Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the

Securities Act. o☐ Yes x☒ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or

Section 15(d) of the Exchange Act. o☐ Yes x☒ No

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.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). x☒ Yes o☐ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x☒

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~~"large accelerated filer,~~” “accelerated filer”~~" "accelerated filer" and ~~“smaller~~"smaller reporting ~~company”~~company" in Rule 12b-2 of the Exchange Act.

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

As of June 30, ~~2013,~~2016, there were ~~1,781,725.0~~1,744,006.0 Units of limited membership interest outstanding and owned by nonaffiliates of the registrant, which Units had an aggregate market value (based solely on the price at which they were sold since there is no ready market for such Units) of ~~$17,817,250.~~$17,440,060.

AEI Income & Growth Fund 26 LLC (the "Company" or the "Registrant") is a limited liability company which was organized pursuant to the laws of the State of Delaware on March 14, 2005. The registrant is comprised of AEI Fund Management XXI, Inc. ~~(“AFM”~~("AFM"), as the Managing Member, Robert P. Johnson, the President and sole director of AFM, as the Special Managing Member, and purchasers of LLC Units as Limited Members. The Company offered for sale up to $100,000,000 of limited membership interests (the "Units") (10,000,000 Units at $10 per Unit) pursuant to a registration statement effective October 20, 2005. The Company commenced operations on April 3, 2006 when minimum subscriptions of 150,000 LLC Units ($1,500,000) were accepted. The offering terminated October 19, 2007 when the extended offering period expired. The Company received subscriptions for 1,832,736 LLC Units. Under the terms of the Operating Agreement, the Limited Members and Managing Members contributed funds of $18,327,360 and $1,000, respectively.

The Company was organized to acquire existing and newly constructed commercial properties, to lease such properties to tenants under net leases, to hold such properties and to eventually sell such properties. From subscription proceeds, the Company purchased eight properties, including partial interests in five properties, at a total cost of $15,376,536. The balance of the subscription proceeds was applied to organization and syndication costs, working capital reserves and distributions, which represented a return of capital. The properties are commercial, single tenant buildings leased under net leases.

The Company's properties were purchased without any indebtedness. The Company will not finance properties in the future to obtain proceeds for new property acquisitions. If it is required to do so, the Company may incur short-term indebtedness to finance day-to-day cash flow requirements (including cash flow necessary to repurchase Units). The Company may borrow to finance the refurbishing of a property.

The Company will hold its properties until the Managing Members determine that the sale or other disposition of the properties is advantageous in view of the Company's investment objectives. In deciding whether to sell properties, the Managing Members will consider factors such as potential appreciation, net cash flow and income tax considerations. The Company expects to sell some or all of its properties prior to its final liquidation and to reinvest the proceeds from such sales in additional properties. The Company reserves the right, at the discretion of the Managing Members, to either distribute proceeds from the sale of properties to the Members or to reinvest such proceeds in additional properties, provided that sufficient proceeds are distributed to the Limited Members to pay federal and state income taxes related to any taxable gain recognized as a result of the sale. The prospectus under which Units were initially sold indicated that the Managing Members intended to liquidate the Company through the sale of its remaining properties ten to twelve years after completion of the acquisition phase (completed in May 2008), depending upon the then current real estate and money markets, the economic climate and the income tax consequences to the Members.

Although there are variations in the specific terms of the leases, the following is a summary of the general terms of the Company's leases. The properties are leased to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Company is responsible for repairs to the structural components of the building, the roof and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 20 years. The leases provide the tenants with three to four five-year renewal options subject to the same terms and conditions as the primary term. The leases provide for base annual rental payments, payable in monthly installments, and contain rent clauses which entitle the Company to receive additional rent in future years based on stated rent increases.

As of December 31, 2010, the Company owned interests in eight properties with a total cost of $15,376,536. During the year ended December 31, 2012, the Company sold one property and received net sale proceeds of $1,811,647, which resulted in a net gain of $277,992. During 2012, the Company expended $1,510,500 to purchase one additional property as it reinvested cash generated from the property sale. As of December 31, 2013, the Company owned interests in eight properties with a total cost of $15,353,381. During the years ended December 31, 2014 and 2015, the Company sold two properties and received net sale proceeds of $3,701,417 and $1,871,493, which resulted in net gains of $1,287,642 and $486,053. During 2014, 2015 and 2016, the Company expended $1,292,220, $1,600,000 and $1,535,714, respectively, to purchase three additional properties as it reinvested cash generated from property sales. As of December 31, 2016, the Company owned interests in nine properties with a total cost of $14,770,800.

During ~~2013, four~~2016, three tenants each contributed more than ten percent of the Company's total rental income. The major tenants in aggregate contributed ~~77%~~48% of total rental income in ~~2013.~~2016. It is anticipated that, based on minimum rental payments required under the leases, each major tenant will continue to contribute more than ten percent of rental income in ~~2014.~~2017. Any failure of these major tenants could materially affect the Company's net income and cash distributions.

The Company is a minor factor in the commercial real estate business. There are numerous entities engaged in the commercial real estate business which have greater financial resources than the Company. At the time the Company elects to dispose of its properties, it will be in competition with other persons and entities to find buyers for its properties.

The Company has no direct employees. Management services are performed for the Company by AEI Fund Management, Inc., an affiliate of AFM.

Not required for a smaller reporting company.

The Company's investment objectives are to acquire existing or newly-developed commercial properties that provide (i) regular rental income; (ii) growth in lease income through rent escalation provisions; (iii) capital growth through appreciation in the value of properties; (iv) reduced occupancy risks as a result of long-term leases with creditworthy corporate tenants; and (v) passive income that may be offset by eligible passive losses from other investments for tax purposes. The Company does not have a policy, and there is no limitation, as to the amount or percentage of assets that may be invested in any one property. However, to the extent possible, the Managing Members attempt to diversify the properties by tenant and geographic location.

The Company's properties are commercial, single tenant buildings. The properties were acquired on a debt-free basis and are leased to tenants under net leases, classified as operating leases. The Company holds an undivided fee simple interest in the properties.

The Company's properties are subject to the general competitive conditions incident to the ownership of single tenant investment real estate. Since each property is leased under a ~~long-term~~long‑term lease, there is little competition until the Company decides to sell the property. At this time, the Company will be competing with other real estate owners, on both a national and local level, in attempting to find buyers for the properties. In the event of a tenant default, the Company would be competing with other real estate owners, who have property vacancies, to attract a new tenant to lease the property. The Company's tenants operate in industries that are competitive and can be affected by factors such as changes in regional or local economies, seasonality and changes in consumer preference.

The following table is a summary of the properties that the Company acquired and owned as of December 31, ~~2013.~~2016.

(1) This property is vacant and listed for lease.

(2) Does not include acquisition costs that were expensed.

The properties listed above with a partial ownership percentage are owned with the following affiliated entities: Sports Authority store (AEI Income & Growth Fund 25 LLC); Advance Auto Parts store (AEI Income & Growth Fund 24 LLC); ~~Applebee’s~~Applebee's restaurant in Crawfordsville, Indiana (AEI Income & Growth Fund XXII Limited Partnership); Best Buy store (AEI Income & Growth Fund XXI Limited Partnership and AEI Income & Growth Fund 23 LLC); ~~Dick’s~~Dick's Sporting Goods store (AEI Income & Growth Fund 23 LLC, AEI Income & Growth Fund 24 LLC and AEI Income & Growth Fund 25 LLC); and ~~Tractor Supply Company store~~Fresenius Medical Center (AEI ~~Net Lease~~ Income & Growth Fund ~~XX Limited Partnership)~~27 LLC).

The Company accounts for properties owned as tenants-in-common with affiliated entities and/or unrelated third parties using the proportionate consolidation method. Each tenant-in-common owns a separate, undivided interest in the properties. Any tenant-in-common that holds more than a 50% interest does not control decisions over the other tenant-in-common interests. The financial statements reflect only this ~~Company’s~~Company's percentage share of the ~~properties’~~properties' land, building, ~~and equipment,~~ liabilities, revenues and expenses.

At the time the properties were acquired, the remaining primary lease terms varied from 10 to 20 years. The leases provide the tenants with three to four five-year renewal options subject to the same terms and conditions as the primary term.

Pursuant to the lease agreements, the tenants are required to provide proof of adequate insurance coverage on the properties they occupy. The Managing Members believe the properties are adequately covered by insurance and consider the properties to be well-maintained and sufficient for the Company's operations.

For tax purposes, the Company's properties are depreciated under the Modified Accelerated Cost Recovery System (MACRS). The largest depreciable component of a property is the building which is depreciated using the straight-line method over 39 years. The remaining depreciable ~~components~~component of a property ~~are personal property and~~is land improvements which are depreciated using an accelerated method over ~~5 and~~ 15 ~~years, respectively.~~years. Since the Company has tax-exempt Members, the Company is subject to the rules of Section 168(h)(6) of the Internal Revenue Code which requires a percentage of the properties' depreciable components to be depreciated over longer lives using the straight-line method. In general, the federal tax basis of the properties for tax depreciation purposes equals the book depreciable cost of the properties plus the amortizable cost of the related intangible lease assets, except for properties whose carrying value was reduced by a real estate impairment and properties purchased after January 1, 2009. Real estate impairments, which are recorded against the book cost of the land and depreciable property, are not recognized for tax purposes. For ~~those~~ properties purchased after January 1, 2009, acquisition expenses that were expensed for book purposes were capitalized and added to the basis of the property for tax depreciation purposes.

At December 31, ~~2013,~~2016, all properties listed above were 100% occupied. The only exception is the Sports Authority store that became vacant in July 2016.

(a) As of December 31, ~~2013,~~2016, there were ~~450~~444 holders of record of the registrant's LLC Units. There is no other class of security outstanding or authorized. The registrant's Units are not a traded security in any market. During the period covered by this report, the Company did not sell any equity securities that are not registered under the Securities Act of 1933.

Cash distributions of ~~$28,330~~$21,872 and ~~$26,340~~$23,956 were made to the Managing Members and ~~$915,997~~$787,998 and ~~$1,007,598~~$916,000 were made to the Limited Members for ~~2013~~2016 and ~~2012,~~2015, respectively. The distributions were made on a quarterly basis and represented Net Cash Flow, as defined, except as discussed below. These distributions should not be compared with dividends paid on capital stock by corporations.

As part of the Limited Members' distributions discussed above, the Company distributed net sale proceeds of $120,000 and $210,000 in 2016 and 2015, respectively.

(c) Pursuant to Section 7.7 of the Operating Agreement, each Limited Member has the right to present Units to the Company for purchase by submitting notice to the Managing Member during January or July of each year. The purchase price of the Units is equal to 85% of the net asset value per Unit, as of the first business day of January or July of each year, as determined by the Managing Member in accordance with the provisions of the Operating Agreement. The purchase price is equal to 100% of the net asset value per Unit in the case of Units of a deceased investor, who purchased the Units in the initial offering and who is a natural person, including Units held by an investor that is an IRA or other qualified plan for which the deceased person was the primary beneficiary, or Units held by an investor that is a grantor trust for which the deceased person was the grantor.

Units tendered to the Company during January and July ~~are redeemed~~may be repurchased on April 1st and October 1st, respectively, of each year subject to the following limitations. The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company. During the last three months of 2016, the Company did not purchase any Units.

Period
Total Number
of Units
Purchased
Average
Price Paid
per Unit
Total Number of Units
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number
of Units that May Yet
Be Purchased Under
the Plans or Programs

10/1/13 to 10/31/13 1000.00 $6.55 52,011.0(1) (2)

11/1/13 to 11/30/13 -- -- -- --

12/1/13 to 12/31/13 -- -- -- --
Effective April 11, 2016, the Financial Industry Regulatory Authority ("FINRA") implemented Rule 2310, a revised rule that requires securities broker-dealers to report on customer account statements the value of investment units of non-traded securities, such as REITs, LLCs and Limited Partnerships, provided that the per unit value is derived using methodology set forth by the rule.

~~(1)~~

~~The Company’s repurchase plan is mandated by the Operating Agreement as included in the prospectus related to the original offering of the Units.~~

~~Other Information~~

Not required for a smaller reporting company.

This section contains "forward-looking statements" which represent management's expectations or beliefs concerning future events, including statements regarding anticipated application of cash, expected returns from rental income, growth in revenue, the sufficiency of cash to meet operating expenses, rates of distribution, and other matters. These, and other forward-looking statements, should be evaluated in the context of a number of factors that may affect the ~~Company’s~~Company's financial condition and results of operations, including the following:

The ~~Company’s~~Company's financial statements have been prepared in accordance with ~~accounting principles generally accepted in the United States (GAAP).~~US GAAP. Preparing the financial statements requires management to use judgment in the application of these accounting policies, including making estimates and assumptions. These judgments will affect the reported amounts of the ~~Company’s~~Company's assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financial statements and will affect the reported amounts of revenue and expenses during the reporting periods. It is possible that the carrying amount of the ~~Company’s~~Company's assets and liabilities, or the results of reported operations, will be affected if ~~management’s~~management's estimates or assumptions prove inaccurate.

Management of the Company evaluates the following accounting estimates on an ongoing basis, and has discussed the development and selection of these estimates and the management discussion and analysis disclosures regarding them with the managing member of the Company.

Upon acquisition of real properties, the Company records them in the financial statements at cost. The purchase price is allocated to tangible assets, consisting of land and building, and to identified intangible assets and liabilities, which may include the value of above market and below market leases and the value of in-place leases. The allocation of the purchase price is based upon the fair value of each component of the property. Although independent appraisals may be used to assist in the determination of fair value, in many cases these values will be based upon ~~management’s~~management's assessment of each property, the selling prices of comparable properties and the discounted value of cash flows from the asset.

The fair values of above market and below market in-place leases will be recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the non-cancelable term of the lease including any bargain renewal periods. The above market and below market lease values will be capitalized as intangible lease assets or liabilities. Above market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases. Below market ~~leases~~lease values will be amortized as an adjustment of rental income over the remaining ~~terms~~term of the respective leases, including any bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market and below market in-place lease values relating to that lease would be recorded as an adjustment to rental income.

The fair values of in-place leases will include estimated direct costs associated with obtaining a new tenant, and opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant may include commissions, tenant improvements, and other direct costs and are estimated, in part, by ~~management’s~~management's consideration of current market costs to execute a similar lease. These direct costs will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. The value of opportunity costs will be calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These intangibles will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed.

The determination of the fair values of the assets and liabilities acquired will require the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount and capitalization rates, interest rates and other variables. If ~~management’s~~management's estimates or assumptions prove inaccurate, the result would be an inaccurate allocation of purchase price, which could impact the amount of reported net income.

Properties are carried at original cost, less accumulated depreciation and amortization. The Company tests long-lived assets for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Company will hold and operate, management determines whether impairment has occurred by comparing the ~~property’s~~property's probability-weighted future undiscounted cash flows to its current carrying value. For properties held for sale, management determines whether impairment has occurred by comparing the ~~property’s~~property's estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value. Changes in these assumptions or analysis may cause material changes in the carrying value of the properties.

AEI Fund Management, Inc. allocates expenses to each of the funds they manage primarily on the basis of the number of hours devoted by their employees to each ~~fund’s~~fund's affairs. They also allocate expenses at the end of each month that are not directly related to a ~~fund’s~~fund's operations based upon the number of investors in the fund and the ~~fund’s~~fund's capitalization relative to other funds they manage. The Company reimburses these expenses subject to detailed limitations contained in the Operating Agreement.

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company recognized rental income ~~from continuing operations~~ of ~~$1,207,519~~$1,051,745 and ~~$1,177,402,~~$1,043,359, respectively. In ~~2013,~~2016, rental income increased ~~primarily~~ due to additional rent received from one property acquisition in ~~2012~~2015 and one acquisition in 2016, and rent increases on ~~three~~two properties. These increases were partially offset by decreases in rental income due to the sale of one property in 2015 and rent that was not received from the tenant of the Sports Authority store, as discussed below. Based on the scheduled rent for the properties ~~owned~~ as of February 28, ~~2014,~~2017, the Company expects to recognize rental income ~~from continuing operations~~ of approximately ~~$1,223,000~~$915,000 in ~~2014.~~2017.

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company incurred LLC administration expenses from affiliated parties of ~~$140,613~~$149,251 and ~~$154,427,~~$161,038, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Members. During the same periods, the Company incurred LLC administration and property management expenses from unrelated parties of ~~$29,137~~$102,892 and ~~$28,138,~~$38,072, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. These expenses were higher in 2016, when compared to 2015, as a result of expenses related to the Sports Authority store.

For the year ended December 31, ~~2012,~~2016, the Company incurred property acquisition expenses of ~~$28,135~~$55,479 related to the purchase of the Dollar Tree store in West Point, Mississippi. For the year ended December 31, 2015, the Company incurred property acquisition expenses of $48,817 related to the purchase of the Zales store in Enid, Oklahoma.

In November 2015, the Company entered into an agreement to sell its 40% interest in the Sports Authority store in Wichita, Kansas to an unrelated third party. In May 2016, the agreement was terminated by the buyer. If the sale was completed, the Company expected to receive net sale proceeds of approximately $1,190,000. Based on its long-lived asset valuation analysis, the Company determined the Sports Authority store was impaired. As a result, in the fourth quarter of 2015, a charge to operations for real estate impairment of $445,828 was recognized, which was the difference between the carrying value at December 31, 2015 of $1,635,828 and the estimated fair value of $1,190,000. The charge was recorded against the cost of the land and building.

On March 2, 2016, the tenant of the Sports Authority store, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2016, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. The owners have listed the property for lease with a real estate broker in the Wichita area. While the property is vacant, the Company is responsible for its 40% share of real estate taxes and other costs associated with maintaining the property. The annual rent from this property represented approximately 19% of the total annual rent of the Company's property portfolio. The loss of rent and increased expenses related to this property will decrease the Company's cash flow. Consequently, beginning with the third quarter of 2016, the Company reduced its regular quarterly cash distribution rate from $0.1313 per Unit to $0.0946 per Unit.

On January 22, 2015, to facilitate the sale of its 53% interest in the Tractor Supply Company store in Starkville, ~~Mississippi.~~Mississippi, the Company contributed the property via a limited liability company to AEI Net Lease Portfolio II DST ("ANLP II"), a Delaware statutory trust ("DST"), in exchange for 10.18% of the Class B ownership interests in ANLP II. The remaining interest in the property, owned by an affiliated entity, along with three other properties owned by two other affiliated entities, were also contributed to ANLP II in exchange for 89.82% of the Class B ownership interests in ANLP II. In addition, cash was contributed for working capital. A DST is a recognized mechanism for selling property to investors who are looking for replacement real estate to complete like-kind exchanges under Section 1031 of the Internal Revenue Code. As investors purchased Class A ownership interests in ANLP II, the proceeds received were used to redeem, on a one-for-one basis, the Class B ownership interests of the Company and affiliated entities. From January 28, 2015 to July 15, 2015, ANLP II sold 100% of its Class A ownership interests to investors and redeemed 100% of the Class B ownership interests from the Company and affiliated entities. As of December 31, 2015, the Company had no ongoing interest in ANLP II.

The investment in ANLP II was recorded using the equity method of accounting in the accompanying financial statements. Under the equity method, the investment in ANLP II was stated at cost and adjusted for the Company's share of net income or losses and reduced by proceeds received from the sale of the Class B ownership interests of ANLP II as well as distributions from net rental income. For the year ended December 31, 2015, the Company's share of the net income of ANLP II was $514,987.

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company recognized interest income of ~~$644 and $1,922,~~$2,247and $5,635, respectively.

Management believes inflation has not significantly affected income from operations. Leases may contain rent increases, based on the increase in the Consumer Price Index over a specified period, which will result in an increase in rental income over the term of the leases. Inflation also may cause the real estate to appreciate in value. However, inflation and changing prices may have an adverse impact on the operating margins of the properties' tenants, which could impair their ability to pay rent and subsequently reduce the Net Cash Flow available for distributions.

During the year ended December 31, ~~2013,~~2016, the Company's cash balances decreased ~~$4,689~~$1,727,592 as a result of ~~distributions~~cash used to purchase property and ~~redemption payments~~distributions paid to the Members and cash used to repurchase Units in excess of cash generated from operating activities. During the year ended December 31, ~~2012,~~2015, the Company's cash balances decreased ~~$35,763~~$339,901 as a result of cash used to purchase property, cash paid for an equity method investment, and distributions ~~and redemption payments~~ paid to the Members and cash used to repurchase Units in excess of cash generated from operating activities, which were partially offset by ~~cash generated~~proceeds received from ~~the sale of property.~~an equity method investment.

Net cash provided by operating activities increased from ~~$942,051~~$721,666 in ~~2012~~2015 to ~~$1,024,867~~$760,869 in ~~2013~~2016 as a result of ~~an increase in total rental and interest income in 2013, a decrease in LLC administration and property management expenses in 2013 and~~ net timing differences in the collection of payments from the tenants and the payment of ~~expenses.~~expenses, which were partially offset by a decrease in total rental and interest income in 2016 and an increase in LLC administration and property management expenses in 2016. During ~~2012,~~2016 and 2015, cash from operations was reduced by ~~$28,135~~$55,479 and $48,817, respectively, of acquisition expenses related to the purchase of real estate. Pursuant to accounting guidance, ~~the acquisition~~these expenses were reflected as operating cash outflows. However, pursuant to the ~~Company’s~~Company's Operating Agreement, acquisition expenses were funded with proceeds from property sales.

The major components of the Company's cash flow from investing activities are investments in real estate and proceeds from the sale of real ~~estate.~~estate, including proceeds from an equity method investment. During the ~~year~~years ended December 31, ~~2012, the Company generated cash flow from the sale of real estate of $1,811,647. During the same period,~~2016 and 2015, the Company expended ~~$1,510,500~~$1,535,714 and $1,600,000, respectively, to invest in real ~~property~~properties as the Company reinvested cash generated from property sales. During the year ended December 31, 2015, the Company paid cash for equity method investments of $15,316, and received proceeds from equity method investments of $1,900,427. All but a small portion of these proceeds were generated from the sale of the Tractor Supply Company store as discussed above.

On ~~February 23, 2012,~~March 17, 2015, the Company purchased a ~~53% interest in a Tractor Supply Company~~Zales store in ~~Starkville, Mississippi~~Enid, Oklahoma for ~~$1,510,500.~~$1,600,000. The property is leased to ~~Tractor Supply Company~~Zale Delaware, Inc. under a Lease Agreement with a remaining primary term of 159.6 years (as of the date of purchase) and annual rent of ~~$115,542~~$105,600.

On February 3, 2016, the Company purchased a Dollar Tree store in West Point, Mississippi for ~~the interest purchased.~~$1,535,714. The property is leased to Dollar Tree Stores, Inc. under a Lease Agreement with a remaining ~~interest in the property was purchased by AEI Net Lease Income & Growth Fund XX Limited Partnership, an affiliate~~primary term of ~~the Company.~~9.7 years and annual rent of $107,500.

The Company's primary use of cash flow, other than investment in real estate, is distribution ~~and redemption~~ payments to ~~Members.~~Members and cash used to repurchase Units. The Company declares its regular quarterly distributions before the end of each quarter and pays the distribution in the first week after the end of each quarter. The Company attempts to maintain a stable distribution rate from quarter to quarter. ~~Redemption payments are paid~~The Company may repurchase tendered Units on April 1st and October 1st of each year subject to ~~redeeming Members on a semi-annual basis.~~limitations.

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company declared distributions of ~~$944,327~~$809,870 and ~~$1,033,938,~~$939,956, respectively. Pursuant to the Operating Agreement, distributions of Net Cash Flow were allocated 97% to the Limited Members and 3% to the Managing Members. Distributions of Net Proceeds of Sale were allocated 99% to the Limited Members and 1% to the Managing Members. The Limited Members received distributions of ~~$915,997~~$787,998 and ~~$1,007,598~~$916,000 and the Managing Members received distributions of ~~$28,330~~$21,872 and ~~$26,340~~$23,956 for the years, respectively. In ~~March 2012,~~December 2014, the Company declared a special distribution of net sale proceeds of ~~$92,525~~$277,778 which was paid in the first week of January 2015 and resulted in higher distributions ~~declared~~paid in ~~2012.~~

As part of the distributions discussed above, the Company distributed net sale proceeds of ~~$233,939~~$121,212 and $212,121 in ~~2012.~~2016 and 2015, respectively. The Limited Members received distributions of ~~$231,600~~$120,000 and $210,000 and the Managing Members received distributions of ~~$2,339~~$1,212 and $2,121 for the ~~year.~~years, respectively. The Limited ~~Members’~~Members' distributions represented ~~$0.13~~$.07 and $0.12 per ~~Unit. The Company anticipates~~Unit for the ~~remaining net sale proceeds will either be reinvested in additional property or distributed to the Members in the future.~~years, respectively.

The Company may ~~acquire~~repurchase Units from Limited Members who have tendered their Units to the Company. Such Units may be acquired at a discount. The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company.

~~During 2013, five Limited Members redeemed~~On April 1, 2016, the Company repurchased a total of ~~12,200.0~~10,835.5 Units for ~~$85,500~~$75,397 from six Limited Members in accordance with the Operating Agreement. During ~~2012, five Limited Members redeemed~~2015, the Company repurchased a total of ~~34,811.0~~16,755.0 Units for ~~$234,843.~~$124,268 from three Limited Members. The Company acquired these Units using Net Cash Flow from operations. In prior years, ~~one Limited Member redeemed~~the Company repurchased a total of ~~5,000.0~~61,139.5 Units for ~~$38,225.~~$417,045 from 17 Limited Members. The ~~redemptions~~repurchases increase the remaining Limited ~~Members’~~Members' ownership interest in the Company. As a result of these ~~redemption payments~~repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of ~~$2,645~~$2,332 and ~~$7,263~~$3,844 in ~~2013~~2016 and ~~2012,~~2015, respectively.

The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Company obligations on both a short-term and long-term basis.

As of December 31, ~~2013~~2016 and ~~2012,~~2015, the Company had no material off-balance sheet arrangements that had or are reasonably likely to have current or future effects on its financial condition, results of operations, liquidity or capital resources.

Not required for a smaller reporting company.

AEI Income & Growth Fund 26 LLC

We have audited the accompanying balance ~~sheet~~sheets of AEI Income & Growth Fund 26 LLC (a Delaware limited liability company) as of December 31, ~~2013~~2016 and ~~2012,~~2015, and the related statements of income, cash flows and changes in members' equity (deficit) for each of the years then ended. ~~The Company’s~~AEI Income & Growth Fund 26 LLC's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our ~~audits~~audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the ~~company’s~~company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AEI Income & Growth Fund 26 LLC as of December 31, ~~2013~~2016 and ~~2012,~~2015, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

AEI Income & Growth Fund 26 LLC ~~(“Company”~~("Company"), a Limited Liability Company, was formed on March 14, 2005 to acquire and lease commercial properties to operating tenants. The Company's operations are managed by AEI Fund Management XXI, Inc. ~~(“AFM”~~("AFM"), the Managing Member. Robert P. Johnson, the President and sole director of AFM, serves as the Special Managing Member. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AEI Fund Management, Inc. ~~(“AEI”~~("AEI"), an affiliate of AFM, performs the administrative and operating functions for the Company.

The terms of the offering called for a subscription price of $10 per LLC Unit, payable on acceptance of the offer. The Company commenced operations on April 3, 2006 when minimum subscriptions of 150,000 LLC Units ($1,500,000) were accepted. The offering terminated October 19, 2007, when the extended offering period expired. The Company received subscriptions for 1,832,736 Units. Under the terms of the Operating Agreement, the Limited Members and Managing Members contributed funds of $18,327,360 and $1,000, respectively. The Company shall continue until December 31, 2055, unless dissolved, terminated and liquidated prior to that date.

During operations, any Net Cash Flow, as defined, which the Managing Members determine to distribute will be distributed 97% to the Limited Members and 3% to the Managing Members. Distributions to Limited Members will be made pro rata by Units.

Any Net Proceeds of Sale, as defined, from the sale or financing of properties which the Managing Members determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Members and 1% to the Managing Members until the Limited Members receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 6.5% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed from Net Cash Flow; (ii) any remaining balance will be distributed 90% to the Limited Members and 10% to the Managing Members. Distributions to the Limited Members will be made pro rata by Units.

For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of property, will be allocated 97% to the Limited Members and 3% to the Managing Members. Net losses from operations will be allocated 99% to the Limited Members and 1% to the Managing Members.

For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Operating Agreement as follows: (i) first, to those Members with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Members and 1% to the Managing Members until the aggregate balance in the Limited Members' capital accounts equals the sum of the Limited Members' Adjusted Capital Contributions plus an amount equal to 6.5% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously allocated; (iii) third, the balance of any remaining gain will then be allocated 90% to the Limited Members and 10% to the Managing Members. Losses will be allocated 99% to the Limited Members and 1% to the Managing Members.

The Managing Members are not required to currently fund a deficit capital balance. Upon liquidation of the Company or withdrawal by a Managing Member, the Managing Members will contribute to the Company an amount equal to the lesser of the deficit balances in their capital accounts or 1.01% of the total capital contributions of the Limited Members over the amount previously contributed by the Managing Members.

The accounts of the Company are maintained on the accrual basis of accounting for both federal income tax purposes and financial reporting purposes.

Management uses estimates and assumptions in preparing these financial statements in accordance with ~~generally accepted accounting principles.~~United States Generally Accepted Accounting Principles (US GAAP). Those estimates and assumptions may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. Significant items, subject to such estimates and assumptions, include the carrying value of real estate held for investment, real estate held for sale and related intangible assets.

The Company regularly assesses whether market events and conditions indicate that it is reasonably possible to recover the carrying amounts of its investments in real estate from future operations and sales. A change in those market events and conditions could have a material effect on the carrying amount of its real estate.

The Company's cash is deposited in one financial institution and at times during the year it may exceed FDIC insurance limits.

Credit terms are extended to tenants in the normal course of business. The Company performs ongoing credit evaluations of its ~~customers’~~customers' financial condition and, generally, requires no collateral.

Receivables are recorded at their estimated net realizable value. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts, if any, will be collectible in all material respects and thus an allowance is not necessary. Accounts are considered past due if payment is not made on a timely basis in accordance with the ~~Company’s~~Company's credit terms. Receivables considered uncollectible are written off.

The income or loss of the Company for federal income tax reporting purposes is includable in the income tax returns of the Members. In general, no recognition has been given to income taxes in the accompanying financial statements.

The tax return and the amount of distributable Company income or loss are subject to examination by federal and state taxing authorities. If such an examination results in changes to distributable Company income or loss, the taxable income of the members would be adjusted accordingly. Primarily due to its tax status as a partnership, the Company has no significant tax uncertainties that require recognition or disclosure. The Company is no longer subject to U.S. federal income tax examinations for tax years before ~~2010,~~2013, and with few exceptions, is no longer subject to state tax examinations for tax years before ~~2010.~~2013.

The Company's real estate is leased under net leases, classified as operating leases. The leases provide for base annual rental payments payable in monthly installments. The Company recognizes rental income according to the terms of the individual leases. For leases that contain stated rental increases, the increases are recognized in the year in which they are effective. Contingent rental payments are recognized when the contingencies on which the payments are based are satisfied and the rental payments become due under the terms of the leases.

The fair values of above market and below market in-place leases will be recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the non-cancelable term of the lease including any bargain renewal periods. The above market and below market lease values will be capitalized as intangible lease assets or liabilities. Above market lease values will be amortized as an adjustment of rental income over the remaining ~~terms~~term of the respective leases. Below market ~~leases~~lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases, including any bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market and below market in-place lease values relating to that lease would be recorded as an adjustment to rental income.

The Company tests real estate for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Company will hold and operate, it compares the carrying amount of the property to the estimated probability-weighted future undiscounted cash flows expected to result from the property and its eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the property, the Company recognizes an impairment loss by the amount by which the carrying amount of the property exceeds the fair value of the property. For properties held for sale, the Company determines whether impairment has occurred by comparing the ~~property’s~~property's estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value.

~~The~~For financial reporting purposes, the buildings ~~and equipment of~~owned by the Company are depreciated using the straight-line method ~~for financial reporting purposes based on~~over an estimated useful ~~lives~~life of 25 ~~years and 5 years, respectively.~~years. Intangible lease assets are amortized using the straight-line method for financial reporting purposes based on the remaining life of the lease.

The disposition of a property or classification of a property as Real Estate Held for Sale by the Company ~~includes~~does not represent a strategic shift that will have a major effect on the Company's operations and financial results. Therefore, the results from operating ~~results~~ and ~~sale of~~selling the property are included in ~~discontinued operations. In addition, the Company reclassifies the prior periods’ operating results of the property to discontinued~~continuing operations.

The Company accounts for properties owned as tenants-in-common with affiliated entities and/or unrelated third parties using the proportionate consolidation method. Each tenant-in-common owns a separate, undivided interest in the properties. Any tenant-in-common that holds more than a 50% interest does not control decisions over the other tenant-in-common interests. The financial statements reflect only this Company's percentage share of the properties' land, building, ~~and equipment,~~ liabilities, revenues and expenses.

The ~~Company’s~~Company's properties are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which the properties are located. These laws could require the Company to investigate and remediate the effects of the release or disposal of hazardous materials at these locations if found. For each property, an environmental assessment is completed prior to acquisition. In addition, the lease agreements typically strictly prohibit the production, handling, or storage of hazardous materials (except where incidental to the ~~tenant’s~~tenant's business such as use of cleaning supplies) in violation of applicable law to restrict environmental and other damage. Environmental liabilities are recorded when it is determined the liability is probable and the costs can reasonably be estimated. There were no environmental issues noted or liabilities recorded at December 31, ~~2013~~2016 and ~~2012.~~2015.

~~Page 24~~Fair value, as defined by US GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. US GAAP establishes a hierarchy in determining the fair value of 38

an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. US GAAP requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1 inputs, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

At December 31, 2016 and 2015, the Company had no financial assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure. The Company had the following nonfinancial assets measured on a nonrecurring basis that were recorded at fair value during 2015. There was no such measurement during 2016.

Page 25 of 41

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2016 AND ~~2012~~2015

(2) Summary of Significant Accounting Policies – (Continued)

~~Fair Value Measurements~~

AsThe Sports Authority store in Wichita, Kansas with a carrying amount of $1,635,828 at December 31, ~~2013, the Company had no assets or liabilities measured at~~2015, was written down to its estimated fair value onof $1,190,000 after completing our long-lived asset valuation analysis. The resulting impairment charge of $445,828 was included in earnings for the fourth quarter of 2015. The fair value of the property was based upon a ~~recurring basis or nonrecurring basis.~~signed purchase agreement, which is considered a Level 3 input in the valuation hierarchy.

Income Per Unit

Income per LLC Unit is calculated based on the weighted average number of LLC Units outstanding during each period presented. Diluted income per LLC Unit considers the effect of any potentially dilutive Unit equivalents, of which the Company had none for each of the years ended December 31, ~~2013~~2016 and ~~2012.~~2015.

Reportable Segments

The Company invests in single tenant commercial properties throughout the United States that are net leased to tenants in various industries. Because these net leased properties have similar economic characteristics, the Company evaluates operating performance on an overall portfolio basis. Therefore, the ~~Company’s~~Company's properties are classified as one reportable segment.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. It is to be adopted using a modified retrospective approach. Management ~~has reviewed recently issued, but not yet effective, accounting pronouncements and does not expect~~is currently evaluating the ~~implementation~~impact the adoption of ~~these pronouncements to~~this guidance will have ~~a significant effect~~ on the ~~Company’s~~Company's financial statements.

(3) Related Party Transactions –

The Company owns the percentage interest shown below in the following properties as tenants-in-common with the affiliated entities listed: Sports Authority store (40% – AEI Income & Growth Fund 25 LLC); Advance Auto Parts store (55% --– AEI Income & Growth Fund 24 LLC); ~~Applebee’s~~Applebee's restaurant in Crawfordsville, Indiana (40% --– AEI Income & Growth Fund XXII Limited Partnership); Best Buy store (30% – AEI Income & Growth Fund XXI Limited Partnership and AEI Income & Growth Fund 23 LLC); ~~Dick’s~~Dick's Sporting Goods store in Fredericksburg, Virginia (27% – AEI Income & Growth Fund 23 LLC, AEI Income & Growth Fund 24 LLC and AEI Income & Growth Fund 25 LLC); and ~~Tractor Supply Company store (53%~~Fresenius Medical Center (54% – AEI ~~Net Lease~~ Income & Growth Fund ~~XX Limited Partnership)~~27 LLC).

Page 2526 of 38

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2016 AND ~~2012~~2015

(3) Related Party Transactions – (Continued)

During 2015, the Company sold its 53% interest in the Tractor Supply Company store in Starkville, Mississippi. The remaining interest in the property that was owned by an affiliated entity, AEI Net Lease Income & Growth Fund XX LP, was also sold in 2015.

AEI received the following reimbursements for costs and expenses from the Company for the years ended December 31:

			2013		2012			2016		2015

a.	AEI is reimbursed for costs incurred in providing services related to managing the Company’s operations and properties, maintaining the Company’s books, and communicating with the Limited Members.	$	140,613	$	154,427	AEI is reimbursed for costs incurred in providing services related to managing the Company's operations and properties, maintaining the Company's books, and communicating with the Limited Members.	$	149,251	$	161,038

b.	AEI is reimbursed for all direct expenses it paid on the Company’s behalf to third parties related to Company administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs.	$	29,137	$	28,138	AEI is reimbursed for all direct expenses it paid on the Company's behalf to third parties related to Company administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs.	$	102,892	$	38,072

c.	AEI is reimbursed for costs incurred in providing services and direct expenses related to the acquisition of properties on behalf of the Company.	$	0	$	28,135	AEI is reimbursed for costs incurred in providing services and direct expenses related to the acquisition of properties on behalf of the Company.	$	55,479	$	48,817

d.	AEI is reimbursed for costs incurred in providing services related to the sale of property.	$	0	$	39,016	AEI is reimbursed for costs incurred in providing services related to the sale of property.	$	0	$	50,338

The payable to AEI Fund Management, Inc. represents the balance due for the services described in 3a, b, c and d. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business.

(4) Real Estate ~~Held for Investment~~Investments –

The Company leases its properties to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Company is responsible for repairs to the structural components of the building, the roof and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 20 years. The leases provide the tenants with three to four five-year renewal options subject to the same terms and conditions as the primary term.

Page 2627 of 38

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2016 AND ~~2012~~2015

(4) Real Estate ~~Held for Investment~~Investments – (Continued)

The Company's properties are commercial, single-tenant buildings. The Sports Authority store was constructed in 1996, renovated in 2001 and acquired in 2006. The Advance Auto Parts store was constructed in 2004 and acquired in 2006. The ~~Applebee’s restaurant in Indianapolis, Indiana was constructed in 1997 and acquired in 2006. The Applebee’s~~Applebee's restaurant in Crawfordsville, Indiana was constructed in 1996 and acquired in 2006. The Starbucks restaurant was constructed and acquired in 2007. The Best Buy store was constructed in 1990, renovated in 1997 and acquired in 2008. The land for the ~~Dick’s~~Dick's Sporting Goods store was acquired in 2007 and construction of the store was completed in 2008. The ~~Tractor Supply Company~~Fresenius Medical Center was constructed in 2012 and acquired in 2014. The Zales store was constructed in 1983, renovated in 2014 and acquired in ~~2012.~~2015. The Dollar Tree store was constructed in 2015 and acquired in 2016. There have been no costs capitalized as improvements subsequent to the acquisitions.

The cost of the properties not held for sale and related accumulated depreciation at December 31, ~~2013~~2016 are as follows:

Property	Land		Buildings and Equipment		Total		Accumulated Depreciation		Land		Buildings		Total		Accumulated Depreciation

Sports Authority, Wichita, KS	$	697,617	$	1,533,136	$	2,230,753	$	472,273	$	507,489	$	1,277,436	$	1,784,925	$	639,437
Advance Auto Parts, Middletown, OH		112,315		909,974		1,022,289		276,026		112,315		909,974		1,022,289		385,224
Applebee’s, Indianapolis, IN		889,340		2,164,847		3,054,187		624,956
Applebee’s, Crawfordsville, IN		337,353		900,418		1,237,771		252,119
Applebee's, Crawfordsville, IN										337,353		900,418		1,237,771		360,169
Starbucks, Bluffton, IN		344,008		806,108		1,150,116		205,556		344,008		806,108		1,150,116		302,288
Best Buy, Eau Claire, WI		474,137		1,547,025		2,021,162		366,129		474,137		1,547,025		2,021,162		551,771
Dick’s Sporting Goods, Fredericksburg, VA		1,603,559		1,523,044		3,126,603		358,494
Tractor Supply, Starkville, MS		397,500		947,775		1,345,275		71,083
Dick's Sporting Goods, Fredericksburg, VA									Dick's Sporting Goods, Fredericksburg, VA	1,603,559		1,523,044		3,126,603		564,974
Fresenius Medical Center, Chicago, IL										464,400		665,142		1,129,542		53,210
Zales, Enid, OK										440,000		903,630		1,343,630		64,759
Dollar Tree, West Point, MS										270,000		1,316,232		1,586,232		48,262
	$	4,855,829	$	10,332,327	$	15,188,156	$	2,626,636	$	4,553,261	$	9,849,009	$	14,402,270	$	2,970,094

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company recognized depreciation expense ~~for properties not held for sale~~ of ~~$421,198~~$390,890 and ~~$416,459,~~$351,914, respectively.

On ~~February 23, 2012,~~March 17, 2015, the Company purchased a ~~53% interest in a Tractor Supply Company~~Zales store in ~~Starkville, Mississippi~~Enid, Oklahoma for ~~$1,510,500.~~$1,600,000. The Company allocated ~~$257,767~~$256,370 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles of $183,764 and above-market lease intangibles of $72,606. The Company incurred $48,817 of acquisition expenses related to the purchase that were expensed. The property is leased to Zale Delaware, Inc. under a Lease Agreement with a remaining primary term of 9.6 years (as of the date of purchase) and annual rent of $105,600.

Page 28 of 41

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

(4) Real Estate Investments – (Continued)

On February 3, 2016, the Company purchased a Dollar Tree store in West Point, Mississippi for $1,535,714. The Company allocated $232,977 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles, and allocated ~~$92,542~~$283,495 to Acquired Below-Market Lease Intangibles. The Company incurred ~~$28,135~~$55,479 of acquisition expenses related to the purchase that were expensed. The property is leased to ~~Tractor Supply Company~~Dollar Tree Stores, Inc. under a Lease Agreement with a remaining primary term of 159.7 years ~~(as of the date of purchase)~~ and annual rent of ~~$115,542 for the interest purchased.~~

~~Page 27 of 38~~

~~AEI INCOME & GROWTH FUND 26 LLC~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2013 AND 2012~~

~~(4) Real Estate Held for Investment – (Continued)~~$107,500.

The following schedule presents the cost and related accumulated amortization of acquired lease intangibles not held for sale at December 31:

2013

2012

Cost

Accumulated Amortization

Cost

Accumulated Amortization
Acquired Intangible Lease Assets
(weighted average life of 157 and 169 months, respectively)
$
257,767
$
31,680
$
257,767
$
14,400

Acquired Below-Market Lease Intangibles
(weighted average life of 157 and 169 months, respectively)
$
92,542
$
11,374
$
92,542
$
5,170

		2016				2015
		Cost		Accumulated Amortization		Cost		Accumulated Amortization
In-Place Lease Intangibles (weighted average life of 107 and 120 months, respectively)	$	579,419	$	80,199	$	346,442	$	27,572

Above-Market Lease Intangibles (weighted average life of 94 and 106 months, respectively)		72,606		13,258		72,606		5,682
Acquired Intangible Lease Assets	$	652,025	$	93,457	$	419,048	$	33,254

Acquired Below-Market Lease Intangibles (weighted average life of 105 and 0 months, respectively)	$	283,495	$	24,652	$	0	$	0

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the value of in-place lease intangibles amortized to expense was ~~$17,280~~$52,627 and ~~$14,400, respectively,~~$27,572, the decrease to rental income for above-market leases was $7,576 and $5,682, and the increase to rental income for below-market leases was ~~$6,204~~$24,652 and ~~$5,170,~~$0, respectively. For lease intangibles not held for sale atas of December 31, ~~2013,~~2016, the estimated amortization expense is ~~$17,280~~$56,680, the estimated decrease to rental income for above-market leases is $7,576 and the estimated increase to rental income for below-market leases is ~~$6,204~~$29,584 for each of the next five succeeding years.

Page 29 of 41

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

(4) Real Estate Investments – (Continued)

For properties owned as of December 31, ~~2013,~~2016, the minimum future rent payments required by the leases are as follows:

2014	$	1,217,236
2015		1,222,351
2016		1,228,591
2017		1,004,456	$	892,532
2018		804,246		731,209
2019				481,339
2020				427,180
2021				431,623
Thereafter		4,062,843		1,852,327
	$	9,539,723	$	4,816,210

There were no contingent rents recognized in ~~2013~~2016 and ~~2012.~~2015.

(5) Equity Method Investments –

On January 22, 2015, to facilitate the sale of its 53% interest in the Tractor Supply Company store in Starkville, Mississippi, the Company contributed the property via a limited liability company to AEI Net Lease Portfolio II DST ("ANLP II"), a Delaware statutory trust ("DST"), in exchange for 10.18% of the Class B ownership interests in ANLP II. The remaining interest in the property, owned by an affiliated entity, along with three other properties owned by two other affiliated entities, were also contributed to ANLP II in exchange for 89.82% of the Class B ownership interests in ANLP II. In addition, cash was contributed for working capital. A DST is a recognized mechanism for selling property to investors who are looking for replacement real estate to complete like-kind exchanges under Section 1031 of the Internal Revenue Code. As investors purchased Class A ownership interests in ANLP II, the proceeds received were used to redeem, on a one-for-one basis, the Class B ownership interests of the Company and affiliated entities. From January 28, 2015 to July 15, 2015, ANLP II sold 100% of its Class A ownership interests to investors and redeemed 100% of the Class B ownership interests from the Company and affiliated entities. As of December 31, 2015, the Company had no ongoing interest in ANLP II.

Page 30 of 41

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 2015

(5) Equity Method Investments – (Continued)

The investment in ANLP II was recorded using the equity method of accounting in the accompanying financial statements. Under the equity method, the investment in ANLP II was stated at cost and adjusted for the Company's share of net income or losses and reduced by proceeds received from the sale of the Class B ownership interests of ANLP II as well as distributions from net rental income. As of December 31, 2015, the investment balances consisted of the following:

Activity from January 22, 2015 through December 31, 2015:		ANLP II
Real Estate Contributed (at carrying value)	$	1,370,124
Cash Contributed		15,316
Net Income – Rental Activity		28,934
Net Income – Gain on Sale of Real Estate		486,053
Distributions from Net Rental Income		(28,934)
Proceeds from Sale of Class B Interests		(1,871,493)
Equity Method Investments at December 31, 2015	$	0

(6) Major Tenants –

The following schedule presents rental income from individual tenants, or affiliated groups of tenants, who each contributed more than ten percent of the Company's total rental income for the years ended December 31:

Tenants	Industry		2016		2015

Dick's Sporting Goods, Inc.	Retail	$	232,950	$	232,950
Best Buy Stores, L.P.	Retail		149,334		149,333
Dollar Tree Stores, Inc.	Retail		122,576		N/A
TSA Stores, Inc.	Retail		N/A		225,131
Aggregate rental income of major tenants		$	504,860	$	607,414
Aggregate rental income of major tenants as a percentage of total rental income			48%		58%

Tenants Industry 2013 2012

Apple American Group Restaurant $ 332,768 $ 332,768
TSA Stores, Inc. Retail 225,131 221,720
Dick’s Sporting Goods, Inc. Retail 219,445 219,445
Best Buy Stores, L.P. Retail
148,970

142,222
Aggregate rental income of major tenants $
926,314
$
916,155
Aggregate rental income of major tenants
as a percentage of total rental income

77%

77%

~~Page 28 of 38~~

Page 31 of 41

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2016 AND ~~2012~~

~~(6) Discontinued Operations –~~

On January 31, 2012, the Company sold the land under the Red Robin restaurant in Beavercreek, Ohio to an unrelated third party. The Company received net sale proceeds of $1,811,647, which resulted in a net gain of $277,992.

The financial results for this property are reflected as Discontinued Operations in the accompanying financial statements. The following are the results of discontinued operations for the years ended December 31:

2013 2012

Rental Income $ 0 $ 9,315
Gain on Disposal of Real Estate
0

277,992
Income from Discontinued Operations $
0
$
287,307

2015

(7) ~~Members’~~Members' Capital –

For the years ended December 31, ~~2013~~2016 and ~~2012,~~2015, the Company declared distributions of ~~$944,327~~$809,870 and ~~$1,033,938,~~$939,956, respectively. The Limited Members received distributions of ~~$915,997~~$787,998 and ~~$1,007,598~~$916,000 and the Managing Members received distributions of ~~$28,330~~$21,872 and ~~$26,340~~$23,956 for the years, respectively. The Limited Members' distributions represented ~~$0.51~~$0.45 and ~~$0.56~~$0.52 per LLC Unit outstanding using ~~1,784,275~~1,746,715 and ~~1,812,131~~1,759,863 weighted average Units in ~~2013~~2016 and ~~2012,~~2015, respectively. The distributions represented ~~$0.28~~$0.13 and ~~$0.28~~$0.20 per Unit of Net Income and ~~$0.23~~$0.32 and ~~$0.28~~$0.32 per Unit of return of contributed capital in ~~2013~~2016 and ~~2012,~~2015, respectively.

As part of the distributions discussed above, the Company distributed net sale proceeds of ~~$233,939~~$121,212 and $212,121 in ~~2012.~~2016 and 2015, respectively. The Limited Members received distributions of ~~$231,600~~$120,000 and $210,000 and the Managing Members received distributions of ~~$2,339~~$1,212 and $2,121 for the ~~year.~~years, respectively. The Limited ~~Members’~~Members' distributions represented ~~$0.13~~$0.07 and $0.12 per ~~Unit.~~Unit for the years, respectively.

The Company may ~~acquire~~repurchase Units from Limited Members who have tendered their Units to the Company. Such Units may be acquired at a discount. The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Members, such purchase would impair the capital or operation of the Company.

~~During 2013, five Limited Members redeemed~~On April 1, 2016, the Company repurchased a total of ~~12,200.0~~10,835.5 Units for ~~$85,500~~$75,397 from six Limited Members in accordance with the Operating Agreement. During ~~2012, five Limited Members redeemed~~2015, the Company repurchased a total of ~~34,811.0~~16,755.0 Units for ~~$234,843.~~$124,268 from three Limited Members. The Company acquired these Units using Net Cash Flow from operations. The ~~redemptions~~repurchases increase the remaining Limited ~~Members’~~Members' ownership interest in the Company. As a result of these ~~redemption payments~~repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of ~~$2,645~~$2,332 and ~~$7,263~~$3,844 in ~~2013~~2016 and ~~2012,~~2015, respectively.

Page 2932 of 38

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2016 AND ~~2012~~2015

(8) Income Taxes –

The following is a reconciliation of net income for financial reporting purposes to income reported for federal income tax purposes for the years ended December 31:

		2013		2012		2016		2015

Net Income for Financial Reporting Purposes	$	599,935	$	825,072	$	302,853	$	490,740

Depreciation for Tax Purposes Under Depreciation and Amortization for Financial Reporting Purposes		138,153		136,969		129,379		125,199

Income Accrued for Tax Purposes Over (Under) Income for Financial Reporting Purposes		0		(27,731)		19,366		(7,269)

Acquisition Costs Expensed for Financial Reporting Purposes, Capitalized for Tax Purposes		0		28,135		55,479		48,817

Real Estate Impairment Loss Not Recognized for Tax Purposes						0		445,828

Gain on Sale of Real Estate for Tax Purposes Under Gain for Financial Reporting Purposes						0		(64,542)
Taxable Income to Members	$	738,088	$	962,445	$	507,077	$	1,038,773

The following is a reconciliation of ~~Members’~~Members' Equity for financial reporting purposes to ~~Members’~~Members' Equity reported for federal income tax purposes for the years ended December 31:

		2013		2012		2016		2015

Members’ Equity for Financial Reporting Purposes	$	12,766,968	$	13,199,505
Members' Equity for Financial Reporting Purposes					$	12,144,131	$	12,728,877

Adjusted Tax Basis of Investments in Real Estate Over Net Investments in Real Estate for Financial Reporting Purposes		841,928		703,775		1,497,990		1,313,132

Income Accrued for Tax Purposes Over Income for Financial Reporting Purposes						19,366		0

Syndication Costs Treated as Reduction of Capital For Financial Reporting Purposes		2,691,997		2,691,997		2,691,997		2,691,997
Members’ Equity for Tax Reporting Purposes	$	16,300,893	$	16,595,277
Members' Equity for Tax Reporting Purposes					$	16,353,484	$	16,734,006

Page 3033 of 38

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures.

Under the supervision and with the participation of management, including its President and Chief Financial Officer, the Managing Member of the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the ~~“Exchange Act”~~"Exchange Act")). Based upon that evaluation, the President and Chief Financial Officer of the Managing Member concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to management, including the President and Chief Financial Officer of the Managing Member, in a manner that allows timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting.

(i) ~~Management’s~~Management's Report on Internal Control Over Financial Reporting. The Managing Member, through its management, is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, and for performing an assessment of the effectiveness of our internal control over financial reporting as of December 31, ~~2013.~~2016. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~generally accepted accounting principles.~~US GAAP. Our system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with ~~generally accepted accounting principles,~~US GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Managing Member; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Management of the Managing Member performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, ~~2013~~2016 based upon criteria in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(“COSO”~~("COSO"). Based on our assessment, management of the Managing Member determined that our internal control over financial reporting was effective as of December 31, ~~2013~~2016 based on the criteria in Internal Control-Integrated Framework ~~(1992)~~(2013) issued by the COSO.

Page 3134 of 38

ITEM 9A. CONTROLS AND PROCEDURES. (Continued)

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. ~~Management’s~~Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only ~~management’s~~management's report in this annual report.

(ii) Changes in Internal Control Over Financial Reporting. During the most recent period covered by this report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The registrant is a limited liability company and has no officers, directors, or direct employees. The Managing Members manage and control the ~~Company’s~~Company's affairs and have general responsibility and the ultimate authority in all matters affecting the ~~Company’s~~Company's business. The Managing Members are AEI Fund Management XXI, Inc. ~~(“AFM”~~("AFM"), the Managing Member, and Robert P. Johnson, Chief Executive Officer, President and sole director of AFM, the Special Managing Member. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AFM has only one senior financial executive, its Chief Financial Officer. The Chief Financial Officer reports directly to Mr. Johnson and is accountable for his actions to Mr. Johnson. Although Mr. Johnson and AFM require that all of their personnel, including the Chief Financial Officer, engage in honest and ethical conduct, ensure full, fair, accurate, timely, and understandable disclosure, comply with all applicable governmental laws, rules and regulations, and report to Mr. Johnson any deviation from these principles, because the organization is composed of only approximately 4045 individuals, because the management of a company by an entity that has different interests in distributions and income than investors involves numerous conflicts of interest that must be resolved on a daily basis, and because the ultimate decision maker in all instances is Mr. Johnson, AFM has not adopted a formal code of conduct. Instead, the materials pursuant to which investors purchase Units disclose these conflicts of interest in detail and Mr. Johnson, as the CEO and sole director of AFM, resolves conflicts to the best of his ability, consistent with his fiduciary obligations to AFM and the fiduciary obligations of AFM to the Company. The director and officers of AFM are as follows:

Page 3235 of 38

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

(Continued)

Robert P. Johnson, age ~~69,~~72, is Chief Executive Officer, President and sole director and has held these positions since the formation of AFM in August 1994, and has been elected to continue in these positions until December ~~2014.~~2017. From 1970 to the present, he has been employed exclusively in the investment industry, specializing in limited partnership investments. In that capacity, he has been involved in the development, analysis, marketing and management of public and private investment programs investing in net lease properties as well as public and private investment programs investing in energy development. Since 1971, Mr. Johnson has been the president, a director and a registered principal of AEI Securities, Inc., which is registered with the SEC as a securities broker-dealer, is a member of the Financial Industry Regulatory Authority (FINRA) and is a member of the Security Investors Protection Corporation (SIPC). Mr. Johnson has been president, a director and the principal shareholder of AEI Fund Management, Inc., a real estate management company founded by him, since 1978. Mr. Johnson is currently a general partner or principal of the general partner in ~~ten~~eight limited partnerships and a managing member in five LLCs.

Patrick W. Keene, age ~~54,~~57, is Chief Financial Officer, Treasurer and Secretary and has held these positions since January 22, 2003 and has been elected to continue in these positions until December ~~2014.~~2017. Mr. Keene has been employed by AEI Fund Management, Inc. and affiliated entities since 1986. Prior to being elected to the positions above, he was Controller of the various entities. From 1982 to 1986, Mr. Keene was with KPMG Certified Public Accountants, first as an auditor and later as a tax manager. Mr. Keene is responsible for all accounting functions of AFM and the registrant.

Since Mr. Johnson serves as the Special Managing Member of the Company, as well as the sole director of AFM, all of the duties that might be assigned to an audit committee are assigned to Mr. Johnson. Mr. Johnson is not an audit committee financial expert, as defined. As an officer and majority owner, through a parent company, of AFM, and as the Special Managing Member, Mr. Johnson is not a "disinterested director" and may be subject to a number of conflicts of interests in his capacity as sole director of AFM.

Before the independent auditors are engaged, Mr. Johnson, as the sole director of AFM, approves all audit-related fees, and all permissible nonaudit fees, for services of our auditors.

Section 16(a) Beneficial Ownership Reporting Compliance

Under federal securities laws, the directors and officers of the Managing Member of the Company, and any beneficial owner of more than 10% of a class of equity securities of the Company, are required to report their ownership of the Company's equity securities and any changes in such ownership to the Securities and Exchange Commission (the "Commission"). Specific due dates for these reports have been established by the Commission, and the Company is required to disclose in this Annual Report on 10-K any delinquent filing of such reports and any failure to file such reports during the fiscal year ended December 31, ~~2013.~~2016. Based upon information provided by officers and directors of the Managing Member, all officers, directors and 10% owners filed all reports on a timely basis in the ~~2013~~2016 fiscal year.

Page 3336 of 38

ITEM 11. EXECUTIVE COMPENSATION.

The Managing Member and affiliates are reimbursed at cost for all services performed on behalf of the registrant and for all third party expenses paid on behalf of the registrant. The cost for services performed on behalf of the registrant is based on actual time spent performing such services plus an overhead burden. These services include organizing the registrant and arranging for the offer and sale of Units, reviewing properties for acquisition and rendering administrative, property management and property sales services. The amount and nature of such payments are detailed in Item 13 of this annual report on Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information pertaining to the ownership of the Units by each person known by the Company to beneficially own 5% or more of the Units, by each Managing Member, and by each officer or director of the Managing Member as of February 28, ~~2014:~~2017:

Name and Address of Beneficial Owner	Number of Units Held	Percent of Class

AEI Fund Management XXI, Inc.	0	0.00%
Robert P. Johnson	0	0.00%
Patrick W. Keene	0	0.00%

Address for all:
1300 Wells Fargo Place 30 East 7th Street, St. Paul, Minnesota 55101

The Managing Members know of no holders of more than 5% of the outstanding Units.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND

DIRECTOR INDEPENDENCE.

The registrant, AFM and its affiliates have common management and utilize the same facilities. As a result, certain administrative expenses are allocated among these related entities. All of such activities and any other transactions involving the affiliates of the Managing Member of the registrant are governed by, and are conducted in conformity with, the limitations set forth in the Operating Agreement of the registrant. Reference is made to Note 3 of the Financial Statements, as presented, and is incorporated herein by reference, for details of related party transactions for the years ended December 31, ~~2013~~2016 and ~~2012.~~2015.

Neither the registrant, nor the Managing Member of the registrant, has a board of directors consisting of any members who are ~~“independent.”~~"independent." The sole director of the Managing Member, Robert P. Johnson, is also the Special Managing Member of the registrant, and is the Chief Executive Officer, and indirectly the principal owner, of the Managing Member. Accordingly, there is no disinterested board, or other functioning body, that reviews related party transactions, or the transactions between the registrant and the Managing Members, except as performed in connection with the audit of its financial statements.

Page 3437 of 38

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND

DIRECTOR INDEPENDENCE. (Continued)

The limitations included in the Operating Agreement require that the cumulative reimbursements to the Managing Members and their affiliates for certain expenses will not exceed an amount equal to the sum of (i) 20% of capital contributions, (ii) 1% of gross revenues, plus an initial leasing fee of 3% of gross revenues for the first five years of the original term of each lease, (iii) 3% of Net Proceeds of Sale, and (iv) 10% of Net Cash Flow less the Net Cash Flow actually distributed to the Managing Members. The cumulative reimbursements subject to this limitation are reimbursements for (i) organization and offering expenses, including commissions and an Organization Fee, (ii) acquisition expenses paid with proceeds from the initial offering of Units, (iii) services provided in the sales effort of properties, and (iv) expenses of controlling persons and overhead expenses directly attributable to the forgoing services or attributable to administrative services. As of December 31, ~~2013,~~2016, these cumulative reimbursements to the Managing Members and their affiliates did not exceed the limitation amount.

The following table sets forth the forms of compensation, distributions and cost reimbursements paid by the registrant to the Managing Members or their Affiliates in connection with the operation of the Fund for the period from inception through December 31, ~~2013.~~2016.

Person or Entity Receiving Compensation	Form and Method of Compensation	Amount Incurred From Inception (March 14, 2005) To December 31, 2013			Form and Method of Compensation	Amount Incurred From Inception (March 14, 2005) To December 31, 2016

AEI Securities, Inc.	Selling Commissions equal to 10% of proceeds, excluding proceeds from distribution reinvestments, most of which were reallowed to Participating Dealers.		$	1,790,447	Selling Commissions equal to 10% of proceeds, excluding proceeds from distribution reinvestments, most of which were reallowed to Participating Dealers.		$	1,790,447

Managing Members and Affiliates	Reimbursement at Cost for other Organization and Offering Costs.		$	916,368	Reimbursement at Cost for other Organization and Offering Costs.		$	916,368

Managing Members and Affiliates	Reimbursement at Cost for all Acquisition Expenses.		$	306,861	Reimbursement at Cost for all Acquisition Expenses.		$	448,199

Managing Members and Affiliates	Reimbursement at Cost for providing administrative services to the Fund, including all expenses related to management of the Fund's properties and all other transfer agency, reporting, partner relations and other administrative functions.		$	1,163,409	Reimbursement at Cost for providing administrative services to the Fund, including all expenses related to management of the Fund's properties and all other transfer agency, reporting, partner relations and other administrative functions.		$	1,624,113

Managing Members and Affiliates	Reimbursement at Cost for providing services related to the disposition of the Fund's properties.		$	39,016	Reimbursement at Cost for providing services related to the disposition of the Fund's properties.		$	196,521

Managing Members	3% of Net Cash Flow in any fiscal year.		$	201,063	3% of Net Cash Flow in any fiscal year.		$	279,872

Managing Members	1% of distributions of Net Proceeds of Sale until Limited Members have received an amount equal to (a) their Adjusted Capital Contributions, plus (b) an amount equal to 6.5% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously distributed. 10% of distributions of Net Proceeds of Sale thereafter.		$	2,339	1% of distributions of Net Proceeds of Sale until Limited Members have received an amount equal to (a) their Adjusted Capital Contributions, plus (b) an amount equal to 6.5% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously distributed. 10% of distributions of Net Proceeds of Sale thereafter.		$	8,450

Page 3538 of 38

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following is a summary of the fees billed to the Company by Boulay PLLP for professional services rendered for the years ended December 31, ~~2013~~2016 and ~~2012:~~2015:

Fee Category		2013		2012		2016		2015

Audit Fees	$	16,525	$	16,008	$	18,000	$	17,653
Audit-Related Fees		0		0		0		0
Tax Fees		0		0		0		0
All Other Fees		0		0		0		0
Total Fees	$	16,525	$	16,008	$	18,000	$	17,653

Audit Fees - Consists of fees billed for professional services rendered for the audit of the ~~Company’s~~Company's annual financial statements and review of the interim financial statements included in quarterly reports, and services that are normally provided by Boulay PLLP in connection with statutory and regulatory filings or engagements.

Audit-Related Fees - Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of financial statements and are not reported under "Audit Fees." These services include consultations concerning financial accounting and reporting standards.

Tax Fees - Consists of fees billed for professional services for federal and state tax compliance, tax advice and tax planning.

All Other Fees - Consists of fees for products and services other than the services reported above.

Policy for Preapproval of Audit and Permissible Non-Audit Services

Before the Independent Registered Public Accounting Firm is engaged by the Company to render audit or non-audit services, the engagement is approved by Mr. Johnson acting as the ~~Company’s~~Company's audit committee.

Page 3639 of 38

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) (1) A list of the financial statements contained herein is set forth on page ~~14.~~15.

(a) (2) Schedules are omitted because of the absence of conditions under which they are required or because the required information is presented in the financial statements or related notes.

(a) (3) The Exhibits filed in response to Item 601 of Regulation S-K are listed below.

3.1	Certificate of Limited Liability Company (incorporated by reference to Exhibit 3.1 of the registrant's Registration Statement on Form SB-2 filed on May 26, 2005 [File No. 333-125266]).

3.2	Operating Agreement to the Prospectus (incorporated by reference to Exhibit A of the registrant's Registration Statement on Form SB-2 filed on October 14, 2005 [File No. 333-125266]).

10.1	Assignment and Assumption of Lease and Guaranty dated April 3, 2006 between the Company and AEI Fund Management XVII, Inc. relating to the Property at 6959 East 21st Street, Wichita, Kansas (incorporated by reference to Exhibit 10.1 of Form 8-K filed April 5, 2006).

~~10.2~~

~~Assignment and Assumption of Lease~~ dated May 31, 2006 between the Company, AEI Income & Growth Fund 24 LLC and Blue Bell Partners, LLC relating to the Property at 65 North University Boulevard, Middletown, Ohio (incorporated by reference to Exhibit 10.2 of Form 8-K filed June 7, 2006).

~~10.3~~

Net Lease Agreement dated September 21, 2006 between the Company, AEI Fund Management XVII, Inc. and Apple Indiana II LLC relating to the Property at 7345 E. Washington Street, Indianapolis, Indiana (incorporated by reference to Exhibit 10.2 ~~of Form 8-K filed September 26, 2006).~~

~~10.4~~

Assignment and Assumption of Lease dated December 29, 2006 between the Company, AEI Income & Growth Fund XXII Limited Partnership and AEI Fund Management XVII, Inc. relating to the Property at 1516 South Washington Street, Crawfordsville, Indiana (incorporated by reference to Exhibit 10.1 of Form ~~8-K~~8‑K filed January 8, 2007).

31.1	Certification of Chief Executive Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Financial Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.

32	Certification of Chief Executive Officer and Chief Financial Officer of Managing Member pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Page 3740 of 38

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AEI INCOME & GROWTH FUND 26
	Limited Liability Company
	By:	AEI Fund Management XXI, Inc.
		Its Managing Member


March ~~28, 2014~~29, 2017	By:	/s/ ROBERT P JOHNSON
		Robert P. Johnson, President and Director
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date


/s/ ROBERT P JOHNSON	President (Principal Executive Officer)	March ~~28, 2014~~29, 2017
Robert P. Johnson	and Sole Director of Managing Member

/s/ PATRICK W KEENE	Chief Financial Officer and Treasurer	March ~~28, 2014~~29, 2017
Patrick W. Keene	(Principal Accounting Officer)

Page 3841 of 3841

	State of Delaware		41-2173048
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	30 East 7^th Street, Suite 1300 St. Paul, Minnesota 55101		(651) 227-7333
	(Address of principal executive offices)		(~~Registrant’s~~Registrant's telephone number)

o☐ Large accelerated filer	o☐ Accelerated filer
o☐ Non-accelerated filer	x☒ Smaller reporting company

Property	Purchase Date		Original Property Cost	Tenant	Annual Lease Payment		Annual Rent Per Sq. Ft.		Purchase Date		Original Property Cost	Tenant	Annual Lease Payment		Annual Rent Per Sq. Ft.

Sports Authority Store Wichita, KS (40%)	4/3/06 to 6/30/06	$	2,230,753	TSA Stores, Inc.	$	225,131	$	10.77	4/3/06 to 6/30/06	$	2,230,753	(1)

Advance Auto Parts Store Middletown, OH (55%)	6/1/06	$	1,022,289	Advance Stores Company, Inc.	$	71,679	$	18.94	6/1/06	$	1,022,289	Advance Stores Company, Inc.	$	78,847	$	20.84

Applebee’s Restaurant Indianapolis, IN	9/21/06 to 12/1/06	$	3,054,187	Apple Indiana II LLC	$	236,782	$	45.27
Applebee's Restaurant Crawfordsville, IN (40%)									12/29/06	$	1,237,771	Apple Indiana II LLC	$	103,184	$	49.04

Property	Purchase Date		Original Property Cost		Tenant	Annual Lease Payment		Annual Rent Per Sq. Ft.		Purchase Date		Original Property Cost		Tenant	Annual Lease Payment		Annual Rent Per Sq. Ft.

Applebee’s Restaurant Crawfordsville, IN (40%)	12/29/06	$	1,237,771		Apple Indiana II LLC	$	95,985	$	45.62

Starbucks Store Bluffton, IN	8/10/07	$	1,150,116		Starbucks Corporation	$	87,780	$	48.58	8/10/07	$	1,150,116		Starbucks Corporation	$	87,780	$	48.58

Best Buy Store Eau Claire, WI (30%)	1/31/08	$	2,021,162		Best Buy Stores, L.P.	$	149,333	$	10.51	1/31/08	$	2,021,162		Best Buy Stores, L.P.	$	149,333	$	10.51

Dick’s Sporting Goods Store Fredericksburg, VA (27%)	5/8/08	$	3,126,603		Dick’s Sporting Goods, Inc.	$	219,445	$	16.69
Dick's Sporting Goods Store Fredericksburg, VA (27%)										5/8/08	$	3,126,603		Dick's Sporting Goods, Inc.	$	232,950	$	17.71

Tractor Supply Company Store Starkville, MS (53%)	2/23/12	$	1,510,500	(1)	Tractor Supply Company	$	115,542	$	11.51
Fresenius Medical Center Chicago, IL (54%)										12/30/14	$	1,292,220	(2)	Fresenius Medical Care Chatham, LLC	$	91,644	$	22.63

Zales Store Enid, OK										3/17/15	$	1,600,000	(2)	Zale Delaware, Inc.	$	105,600	$	22.03

Dollar Tree West Point, MS										2/3/16	$	1,535,714	(2)	Dollar Tree Stores, Inc.	$	107,500	$	10.77

		Page

Report of Independent Registered Public Accounting Firm		1516

Balance ~~Sheet~~Sheets as of December 31, ~~2013~~2016 and ~~2012~~2015		1617

Statements for the Years Ended December 31, ~~2013~~2016 and ~~2012:~~2015:

	Income	1718

	Cash Flows	1819

	Changes in ~~Members’~~Members' Equity (Deficit)	1920

Notes to Financial Statements		2021 – 3033

	Title of each class		Name of each exchange on which registered
	None		None

Period	Total Number of Units Purchased	Average Price Paid per Unit	Total Number of Units Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs

10/1/13 to 10/31/13	1000.00	$6.55	52,011.0(1)	(2)

11/1/13 to 11/30/13	--	--	--	--

12/1/13 to 12/31/13	--	--	--	--

	/s/ BOULAY PLLP
	Boulay PLLP
	Certified Public Accountants

Minneapolis, Minnesota
March ~~28, 2014~~29, 2017

	December 31,			December 31,			December 31,			December 31,
	2013			2012			2016			2015
Current Assets:
Cash	$	306,395		$	311,084		$	603,691		$	2,331,283
Receivables								0			22,487
Total Current Assets								603,691			2,353,770

Real Estate Held for Investment:
Real Estate Investments:
Land		4,855,829			4,855,829			4,553,261			4,283,261
Buildings and Equipment		10,332,327			10,332,327
Buildings								9,849,009			8,532,777
Acquired Intangible Lease Assets		257,767			257,767			652,025			419,048
Real Estate Investments, at cost		15,445,923			15,445,923
Real Estate Held for Investment, at cost								15,054,295			13,235,086
Accumulated Depreciation and Amortization		(2,658,316	)		(2,219,838	)		(3,063,551	)		(2,612,458	)
Real Estate Held for Investment, Net		12,787,607			13,226,085			11,990,744			10,622,628
Total Assets	$	13,094,002		$	13,537,169		$	12,594,435		$	12,976,398

Current Liabilities:
Payable to AEI Fund Management, Inc.	$	21,359		$	12,271
Distributions Payable		170,102			235,250
Total Current Liabilities		191,461			247,521

Long-term Liabilities:
Acquired Below-Market Lease Intangibles, Net		258,843			0

Members' Equity (Deficit):
Managing Members		(10,319	)		4,799
Limited Members – 10,000,000 Units authorized; 1,744,006 and 1,754,842 Units issued and outstanding as of December 31, 2016 and 2015, respectively		12,154,450			12,724,078
Total Members' Equity		12,144,131			12,728,877
Total Liabilities and Members' Equity	$	12,594,435		$	12,976,398

Current Liabilities:
Payable to AEI Fund Management, Inc.	$	9,784		$	17,126
Distributions Payable		236,082			233,166
Total Current Liabilities		245,866			250,292

Long-term Liabilities:
Acquired Below-Market Lease Intangibles, Net		81,168			87,372

Members’ Equity (Deficit):
Managing Members		(10,919	)		2,058
Limited Members – 10,000,000 Units authorized; 1,780,725 and 1,792,925 Units issued and outstanding in 2013 and 2012, respectively		12,777,887			13,197,447
Total Members’ Equity		12,766,968			13,199,505
Total Liabilities and Members’ Equity	$	13,094,002		$	13,537,169

	Year Ended December 31
	2016		2015

Rental Income	$	1,051,745	$	1,043,359

Expenses:
LLC Administration – Affiliates		149,251		161,038
LLC Administration and Property Management – Unrelated Parties		102,892		38,072
Property Acquisition		55,479		48,817
Depreciation and Amortization		443,517		379,486
Real Estate Impairment		0		445,828
Total Expenses		751,139		1,073,241

Operating Income (Loss)		300,606		(29,882	)

Other Income:
Income from Equity Method Investments		0		514,987
Interest Income		2,247		5,635
Total Other Income		2,247		520,622

Net Income	$	302,853	$	490,740

Net Income Allocated:
Managing Members	$	9,086	$	20,000
Limited Members		293,767		470,740
Total	$	302,853	$	490,740

Net Income per LLC Unit	$	.17	$	.27

Weighted Average Units Outstanding – Basic and Diluted		1,746,715		1,759,863

	Managing Members			Limited Members			Total			Limited Member Units Outstanding


Balance, December 31, 2011	$	(54,895	)	$	13,705,372		$	13,650,477			1,827,736.0

Distributions Declared		(26,340	)		(1,007,598	)		(1,033,938	)

Redemption Payments		(7,263	)		(234,843	)		(242,106	)		(34,811.0	)

Net Income		90,556			734,516			825,072

Balance, December 31, 2012		2,058			13,197,447			13,199,505			1,792,925.0

Distributions Declared		(28,330	)		(915,997	)		(944,327	)

Redemption Payments		(2,645	)		(85,500	)		(88,145	)		(12,200.0	)

Net Income		17,998			581,937			599,935

Balance, December 31, 2013	$	(10,919	)	$	12,777,887		$	12,766,968			1,780,725.0