MG 42 in my future??

[CSestp]

Hello fellas,

This is my first trip into the NFA part of THR so be kind. Alrighty my plan is to build a MG42 hopefully in the next year. This brings about some questions. I do understand I will have to get a class 3 manufacturing license, and that the gun will not be able to be sold to anyone. Now that is about all I know.

I see parts kits for MG42 all over the place but the receivers are all cut. Am I going to have to machine a whole new one, or are there ones for sale out there? Can the gun be transferred to my son when I pass away, am I going to have to setup a Class 3 trust? Is the 200 dollar tax stamp a one time thing or is it every year.

Any more information you all could provide that I do not know to ask would be helpful.

 

[Sam1911]

Well...there are lots of points here to cover.

You say you're getting your manufacturing license. That means you're getting a Type 07 or Type 10 Federal Firearms License. You're actually going to be in the business of manufacturing firearms for a living. (This is not a hobbyist license.)

You need to have all your business licenses and proper zoning approval, etc, before you'll be licensed.

Then you'll be applying to pay the Special Occupational Tax, Class 2 to become a manufacturer of National Firearms Act (Title II) firearms. ($500 per year.)

You'll also need to register and pay ITAR, which is $2,250 a year.

This is all quite a big deal. If you're just getting started down this road, send one of our SOT2 manufacturer members (like Bubbles, for example) a PM and get some insights about this, or do a search and read up on what goes into becoming a machine gun maker.

If you're buying an MG42 parts kit, the receiver and barrel will be trashed to make the lot importable as a pile of parts. You will either be manufacturing your own receiver (and then registering it on a form 5320.2) or buying one pre-made from another SOT2 manufacturer.

The weapon you'll be making is known as a "Post '86 Dealer Sample" which means the point of the exercise is to produce a weapon for test and demonstration purposes to potential governmental agency buyers. But you can play with it or sell it to other SOTs if you want.

You will not be able to transfer that weapon to any non-licensed individual, ever. If your son becomes the new licensed 07/10 FFL & SOT2 owner of the company he could have it with the other assets of the business. If he does not, then the weapon will have to be sold to a lawful buyer or destroyed.

Setting up a trust doesn't have anything to do with becoming a manufacturer, though you will in essence be doing something like that when you incorporate your manufacturing business.

An SOT02 manufacturer doesn't pay the $200 fee for making the device. That tax will be paid on transfer.

 

[Flyincedar]

Pretty much covered it... On the receiver though, if you arent going to make one yourself, you'll need a demo letter from an LE in order to buy one from another SOT.

Thats the retarded thing about this business.... I can build whatever I want, but I still cannot buy one without a demo letter. Same goes for sales. Sales to another SOT from me require them to have a demo letter, unless I am not renewing my SOT, then they can buy my stock that I have manufactured, with no letter.

As stated before, this is not a hobby license. You need a legitimate business to get it going.

I know you may be thinking that because an MG42 is pre 86, you should be able to... not the case. It wasnt manufactured AND in the registry prior to the cut off, which means if you manufacture it, it is a newly made machine gun, which is only legal under the parameters stated above. The other route you could go with your trust, etc would be to find a registered pre 86 receiver, which is gonna be a task in and of itself. If you find one for sale on a form 4, you can buy that one, though it will be expensive, and use all new parts to build the gun.

 

[Bubbles]

An FFL is a business license. Getting one means you need to be in the business of dealing and/or manufacturing firearms. Getting one to enhance your personal collection is a big no-no.

So, the first step is to see if you can even get an FFL at your home. Check first to make sure your local zoning regulations don't prohibit commercial or manufacturing activities, and you have no HOA CCR's that prohibit it.

If all is ok there, form some sort of a corp (LLC, S Corp, or C Corp), get your federal tax ID number, and any state or local business licenses needed. (Consult with a CPA and/or tax attorney for the best way to handle business income tax filings.)

Then the business can apply for your Type 07 FFL. As Sam said, we get stuck for $2,250 every year for ITAR from the State Department as well. The $500 Class 2 SOT is also paid annually; the "tax year" runs from July 1 to June 30. If you give up your SOT, post-sample machine guns in your inventory must be sold or destroyed.

Cold Steel Solutions sells 80% receivers. As an 07/C2 you can complete it (some machining required), engrave it, file the ATF Form 2, etc.

ETA: There will be no transfer to a trust as a trust can not hold an FFL. Your son will not inherit the gun directly, but he can be given shares of the business and control of its assets when he comes of age, as long as he's not a prohibited person.

 

[Bubbles]

If you find one for sale on a form 4, you can buy that one, though it will be expensive, and use all new parts to build the gun.

No need, there's a C&R transferrable MG42 on subguns.com for $27,500.

 

[Flyincedar]

I was thinking finding a receiver only because he mentioned building one.