~~processing costs, postage, printing expenses~~ and ~~farm management~~legal fees. ~~General~~Professional ~~and~~services ~~administrative expenses~~ to affiliates and non-affiliates increased ~~primarily~~ due to anadditional ~~increase~~accounting ~~in farm management~~ fees, ~~printing~~for ~~and~~state ~~postage~~tax costs. Printing and postage costs increased due to the investor distribution. Farm management fees are incurred when the farm rent is negotiated and collected. The annual rent from the farm leases was collected in one installmentfilings, ~~therefore,~~XBRL ~~the farm management fee was fully assessed during the first quarter of 2012. In~~filing ~~addition~~requirements, ~~the~~and ~~unearned~~audit ~~income of $29,650 at September 30, 2012 reflects the collection of all the annual farm rent during the first quarter of 2012~~fees.

~~Marketing~~General and administrative expenses to affiliates and non-affiliates were $121,~~472~~620 and $~~335~~19,808 for the ~~nine~~ three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~Marketing~~General and administrative expenses toprimarily ~~affiliates~~include ~~are~~data processing costs, ~~incurred~~postage, ~~for preparing~~printing expenses and ~~marketing~~farm ~~parcels~~management ~~for sale~~fees. ~~The~~General ~~increase~~and inadministrative ~~marketing~~ expenses isto affiliates and non-affiliates increased primarily due to ~~the~~an increase in ~~sales~~printing ~~activity~~and ~~during~~postage ~~the~~costs ~~third~~as ~~quarter~~a result of ~~2012~~the mini-tender offer.

~~Land~~Marketing ~~operating~~ expenses to ~~non-~~affiliates were $~~9,378~~130 and $~~5,359~~0 for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~These~~Marketing ~~costs~~expenses ~~primarily include real estate taxes and insurance. The increase is due~~ to anaffiliates ~~increase~~were infor ~~both~~signage ~~real estate taxes and insurance~~costs.

~~Interest~~Land ~~income~~operating ~~was~~expenses to non-affiliates were $82,~~606~~883 and $154,~~211~~577 for the ~~nine~~three months ended ~~September~~ March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~Interest~~These ~~income~~costs is primarily ainclude ~~result~~real ofestate ~~the~~taxes ~~cash~~and ~~available~~insurance. toThe decrease ~~invest~~is ondue to a ~~short~~decrease ~~term~~in ~~basis.~~both ~~The~~real ~~decrease~~estate intaxes ~~interest~~and ~~income~~insurance issince ~~due~~three toparcels awere ~~decrease~~sold induring ~~interest rates~~2012.

~~Other~~Interest income was $61,~~800~~ 236 and $52,~~625~~442 for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~Other~~Interest income is ~~due~~ primarily ~~to transfer fee income as~~ a result of the ~~number~~cash ofavailable ~~completed~~to ~~Unit~~invest ~~transfers.~~on ~~The~~a ~~increase~~short isterm ~~due~~basis. toThe ~~more~~decrease ~~transfer~~in ~~fee~~interest income asis adue ~~result~~to ofa andecrease ~~increase~~ in ~~the~~interest ~~number of completed Unit transfers~~rates.

~~Income~~Other ~~from~~income ~~discontinued operations~~ was $701,~~145~~500 and $782,~~224~~850 for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012, respectively. ~~Included~~Other in income ~~from~~is ~~discontinued~~due ~~operations~~primarily ~~are~~to transfer ~~rental~~fee income~~, insurance~~ ~~and~~as ~~real~~a estate taxes pertaining to the parcels sold during the nine months ended September 30, 2012. The gain on sales of investment properties of $619,039 for the nine months ended September 30, 2012 is the result of the ~~sale of~~number ~~Parcel 24, consisting~~ of ~~approximately~~completed ~~212~~unit ~~acres, the sale of Parcel 25, consisting of 225 acres, and the sale of Parcel 14, consisting of approximately 76 acres~~transfers. ~~Sales~~The ~~activity~~decrease ~~for~~is ~~the~~due ~~nine~~to ~~months~~less ~~ended~~transfer ~~September 30,~~fee ~~2012~~income isas ~~the~~a result of an ~~increase~~a decrease in ~~sales of vacant land to both speculators looking to hold land until~~ the ~~market~~number ~~rebounds~~of ~~and~~completed ~~farmers~~unit ~~looking to increase their farming businesses~~transfers. ~~During the nine months ended September 30, 2011, there were no land sales.~~

Income from discontinued operations was $0 and $13,990 for the three months ended March 31, 2013 and 2012, respectively. Included in income from discontinued operations are rental income, insurance and real estate taxes pertaining to the investment property held for sale as of March 31, 2012. There is no investment property held for sale as of March 31, 2013.

-11-

Investment ~~properties~~Properties

~~The~~We acquired fee ownership of the following real property investments. The table below summarizes the detail activity of all the land parcels owned by the Partnership from the purchase date through the quarter ending ~~September~~March 3031, ~~2012~~2013.

Investment properties activity:

							Initial Costs
Parcel	Illinois County	GrossAcresPurchased (Sold)			Purchase/ Sales Date		Initial Costs								CostsCapitalizedSubsequent to Acquisition		Costs ofProperty Sold		TotalRemainingCosts ofParcels at 3/31/13		Current YearGain(Loss)on Sale Recognized
Parcel	Illinois County	Gross AcresPurchased (Sold)			Purchase/Sales Date		Original Costs		Acquisition Costs		Total Costs		CostsCapitalizedSubsequent to Acquisition		Costs ofProperty Sold		TotalRemainingCosts ofParcels at 09/30/2012		Current YearGain(Loss)on Sale Recognized
									Original Costs		Acquisition Costs		Total Costs
1	Kendall		84.7360			01/19/89	$	~~423,680~~		61423,~~625~~680		~~485~~61,~~305~~625		5485,~~462,589~~305		5,~~947~~462,~~894~~589		05,947,894		0		0
			(3.5200	)		12/24/96
			(.3520	)		11/25/97
			(80.8640	)		12/29/97
2	McHenry		223.4121			01/19/89		~~650,000~~		95650,~~014~~000		~~745~~95,014		26745,~~816~~014		~~771~~26,~~830~~816		0771,830		0		0
			(183.3759	)		12/27/90
			(40.0362	)		05/11/00
3	Kendall		20.0000			02/09/89		~~189,000~~		13189,~~305~~000		~~202~~13,305		0202,305		~~202,305~~0		0202,305		0		0
			(20.0000	)		05/08/90
4	Kendall		69.2760			04/18/89		~~508,196~~		38508,~~126~~196		~~546~~38,~~322~~126		1546,~~223,376~~322		1,~~769~~223,~~698~~376		01,769,698		0		0
			(.4860	)		02/28/91
			(27.5850	)		08/25/95
			(4.4017	)		Var 2001
			(2.1400	)		Var 2002
			(23.0933	)		Var 2003
			(6.7800	)		Var 2004
			(4.7900	)		Var 2005
5	Kendall (a)		372.2230			05/03/89		~~2,532,227~~		~~135~~2,~~943~~532,227		2135,~~668,170~~943		~~456~~2,~~398~~668,170		3456,~~124,568~~398		03,124,568		0		0
			(Option	)		04/06/90
			(372.2230	)		06/20/03
6	Kendall (b)		78.3900			06/21/89		~~416,783~~		31416,~~691~~783		~~448~~31,~~474~~691		1448,~~461,256~~474		1,~~909~~461,~~730~~256		01,909,730		0		0
			(3.9500	)		11/01/00
			(30.0000	)		07/12/05
			(33.4270	)		07/27/06
			(11.0130	)		08/22/07
7	Kendall (b)		77.0490			06/21/89		~~84,754~~		884,~~163~~754		928,~~917~~163		192,~~438,727~~917		1,~~531~~438,~~644~~727		01,531,644		0		0
			(71.2070	)		08/22/07
			(5.8420	)		03/20/08

-12-

~~Investment~~INLAND ~~properties~~LAND ~~activity~~APPRECIATION ~~(continued):~~FUND, L.P.

							Initial Costs
Parcel	Illinois County	Gross AcresPurchased (Sold)			Purchase/Sales Date		Original Costs		Acquisition Costs		Total Costs		CostsCapitalizedSubsequent to Acquisition		Costs ofProperty Sold		TotalRemainingCosts ofParcels at 09/30/2012		Current YearGain(Loss)on Sale Recognized
8	Kendall (b)		5.0000			06/21/89	$	60,000		5,113		65,113		0		65,113		0		0
			(5.0000	)		10/06/89
9	McHenry (b)		51.0300			08/07/89		586,845		22,482		609,327		94,659		0		703,986		0
10	McHenry (b)		123.9400			08/07/89				7,224		99,163		600		99,763		0		0
			(123.9400	)		12/06/89
11	McHenry (b)		30.5920			08/07/89		321,216		22,641		343,857		94,534		0		438,391		0
12	Kendall		90.2710			10/31/89		907,389		41,908		949,297		246,964		1,196,261		0		0
			(.7090	)		04/26/91
			(89.5620	)		03/10/04
13	McHenry		92.7800			11/07/89		251,306		19,188		270,494		18,745		289,239		0		0
			(2.0810	)		09/18/97
			(90.6990	)		02/15/01
14	McHenry		76.2020			11/07/89		419,111		23,402		442,513		206,810		649,323		0		151,761
			(76.2020	)		09/13/12
15	Lake		84.5564			01/03/90		1,056,955		85,283		1,142,238		1,661,344		2,803,582		0		0
			(10.5300	)		Var 1996
			(5.4680	)		Var 1997
			(68.5584	)		Var 1998
16	Kane/		72.4187			01/29/90		1,273,537		55,333		1,328,870		706,718		2,035,588		0		0
	Kendall		(30.9000	)		07/10/98
			(10.3910	)		12/15/99
			(3.1000	)		12/12/00
			(28.0277	)		05/19/03
17	McHenry		99.9240			01/29/90		739,635		61,038		800,673		1,254,202		320,961		1,733,914		0
			(27.5100	)		01/29/99

(a limited partnership)

Investment properties activity (continued)


Parcel	Illinois County	Gross Acres Purchased (Sold)			Purchase/ Sales Date		Initial Costs							Costs Capitalized Subsequent to Acquisition		Costs of Property Sold		Total Remaining Costs of Parcels at 3/31/13		Current Year Gain(Loss) on Sale Recognized
Parcel	Illinois County	Gross Acres Purchased (Sold)			Purchase/ Sales Date			Original Costs		Acquisition Costs		Total Costs		Costs Capitalized Subsequent to Acquisition		Costs of Property Sold		Total Remaining Costs of Parcels at 3/31/13		Current Year Gain(Loss) on Sale Recognized
8	Kendall (b)		5.0000			06/21/89	$		60,000		5,113		65,113		0		65,113		0		0
			(5.0000	)		10/06/89

9	McHenry (b)		51.0300			08/07/89			586,845		22,482		609,327		94,659		0		703,986		0

10	McHenry (b)		123.9400			08/07/89			91,939		7,224		99,163		600		99,763		0		0
			(123.9400	)		12/06/89

11	McHenry (b)		30.5920			08/07/89			321,216		22,641		343,857		94,534		0		438,391		0

12	Kendall		90.2710			10/31/89			907,389		41,908		949,297		246,964		1,196,261		0		0
			(.7090	)		04/26/91
			(89.5620	)		03/10/04

13	McHenry		92.7800			11/07/89			251,306		19,188		270,494		18,745		289,239		0		0
			(2.0810	)		09/18/97
			(90.6990	)		02/15/01

14	McHenry		76.2020			11/07/89			419,111		23,402		442,513		206,810		649,323		0		0
			(76.2020	)		09/13/12

15	Lake		84.5564			01/03/90			1,056,955		85,283		1,142,238		1,661,344		2,803,582		0		0
			(10.5300	)		Var 1996
			(5.4680	)		Var 1997
			(68.5584	)		Var 1998

16	Kane/		72.4187			01/29/90			1,273,537		55,333		1,328,870		706,718		2,035,588		0		0
	Kendall		(30.9000	)		07/10/98
			(10.3910	)		12/15/99
			(3.1000	)		12/12/00
			(28.0277	)		05/19/03

17	McHenry		99.9240			01/29/90			739,635		61,038		800,673		1,254,202		320,961		1,733,914		0
			(27.5100	)		01/29/99

-13-

~~Investment~~INLAND ~~properties~~LAND ~~activity~~APPRECIATION ~~(continued):~~FUND, L.P.

							Initial Costs
Parcel	Illinois County	Gross AcresPurchased (Sold)			Purchase/Sales Date		Original Costs		Acquisition Costs		Total Costs		CostsCapitalizedSubsequent to Acquisition		Costs ofProperty Sold		TotalRemainingCosts ofParcels at 09/30/2012		Current Year Gain(Loss) on Sale Recognized
18	McHenry		71.4870			01/29/90	$	496,116		26,259		522,375		517,216		11,109		1,028,482		0
			(1.0000	)		Var 1990
			(.5200	)		03/11/93
19	McHenry		63.6915			02/23/90		490,158		29,158		519,316		651,133		0		1,170,449		0
20	Kane		224.1480			02/28/90		2,749,800		183,092		2,932,892		1,938,930		4,871,822		0		0
			(.2790	)		10/17/91
			(223.8690	)		02/20/04
21	Kendall		172.4950			03/08/90		1,327,459		75,822		1,403,281		954,415		2,357,696		0		0
			(172.4950	)		Var 1998
22	McHenry		254.5250			04/11/90		2,608,881		136,559		2,745,440		577,489		0		3,322,929		0
			(51.000	)		10/02/08
23	Kendall		140.0210			05/08/90		1,480,000		116,240		1,596,240		909,395		2,505,635		0		0
			(4.4100	)		Var 1993
			(35.8800	)		Var 1994
			(3.4400	)		Var 1995
			(96.2910	)		08/26/99
24	Kendall		298.4830			05/23/90		1,359,774		98,921		1,458,695		101,991		1,560,686		0		1,088,536
			(12.4570	)		05/25/90
			(4.6290	)		04/01/96
			(69.8200	)		11/26/02
			(211.5770	)		05/04/12
25	Kane		225.0000			06/01/90		2,600,000		168,778		2,768,778		301,040		3,069,818		0		(621,258)
			(225.0000	)		09/07/12
	Totals						$	23,624,761		1,562,308		25,187,069		20,305,347		37,094,265		8,398,151		619,039

(a limited partnership)

Investment properties activity (continued)


Parcel	Illinois County	Gross Acres Purchased (Sold)			Purchase/ Sales Date		Initial Costs							Costs Capitalized Subsequent to Acquisition		Costs of Property Sold		Total Remaining Costs of Parcels at 3/31/13		Current Year Gain (Loss) on Sale Recognized
Parcel	Illinois County	Gross Acres Purchased (Sold)			Purchase/ Sales Date			Original Costs		Acquisition Costs		Total Costs		Costs Capitalized Subsequent to Acquisition		Costs of Property Sold		Total Remaining Costs of Parcels at 3/31/13		Current Year Gain (Loss) on Sale Recognized
18	McHenry		71.4870			01/29/90	$		496,116		26,259		522,375		517,216		11,109		1,028,482		0
			(1.0000	)		Var 1990
			(.5200	)		03/11/93

19	McHenry		63.6915			02/23/90			490,158		29,158		519,316		662,697		0		1,182,013		0

20	Kane		224.1480			02/28/90			2,749,800		183,092		2,932,892		1,938,930		4,871,822		0		0
			(.2790	)		10/17/91
			(223.8690	)		02/20/04

21	Kendall		172.4950			03/08/90			1,327,459		75,822		1,403,281		954,415		2,357,696		0		0
			(172.4950	)		Var 1998

22	McHenry		254.5250			04/11/90			2,608,881		136,559		2,745,440		577,489		0		3,322,929		0
			(51.000	)		10/02/08

23	Kendall		140.0210			05/08/90			1,480,000		116,240		1,596,240		909,395		2,505,635		0		0
			(4.4100	)		Var 1993
			(35.8800	)		Var 1994
			(3.4400	)		Var 1995
			(96.2910	)		08/26/99

24	Kendall		298.4830			05/23/90			1,359,774		98,921		1,458,695		101,991		1,560,686		0		0
			(12.4570	)		05/25/90
			(4.6290	)		04/01/96
			(69.8200	)		11/26/02
			(211.577	)		05/04/12

25	Kane		225.0000			06/01/90			2,600,000		168,778		2,768,778		301,040		3,069,818		0		0
			(225.0000	)		09/07/12

	Totals						$		23,624,761		1,562,308		25,187,069		20,316,911		37,094,265		8,409,715		0

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(a)

Included in the purchase agreement of Parcel 5 was a condition that required the Partnership to buy an option to purchase an additional 243 acres immediately to the west of this parcel. The 1990 sale transaction relates to the sale of this option.

(b) The Partnership purchased from two third parties, two sets of three contiguous parcels of land (Parcels 6, 7 and 8; and Parcels 9, 10 and 11). The General Partner believes that the total value of this land will be maximized if it is treated and marketed to buyers as six separate parcels and closed the transactions as six separate purchases to facilitate this. Parcels 6, 7 and 8 ~~will~~were be treated as one parcel and Parcels 9, 10 and 11 will continue to be treated as one parcel for purposes of computing Parcel Capital (as defined in the Partnership Agreement) and distributions to the partners.

Subsequent Events

The Partnership evaluates subsequent events occurring between the most recent balance sheet date and the date that the financial statements are available to be issued in order to determine whether the subsequent events are to be recorded in and/or disclosed in the Partnership’s financial statements and footnotes. The financial statements are considered to be available to be issued at the time that they are filed with the SEC. There are no subsequent events to report that would have a material impact on the Partnership’s financial statements.

Other Items

In accordance with Article XVI Section 16.1 of the Inland Land Appreciation Fund, L.P. Partnership Agreement and Treasury Regulation Section 1.7704-1(j), we have not yet reached the maximum threshold of limited partnership units that may be transferred/assigned directly between parties during ~~2012~~2013. Therefore, we may authorize additional sales of partnership units directly between parties during ~~2012~~2013. For the benefit of interested limited partners, we have a relationship with a “qualified matching service” as defined under Treasury Regulation Section 1.7704-1(g). In accordance with this Treasury Regulation and the IRS private letter ruling obtained by the “qualified matching service”, we understand that limited partnership units may be transferred/assigned up to a separate maximum threshold each taxable year (in addition to the maximum threshold that may be transferred/assigned directly between parties discussed above). However, there can be no assurance that the IRS private letter ruling will apply to transfers of our units, or that any particular transfer will not violate the transfer restrictions contained in our partnership agreement or the provisions of Treasury Regulation Section 1.7704-1(g). If you have any interest in participating in a transfer/assignment of partnership units through this “qualified matching service,” please contact American Partnership Board directly at 800-736-9797. You are strongly encouraged to consult your personal legal, financial and tax advisors in connection with any such transfer/assignment.

The Illinois Department of Revenue regulates Illinois income tax withholding requirements for nonresident partners. Payment of the required withholding amount of $1,~~529~~106 was made to the Illinois Department of Revenue during March ~~2012~~2013 and was recorded as a distribution to the limited partners. We are also required to pay a withholding tax to the Internal Revenue Service with respect to a partner’s allocable share of our taxable net income, if the partner is a foreign person. We will first pay the withholding tax from the distributions to any nonresident and/or foreign partners, and to the extent that the tax exceeds the amount of distributions withheld, or if there have been no distributions to withhold, the excess will be accounted for as a distribution to such nonresident and/or foreign partners. During ~~March~~April ~~2012~~2013, we paid $96 to the Internal Revenue Service on behalf of foreign partners and recorded it as a distribution to the limited partners.

Off-Balance Sheet Arrangements, Contractual Obligations, Liabilities and Contracts and Commitments

None

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 4. Controls and Procedures

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Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to us is made known to the members of senior management and the Audit Committee.

Based on management’s evaluation as of ~~September~~March 3031, ~~2012~~2013, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of ~~September~~March 3031, ~~2012~~2013. This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

There were no changes to our internal controls over financial reporting during the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 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:

10.1		Vacant Land Purchase and Sale Contract (re: Inland Land Appreciation Fund, L.P. Parcel 25), by and between Inland Land Appreciation Fund, L.P. and Gerard F. Schiele Trust, dated August 9, 2012.
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
101		The following financial information from our Quarterly Report on Form 10-Q for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) related notes. This information is furnished but should not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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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 Corporation Its: General Partner By: /S/ BRENDA G. GUJRAL By: Brenda G. Gujral Its: Principal Executive Officer Date: November 2, 2012 By: /S/ GUADALUPE GRIFFIN By: Guadalupe Griffin Its: Senior Vice President Date: November 2, 2012 By: /S/ DONNA URBAIN By: Donna Urbain Its: Principal Financial Officer Date: November 2, 2012


				INLAND LAND APPRECIATION FUND, L.P.

		By:		Inland Real Estate Investment Corporation
		Its:		General Partner

		By:		/S/ BRENDA G. GUJRAL

		By:		Brenda G. Gujral
		Its:		Principal Executive Officer with respect to Inland Land Appreciation Fund, L.P.
		Date:		May 7, 2013

		By:		/S/ GUADALUPE GRIFFIN

		By:		Guadalupe Griffin
		Its:		Senior Vice President
		Date:		May 7, 2013

		By:		/S/ DONNA URBAIN

		By:		Donna Urbain
		Its:		Principal Financial Officer with respect to Inland Land Appreciation Fund, L.P.
		Date:		May 7, 2013

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Filing Compare · INLAND LAND APPRECIATION FUND LP