An investor’s portfolio currently is worth $1 million. During the year, the investor sells 1,000 shares of FedEx at a price of $80 per share and 4,000 shares of Cisco at a price of $20 per share. The proceeds are used to buy 1,600 shares of IBM at $100 per share.

a. What was the portfolio turnover rate?

b. If the shares in FedEx originally were purchased for $70 each and those in Cisco were purchased for $17.50, and the investor’s tax rate on capital gains income is 20%, how much extra will the investor owe on this year’s taxes as a result of these transactions?