Do you know if the gun is registered? As Jim says, even non-functional machineguns had to be registered in 1968; if that was not done, the gun is illegal and you could be in trouble. Try to find the registration papers (Form 4 or Form 4467); your father should have kept them in his personal papers.
If you can't find the papers, the only legal thing you can do is contact BATFE. If the gun is registered, they will find out and help you with getting it transferred to your name. No, I am not being sarcastic; they really will help you on this. See their web site (
www.atf.gov) for info on what to do on the death of the owner of a registered machinegun.
If the gun is not registered, the only sure legal alternative you have is to surrender ("abandon") it to BATFE. There will be no penalty or any further problem. They deal with this sort of thing all the time, and only get up tight if someone tries to play games with them to evade the law. Some folks will advise you to try some tricks, like giving it to a government museum; that might work sometimes, but could just make things worse if the museum calls BATFE and says you are trying to donate an illegal weapon.
Unless/until you have legal possession, don't try to sell it or even destroy it. Both would be crimes and would change you from an honest person in possession of contraband to a criminal who is trying to profit. It is just like illegal drugs. If you find a packet of heroin and turn it in, you are a good citizen; if you try to sell it, you become a bad guy.
Jim
