Research Memo Problem $($Prize$)$

Steve Spitz was given a service award for his outstanding

customer

service at his workplace. The award was a watch valued at $$375.$ His best friend is studying tax at BANK and told him that all prizes and awards are taxable. Steve disagrees and argues that the award was not

a cash award and therefore not taxable. Steve has come to you and asks

if he is correct, is the award taxable, does it matter if it was not a cash award?