During the year, Amr received the following noncash gifts from his employer: A painting worth $400 and a watch worth $250. How will these gifts be taxed?

Multiple Choice

• The entire $650 will be reported on Amr's return.

• As noncash gifts, there is a $500 exemption and the remaining $150 will be taxed.

• These gifts will not be taxed at all.

• The painting will not be taxed but the watch will.