>but if the stock dropped in value, doesn't the loss in capital offset the taxes? Or has he _already_ paid the taxes, and cannot claw back any losses (since he

>but if the stock dropped in value, doesn't the loss in capital offset the taxes? Or has he _already_ paid the taxes, and cannot claw back any losses (since he has to offset those losses on future capital gains from other sources)? It's the second. But someone getting 7 million in stock options should still be making bank somewhere and can probably offset it in the future. He's not really in that big of a pickle. Ultimately he will work out a payment plan with the IRS and pay it off over a few years. He's also just an idiot. He should have sold enough stock to cover his taxes when he exercised the options. The people that get really screwed are those exercising options into illiquid companies. They may be paper millionaires as relatively junior engineers and have big tax bills. Then the company goes tits up and they lose everything without a reasonable expectation of future income high enough to offset their paper loss.