Quoted:
From the conversations I have had with the ATF, your Form1 items become an NFA item the second the tax stamp is afixed to your Form1.  I had a Kahr Thompson that I SBR'd on a Form1 but never got around to getting a short barrel for it.  I sold it as a Title I rifle by sending a letter to the ATF and having them ammend the registry.  When I got the letter back from the ATF I sold it for more than I paid including the cost of the tax stamp.  In the process of doing this I had a few conversations with ATF.  It was then that they told me my Thompson was an SBR the second they put the tax stamp on my form regardless if I put a short barrel on it or not.

MadDog

Section 6.8 Withdrawal or Cancellation of an ATF Form 1 and Refund of Making Tax. The Form
1 applicant may withdraw the application by submitting a request, in writing, to the Chief, NFA Branch.
The applicant may also cancel an approved Form 1 application by submitting a request, in writing, to the
Chief, NFA Branch. The request for cancellation must state that the firearm was not made and must
include the approved Form 1 with the stamp affixed. The NFA Branch will amend the NFRTR to reflect
the withdrawal or cancellation of the application and arrange for the refund of the making tax. A request
for cancellation may only be done if the firearm has not already been manufactured. If the firearm is
made, the tax liability is incurred and the applicant cannot seek a cancellation.