The National Firearms Act of 1934 was enacted in the wake of the gang crime of the Prohibition era, including such notable incidents as the St. Valentine's Day Massacre in 1929. Its principal purpose was to strictly regulate several categories of firearms: machine guns, short-barreled shotguns, short-barreled rifles, sound suppressors (silencers), destructive devices, and "any other weapon". Among the many restrictions imposed, the most relevant to individual gun-owners are the taxes. An person who does not hold an appropriate license must pay a $200 tax to make any of these items, or to buy or sell any of them (except that a transfer of an "any other weapon" is only subject to a $5 tax). Making and transferring NFA items also requires permission from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE).
Possession and transfer of NFA items is perfectly legal under federal law, and under most states' laws. Making NFA items, other than machine guns, is also legal in most states.