The part of the story I don't get (and I'm an accountant) is why he should get taxed on it for holding it. This was not a raffle, lottery, or prize. I think of it more akin to finders/keepers.
Does this mean if you buy something for $1 at a yard sale and find out it's worth $1 million, you should pay taxes on it even if you keep it?
I can understand paying taxes on it once he sells it but shouldn't have to pay to keep it.
I'm sure there is some case law surrounding this very issue but I do think he might have a good case in court if he wanted to fight the tax battle.