Quoted:
To expand on the OP question,
What happens to the post86 demo gun when the FFL SOT gives up his license?
Can it transfer to another SOT without the other SOT having a demo letter??
Transfers to a dealer w/ SOT will need a demo letter, transfers to a manufacturer or importer w/ SOT will not.
http://www.atf.gov/publications/download/p/atf-p-5320-8/atf-p-5320-8-chapter-14.pdf
Section 14.3 Disposition of “post-86 machineguns.” Section 479.105(f) requires the FFL/SOT going
out of business to transfer machinegun(s) manufactured after May 19, 1986 to a Federal, State or local
government entity, qualified manufacturer, qualified importer, or, subject to the provisions of
479.105(d), to a qualified dealer. The transfers must be completed prior to the FFL/SOT going out of
business. The transfer to a government entity would be on Form 5 and the transfer to a qualified
manufacturer, importer, or dealer would be on Form 3. The transfer of a machinegun manufactured
after May 19, 1986 to a qualified manufacturer or qualified importer can be done without the ‘law
enforcement letters of interest’ when the possessing FFL/SOT is going out of business. That fact that
the transferring FFL is discontinuing business must be documented with the submission of the transfer
applications. Transfer of a machinegun manufactured after May 19, 1986 from an FFL/SOT going out
of business to a qualified dealer requires compliance with section 479.105(d).
The FFL/SOT going out of business may also choose to destroy the machinegun(s), transfer them to
State or local government agencies, or abandon them to ATF or State or local government agencies. If
the firearms will be destroyed, ATF’s Firearms Technology Branch can be contacted for procedures to
properly destroy a machinegun. Once the destruction has been accomplished, notify the NFA Branch of
the destruction in writing, including a description of the machinegun(s) and the means of destruction.
For abandonment to ATF, contact the local ATF office.