Art, Collectibles and Tangible Personal Property in the Cross-Border Estate
The guide explains how US estate and gift tax reaches the art, jewelry, vehicles and other tangible property of a nonresident collector, how the treaties change the result, and how valuation, export and provenance rules affect the plan.
By Caroline Esche Ashford, PhD, JD · Updated in September 2026
In brief.
- For tangible personal property, US situs depends on where the object is on the date of death or of the gift. A nonresident’s art, jewelry, cars or wine located in the United States belong to the US gross estate, and a Form 706-NA is due once that estate, with adjusted taxable gifts, exceeds USD 60,000.
- The treaty decides before the Code. Under the treaties with Germany, the United Kingdom, the Netherlands, Austria and Denmark, only the country of domicile may tax a non-citizen domiciliary’s tangibles; the treaty with France lets the United States tax tangibles located there (Article 7 of the estate and gift tax treaty with France).
- A work of art imported only for exhibition, on loan to a public museum and on display or in transit to or from the exhibition at death is treated as located abroad (I.R.C. § 2105(c)). Gifts have no such exemption.
- Unless a gift tax treaty applies, a nonresident who gives away an object while it is in the United States owes gift tax at up to 40 percent, with only the annual exclusion, USD 19,000 per donee in 2026, to offset it.
- European export licenses and claims under the amended Holocaust Expropriated Art Recovery Act can decide whether a work may be moved or sold at all.
The issue
For most assets of a nonresident non-citizen, situs is a legal conclusion. For a painting or a watch it is a physical fact that the owner controls until the day it is tested, so the tax outcome may turn on when an object was shipped, the terms on which it was lent, or where it was handed over. The guide begins with the treaty rather than the Code, because for clients domiciled in treaty countries the treaty usually settles the question first.
Who the guide is for
The guide addresses advisors to collectors and to estates holding valuables in more than one country, and executors, appraisers and art advisors asked about the tax effect of a loan, a shipment, a gift or a sale.
Location, the transit argument and the state taxes
A sculpture in a Florida residence or a car garaged in California belongs to the US estate; the same object stored in Geneva does not. An object transferred to a revocable trust at a time when it was in the United States remains US property at death even after it has been moved abroad (I.R.C. § 2104(b)). The argument that property merely passing through is not located in the United States rests on two court decisions, not on any regulation. No treaty binds the states; New York, Washington and others tax tangibles within their borders.
The three treaty patterns
The five domicile-based treaties leave a non-citizen domiciliary’s art to the country of domicile, subject to reservations for US citizens and, in the British treaty, US nationals. The treaty with France allows US tax on tangibles located in the United States, with relief through a prorated credit, a 50 percent marital exclusion and an elective marital deduction. The situs-type treaties, among them those with Switzerland, Italy and Japan, keep the location rule; most prorate the exemption, but those with Ireland and South Africa do not. Only seven treaties cover gifts.
The museum-loan exemption and the gift tax
A painting acquired in the United States, or imported for the owner’s own enjoyment and only later placed on loan, does not meet the import condition, and a dealer’s showroom is not a public museum. New York and Minnesota have their own versions. Because the gift tax has no such exception, the guide treats the place where an object is handed over as a planning decision and the shipping and customs records as evidence. Connecticut, the only state with a gift tax, reaches tangibles located within it.
Structures, valuation, export and provenance
Holding the object through a foreign corporation turns it into foreign-situs shares, but the art inside keeps its historic basis. Free-port storage in Geneva, Luxembourg or Singapore keeps an object outside the US tax base only because it is abroad; a Delaware bonded warehouse does not. The guide covers sworn appraisals, the Art Advisory Panel, the 20 and 40 percent understatement penalties and the Statement of Value under Rev. Proc. 96-15, then the European Union, German, French, Italian and British export regimes, and Public Law 119-82 of April 13, 2026, which made the Holocaust Expropriated Art Recovery Act permanent and barred time-based and other non-merits defenses to timely claims.
The questions the guide answers
- How does an object’s location at death or at the time of a gift decide US estate and gift tax?
- Which treaty pattern applies, and does it exempt tangibles, tax them with a prorated credit or leave the Code in place?
- How is a museum loan documented so that the works-of-art exemption holds at death?
- When does a lifetime gift of art attract US gift tax?
- How will the IRS review the reported values, and when is a Statement of Value worth requesting?
- Which export licenses and provenance checks must precede a sale, a loan or a distribution to heirs?
- What should the executor do with the collection after the collector’s death?
- Part I. The situs rule for tangible property and the transit doctrine
- Part II. The tax treaties
- Part III. The works-of-art exemption
- Part IV. The gift tax on tangible property located in the United States
- Part V. Structures, storage and the income tax
- Part VI. Valuation, appraisal and the Art Advisory Panel
- Part VII. Import, export and cultural property
- Part VIII. Provenance and the amended HEAR Act
- Part IX. Administering the collection
- Part X. Practice points
The firm advises collectors, executors and their advisors on the US tax position of collections held across borders: treaty analysis and the location of objects, museum loans and storage, gifts of tangibles, appraisal strategy and the administration of collections in cross-border estates. Export licensing and the law of the country where a work is located are coordinated with the client’s counsel there or with counsel from the firm’s network.
Figures as of October 2026.
This page is general information as of the date stated and is not legal or tax advice. The application of the rules and conventions described depends on the facts of each case.
