Deferred income taxes are the result of qualified tax-free exchanges of property transacted in previous years and reporting depreciation differently for income tax purposes. The tax effects of temporary differences that give rise to the deferred tax liability are as follows as of September 30:
| 2017 | 2016 | ||
| Deferred income tax liabilities: | |||
| Basis in Investment Properties | $ 1,367,556 | $ 1,406,668 |
Taxable gains deferred by the Company in prior years and in the current year through qualified tax-free like-kind exchanges totaled approximately $2,835,235. These deferred gains for tax reporting comprise a substantial portion of the Company's deferred income tax liabilities as of September 30, 2017 and 2016, net of the effects of depreciation.
The provision for income taxes is as follows:
| For the years ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Current expense | $ | 255,909 | $ | 230,298 | ||||
| Deferred benefit | (39,112 | ) | (6,519 | ) | ||||
| $ | 216,797 | $ | 223,779 | |||||
The provision for income taxes for the years ended September 30, 2017 and 2016 differs from the amount obtained by applying the U.S. federal and state income tax rate to pretax income due to the following:
| 2017 | 2016 | ||||||
| Net income before tax | $ | 548,614 | $ | 524,030 | |||
| Expected federal tax expense at 34% | 186,529 | 178,170 | |||||
| State tax expense, net of federal benefit | 21,725 | 27,499 | |||||
| Other | 8,543 | 18,110 | |||||
| Tax expense | $ | 216,797 | $ | 223,779 |
See also Note 1 – Subsequent events.