I am about to order a AR-15 reciever. As I understand it I can have this virgin reciever signed out as a handgun. Then I can build my dream varmit handgun. But until the money comes for all of the pistol parts I can assemble a rifle on it and enjoy the lower as a rifle. Am I right or am I asking for trouble from the ATF?

You must build it as a pistol first.  Not just have it logged out, but actually assembled.  Would be best to then document it's configuration before changing to a rifle.  Frankly with the price of lowers nowadays, might be best to just leave it assembled and build up a separate rifle.

That is good to know. What is the legal standard for proof that I have assembled it into a pistol? It sounds like you are right. I need to just order an extra reciever and have one logged as a rifle and one as a pistol.

read

CavVet, while the ATF letter you linked to does say what "must" be done as far as the initial purchase, this doesn't jibe with later ATF letters, which simply discuss what "should" be done.

On top of that, no letter that I've seen discusses the fundamental question: "What must one do to PROVE a pistol build configuration on date X so that later pistol -> rifle -> pistol switches are legally kosher?" Suggestions? I'd be surprised if 'datestamp showing on a photo' truely cuts it, considering no camera that I know of is always and only set by atomic clocks. Perhaps that's one value of 'picture threads' here on AR15.com, but I'd be a bit surprised if that counts as legal documentation.

Photograph the assembled pistol in front of a newspaper with the date visible.  That's all that is really needed.  The ATFE is not overly concerned with these things when used for legal purposes and if you make some effort to document the first build you are in the clear.  If anyone really thinks the ATFE is just waiting to kick down your door at the first infraction, just look at all the cases the ATFE prosecuted during the AWB years for illegal possession of illegal "assault rifles" or illegal mags.  Damned few if any and NONE that I know of that did not involve more serious charges.  The ATFE has bigger fish to fry than to worry a whole lot about when average Joe Blow actually built his legally used and owned pistol.  Make an effort to stay within the letter of the law  and some effort to document and then sleep soundly at night.

Also, read the letter tacked at the top of this forum I got from the ATFE dated Nov. 30 2004, not some outdated letter from 1992 from a director no longer around.