It seems that no law letter post samples sell for a little more than similar guns that require one.

These exist when a SOT goes out of business - they can sell their post 1986 samples to other SOTs even without those SOTs showing a letter from law enforcement asking for a demonstration.

Is this an investment technique that is used strategically or are these SOTs all legitimately closing for good/retiring?

The strategy being start a company - get SOT/manufacturer - convert a bunch of rifles to post sample machine guns (I assume would have to be something kind of complex to convert and desirable, not just AR15s) - then announce intention to not renew SOT and sell inventory capturing this no law letter premium. Then repeat the whole process with a new business.

I supposed the target market is pretty small and the capital requirements would be very high (buying and holding a bunch of guns until ready to close and sell).


Just a random thought I had while cruising sturmgewehr that keeps popping into my head.

They don't need to go out of business. They just need to announce their intention to not renew their SOT for the following year (June 30th).

Any sense if the premium on these makes it worthwhile? I guess the key would be make something that is in demand but not so easy that anyone can make it. Like maybe convert a bunch of semi MP5s or AUGs or PS90s.

There's certainly a significant premium, even for common Form 2 stuff like M16s, DIAS, and HK packs.
I've wondered the same thing.

Seems if ATF didn't take issue with it, and a person/group had several FFL/SOT businesses under their control, they could constantly roll inventory around to where one of the SOTs was in that status any given year (July 1st to June 30th) and make all the post-sample sales like that.

Yes. That sounds like an even better idea. Add a new entity each year for 3 years and then keep them in a rotation - one entity does not have a SOT, one entity has an SOT but has announced intention to not renew next year (the one that is selling) and a third that has a SOT with plans to renew (the one that is building/registering).

A dealer I used to work for had some ancient silencers from having an SOTmany years previously and had let it lapse. When we decided to do some NFA stuff, they weren't going to approve the SOT because they figured he wanted to get the SOT purely to transfer out the old stuff. Why that mattered to someone at ATF, I don't know. How much fighting it would have taken to get the SOT if they didn't like our explanation of "no, we want to sell new stuff, the old silencers are beyond worthless", no clue.

So yeah, you could do it, but I think ATF would catch on pretty quickly and throw stumbling blocks in your way to make sure it wasn't a long term plan. Exact terminology might differ, obviously, but they'd probably find something.

Like a F5 is for transfer to or from a LEO department, so whatsisname had a friendly agency that he'd transfer to, then they'd transfer to an individual, thus avoiding a F4 and $200, so it was tax evasion. (might have messed up some details, but you get the idea!)

I don't think there's much they could do if you quickly ran off 20 machineguns and then went out of business or something, but setting up a rotating plan seems like asking for targeting.

How did he know ATF wouldn't approve the SOT?
Did he send payment and the Form 5630.7 and receive some kind of rejection?

It's not like one has to ask them in advance.

Yep, watching with popcorn to see how many new FFL/SOTs they can get/dump before the hammer coms down.

Been a while, but from what I recall they didn't send the SOT certificate, so he called them and talked with them and they told him they weren't going to approve it.

Do tell?

If you're going do sketchy shit, start an LLC and have it become an FFL/SOT.  Be legit, and do business for awhile.  Sometime before you get tired of running an FFL/SOT, buy an expensive pre-sample which isn't available as a transferable (an M249 or something like that).  The ex-FFL/SOT can retain pre-samples.  Then after the LLC gives up its FFL/SOT, sell the LLC to someone who wants a pre-sample but doesn't want to go through the trouble of running an FFL/SOT to be legit.

Interesting

Yes. I never thought of that. I always envisioned the owner of the business keeping the "pre may keeper". If this works then why is every pre-may machine gun not owned by an LLC? It seems like a pretty low fee to make it essentially freely transferable (by selling the company).

Typically an LLC (being a former FFL/SOT) would own more than one, and few buyers are interested in package deals.
If the LLC is sold, they'd be selling all its property at once.

It's easy enough to sell them one at a time (to SOT buyers of course, if you're talking pre-May dealer sample MGs aka pre samples) and the seller doesn't need to have a FFL (although the seller not having a current SOT means each buyer will have a $200 tax to pay).

The US Govt. created this hazy maze system of rules & laws, some people are very good at figuring out ways to make it work in their favor! Good for them!

That's why it would need to be done with an expensive pre-sample, so it's worth the trouble.  If the one transferable M249 last sold for $400k, and pre-sample M249's are going for $100k (excuse me if I get the numbers wrong, but they should at least be in the ballpark), then there's probably a market for an LLC that happens to own a pre-sample M249 for somewhere in the $200-300k range.