In the episode, Claire and Phil threaten to take away Christmas when they discover that one of the kids tried a cigarette but none wants to admit it.
Alex takes the blame to save Christmas but it is revealed that they were all saying the truth from the start.
While Claire (Julie Bowen), Phil (Ty Burrell) and the kids talk to Phil's dad, Frank (Fred Willard) via video chat to wish him Merry Christmas, Claire discovers a burn mark on the arm of the couch.
When none of the kids admit the truth, Phil reacts in an extreme manner and threatens to cancel Christmas, taking the tree away until someone confesses.
Alex (Ariel Winter), seeing that Phil is serious about taking away the Christmas tree, admits that she was the one who tried to smoke.
While they are celebrating, they discover that the burn mark on the couch was caused by the refracting sunlight through a Christmas ornament that Frank sent them.
Jay (Ed O'Neill) tries to introduce Manny (Rico Rodriguez) and Gloria (Sofía Vergara) to some Pritchett Christmas traditions such as watching Miracle on 34th Street.