Musk, whenever he chose to exercise his stock options, would have to pay in tax an amount equal to the maximum combined federal and California state tax rate on the equity in the options at the time of exercise. According to Musk, that combined federal and California tax rate would be 53 percent for 2021. I come up with a slightly lower rate, but let’s use Musk’s figure. And to make the math easy, let’s ignore the $6.24 per share purchase price under Musk’s option agreement (with Tesla stock trading at $1,000 per share, or even $100 per share, that tiny purchase price counts as almost totally insignificant).

Now, let’s compare the tax results to Musk of exercising when the trading price is running at $100 per share and $1,000 per share, assuming in either case that he sells just enough of the shares he’s exercised to cover his tax liability. In both cases, he’d have income equal to the value of the shares and end up holding 47 percent of the shares on which he exercised options, with the other 53 percent of the shares sold to pay tax. In both cases, he would face no additional tax on the sale of shares since his cost basis in those shares would be equal to the price for which they were sold. But his cost basis in the shares he retains would be $900 per share higher in the case where he exercises his option when Tesla is trading at $1,000 per share. Musk does better by exercising when the stock price is higher, the opposite of what both Fortune and the Wall Street Journal suggest.

If you’re having trouble wrapping your head around all this, think about it this way: Once Tesla issued the non-qualified stock options to Musk, he and the taxing authorities became partners in the ownership of the underlying shares. As Tesla’s share price rose, 53 percent of the increase would go to the taxing authorities and 47 percent would go to Musk. Whenever Musk exercised his stock options, the partnership would break up and the taxing authorities’ portion of the stock would be sold.

But wait, you might ask, what if Musk wanted to pay the tax from his own pocket and keep all those shares he purchased under his option agreement? In that case, he’d do way better exercising when the stock is trading lower, right? No, not really, which is where the analyses of Fortune and the Wall Street Journal miss the mark. Musk paying the tax from his own pocket would be no different from him allowing stock to be sold to pay the tax and purchasing the same number of shares on the open market. And he doesn’t need to exercise his option to purchase shares on the open market. Which makes meaningless his right to pay the tax from his own pocket at the time he exercises his options.

To see this, compare the result if Musk exercises his option on 1,000,000 shares when the trading price is $100 and pays the tax, $53 million, from his own pocket with the result if Musk buys 530,000 shares when the stock is trading at $100 for the same $53 million and waits until the stock is trading at $1,000 to exercise his options, at which time he allows 530,000 of the shares just purchased to pay the tax. Economically, the results in these two cases end up identical. In both cases he pays $53 million when the trading price is $100. In both cases he winds up with 1,000,000 shares when the trading price is $1,000. But Musk’s cost basis in 470,000 of those shares jumps $900 higher per share under the second scenario.

Yes, I know this may initially sound crazy, but Musk gets a better result by (technically) paying more tax on the exercise of his stock options. He was going to keep about 47 percent of the shares regardless, but he took a higher cost basis (which will reduce his tax when he ultimately sold those shares) by exercising when Tesla shares were trading near their peak.

Why then did Musk sell when he did? Three things can make a person in Musk’s position exercise stock options: The options could be about to expire or the stock could appear to be overvalued or tax rates could be about to increase. Any one of these could cause a savvy option holder to sell.

In Musk’s case, at least two, and likely all three, of the possible triggers happened to be present. His options from 2012 stood ready to expire in August 2022. On top of that, under the proposed Build Back Better Act legislation, Musk’s income on exercise of the options could be subject to an 8 percent federal surtax if he waited until next year to exercise. Finally, at around $1,000 per share, Tesla’s stock price was sitting at ten times the stock’s value just two years ago and over 300 times its earnings per share.

For Musk, in other words, a perfect storm. He has paid tax in 2021 — lots of it — because doing so was by far his best option. Did he pay more tax than any American in history, as he claims? Probably. But he also received compensation of more than $20 billion, which almost certainly dwarfs the compensation any other CEO in American history has ever been paid, from a company with profits not remotely commensurate with that level of compensation.

The bottom line: Musk made record tax payments because the compensation he has extracted from Tesla has been obscene. So maybe Musk’s taxes turn out to be really super simple after all.