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

                           FORM 10-KSB

    Annual Report Under Section 13 or 15(d) of The Securities
                      Exchange Act of 1934

          For the Fiscal Year Ended:  December 31, 2007

               Commission file number:  000-51823

                 AEI INCOME & GROWTH FUND 26 LLC
         (Name of small business issuer in its charter)

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

30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
        (Address of principal executive offices)

                         (651) 227-7333
                   (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:
                                 Name of each exchange on
     Title of each class             which registered
             None                          None

Securities registered under Section 12(g) of the Exchange Act:

                   Limited Liability Company Units
                        (Title of class)

Check whether the issuer is not required to file reports pursuant
to Section 13 or 15(d) of the Exchange Act.

Check  whether  the issuer (1) filed all reports required  to  be
filed by Section 13 or 15(d) of the Exchange Act during the  past
12  months  (or  for such shorter period that the registrant  was
required to file such reports), and (2) has been subject to  such
filing requirements for the past 90 days.      Yes [X]  No

Check if disclosure of delinquent filers in response to Rule  405
of  Regulation  S-B  is  not  contained  in  this  Form,  and  no
disclosure  will  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-KSB or  any
amendment to this Form 10-KSB.  [X]

Indicate by check mark whether the registrant is a shell  company
(as defined in Rule 12b-2 of the Exchange Act).  Yes  No [X]

The  Issuer's revenues for the year ended December 31, 2007  were
$413,705.

As  of February 29, 2008, there were 1,832,736.0 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 $18,327,360.

               DOCUMENTS INCORPORATED BY REFERENCE
 The registrant has not incorporated any documents by reference
                        into this report.

Transitional Small Business Disclosure Format:     Yes   No [X]


                             PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

        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),  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.  As of December 31,  2007,  the
Company   had  purchased  seven  properties,  including   partial
interests in four properties, at a total cost of $11,641,210  and
had  committed an additional approximately $1,700,000 toward  the
construction of one of these properties.  Subsequent to  December
31,   2007,  the  Company  purchased  its  eighth  property   for
approximately  $1,995,000.   The  balance  of  the   subscription
proceeds  was applied to organization and syndication  costs  and
working capital reserves.  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.  It is anticipated that the Company will  commence
liquidation through the sale of its remaining properties  ten  to
twelve years after completion of the acquisition phase, depending
upon the then current real estate and money markets, the economic
climate and the income tax consequences to the Members.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

Leases

       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 various  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.   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.

Property Activity

       During the second quarter of 2006, the Company purchased a
40%  interest in a Sports Authority (formerly Gart Sports)  store
in Wichita, Kansas for $2,230,753.  The property is leased to TSA
Stores,  Inc.  under a Lease Agreement with a  remaining  primary
term  of  11  years  and initial annual rent  of  $186,059.   The
remaining interest in the property was purchased by AEI Income  &
Growth Fund 25 LLC, an affiliate of the Company.  The Company  is
attempting to sell its interest in the property.  At December 31,
2007,  the property was classified as Real Estate Held  for  Sale
with a book value of $2,126,435.

        On June 1, 2006, the Company purchased a 55% interest  in
an  Advance  Auto Parts store in Middletown, Ohio for $1,022,289.
The  property is leased to Advance Stores Company, Inc.  under  a
Lease  Agreement with a remaining primary term of 13.2 years  and
initial  annual rent of $71,679.  The remaining interest  in  the
property  was purchased by AEI Income & Growth Fund  24  LLC,  an
affiliate of the Company.

        On  September  21,  2006,  the Company  purchased  a  37%
interest in an Applebee's restaurant in Indianapolis, Indiana for
$1,130,049.   During  the fourth quarter  of  2006,  the  Company
purchased  the  remaining  63%  interest  in  this  property  for
$1,924,138.  The property is leased to Apple Indiana II LLC under
a  Lease Agreement with a remaining primary term of 20 years  and
initial annual rent of $220,262.

       On December 29, 2006, the Company purchased a 40% interest
in  an  Applebee's  restaurant  in  Crawfordsville,  Indiana  for
$1,237,771.  The property is leased to Apple Indiana II LLC under
a  Lease Agreement with a remaining primary term of 20 years  and
initial  annual rent of $89,289.  The remaining interest  in  the
property  was purchased by AEI Income & Growth Fund XXII  Limited
Partnership, an affiliate of the Company.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

        The Sports Authority store, the Applebee's restaurant  in
Crawfordsville,  Indiana and the 63% interest in  the  Applebee's
restaurant in Indianapolis, Indiana were purchased from AEI  Fund
Management  XVII,  Inc.  (AFMX), an  affiliate  of  the  Managing
Members.  In order to facilitate the Company's purchase of  these
property  interests, AFMX purchased the properties from unrelated
third  parties.  For property interests purchased from AFMX,  the
price  paid  by the Company was equal to the price paid  by  AFMX
plus  the expenses incurred to transfer ownership of the property
to the Company, which were minimal.  There was no benefit arising
out  of  the  transactions  to  the  Managing  Members  or  their
affiliates  apart  from compensation otherwise permitted  by  the
Operating Agreement.

        On  August  10, 2007, the Company purchased  a  Starbucks
store  in  Bluffton,  Indiana for $1,150,116.   The  property  is
leased  to Starbucks Corporation under a Lease Agreement  with  a
remaining  primary term of 10 years and initial  annual  rent  of
$79,800.

       On December 17, 2007, the Company purchased a 27% interest
in  a  parcel of land in Fredericksburg, Virginia for $1,412,439,
including  acquisition expenses.  The Company obtained  title  to
the  land in the form of an undivided fee simple interest in  the
27%  interest purchased.  Simultaneous with the purchase  of  the
land,  the  Company  entered  into  a  Project  Construction  and
Development  Financing  Agreement under which  the  Company  will
advance funds to Silver-Honaker Development Company, LLC (Silver)
for  the  construction of a Dick's Sporting Goods  store  on  the
site.   The purchase price, including the cost of the land,  will
be  approximately  $3,100,000.  The remaining  interests  in  the
property  were purchased by AEI Income & Growth Fund 24  LLC  and
AEI Income & Growth Fund 25 LLC, affiliates of the Company.

        The  property  is leased to Dick's Sporting  Goods,  Inc.
under  a  Lease  Agreement with a primary term of  10  years  and
initial  annual  rent of $219,445.  Pursuant to  the  Lease,  the
tenant  will commence paying rent on the day the store opens  for
business, which is expected to be in June 2008.  Pursuant to  the
development agreement, for the period from December 17,  2007  to
the  day  that the tenant commences paying rent, Silver will  pay
the Company interest at a rate of 6.75% on the purchase price  of
the  land and the amounts advanced for construction of the store.
Pursuant  to the Lease, any improvements to the land  during  the
term of the Lease become the property of the Company.

        On December 28, 2007, the Company purchased 2.04 acres of
land in Beavercreek, Ohio for $1,533,655.  The land is leased  to
Red  Robin  International, Inc. under a Lease  Agreement  with  a
remaining primary term of 11.3 years and initial annual  rent  of
$105,000.   Red Robin International, Inc. operates  a  Red  Robin
restaurant   on  the  site.   Ownership  of  the   building   and
improvements will transfer to the Company upon termination of the
lease.

        Subsequent to December 31, 2007, the Company purchased  a
30%  interest  in a Best Buy store in Eau Claire,  Wisconsin  for
approximately  $1,995,000.  The property is leased  to  Best  Buy
Stores,  L.P.  under a Lease Agreement with a  remaining  primary
term  of  10  years  and initial annual rent  of  $142,222.   The
remaining interests in the property were purchased by AEI  Income
&  Growth  Fund XXI Limited Partnership and AEI Income  &  Growth
Fund 23 LLC, affiliates of the Company.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

Major Tenants

        During 2007, three tenants each contributed more than ten
percent of the Company's total rental revenue.  The major tenants
in aggregate contributed 95% of total rental revenue in 2007.  It
is  anticipated  that, based on minimum rental payments  required
under   the  leases,  Apple  American  Group  will  continue   to
contribute  more than ten percent of rental revenue in  2008  and
future  years.   In  addition,  it  is  anticipated  that  Dick's
Sporting  Goods,  Inc. and Best Buy Stores, L.P. will  contribute
more than ten percent of rental revenue in 2008 and future years.
TSA Stores, Inc. will likely not continue to be a major tenant as
the  Company  is attempting to sell the property it leases.   Any
failure  of  these  major  tenants could  materially  affect  the
Company's net income and cash distributions.

Competition

        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.

Employees

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

ITEM 2.   DESCRIPTION OF PROPERTIES.

Investment Objectives

         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  type  and  location  of  the
properties.

Description of Properties

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

ITEM 2.   DESCRIPTION OF PROPERTIES.  (Continued)

        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  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 very 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, 2007.

                           Total Property                 Annual    Annual
                  Purchase  Acquisition                   Lease    Rent Per
Property            Date      Costs        Tenant         Payment    Sq. Ft.

Sports Authority Store
 Wichita, KS      4/3/06 to
 (40.0%)           6/30/06  $2,230,753  TSA Stores, Inc.  $204,665   $ 9.79

Advance Auto Parts Store
 Middletown, OH                            Advance Stores
 (55.0%)            6/1/06  $1,022,289      Company, Inc. $ 71,679   $18.94

Applebee's Restaurant9/21/06 to          Apple Indiana
 Indianapolis, IN  12/1/06  $3,054,187       II LLC       $220,262   $42.12

Applebee's Restaurant
 Crawfordsville, IN                      Apple Indiana
 (40%)            12/29/06  $1,237,771       II LLC       $ 89,289   $42.44

Starbucks Store                            Starbucks
 Bluffton, IN      8/10/07  $1,150,116    Corporation     $ 79,800   $44.16

Dick's Sporting Goods
 Fredericksburg, VA
 (27.0%)                                Dick's Sporting
 (land only) (1)  12/17/07  $1,412,439    Goods, Inc.         (1)

Red Robin
 Beavercreek, OH                            Red Robin
 (land only)      12/28/07  $1,533,655 International,Inc. $105,000   $ 1.18


(1)  Store was under construction as of December 31, 2007.   Rent
payments  will  commence when construction is  complete  and  the
store opens for business, which is expected to be in June 2008.


ITEM 2.   DESCRIPTION OF PROPERTIES.  (Continued)

        The  properties  listed above with  a  partial  ownership
percentage  are  owned  with  affiliates  of  the  Company.   The
remaining interest in the Sports Authority store is owned by  AEI
Income  &  Growth  Fund 25 LLC.  The remaining  interest  in  the
Advance Auto Parts store is owned by AEI Income & Growth Fund  24
LLC.   The  remaining  interest in the Applebee's  restaurant  in
Crawfordsville, Indiana is owned by AEI Income & Growth Fund XXII
Limited  Partnership.   The remaining  interests  in  the  Dick's
Sporting Goods store are owned by AEI Income & Growth Fund 24 LLC
and AEI Income & Growth Fund 25 LLC.

        The  Company accounts for properties owned as tenants-in-
common  with  affiliated  Partnerships  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.

        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 of a property are  personal
property  and land improvements which are depreciated,  using  an
accelerated method, over 5 and 15 years, respectively.  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 will be the same as the basis for book
depreciation purposes.

        At  December 31, 2007, all properties listed  above  were
100% occupied.

ITEM 3.   LEGAL PROCEEDINGS.

       None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

       None.


                             PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
         AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

        (a)  As  of December 31, 2007, there were 453 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 $20,870 and $5,342 were made to the
Managing  Members  and $674,790 and $172,728  were  made  to  the
Limited   Members   in   2007   and  2006,   respectively.    The
distributions  were made on a quarterly basis and  represent  Net
Cash  Flow,  as  defined.   These  distributions  should  not  be
compared with dividends paid on capital stock by corporations.

        (b) The registration statement for the offering (No. 333-
125266) was declared effective on October 20, 2005.  The offering
commenced  on May 13, 2003 and terminated October 19, 2007,  when
the extended offering period expired.  AEI Securities, Inc. (ASI)
was  the  dealer  manager  of  the  offering.   The  registration
statement  covers  10,000,000 Units of limited liability  company
interest  at  an  aggregate price of up  to  $100  million.   The
Company  sold  1,832,736  Units for gross  offering  proceeds  of
$18,327,360.

        From gross offering proceeds, the Company paid $1,775,629
in  selling  commissions  to ASI, an affiliate  of  the  Managing
Members.   Of this amount, $1,171,495 was re-allowed  by  ASI  to
participating  broker-dealers not affiliated  with  the  Managing
Members.   The  gross offering proceeds were further  reduced  by
underwriting  discounts  of $14,818 and  other  organization  and
syndication costs of $916,368 of which $515,983 was paid  to  AEI
Fund Management, Inc., an affiliate of the Managing Members,  for
costs incurred in connection with managing the Company's offering
and  organization.  From subscription proceeds, the Company  paid
commissions,   organization   and  syndication   costs   totaling
$2,706,815.

        From  the  net  offering proceeds, the  Company  expended
$11,641,210   to   acquire  real  estate  of  which   $11,408,560
represented cash paid to unaffiliated sellers of real estate  and
$232,650  represented cash paid to reimburse AEI Fund Management,
Inc.  for  costs and direct expenses incurred by it in  acquiring
properties on behalf of the Company.

        (c)  Beginning in March 2009, 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.

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
         AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

        Units tendered to the Company during January and July are
redeemed 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
period  covered by this report, the Company did not purchase  any
Units.

Other Information

        The Company is required, pursuant to FINRA Rule 2810,  to
disclose  in each annual report distributed to Limited Members  a
per  Unit  estimated value, the method by which it was  developed
and the date of the data used to develop the estimated value.  At
December  31, 2007, the Company's Units were valued at $10.   The
basis for this valuation is the Company was recently engaged in a
public offering at a price of $10 per Unit.  However, please note
that  there is no public trading market for the Units nor is  one
ever  expected  to  develop and there can be  no  assurance  that
Limited  Members could receive $10 per unit if such a market  did
exist  and  they sold their Units or that they will  be  able  to
receive  such amount for their Units in the future.  In addition,
the  Company  has  not  performed an evaluation  of  the  Company
properties and, therefore, this valuation is not based  upon  the
value of the Company properties, nor does it represent the amount
Limited Members would receive if the Company properties were sold
and  the  proceeds  distributed  to  the  Limited  Members  in  a
liquidation  of  the Company, which amount would most  likely  be
less  than $10 per Unit as a result of the fact that, at the time
the  Company  is purchasing its properties, the amount  of  funds
available for investment in properties is approximately 15%  less
than the offering proceeds due to the payment of organization and
offering expenses, including selling commissions, as described in
more detail in the Company's Prospectus.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.

        The Management's Discussion and Analysis contains various
"forward  looking  statements"  within  the  meaning  of  federal
securities  laws  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 made by the Company,
must be evaluated in the context of a number of factors that  may
affect   the   Company's  financial  condition  and  results   of
operations, including the following:

    Market and economic conditions which affect the value
    of the properties the Company owns and the cash from
    rental income such properties generate;

    the federal income tax consequences of rental income,
    deductions, gain on sales and other items and the
    effects of these consequences for Members;

    resolution by the Managing Members of conflicts with
    which they may be confronted;

    the success of the Managing Members of locating
    properties with favorable risk return characteristics;

    the effect of tenant defaults; and

    the condition of the industries in which the tenants of
    properties owned by the Company operate.


The Application of Critical Accounting Policies

        The  preparation  of  the Company's financial  statements
requires  management to make estimates and assumptions  that  may
affect the reported amounts of assets, liabilities, revenues  and
expenses,  and  related  disclosure  of  contingent  assets   and
liabilities. Management evaluates these estimates on  an  ongoing
basis,  including  those related to the carrying  value  of  real
estate  and  the  allocation  by AEI  Fund  Management,  Inc.  of
expenses to the Company as opposed to other funds they manage.

        The Company purchases properties and records them in  the
financial  statements at cost (including capitalized  acquisition
expenses).     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 probability-
weighted   cash  flows  to  its  current  carrying  value.    For
properties   held   for  sale,  management   determines   whether
impairment  has  occurred by comparing the  property's  estimated
fair  value less cost to sell to its current carrying value.   If
the  carrying  value  is greater than the  realizable  value,  an
impairment loss is recorded to reduce the carrying value  of  the
property  to  its realizable value.  Changes in these assumptions
or  analysis may cause material changes in the carrying value  of
the properties.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        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 affairs.   They
also  allocate  expenses at the end of each month  that  are  not
directly related to a fund's operations based upon the number  of
investors  in the fund and the fund's capitalization relative  to
other  funds they manage.  The Company reimburses these  expenses
subject  to  detailed  limitations  contained  in  the  Operating
Agreement.

        Management  of the Company has discussed the  development
and   selection  of  the  above  accounting  estimates  and   the
management  discussion  and analysis disclosures  regarding  them
with the managing member of the Company.

Results of Operations

        The  Company was organized on March 14, 2005.  From  this
date  until the initial subscription proceeds of $1,932,316  were
released  from escrow on April 3, 2006, the Company had  received
only  $1,000  of  capital  from the  Managing  Members,  had  not
conducted any business operations other than those related to the
offering and sale of Units, and had not admitted any investors as
Limited Members.

        For  the  year  ended  December  31,  2007,  the  Company
recognized rental income from continuing operations of  $413,705,
representing  twelve months rent from three properties  and  rent
from  two  properties acquired during the period.  For  the  year
ended  December  31, 2006, the Company recognized  rental  income
from  continuing  operations of $89,196, representing  rent  from
three properties acquired during the period.

        For  the  years  ended December 31, 2007  and  2006,  the
Company  incurred  LLC  administration expenses  from  affiliated
parties   of   $117,958   and   $40,207,   respectively.    These
administration  expenses  include  costs  associated   with   the
management of the properties, processing distributions, reporting
requirements  and correspondence to the Limited Members.   During
the  same  periods,  the Company incurred LLC administration  and
property  management expenses from unrelated parties  of  $18,126
and   $8,646,  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.   As  the  Company  raised   additional
subscription  proceeds and purchased additional  properties,  the
administration and property management expenses increased.

        For  the  years  ended December 31, 2007  and  2006,  the
Company  recognized  interest income  of  $163,247  and  $10,263,
respectively,  mainly  from  subscription  proceeds   temporarily
invested  in  a  money market account.  In 2007, interest  income
increased  due  to the Company having more money  invested  in  a
money market account due to the sale of additional LLC Units.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        In  accordance  with  Statement of  Financial  Accounting
Standards  No. 144, Accounting for the Impairment or Disposal  of
Long-Lived  Assets,  upon  complete disposal  of  a  property  or
classification of a property as Real Estate Held  for  Sale,  the
Company  includes the operating results and sale of the  property
in   discontinued   operations.    In   addition,   the   Company
reclassifies the prior periods' operating results of the property
to  discontinued  operations.  For the years ended  December  31,
2007,  the Company recognized income from discontinued operations
of  $135,992 representing rental income less property  management
expenses and depreciation.  For the year ended December 31, 2006,
the  Company  recognized income from discontinued  operations  of
$91,438  representing  rental  income  less  property  management
expenses and depreciation.  The Company is attempting to sell its
40%  interest  in the Sports Authority store in Wichita,  Kansas.
At  December 31, 2007, the property was classified as Real Estate
Held for Sale with a book value of $2,126,435.

        Inflation  has  had  a  minimal  effect  on  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.   In addition, leases may contain  rent  clauses
which  entitle the Company to receive additional rent  in  future
years if gross receipts for the property exceed certain specified
amounts.   Increases  in sales volumes of  the  tenants,  due  to
inflation  and  real sales growth, may 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.

Liquidity and Capital Resources

        The  Company's primary sources of cash are proceeds  from
the  sale  of Units, interest income, rental income and  proceeds
from  the  sale  of  property.  Its  primary  uses  of  cash  are
investment  in real properties, payment of expenses  involved  in
the sale of Units, the management of properties, the organization
and   administration  of  the  Company,  and   the   payment   of
distributions.

        The  Company  generated $637,819 of cash from  operations
during  the year ended December 31, 2007, representing net income
of  $405,758 and a non-cash expense of $232,428 for depreciation,
which were partially offset by $367 in net timing differences  in
the  collection of payments from the tenants and the  payment  of
expenses.  The Company generated $271,540 of cash from operations
during  the year ended December 31, 2006, representing net income
of $102,013, a non-cash expense of $83,023 for depreciation and a
$86,504 increase in the payable to the Company's managers.

        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.  During the year ended December 31,
2007,   the  Company  expended  $4,096,210  to  invest  in   real
properties  (inclusive of acquisition expenses).  On  August  10,
2007,  the  Company  purchased  a Starbucks  store  in  Bluffton,
Indiana  for  $1,150,116.   On December  17,  2007,  the  Company
purchased  land  in Fredericksburg, Virginia for $1,412,439.   On
December  28,  2007, the Company purchased land  in  Beavercreek,
Ohio for $1,533,655.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        During  the  year  ended December 31, 2006,  the  Company
expended  $7,545,000 to invest in real properties  (inclusive  of
acquisition  expenses).  During the second quarter of  2006,  the
Company  purchased a 40% interest in a Sports Authority store  in
Wichita,  Kansas  for $2,230,753.  On June 1, 2006,  the  Company
purchased  a  55%  interest in an Advance  Auto  Parts  store  in
Middletown,  Ohio  for $1,022,289.  On September  21,  2006,  the
Company  purchased a 37% interest in an Applebee's restaurant  in
Indianapolis, Indiana for $1,130,049.  During the fourth  quarter
of 2006, the Company purchased the remaining 63% interest in this
property  for  $1,924,138.  On December  29,  2006,  the  Company
purchased   a  40%  interest  in  an  Applebee's  restaurant   in
Crawfordsville, Indiana for $1,237,771.

        The Sports Authority store, the Applebee's restaurant  in
Crawfordsville,  Indiana and the 63% interest in  the  Applebee's
restaurant in Indianapolis, Indiana were purchased from AEI  Fund
Management  XVII,  Inc.  (AFMX), an  affiliate  of  the  Managing
Members.  In order to facilitate the Company's purchase of  these
property  interests, AFMX purchased the properties from unrelated
third  parties.  For property interests purchased from AFMX,  the
price  paid  by the Company was equal to the price paid  by  AFMX
plus  the expenses incurred to transfer ownership of the property
to the Company, which were minimal.  There was no benefit arising
out  of  the  transactions  to  the  Managing  Members  or  their
affiliates  apart  from compensation otherwise permitted  by  the
Operating Agreement.

       During the offering of Units, the Company's primary source
of  cash  flow  was  from  the sale of LLC  Units.   The  Company
commenced  the  offering of LLC Units to  the  public  through  a
registration statement that became effective October 20, 2005 and
continued  until  October 19, 2007, when  the  extended  offering
period  expired.  The Company raised a total of $18,327,360  from
the  sale  of  1,832,736 Units.  From subscription proceeds,  the
Company paid organization and syndication costs (which constitute
a reduction of capital) of $2,706,815.

        After  completion of the acquisition phase, the Company's
primary  use of cash flow is distribution and redemption payments
to   Members.    The  Company  declares  its  regular   quarterly
distributions  before  the  end of  each  quarter  and  pays  the
distribution in the first ten days after the end of each quarter.
For  the  years  ended December 31, 2007 and  2006,  the  Company
declared  distributions  of $695,660 and $178,070,  respectively,
which  were allocated 97% to the Limited Members and  3%  to  the
Managing Members.

        Beginning  in  April 2009, the Company may acquire  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.

        The  Operating Agreement requires that all proceeds  from
the  sale  of Units, subject to a reasonable reserve for  ongoing
operations, be invested or committed to investment in  properties
by  the  later  of  two years after the date of the  registration
statement  or  twelve months after the offering  terminates.   At
December  31,  2007,  the  Company had entered  into  one  formal
contractual commitment to expend capital and it entered into  one
additional commitment after this date.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       On December 17, 2007, the Company purchased a 27% interest
in  a  parcel of land in Fredericksburg, Virginia for $1,412,439,
including  acquisition expenses.  Simultaneous with the  purchase
of  the land, the Company entered into a Project Construction and
Development  Financing  Agreement under which  the  Company  will
advance approximately $1,700,000 for the construction of a Dick's
Sporting Goods store on the site.

        Subsequent to December 31, 2007, the Company purchased  a
30%  interest  in a Best Buy store in Eau Claire,  Wisconsin  for
approximately $1,995,000.  With these property acquisitions,  the
Company  will have completed the investment of the available  net
proceeds from the sale of Units.

        Until capital is invested in properties, the Company will
remain   extremely   liquid.   After   completion   of   property
acquisitions, the Company will attempt to maintain a cash reserve
of  only  approximately  .5% of subscription  proceeds.   Because
properties  are purchased for cash and leased under  net  leases,
this is considered adequate to satisfy most contingencies.

ITEM 7.   FINANCIAL STATEMENTS.

       See accompanying index to financial statements.





                 AEI INCOME & GROWTH FUND 26 LLC

                  INDEX TO FINANCIAL STATEMENTS






Report of Independent Registered Public Accounting Firm

Balance Sheet as of December 31, 2007 and 2006

Statements for the Years Ended December 31, 2007 and 2006:

     Income

     Cash Flows

     Changes in Members' Equity (Deficit)

Notes to Financial Statements




     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Members:
AEI Income & Growth Fund 26 LLC
St. Paul, Minnesota



     We have audited the accompanying balance sheet of AEI Income
& Growth Fund 26 LLC (a Delaware limited liability company) as of
December 31, 2007 and 2006 and the related statements of  income,
cash  flows  and  changes in members' equity for the  years  then
ended.  These financial statements are the responsibility of  the
Company's  management.   Our  responsibility  is  to  express  an
opinion on these financial statements based on our audit.

      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  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  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, 2007  and
2006,  and  the results of its operations and its cash flows  for
the  years then ended, in conformity with U.S. generally accepted
accounting principles.



                        /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                                 Certified Public Accountants


Minneapolis, Minnesota
March 24, 2008

<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                          BALANCE SHEET
                           DECEMBER 31

                             ASSETS

                                                     2007            2006
CURRENT ASSETS:
  Cash and Cash Equivalents                      $ 4,249,562     $   151,644
  Receivables                                          4,102               0
                                                  -----------     -----------
      Total Current Assets                         4,253,664         151,644
                                                  -----------     -----------
INVESTMENTS IN REAL ESTATE:
  Land                                             4,629,110       2,036,625
  Buildings and Equipment                          4,781,347       5,508,375
  Accumulated Depreciation                          (211,133)        (83,023)
                                                  -----------     -----------
                                                   9,199,324       7,461,977
  Real Estate Held for Sale                        2,126,435               0
                                                  -----------     -----------
      Net Investments in Real Estate              11,325,759       7,461,977
                                                  -----------     -----------
           Total  Assets                         $15,579,423     $ 7,613,621
                                                  ===========     ===========

                          LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.           $    90,239     $    86,504
  Distributions Payable                              233,595          87,919
                                                  -----------     -----------
      Total Current Liabilities                      323,834         174,423
                                                  -----------     -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members                                    (9,975)         (1,278)
  Limited Members, $10 per Unit;
   10,000,000 Units authorized;
   1,832,736 and 882,127 Units issued and
   outstanding in 2007 and 2006, respectively     15,265,564       7,440,476
                                                  -----------     -----------
      Total Members' Equity                       15,255,589       7,439,198
                                                  -----------     -----------
        Total Liabilities and Members' Equity    $15,579,423     $ 7,613,621
                                                  ===========     ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                       STATEMENT OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31


                                                      2007          2006

RENTAL INCOME                                     $   413,705    $    89,196

EXPENSES:
  LLC Administration - Affiliates                     117,958         40,207
  LLC Administration and Property
        Management - Unrelated Parties                 18,126          8,646
  Depreciation                                        171,102         40,031
                                                   -----------    -----------
      Total Expenses                                  307,186         88,884
                                                   -----------    -----------

OPERATING INCOME                                      106,519            312

OTHER INCOME:
  Interest Income                                     163,247         10,263
                                                   -----------    -----------

INCOME FROM CONTINUING OPERATIONS                     269,766         10,575

Income from Discontinued Operations                   135,992         91,438
                                                   -----------    -----------
NET INCOME                                        $   405,758    $   102,013
                                                   ===========    ===========
NET INCOME ALLOCATED:
  Managing Members                                $    12,173    $     3,060
  Limited Members                                     393,585         98,953
                                                   -----------    -----------
                                                  $   405,758    $   102,013
                                                   ===========    ===========
INCOME PER LLC UNIT:
  Continuing Operations                           $       .20    $       .02
  Discontinued Operations                                 .10            .19
                                                   -----------    -----------
       Total                                      $       .30    $       .21
                                                   ===========    ===========
Weighted Average Units Outstanding                  1,327,999        460,607
                                                   ===========    ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
                     STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31

                                                        2007         2006

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                      $   405,758    $   102,013

  Adjustments To Reconcile Net Income
  To Net Cash Provided By Operating Activities:
     Depreciation                                     232,428         83,023
     Increase in Receivables                           (4,102)             0
     Increase in Payable to
        AEI Fund Management, Inc.                       3,735         86,504
                                                   -----------    -----------
       Total Adjustments                              232,061        169,527
                                                   -----------    -----------
       Net Cash Provided By
           Operating Activities                       637,819        271,540
                                                   -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in Real Estate                     (4,096,210)    (7,545,000)
                                                   -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Capital  Contributions from Limited Members      9,506,092      8,821,268
   Organization and Syndication Costs              (1,399,799)    (1,307,017)
   Increase in Distributions Payable                  145,676         87,919
   Distributions to Members                          (695,660)      (178,070)
                                                   -----------    -----------
       Net Cash Provided By
           Financing Activities                     7,556,309      7,424,100
                                                   -----------    -----------
NET INCREASE IN CASH
   AND CASH EQUIVALENTS                             4,097,918        150,640

CASH AND CASH EQUIVALENTS, beginning of period        151,644          1,004
                                                   -----------    -----------
CASH AND CASH EQUIVALENTS, end of period          $ 4,249,562    $   151,644
                                                   ===========    ===========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
                 AEI INCOME & GROWTH FUND 26 LLC
        STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31


                                                                   Limited
                                                                    Member
                             Managing   Limited                     Units
                             Members    Members     Total        Outstanding


BALANCE, December 31, 2005 $  1,004  $         0  $     1,004              0

  Capital Contributions           0    8,821,268    8,821,268      882,126.8

  Organization and
    Syndication Costs             0   (1,307,017)  (1,307,017)

  Distributions              (5,342)    (172,728)    (178,070)

  Net Income                  3,060       98,953      102,013
                            --------  ----------   ----------    -----------
BALANCE, December 31, 2006   (1,278)   7,440,476    7,439,198      882,126.8

  Capital Contributions           0    9,506,092    9,506,092      950,609.2

  Organization and
    Syndication Costs             0   (1,399,799)  (1,399,799)

  Distributions             (20,870)    (674,790)    (695,660)

  Net Income                 12,173      393,585      405,758
                            --------  ----------   ----------    -----------
BALANCE, December 31, 2007 $ (9,975) $15,265,564  $15,255,589    1,832,736.0
                            ========  ==========   ==========    ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(1)  Organization -

     AEI  Income  & Growth Fund 26 LLC (the 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),  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), an  affiliate
     of  AFM, performs the administrative and operating functions
     for the Company.

     The  terms of the offering call 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.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(1)  Organization - (Continued)

     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.

(2)  Summary of Significant Accounting Policies -

     Financial Statement Presentation

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

     Accounting Estimates

       Management  uses  estimates and assumptions  in  preparing
       these  financial statements in accordance  with  generally
       accepted  accounting  principles.   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.

       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.

     Cash Concentrations of Credit Risk

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

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

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

     Statement of Cash Flows

       For  purposes  of  reporting cash  flows,  cash  and  cash
       equivalents  may include cash in checking,  cash  invested
       in   money   market  accounts,  certificates  of  deposit,
       federal  agency notes and commercial paper with a term  of
       three months or less.

     Receivables

       Credit  terms are extended to tenants in the normal course
       of   business.    The  Company  performs  ongoing   credit
       evaluations  of  its 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 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 credit
       terms.   Receivables considered uncollectible are  written
       off.

     Income Taxes

       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.

     Real Estate

       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   revenue
       according  to  the  terms of the individual  leases.   For
       leases   which   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.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

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

       The  Company  purchases properties  and  records  them  at
       cost.   The  Company compares the carrying amount  of  its
       properties  to  the estimated probability-weighted  future
       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.

       The  Company has capitalized as Investments in Real Estate
       certain  costs  incurred in the review and acquisition  of
       the  properties.  The costs were allocated  to  the  land,
       buildings and equipment.

       The   buildings   and  equipment  of   the   Company   are
       depreciated  using the straight-line method for  financial
       reporting purposes based on estimated useful lives  of  25
       years and 5 years, respectively.

       In  accordance  with  Statement  of  Financial  Accounting
       Standards  No.  144,  Accounting  for  the  Impairment  or
       Disposal  of Long-Lived Assets, upon complete disposal  of
       a  property or classification of a property as Real Estate
       Held  for Sale, the Company includes the operating results
       and  sale of the property in discontinued operations.   In
       addition,  the  Company reclassifies  the  prior  periods'
       operating   results  of  the  property   to   discontinued
       operations.

       The  Company  accounts for properties owned as tenants-in-
       common  with  affiliated Companies 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  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  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, 2007 and 2006.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

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

     Reclassification

       Certain  items related to discontinued operations  in  the
       prior  year's  financial statements have been reclassified
       to  conform to 2007 presentation.  These reclassifications
       had  no  effect  on Members' capital, net income  or  cash
       flows.

     Recently Issued Accounting Pronouncements

       Management  has  reviewed recently  issued,  but  not  yet
       effective,  accounting pronouncements and does not  expect
       the  implementation  of  these pronouncements  to  have  a
       significant effect on the Company's financial statements.

(3)  Related Party Transactions -

     The  Company  owns a 55% interest in an Advance  Auto  Parts
     store.  The remaining interest in this property is owned  by
     AEI  Income  &  Growth  Fund 24 LLC,  an  affiliate  of  the
     Company.   The  Company  owns a 27%  interest  in  a  Dick's
     Sporting  Goods  store under construction in Fredericksburg,
     Virginia.   The  remaining interests in  this  property  are
     owned  by  AEI Income & Growth Fund 24 LLC and AEI Income  &
     Growth  Fund 25 LLC, affiliates of the Company.  The Company
     owns  a  30%  interest in a Best Buy store.   The  remaining
     interests in this property are owned by AEI Income &  Growth
     Fund XXI Limited Partnership and AEI Income & Growth Fund 23
     LLC, affiliates of the Partnership.

     During  the second quarter of 2006, the Company purchased  a
     40%  interest  in  a Sports Authority store for  $2,230,753.
     The  property  was purchased from AEI Fund Management  XVII,
     Inc. (AFMX), an affiliate of the Managing Members.  In order
     to  facilitate the purchase of the Company's first property,
     AFMX purchased the property from an unrelated third party on
     December  22, 2005.  The remaining interest in this property
     is owned by AEI Income & Growth Fund 25 LLC.

     During the fourth quarter of 2006, the Company purchased the
     remaining  63% of the Applebee's restaurant in Indianapolis,
     Indiana  that  it  did not already own for  $1,924,138.   On
     December  29, 2006, the Company purchased a 40% interest  in
     an  Applebee's  restaurant  in Crawfordsville,  Indiana  for
     $1,237,771.   In order to facilitate the Company's  purchase
     of  these  property interests, AFMX purchased the properties
     from  Apple  Indiana II LLC, an unrelated  third  party,  on
     September 21, 2006.  The remaining interest in the  property
     in  Crawfordsville is owned by AEI Income & Growth Fund XXII
     Limited Partnership, an affiliate of the Company.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(3)  Related Party Transactions - (Continued)

     For  the  property interests purchased from AFMX, the  price
     paid by the Company was equal to the price paid by AFMX plus
     the  expenses  incurred by it to transfer ownership  of  the
     property  to  the Company, which were minimal.   During  the
     periods  the  properties were owned by AFMX, the  properties
     generated combined net income of $1,771, which was  paid  to
     us  pursuant  to  the  Operating Agreement.   There  was  no
     benefit  arising  out of the transactions  to  the  Managing
     Members   or   their  affiliates  apart  from   compensation
     otherwise permitted by the Operating Agreement.

     AEI,  AFM  and  AEI  Securities,  Inc.  (ASI)  received  the
     following  compensation  and reimbursements  for  costs  and
     expenses from the Company:

                                              Total Incurred by the Company
                                             for the Years Ended December 31

                                                          2007          2006
a.AEI and AFM are reimbursed for all costs incurred in
  connection with managing the Company's operations,
  maintaining the Company's books and communicating
  the results of operations to the Limited Members.    $ 117,958   $  40,207
                                                        ========    ========
b.AEI and AFM are reimbursed for all direct expenses they
  have paid on the Company's behalf to third parties
  relating to LLC 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.                                      $  22,372   $   5,744
                                                        ========    ========
c.AEI is reimbursed for all costs and direct expenses
  incurred  by it in acquiring properties on behalf of
  the Company.                                         $ 111,937   $ 120,713
                                                        ========    ========
d.ASI was the underwriter of the Company's offering.  AEI
  Capital Corporation is the sole stockholder of ASI, which is
  a member of the National Association of Securities Dealers,
  Inc.  ASI received, as underwriting commissions,10% for
  sale of certain subscription Units (a majority of this
  amount was re-allowed to other participating broker/dealers).
  These costs are treated as a reduction of members'
  capital.                                             $ 924,494   $ 865,953
                                                        ========    ========
e.AEI is reimbursed for all costs incurred in connection
  with managing the Company's offering and
  organization.                                        $ 295,906   $ 220,077
                                                        ========    ========


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(3)  Related Party Transactions - (Continued)

                                              Total Incurred by the Company
                                              for the Years Ended December 31

                                                            2007       2006
f.AEI is reimbursed for all direct expenses it has paid on the
  Company's behalf to third parties relating to the offering
  and organization of the Company.  These expenses included
  printing costs, legal and filing fees, direct administrative
  costs, underwriting costs and due diligence fees.      $ 179,398  $ 220,987
                                                          ========   ========

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

(4) Investments in Real Estate -

     The  Company leases its properties to various 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.
     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 contain rent clauses which entitle
     the Company to receive additional rent in future years based
     on stated rent increases.

     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   restaurant  in  Crawfordsville,   Indiana   was
     constructed  in  1996 and acquired in 2006.   The  Starbucks
     restaurant was constructed and acquired in 2007.   The  land
     for the Dick's Sporting Goods store was acquired in 2007 and
     construction of the store will be completed in 2008.   There
     have been no costs capitalized as improvements subsequent to
     the acquisitions.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(4)Investments in Real Estate - (Continued)

     The  cost  of  the properties not held for sale and  related
     accumulated  depreciation  at  December  31,  2007  are   as
     follows:

                                       Buildings and             Accumulated
Property                        Land     Equipment      Total    Depreciation

Advance Auto Parts,
  Middletown, OH            $  112,315  $  909,974  $1,022,289  $  57,632
Applebee's, Indianapolis, IN   889,340   2,164,847   3,054,187    105,392
Applebee's, Crawfordsville, IN 337,353     900,418   1,237,771     36,017
Starbucks, Bluffton, IN        344,008     806,108   1,150,116     12,092
Dick's Sporting Goods,
  Fredericksburg, VA         1,412,439           0   1,412,439          0
Red Robin, Beavercreek, OH   1,533,655           0   1,533,655          0
                             ---------   ---------   ---------   ----------
                            $4,629,110  $4,781,347  $9,410,457  $ 211,133
                             =========   =========   ==========  ==========


     On  June 1, 2006, the Company purchased a 55% interest in an
     Advance Auto Parts store in Middletown, Ohio for $1,022,289.
     The property is leased to Advance Stores Company, Inc. under
     a  Lease  Agreement with a remaining primary  term  of  13.2
     years and initial annual rent of $71,679.

     On  September 21, 2006, the Company purchased a 37% interest
     in  an  Applebee's restaurant in Indianapolis,  Indiana  for
     $1,130,049.  During the fourth quarter of 2006, the  Company
     purchased  the remaining 63% interest in this  property  for
     $1,924,138.  The property is leased to Apple Indiana II  LLC
     under a Lease Agreement with a remaining primary term of  20
     years and initial annual rent of $220,262.

     On  December 29, 2006, the Company purchased a 40%  interest
     in  an Applebee's restaurant in Crawfordsville, Indiana  for
     $1,237,771.  The property is leased to Apple Indiana II  LLC
     under a Lease Agreement with a remaining primary term of  20
     years and initial annual rent of $89,289.

     On  August 10, 2007, the Company purchased a Starbucks store
     in Bluffton, Indiana for $1,150,116.  The property is leased
     to  Starbucks  Corporation under a Lease  Agreement  with  a
     remaining  primary term of 10 years and initial annual  rent
     of $79,800.

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(4)  Investments in Real Estate - (Continued)

     On  December 17, 2007, the Company purchased a 27%  interest
     in   a  parcel  of  land  in  Fredericksburg,  Virginia  for
     $1,412,439,  including  acquisition expenses.   The  Company
     obtained  title to the land in the form of an undivided  fee
     simple interest in the 27% interest purchased.  Simultaneous
     with  the purchase of the land, the Company entered  into  a
     Project  Construction  and Development  Financing  Agreement
     under which the Company will advance funds to Silver-Honaker
     Development Company, LLC (Silver) for the construction of  a
     Dick's  Sporting  Goods  store on the  site.   The  purchase
     price, including the cost of the land, will be approximately
     $3,100,000.

     The  property is leased to Dick's Sporting Goods, Inc. under
     a  Lease  Agreement  with a primary term  of  10  years  and
     initial annual rent of $219,445.  Pursuant to the Lease, the
     tenant will commence paying rent on the day the store  opens
     for  business,  which  is  expected  to  be  in  June  2008.
     Pursuant  to the development agreement, for the period  from
     December  17,  2007  to  the day that the  tenant  commences
     paying rent, Silver will pay the Company interest at a  rate
     of  6.75% on the purchase price of the land and the  amounts
     advanced  for  construction of the store.  Pursuant  to  the
     Lease,  any improvements to the land during the term of  the
     Lease become the property of the Company.

     On  December 28, 2007, the Company purchased 2.04  acres  of
     land  in  Beavercreek,  Ohio for $1,533,655.   The  land  is
     leased  to  Red  Robin International,  Inc.  under  a  Lease
     Agreement  with a remaining primary term of 11.3  years  and
     initial  annual  rent of $105,000.  Red Robin International,
     Inc. operates a Red Robin restaurant on the site.  Ownership
     of  the  building  and  improvements will  transfer  to  the
     Company upon termination of the lease.

     Subsequent to December 31, 2007, the Company purchased a 30%
     interest  in  a Best Buy store in Eau Claire, Wisconsin  for
     approximately  $1,995,000.  The property is leased  to  Best
     Buy  Stores,  L.P. under a Lease Agreement with a  remaining
     primary  term  of  10  years  and  initial  annual  rent  of
     $142,222.

     For  properties owned as of December 31, 2007,  the  minimum
     future rent payments required by the leases are as follows:

                       2008          $   898,705
                       2009              998,015
                       2010            1,000,640
                       2011            1,006,444
                       2012            1,046,897
                       Thereafter      8,814,137
                                      ----------
                                     $13,764,838
                                      ==========
     There were no contingent rents recognized in 2007 or 2006.


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(5)  Major Tenants -

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

      Tenants                     Industry           2007       2006

     Apple American Group         Restaurant      $ 309,551   $  47,190
     TSA Stores, Inc.             Retail            201,564     129,757
     Advance Stores Company, Inc. Retail             71,679      42,006
                                                   --------    --------
     Aggregate rent revenue of major tenants      $ 582,794   $ 218,953
                                                   ========    ========
     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue                  95%        100%
                                                   ========    ========

(6)  Discontinued Operations -

     During  the second quarter of 2006, the Company purchased  a
     40%  interest  in a Sports Authority (formerly Gart  Sports)
     store  in  Wichita, Kansas for $2,230,753.  The property  is
     leased  to TSA Stores, Inc. under a Lease Agreement  with  a
     remaining  primary term of 11 years and initial annual  rent
     of   $186,059.   The  Company  is  attempting  to  sell  its
     interest  in  the  property.   At  December  31,  2007,  the
     property was classified as Real Estate Held for Sale with  a
     book value of $2,126,435.

     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:

                                                 2007        2006

     Rental Income                          $ 201,564    $ 135,956
     Property Management Expenses              (4,246)      (1,526)
     Depreciation                             (61,326)     (42,992)
                                             ---------    ---------
       Income from Discontinued Operations  $ 135,992    $  91,438
                                             =========    =========

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(7)  Members' Capital -

     Cash  distributions of $20,870 and $5,342 were made  to  the
     Managing Members and $674,790 and $172,728 were made to  the
     Limited  Members for the years ended December 31,  2007  and
     2006,  respectively.   The  Limited  Members'  distributions
     represent  $0.51  and $0.38 per LLC Unit  outstanding  using
     1,327,999  and 460,607 weighted average Units  in  2007  and
     2006,  respectively.  The distributions represent $0.30  and
     $0.21 per Unit of Net Income and $0.21 and $0.17 per Unit of
     return   of   contributed  capital   in   2007   and   2006,
     respectively.

     Beginning in April 2009, the Company may acquire 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.

(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:

                                                      2007          2006

     Net Income for Financial Reporting Purposes   $  405,758   $  102,013

     Depreciation for Tax Purposes Under
      Depreciation for Financial Reporting Purposes    78,721       32,711
                                                    ----------   ----------
           Taxable Income to Members               $  484,479   $  134,724
                                                    ==========   ==========


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                   DECEMBER 31, 2007 AND 2006

(8)  Income Taxes - (Continued)

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

                                                           2007        2006

     Members' Equity for Financial Reporting Purposes $15,255,589 $ 7,439,198

     Depreciation for Tax Purposes Under
      Depreciation for Financial Reporting Purposes       111,432      32,711

     Organization and Syndication Costs Treated as
      Reduction of Capital for Financial Reporting
      Purposes                                          2,691,997   1,301,525
                                                       ----------  ----------
           Members' Equity for Tax Reporting Purposes $18,059,018 $ 8,773,434
                                                       ==========  ==========

(9)  Fair Value of Financial Instruments -

     The estimated fair values of the financial instruments, none
     of  which  are held for trading purposes, are as follows  at
     December 31:

                                     2007                     2006
                            Carrying        Fair      Carrying     Fair
                             Amount         Value      Amount      Value

     Money  Market Funds   $4,249,562   $4,249,562    $151,644   $151,644
                            ---------    ---------     -------    -------
       Total Cash and
        Cash Equivalents   $4,249,562   $4,249,562    $151,644   $151,644
                            =========    =========     =======    =======


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

       None.

ITEM 8AT.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")).  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 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,  2007.   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.   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, 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, 2007 based upon criteria in Internal
Control-Integrated   Framework  issued  by   the   Committee   of
Sponsoring  Organizations  of the Treadway  Commission  ("COSO").
Based  on  our  assessment, management  of  the  Managing  Member
determined that our internal control over financial reporting was
effective  as  of  December 31, 2007 based  on  the  criteria  in
Internal Control-Integrated Framework issued by the COSO.

ITEM 8AT.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 report  was  not
subject  to attestation by our registered public accounting  firm
pursuant  to  temporary  rules  of the  Securities  and  Exchange
Commission that permit us to provide only management's report  in
this 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 8B.  OTHER INFORMATION.

       None.


                            PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
        CONTROL PERSONS AND CORPORATE GOVERNANCE;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

        The registrant is a limited liability company and has  no
officers,  directors, or direct employees.  The Managing  Members
manage  and  control  the  Company's  affairs  and  have  general
responsibility  and  the  ultimate  authority  in   all   matters
affecting the Company's business.  The Managing Members  are  AEI
Fund  Management XXI, Inc. (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 35  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:

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
        CONTROL PERSONS AND CORPORATE GOVERNANCE;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.(Continued)

        Robert  P.  Johnson, age 63, 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 2008.  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 limited partnerships and a managing member in five LLCs.

        Patrick  W.  Keene,  age 48, 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 2008.  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  Peat  Marwick  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-
KSB any delinquent filing of such reports and any failure to file
such  reports  during the fiscal year ended  December  31,  2007.
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 2007 fiscal year.


ITEM 10.  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 will  be
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 12 of this annual report on Form 10-
KSB.

ITEM 11. 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 29, 2008:


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

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

   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 12. 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, 2007 and 2006.

        Neither  the registrant, nor the Managing Member  of  the
registrant,  has a board of directors consisting of  any  members
who are "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.

ITEM 12. 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,
2007, 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 and its properties for  the  period  from
inception through December 31, 2007.

Person or Entity                                      Amount Incurred From
 Receiving                  Form and Method        Inception (March 14, 2005)
Compensation                of Compensation           To December 31, 2007

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

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

Managing Members       Reimbursement at Cost for all          $  232,650
and Affiliates         Acquisition Expenses.

Managing Members       Reimbursement at Cost for all          $  158,165
and Affiliates         Administrative Expenses attributable
                       to the Fund, including all expenses
                       related to management of the Fund's
                       properties  and  all  other  transfer
                       agency, reporting, Member relations
                       and other administrative functions.

Managing Members       Reimbursement at Cost for all expenses $        0
and Affiliates         related to the disposition of the
                       Fund's properties.

Managing Members       3% of Net Cash Flow in any fiscal year.$   26,212


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
          DIRECTOR INDEPENDENCE.  (Continued)

Person or Entity                                      Amount Incurred From
 Receiving                  Form and Method        Inception (March 14, 2005)
Compensation                of Compensation           To December 31, 2007

Managing Members       1% of distributions of Net Proceeds    $        0
                       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.


                             PART IV

ITEM 13.  EXHIBITS

     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  Purchase  and   Sale
     Agreement  dated  May  24,  2006 between  the  Company,  AEI
     Income  &  Growth Fund 24 LLC and AEI Fund Management,  Inc.
     relating  to the Property at 65 North University  Boulevard,
     Middletown, Ohio (incorporated by reference to Exhibit  10.1
     of Form 8-K filed June 7, 2006).

     10.3  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).

     10.4   Assignment  and  Assumption  of  Purchase  and   Sale
     Agreement dated September 11, 2006 between the Company,  AEI
     Fund  Management  XVII, Inc. and AEI Fund  Management,  Inc.
     relating  to  the  Property at 7345  E.  Washington  Street,
     Indianapolis, Indiana (incorporated by reference to  Exhibit
     10.1 of Form 8-K filed September 26, 2006).

     10.5  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).

     10.6  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 filed January 8, 2007).


ITEM 13.  EXHIBITS (Continued)

     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.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND  SERVICES.

        The  following  is a summary of the fees  billed  to  the
Company   by  Boulay,  Heutmaker,  Zibell  &  Co.  P.L.L.P.   for
professional  services rendered for the years ended December  31,
2007 and 2006:

     Fee Category                            2007       2006

     Audit Fees                           $  16,400   $ 12,001
     Audit-Related Fees                           0          0
     Tax Fees                                     0          0
     All Other Fees                               0          0
                                           --------    -------
     Total Fees                           $  16,400   $ 12,001
                                           ========    =======

Audit  Fees  - Consists of fees billed for professional  services
rendered   for  the  audit  of  the  Company's  annual  financial
statements   and  review  of  the  interim  financial  statements
included  in  quarterly reports, and services that  are  normally
provided   by  Boulay,  Heutmaker,  Zibell  &  Co.  P.L.L.P.   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 of Independent Auditors

       Before the Independent Auditors are engaged by the Company
to render audit or non-audit services, the engagement is approved
by Mr. Johnson acting as the Company's audit committee.



                           SIGNATURES

        In  accordance with Section 13 or 15(d) of  the  Exchange
Act, the registrant 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 24, 2008             By: /s/ Robert P Johnson
                                   Robert P. Johnson, President and Director
                                   (Principal Executive Officer)


        In accordance with the Exchange Act, 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 24, 2008
   Robert P. Johnson and Sole Director of Managing Member


/s/Patrick W Keene   Chief Financial Officer  and  Treasurer   March 24, 2008
   Patrick W. Keene  (Principal Accounting Officer)