Transferring Art When No Charity Is InvolvedTransferring Art When No Charity Is Involved

Paul R. Comeau & Alexander M. Popovich

Taxes are never fun but unexpected taxes are especially annoying. If a Florida resident sells a painting through a worldwide auction house, which holds the auction in New York, does he need to pay New York income taxes? If a New Hampshire resident lends a painting to a New York museum, does she have to pay New York taxes?

In both cases, the answer is … “Maybe.”

How is this possible? How could New York or any other state impose income or use taxes in these situations?

For tax purposes, artwork is generally deemed to be tangible, personal property.¹ Any transfer may subject the transferor to income or gift taxes, or both. The general rules are that any sale or exchange of tangible personal property is sub...