Seems the subsequent transaction went thru a dealer, proving to the gov’t that there was absolutely no grounds for disallowing the transfer.
There is no difference here from person B making a monetary gift to A, A buys a gun thru FFL, decides to dispose of it, and sells it to B thru a FFL for $0. All legal. And I fear the court will disagree with no objective delineation.
The only fly in the ointment for this particular case is, if I am not mistaken, a check from Uncle to Buyer predated the Buyer’s purchase.