Where was it kept from when you inherited it until you sold it?

It stayed in NY.  Additionally, they inherited a rental property in NY so they file as a non resident of NY for that income.  Capital gains on the artwork would be much larger in NY than AZ.

Thanks again

Was the art in the NY rental property?

Art is, generally, movable personal property but if it never moved out of NY I'm thinking it is NY property subject to NY tax. 

The AZ tax should be wiped out by the credit for tax paid NY.

If the dollars are large, I'd start researching this.

I'm for the idea that gains from a sale of collectibles in NY is sourced and taxable to NY for nonresidents under NY tax law Sec. 613(b)(1)(A) and on the basis artistic items are within the definition of personal tangible properties.

I agree it is tangible personal property but Sec 613(b) is percentage of completion method - what code are you referencing? Thank you

My apologies.  I had the section number transposed.  It should be Sec. 631(b)(1)(A).

oh, the NY code New York source income of a nonresident individual

(A) the ownership of any interest in real or tangible personal property in this state; or

Is that it?  Looks like they want it.  Thank you for bringing this up.  

Thank you all