This is a consolidation of defendant’s motions for summary judgment in three related cases in each of which plaintiff seeks a refund of federal income taxes.

Jurisdiction is conferred by Title 28 U.S.C. §§ 1340 and 1346(a) (1).

For its fiscal year ending October 31, 1962, plaintiff reported a loss from the purchase and sale of securities and other miscellaneous stock transactions in the amount of $905,861.47. Plaintiff claims this loss as an ordinary loss and has applied to it the operating loss carry-back provisions of the Internal Revenue Code, resulting in claimed refunds for the fiscal years ending October 31, 1959 (No. 64-692-JWC) and October 31, 1960 (No. 64-694-JWC). In No. 64-693-JWC the plaintiff takes the position that its unsold securities on hand October 31, 1961, costing $1,107,351.61 constituted business inventory and that it should be entitled to value this inventory at cost or market, whichever is lower, in accordance with applicable provisions of the Internal Revenue Code. *216 Plaintiff further claims as a business expense federal stock transfer taxes in the sum of $1,592.60 paid during the fiscal year ending October 31, 1962.

Although there are other items claimed in the pleadings, these have all been resolved by the parties leaving as the only remaining issues to be here considered plaintiff’s contentions that:

The following are the undisputed facts:

Prior to April, 1961, plaintiff was engaged in the business of manufacturing and selling sliding glass doors under the name of Fullview Corporation. In the spring of 1961 the plaintiff sold substantially all of its assets to Cal Tech Systems, Inc., receiving net cash proceeds therefor in the amount of $1,041,271.00. Thereafter plaintiff changed its name to Mirro-Dynamics Corporation, discontinued its sliding glass door business and applied the proceeds from the sale to the purchase of marketable securities. During the fiscal years ending October 31, 1961, and October 31, 1962, the plaintiff purchased and sold securities and conducted other miscellaneous stock transactions solely for its own account. During these years, plaintiff had accounts with several established brokerage firms and through these bought and sold a substantial number of securities, summaries of which were recorded in plaintiff’s general ledger under an account entitled “Stock Investment Account No. 123”. Plaintiff filed federal income tax returns for the years ending October 31, 1961, and 1962, the latter reporting a loss of $905,861.47 from these security transactions and designating such loss as a capital loss. During these years neither the plaintiff nor its officers were members of any stock exchange, nor were they licensed or registered with the Securities and Exchange Commission as a broker or dealer in marketable securities, nor were they licensed or registered by the State of California to sell marketable securities to the general public.

The defendant contends that under the above facts, and as a matter of law, plaintiff’s loss of $905,861.47 was a capital loss, subject to the provisions of Title 26 U.S.C. § 1211 (a) and not an ordinary loss subject to the carryback provisions of 26 U.S.C. § 172 . With this contention I agree.

The characterization of the loss is dependent upon whether the securities involved in plaintiff’s activities constituted capital assets within the meaning of Title 26 U.S.C. § 1221 which provides:

Securities aside from those sold by dealers in the usual course of their business do not fall within any of these express exclusions of this section. Booth Newspapers, Inc. v. United States, 303 F.2d 916 , 157 Ct.Cl. 886 (1962).

The plaintiff here is not a dealer, for a dealer is one who, as a merchant, buys and sells securities to customers for the profit thereon. Schafer v. Helvering, 299 U.S. 171 , 57 S.Ct. 148 , 81 L.Ed. 101 (1936).

*217 Section 1.471-5 of the Regulations dealing with business inventories defines a “dealer in securities” as follows:

Since it is undisputed that the plaintiff purchased and sold securities solely for its own account and not for customers in the ordinary course of a trade or business or otherwise, it follows as a matter of law that the plaintiff is not a dealer within the meaning of the Act and that the securities are capital assets and may not properly be considered business inventory.

Plaintiff argues that the issue is not whether plaintiff’s securities constitute capital assets but whether plaintiff’s dealings in securities resulted in an ordinary loss. However, § 165 of the Internal Revenue Code dealing with deductible losses provides in part:

The crucial question still remains: Are plaintiff’s securities capital assets or not?

Plaintiff puts much reliance on Corn Products Refining Company v. Commissioner of Internal Revenue, 350 U.S. 46 , 76 S.Ct. 20 , 100 L.Ed. 29 (1955). The court there held that, where corn was an essential raw material in the taxpayer’s business and the taxpayer had entered into a program of buying and selling corn futures to protect itself against a rise in the price of corn, the taxpayer’s transactions in the futures were an integral part of its business designed to protect its manufacturing operations and that any gain or loss realized by the taxpayer from these transactions would be ordinary and not capital in nature.

The courts have, in a number of subsequent cases, applied this flexible approach to the concept of “capital asset”. In Electrical Fittings Corp., 33 T.C. 1026 (1960), the taxpayer had participated with two other companies in the formation of a corporation which was to manufacture ductile iron, an essential raw material in the manufacturer’s operation, which it had difficulty in obtaining from regular sources. The taxpayer acquired one-third of the preferred and one-fourth of the common stock in the newly formed corporation. Subsequently, more desirable material became available to the taxpayer, and it sold its stock in the ductile iron at a loss. The court held its loss was not capital in nature but was fully deductible as an ordinary loss, citing Commissioner of Internal Revenue v. Bagley and Sewall, 221 F.2d 944 (2nd Circuit 1955); Tulane Hardwood Lumber Company, 24 T.C. 1146 (1955); Smith and Welton, Inc. v. United States, 164 F.Supp. 605 (E.D.Va.1958). But these cases are not applicable here in light of the distinction drawn by the Tax Court in the Electrical Fittings Case, where it said:

I hold, therefore, that the securities in which the plaintiff dealt during the years in question were capital assets and that the losses resulting from these stock transactions were capital losses, I further hold that plaintiff’s securities do not constitute business inventory within the meaning of the Internal Revenue Act.

This, then, leaves the question of whether the federal stock transfer tax of $1,592.60 constitutes a deductible business expense within the meaning of Title 26 U.S.C. § 162 (a). Plaintiff contends that it is. The Government contends that the tax is in fact a selling cost and may only be offset against the selling price in determining capital loss or gain.

In the years in question the law applicable to this problem was contained in the following sections:

In excluding from the “no deduction allowance” federal stamp taxes where related to “a trade or business”, the effect was to withhold the deduction allowance from the casual investor, but to allow it to a taxpayer engaged in a trade or business within the meaning of the Act.

But at what point does a taxpayer become “one carrying on a trade or business”? The Bureau has ruled administratively (I.T. 3806, 1946-2 Cum. Bul. 41):

While I.T. 3806 is not a regulation and does not have the force and effect of law, it does seem to be consistent with the pronouncements of the Supreme Court. That Court has held that sales commissions paid by a taxpayer engaged in buying and selling securities on his own behalf are not deductible as ordinary and necessary expenses, but are offsets against the gross selling price in determining capital gain or loss. Spree- *219 kles v. Commissioner of Internal Revenue, 315, U.S. 626, 62 S.Ct. 777 , 86 L.Ed. 1073 (1942); Helvering v. Winmill, 305 U.S. 79 , 59 S.Ct. 45 , 83 L.Ed. 52 (1938).

I hold, therefore, that federal stamp taxes paid on the sale of securities by a taxpayer engaged in the business of buying and selling securities on its on own behalf are not deductible as ordinary and necessary expenses, but may be offset against the gross selling price in determining capital gain or loss.

Since it appears from the agreed facts that the plaintiff is not a dealer but is at the most a trader on his own account, the rule just enunciated is applicable.

Defendant’s motion for summary judgment, therefore, in all cases is hereby granted.