On the direct BATFE citation regarding measurement of overall length with the stock folded or extended, the weapon in question was the old "Marble's Game Getter" with an underfolding wire stock. The correct answer has already been given here (the ATF measure with stock extended), and this is merely being provided as a reference to BATFE source material.
Quote taken from From:
ATF E-Publication 5320.8
Revised: April 2009
"NOTE: One version of the Marble’s Game Getter was produced with 18-inch barrels and a folding shoulder stock. This model of the Game Getter, as manufactured, is not subject to the provisions of the NFA because it has barrels that are 18 inches in length and the overall length of the firearm, with stock extended, is more than 26 inches. However, if the shoulder stock has been removed from the 18-inch barrel version of the Game Getter, the firearm has an overall length of less than 26 inches and is an NFA weapon. Specifically, the firearm is classified as a weapon made from a rifle/shotgun."