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Let's say I were to take a 100% AR-15 lower and mill out the internals so that they no longer take AR-15 FCG parts, does it cease to be a firearm? At least for transfer purposes.
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Nope. It's still a firearm, just one that doesn't work. Once the serial number goes on, its a firearm. Unfinished, broken,etc. doesn't matter under the law. Its a firearm.
Now, if you have rendered it inoperable, and not returnable to operable condition, AND get the BATFE to inspect it and declare it as such,THEN (and only then) it is no longer a firearm.
It becomes a deactivated firearm, and goes into a different legal class. DEWAT guns (Deactivated War Trophy) are inspected and approved as such by the Fed. Until then, even if you welded them shut, they are still legal firearms.