Since I could not find a suitable answer, I decided to email the Firearms Tech Branch. Here is what I sent:
"Good Day,
I have a question regarding the usage of M16 Lower Receiver parts in an AR15 receiver. I have heard many schools of thought about what is legal/not legal to use so I thought I would write you for a final ruling.
According to 26 USC Chapter 53 § 5845 (b):
The term ‘‘machinegun’’ means any weapon
which shoots, is designed to shoot, or can be
readily restored to shoot, automatically more
than one shot, without manual reloading, by a
single function of the trigger. The term shall
also include the frame or receiver of any such
weapon, any part designed and intended solely
and exclusively, or combination of parts designed
and intended, for use in converting a
weapon into a machinegun, and
any combination
of parts from which a machinegun can be
assembled if such parts are in the possession or
under the control of a person.
I am particularly looking at the bolded part.
My question is:
Assuming the Auto-Sear and Sear Pin are not in possession of the same person assembling the AR15 .If an AR15 receiver is assembled containing an M16 Hammer, Trigger, Disconnector, and Selector, but without the Auto-Sear or Sear Pin, would that firearm be in violation of the law since the above mentioned "combination of parts" is not able to cause more than one shot by a single function of the trigger? Again, this is assuming the Auto-Sear and Sear Pin are not in possession of the same person assembling the AR15, would the above firearm meet the definition of a machinegun?
If the above firearm would be in violation of the law, are there acceptable ways to build an AR15 receiver with M16 Lower Receiver parts" modified" to AR15 specification? Does the ATF have established guidelines for this? For clarification of "modified" please see the image I have attached below.
I thank you for your time and look forward to your answer on this issue.
Regards,
SGL_Shooter"
I will update when they respond. Hopefully this will set the standard instead of having to rely on internet hear-say.