I spoke to an ATF agent locally that I was referred to by another atty. Although I disagree with him to a certain extent he suggested (off the record) that since it is not rifled and the projectile (tg cannister) would not be readily available nor life threatening and it likely was not designed to shoot anything but a blank 12 ga shell it possibly would not come under NFA regulation. I personally think it does since it conceivably could fire a 12 ga shell with a projectile of shots or slugs (even though I wouldn't want to
). Agent and I discussed this but he said it would essentially need to have a 12 ga bore the entire length to truly come under NFA.
In any event, in order to keep it you would pay a $5 registartion fee, undergo background check and could be legally licensed to keep it or subsequently sell...not $200 since you did not manufacture it. The agent and I agree on this. Assuming you have no felonies you'll have no problems keeping it if you want it especially in light of its history.
He is getting me a definitive opinion and references from the ATF division in DC in charge of this for me to pass on to let you know what to say to agents.
He also said the liklihood of you being in trouble had you sold it was essentially nil.