Thread: LE Demo letter?
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Old May 1, 2012, 06:16 PM   #15
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Join Date: February 10, 2010
Posts: 720
How is this tax evasion? Is it because I would not have to pay the $200 stamp?
It could be understood as such, if an issue comes up. These are to be used for demostration use for a dealer to show a LE agency. Its not a way to by-pass the high prices of transferable firearms for a non-dealer.

First, any machinegun made/imported after May 19, 1986 can be transfered to any Special Operations Tax (SOT) payer if they have LE letter stating that any agency would like to see/demo the firearm. The firearm may only be retained as long as the FFL continues to pay the SOT ($500 each year if I remember properly, plus the FFL). If the FFL holder drops the SOT, he/she must transfer to another dealer paying SOT, a LE agency, or legally destroy the firearm.

It's becoming clear that LE demo units are not the best way to get my hands on the rifles I can only dream of....
Say, you pick up a transferable m-16 for $12,000, vs trying to get by with a LE Demo. The last m-16 I saw locally was $12,000 a couple of years ago.

If you buy the $12,000 transferable M-16 you can probably sell if for what you paid, or probably for more in 15 years.

If you buy a LE Demo M-16, for say, $1,500. then pay $500 sot each year, and a round up to $100 every three years for your FFL (its actually $90 but rounded up for easy figures). You would have $7500 for your SOT, $500 for your FFL, and $1500 for the rifle itself. Since other dealers have samples, I doubt they want yours unless its cheap or free when you do sell it. So you have at this time 15 years later, $8000 in fee's paid to the government, plus the original price of $1500 for the m-16, say around $9500 in it, and you could probably not sell for much, if at all. Of course this is not counting any possibly legal issues, nor have I included the cost for the local/state business license/fee's.

I guess it depends on how you view the math

Last edited by Fishing_Cabin; May 1, 2012 at 06:40 PM.
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