Possession of a Machine Gun - it is unlawful for any person to transfer or possess a machine gun, except a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or any lawful transfer or lawful possession of a machine gun that was lawfully possessed before May 19, 1986. Therefore, notwithstanding any other provision of this part, no application to make, transfer, or import a machine gun will be approved except as provided by this section.
Source: http://www.law.cornell.edu/cfr/text/27/479.105
Source: http://www.law.cornell.edu/cfr/text/27/479.105
