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It's not illegal to pull some rusted hulk(with title) out of the blackberries at a friends place, fab and order up every aftermarket part for it, have little if any of the original car left, and attach/license it with the original VIN. Document your build and keep all the receipts. No stolen parts, taxes paid, no problems. It's very clear in the fed's readings...although some state authorities love to morph this into "you can't do that" if you don't know better.
Safety inspection varies by state.
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