Line Q of paragraph Z, page 7894 section 354 of subsection 18 says....
Possession of the DIAS is illegal without it being registered IIRC. Possession of an AR-15 that has NOT been drilled for the M-16 auto sear is not illegal even if you have all of the M-16 parts required to convert it and a jig and a drill bit. Where it becomes illegal is when you drill the holes. By the letter of the law, you have to be able to assemble all of the parts into your receiver without modification.
Also by the letter of the law... The DRILLING of the receiver to accept the Auto Sear is considered the manufacture of a machinegun and a felony by Federal Law and many state laws unless you have the proper license.
Now, if BATF really followed the letter of the law, they would know they have absolutely no jursidiction to charge you with diddly because there is no tie to interstate commerce involved in the manufacture in your garage of a machinegun. I understand that most people in the BATF and justice department are well-read college boys but they refuse to read beyond the 9th Ammendment of the Constitution.
Me, I hate machineguns being pointed at me by BATF guys so I'll avoid the issue altogether by not testing the 10th ammendment.
Oh, btw, a 'drop-in' conversion is illegal by the letter of the law. That's why I'd suggest the mil-spec parts in conjunction with a drill bit and jig so the conversion can be done in a dire emergency.
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