Mishnah Berurah — משנה ברורה

It is not exempt - For if he doesn't want the corners, [let him] cut them and throw them [away]... rather, certainly in the end he will remove the stitching. Therefore, it's considered as if he already removed the stitching and [so] it is obligated in ציצית. And for this reason, he may affix the ציצית now, on the fold, even [in the area of the garment close to the edge] lower than [the measurement of] the knuckle of the thumb [to the end of the nail], [as long as] if, when he removes [the stitching] it will be higher than [the measurement of] the knuckle of the thumb [to the end of the nail]. And all of this is when he folded and stitched it [in a] rounded [way], but if he folded and stitched it squared... since now too it has a corner, the opinion of the Levush and the Magen Avraham is that he is permitted to affix ציצית there on the fold, even though it is more than three fingers [distance] from the edge of the [real] corner, [but] since he stitched it, it's permitted. And [this is] like [what's written] in Se'if 6 [regarding affixing ציצית on] the fold of the טלית... that [there, the Shulchan Aruch says that] the stitching is valid (ie. the fold becomes the new edge of the garment). And many argue on this and they hold that also in this [case], the stitching is not sufficient [to make the fold be considered as the new edge]... and [they say] it's different, what's written there in Se'if 6, for that is referring to where he folded the entire edge and that's the normal way of [making] a garment. As opposed to this [case] where he only folded a bit of the garment.