"The term ''short-barreled rifle'' means a rifle having one or more barrels less than sixteen inches in length and any weapon made from a rifle (whether by alteration, modification, or otherwise) if such weapon, as modified, has an overall length of less than twenty-six inches."
28 USC 921(a)(8).A Chinese AK underfolder is 25 3/4 inches long when the stock is folded. A California state court held that the measurement is made with the stock folded, and that that such a firearm was a short barreled rifle under state law (which was virtually identical to the federal statute). I believe that there is a Michigan Attorney General opinion reaching the same conclusion. Nevertheless, that does not appear to be the case under federal law.
It
appears (and several non-authorative sources state) that the measurement is made with the stock extended under Federal law (otherwise underfolding AKs would not have been importable except as NFA items). But I searched the U.S. Code, the Code of Federal Regulations, the Federal Register, and federal case law, and I didn't find anything.