The tax treatment for capital gains on artwork can vary depending on the jurisdiction.
In the United States, for example, the sale of artwork is generally considered a capital asset, and any profit from its sale is treated as a capital gain. The capital gain is calculated as the difference between the sale price and the cost basis of the artwork. If the artwork is held for more than one year, the gain is considered a long-term capital gain, which is usually taxed at a lower rate than ordinary income. If held for less than one year, it is considered a short-term capital gain and is taxed at ordinary income rates.
However, there are a few exceptions and special rules to consider. For artworks created by the taxpayer, a special provision called the "artist’s resale right" may apply, requiring the taxpayer to pay a royalty fee to the original artist when the artwork is resold for a significant profit. Additionally, if the artwork is considered a collectible, it may be subject to a higher tax rate called the collectibles tax rate.
It is crucial to consult with a tax professional or accountant for specific guidance and to understand the tax regulations in your jurisdiction, as they may differ.