This is the very same question that I had when I was looking to get my Encore.
There are two answers. There is the technical opinion of ATF and there is what everyone does, which corresponds to what gets enforced.
Technically, the ATF world revolves around the firearm being a rifle. They consider that once it's a rifle, it's always a rifle. So, you can have a handgun and convert it to a rifle and you're perfectly legal. Take that very same rifle and convert it back to the very same handgun that it started as and, technically, according to ATF, you have an illegal short barreled rifle, because, again technically, it was a rifle and will always be.
In reality, people constantly convert firearms from rifle to handgun and back again, states will even list the handgun that used to be a rifle on your permit. When you convert it back to a rifle, you will have a rifle that's listed on your handgun permit! Everyone knows that everyone does it and no one cares.
This is why, when I bought my Encore, I had it shipped into the state without a barrel but WITH pistol grips. According to ATF, it's a pistol. According to NY state, it's a "firearm" but meets neither the qualifications for a handgun OR a rifle until it has a barrel, which makes it exempt from CoBIS testing.
Now, I have a handgun registered on my permit, the ATF thinks it's a handgun and I can convert it back and forth without running into any enforcement issues.
Even so, if you carefully read the ATF site, and court cases that they have taken up, you will see that they technically do not allow for a rifle to be converted to a handgun.