Call the atf and they will transfer to an heir tax free if it was registered
Okay, let me change the hypothetical here and see what comes back.
Let's say it's not Korea and it's not an M16.
Let's say it's WW2 and that "grandpa" or whoemever DID do a legal transfer (paid the tax and had the forms) then to himself and his wife. Meaning, it was a war trophy he wanted to keep, did the tax payment, and had the paperwork filled out at the time.
The wife dies and the weapon is discovered by his kids or grandkids.
What happens then? Remember, the tax was originally paid, but the weapon in this scenario has lain undiscovered for 50 or so years. ALL of the original transferees would now be deceased.
What's the story? Get a lawyer?