Well, he shows classic symptoms of ADD, but I really don't have enough information to give that as a possibility yet.
You said his "teachers recommended thearpy, but that did not work last year." Could you give us more information on that. What kind of therapy? Who gave it?
I still would like to know his birth date and grade level just to rule that out.
This is one of the best sites for information on ADD and ADHD - take a look at it and see if any of the symptoms sound familiar. I don't think the hyper stuff will apply. What you are looking for is the inattention things.
The site is - http://www.help4adhd.org/en/about/what
It does sound like he is in over his head and is shutting down. Moving him out of the gifted class might be a good idea, but it doesn't deal with the problem that is causing his actions. He sounds like he is highly frustrated which is one of the classic ADD symptoms, especially if he had early success in school.
Since he apparently was having troubles last year too, it seem that we can rule out any recent home/school experiences that would lead to his actions?
So take a look at the site I recommended. I think you want to focus on the "ADHD, Predominantly Inattentive Type." Do let me know what they tried last year. I am also the CL on the ADHD site here - http://www.medhelp.org/forums/ADD---ADHD/show/175 -
so feel free to post there if you have any questions about ADD. Best wishes.