> It would be unprecedented, as far as I know, for a company to be liable for taxes on the employee's on-paper-only gains, occurring some arbitrary time later at option-exercise.

The questions is ... would the same taxation be applicable in the reverse direction ? Say SF taxed you on big paper gains last year, your startup crashed and burned this year. Can you get a big refund ?

If not, then it would suggest a new avenue for arbitrage: trading stock in dead startups merely to offset gains in still functioning entities.