What if my client converts to a Roth IRA this year, but his net operating losses are disallowed on audit two years hence, and his AGI turns out to have been over $100,000--would he be able to retrench his converted Roth IRA into a regular IRA, even though it is past the extension date of this year's tax return? Or is he stuck with a taxable distribution?

That question, a crucial one, still has not been answered by the IRS. The best I can get from them is that they will take each case on an individual basis.

I interpret that to mean that if they feel the error is grievous, they will sock the taxpayer. If it's a minor miscalculation, they will be lenient.

In truth, the law, as it is written, does not permit late recharacterizations. I think that Congress may have to get involved, via a law change.