This appears to be a bug with the iOS Simulator. I'm also having the same problem when sharing one of the default images in the iOS Simulator to my app in iOS 14.0 Beta 3.
Willing to bet the image you're having trouble with is from the Photos app, dated March 30, 2018. It's the image with the pink and purple flowers. If you open the Photos app, and try to copy that image from the share sheet, you'll get the error, "Unable to Share: There was an error while preparing to share. Please try again later." This strongly suggests that this image is corrupted somehow.
I'd file a Radar and move on.
Treehouse22
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