This puts me in a very uncomfortable situation.  We have been at outs lately and I was relieved to be able to just go to Christmas dinner without the pressure of buying a gift... Now I feel like and ahole even though it is not my fault.

Serious suggestions please?

Turbo5

You had a no-gift agreement.  No reason for you to feel bad.

It kinda sounds like your brother wanted to put you in an uncomfortable situation, though.

Thank him for the gift, and apologize/explain that you didn't get him anything because of the no-gift arrangement you two had this year.  Then ask him what he'd like to do next year, as far as giving gifts is concerned.